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Soviet Union

The Council for Mutual Economic Assistance

The Soviet Union formed the Council for Mutual Economic Assistance (Comecon) in 1949, in part to discourage the countries of Eastern Europe from participating in the Marshall Plan (see Glossary) and to countereact trade boycotts imposed after World War II by the United States and by Britain and other West European countries. Ostensibly, Comecon was organized to coordinate economic and technical cooperation between the Soviet Union and the member countries. In reality, the Soviet Union's domination over Comecon activities reflected its economic, political, and military power. In 1989 Comecon comprised ten countries: the six original members-- Bulgaria, Czechoslovakia, Hungary, Poland, Romania, and the Soviet Union--plus the German Democratic Republic (East Germany, which joined in 1950), Mongolia (1962), Cuba (1972), and Vietnam (1978). Albania, although it joined in February 1949, has not participated in Comecon activities since 1961.

Since 1949 the Soviet Union has traded primarily with other Comecon members (see fig. 25). In 1960 the Soviet Union sent 56 percent of its exports to and received 58 percent of its imports from Comecon members. From that time, the volume of this trade has steadily increased, but the proportion of Soviet trade with Comecon members decreased as the Soviet Union sought to increase trade with Western industrialized countries. In contrast to 1960, trade with Comecon members accounted for only 42 percent of Soviet exports and 43 percent of Soviet imports in 1980.

The European members of Comecon have looked to the Soviet Union for oil; in turn, they have provided machinery, equipment, agricultural goods, industrial goods, and consumer goods to the Soviet Union. Because of the peculiarities of the Comecon pricing system, throughout the 1970s and early 1980s Comecon prices for Soviet oil were lower than world oil prices. Western specialists have debated the political motivation of this implicit price subsidy to Comecon members. The cohesiveness within Comecon members seemed remarkable when in 1985 the fall in the world price left Comecon members paying above-market prices for Soviet oil.

The membership of Cuba, Mongolia, and Vietnam in Comecon has served Soviet foreign policy interests more than the economic welfare of Comecon members. In general, the more economically developed European members have supported the three less developed members by providing a large market for their exports, often at above-market prices. Most of Cuba's sugar and nickel and all of Mongolia's copper and molybdenum have been imported by the Soviet Union. In addition, the Soviet Union has established naval and air bases in Cuba and Vietnam.

Since 1985 Gorbachev has called for an increase in trade with Comecon members. At the Twenty-Seventh Party Congress in FebruaryMarch 1986, both he and Prime Minister Nikolai I. Ryzhkov stressed the need to improve cooperation with the socialist countries on the basis of Comecon's Comprehensive Program for Scientific and Technical Cooperation up to the Year 2000. This program stressed the self-sufficiency of Comecon countries in five key areas: electronics, automation of production, nuclear power, biotechnology, and development of new raw materials. It also called for improvement of plan coordination, joint planning, Comecon investment strategy, production specialization, and quality of machinery and equipment exported to the Soviet Union (see Appendix B).

Data as of May 1989