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Détente, East-West Trade, and the Future of Economic Integration in Eastern Europe

Published online by Cambridge University Press:  18 July 2011

Andrzej Korbonski
Andrzej Korbonski
Affiliation:
University of California, Los Angeles
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Extract

The paper attempts to examine the impact of East-West trade on the process of economic integration in Eastern Europe, carried out under the aegis of the Council for Mutual Economic Assistance (CMEA). The discussion is focused on the proposition that, other things being equal, the continued growth of East-West trade is at the present time incompatible with the increase in the level of economic integration in that part of Europe.

The problem is analyzed in the context of several factors: the process of regional economic integration; the attitude of the Soviet Union and of the East European political and economic elites toward both integration and East-West trade before and after détente; the influence of economic reforms in Eastern Europe; and the impact of the energy crisis and of the developing global shortage of raw materials.

The conclusion emerges that, on balance, the chances of economic cooperation if not integration in the region are today better than in the past, albeit at the expense of closer economic relations between Eastern Europe and the West.

Type
Research Article
Information
World Politics , Volume 28 , Issue 4 , July 1976 , pp. 568 - 589
Copyright
Copyright © Trustees of Princeton University 1976

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References

1 The list of congressional sources dealing with various aspects of East-West trade is by now quite long. Among representative early studies are: U.S., Congress, Senate, Committee on Foreign Relations, East-West Trade: A Compilation of Views of Businessmen, Bankers, and Academic Experts, 88th Cong., 2d sess. (Washington, D.C.: Government Printing Office 1964)Google Scholar; U.S., Congress, Senate, Legislative Reference Service of the Library of Congress for the Committee on Foreign Relations, A Background Study on East-West Trade, 89th Cong., 1st sess. (Washington, D.C.: Government Printing Office 1965)Google Scholar; U.S., Congress, House, East-West Trade, Hearings before a Subcommittee on Europe of the Committee on Foreign Affairs, 90th Cong., 2d sess. (Washington, D.C.: Government Printing Office 1968)Google Scholar; U.S., Congress, House, Committee on Foreign Affairs, Basic Documents on East-West Trade, 90th Cong., 2d sess. (Washington, D.C.: Government Printing Office 1968)Google Scholar.

2 Report to the President of the Special Committee on U.S. Trade with East European Countries and the Soviet Union (The White House,04 29, 1965)Google Scholar.

3 American Management Association, “East-West Trade,” Management Bulletin, No. 51 (1964)Google Scholar; Committee for Economic Development, East-West Trade; A Common Policy for the West (New York, 05 1965), andGoogle Scholar`A New Trade Policy Toward Communist Countries (New York, 09 1972)Google Scholar.

4 Wilczynski, Jozef, The Economics and Politics of East-West Trade (London: Macmillan 1969)Google Scholar; Pisar, Samuel, Coexistence and Commerce (New York: McGraw-Hill 1970)Google Scholar; Wolf, Thomas A., U.S. East-West Trade Policy (Lexington, Mass.: D. C. Heath 1973)Google Scholar; Nagorski, Zygmunt Jr, The Psychology of East-West Trade (New York: Mason & Lipscomb 1974)Google Scholar.

5 The standard historical account of the first fifteen years of CMEA is Kaser, M. C., Comecon, 2d rev. ed. (London: Oxford University Press 1967). The more recent period is analyzed inGoogle ScholarSchaefer, Henry W., Comecon and the Politics of Integration (New York: Praeger 1972). See alsoGoogle ScholarBrabant, Jozef M. van, “On the Origins and Tasks of the Council for Mutual Economic Assistance,” Osteuropa Wirtschajt, Vol. 19 (09 1974), 182–209;Google ScholarKorbonski, , “Theory and Practice of Regional Integration: The Case of Comecon,” in Lindberg, Leon N. and Scheingold, Stuart A., eds., Regional Integration (Cambridge: Harvard University Press 1971), 338–73Google Scholar.

6 Korbonski, , “East-West Trade and Integration of Eastern Europe,” paper presented at the Conference on International Politics of Eastern Europe (Columbia University, 03 1975)Google Scholar.

7 Pfotenhauer, David and Welsh, William A., “The Economic Dimension of Integration in Eastern Europe,” paper presented at a Conference on Trends in Integration of the East European Community (University of South Carolina1, 04 1972)Google Scholar; Finley, David D., “Some International Pressures and Political Change in Eastern Europe,” paper presented at the Western Slavic Conference (San Francisco, 10 1973)Google Scholar.

8 Korbonski (fn. 5), 343.

9 For a pioneering attempt, see Nye, Josepḣ S., “Comparative Regional Integration: Concept and Measurement,” international Organization, XXII (Autumn 1968), 855–80. See alsoGoogle ScholarKanet, Roger E., “Integration Theory and the Study of Eastern Europe,” International Studies Quarterly, XVIII (09 1974), 368–92;CrossRefGoogle ScholarClark, Cal, “The Study of East European Integration: Method, Madness or Mundanity?” paper presented at the Convention of the International Studies Association (St. Louis, 03 1974)Google Scholar.

10 The classic treatment is, of course, Brzezinski, Zbigniew, The Soviet Bloc, rev. and enl. ed. (Cambridge: Harvard University Press 1967)Google Scholar.

11 Van Brabant (fn. 5), 190. In the case of Poland, for example, the United States was the second-largest supplier after the Soviet Union as late as 1948; even in 1949 the shares of imports from the East and from the West (the United States and Western Europe) were almost identical. Alton, Thad P., Polish Postwar Economy (New York: Columbia University Press 1955), 278. See alsoGoogle ScholarAdler-Karlsson, Gunnar, Western Economic Warfare 1947-1967 (Stockholm: Almqvist and Wiksell 1968), 150–66Google Scholar.

12 For a perceptive discussion, see Montias, John M., “Economic Nationalism in Eastern Europe: Forty Years of Continuity and Change,” in London, Kurt, ed., Eastern Europe in Transition (Baltimore: The Johns Hopkins University Press 1966), 173–203Google Scholar.

13 This crucial point has been generally neglected in the literature except by Montias. However, he seems to restrict it to “interstate movement of people and commodities.” See his “Obstacles to the Economic Integration of Eastern Europe,” Studies in Comparative Communism, II (07-10 1969), 41Google Scholar.

14 For details, see United Nations Economic Commission for Europe, Economic Bulletin for Europe, Vol. 25 (Geneva 1974), 22–74Google Scholar.

15 For a recent study, see Askanas, Benedikt, Askanas, Halina, and Levcik, Friedrich, “Structural Developments in CMEA Foreign Trade over the Last Fifteen Years (1960-1974),” Forschungsberichte, No. 23 (Wiener Institut für Internationale Wirtschaftsvergleiche, 02 1975)Google Scholar.

16 This question is extensively discussed in Vajda, Imre and Simai, Mihaly, eds., Foreign Trade in Planned Economy (Cambridge, England: At the University Press 1971). See alsoGoogle ScholarBrown, Alan A. and Marer, Paul, “Foreign Trade in the East European Reforms,” in Bornstein, Morris, ed., Plan and Market (New Haven and London: Yale University Press 1973), 153–205Google Scholar.

17 For an up-to-date account, see Gamarnikow, Michael, “Balance Sheet on Economic Reforms,” in Reorientation and Commercial Relations of the Economies of Eastern Europe [hereafter referred to as Reorientation]. A Compendium of Papers Submitted to the Joint Economic Committee, 93rd Cong., 2d sess. (Washington, D.C.: Government Printing Office 1974), 164–213Google Scholar.

18 Korbonski, , “Bureaucracy and Interest Groups in Communist Societies: The Case of Czechoslovakia,” Studies in Comparative Communism, IV (No. 1, 1971), 57–79, andCrossRefGoogle Scholar“Political Aspects of Economic Reforms in Eastern Europe,” in Fallenbuchl, Z., ed., Economic Development in the Soviet Union and Eastern Europe (New York: Praeger, forthcoming)Google Scholar.

19 Korbonski, , “Bureaucracy … ” (fn. 18), 67–79Google Scholar.

20 For an interesting discussion, see Farrell, R. Barry, “Top Political Leadership in Eastern Europe,” and Beck, Carl, “Career Characteristics of East European Leadership,” in Farrell, , ed., Political leadership in Eastern Europe and the Soviet Union (Chicago: Aldine 1970), 88–107, I57-94. See alsoGoogle ScholarBeck, Carl, “Leadership Attributes in Eastern Europe: The Effect of Country and Time,” in Beck, and others, , Comparative Communist Political Leadership (New York: David McKay 1973), 86–153;Google ScholarBauman, Zygmunt, “Twenty Years After: The Crisis of Soviet-Type Societies,” Problems of Communism, XX (11-12 1971), 45–53Google Scholar.

21 Montias, John Michael, Economic Development in Communist Rumania (Cambridge: MIT Press 1967), chaps. 4 and 5Google Scholar.

22 Schaefer (fn. 5), 34, 75-76. See also Dornberg, John, “East Germany: The Special Case,” in King, Robert R. and Dean, Robert W., eds., East European Perspectives on European Security and Cooperation (New York: Praeger 1974), 106–9Google Scholar.

23 This was my impression, based on several conversations with Soviet economists and government officials during my stay in Prague and Warsaw in 1966-67 and a visit to Moscow in 1970.

24 New York Times, April 9, 1972.

25 For details, see Montias, John M., “The Structure of Comecon Trade and the Prospects for East-West Exchanges,” in Reorientation (fn. 17), 664, 667Google Scholar.

26 Schaefer (fn. 5), passim. See also Holesovsky, Vaclav, “The Conflict of Integration Concepts and National Self-Assertion in Eastern Europe,” paper presented at the National Convention of the American Association for the Advancement of Slavic Studies (Dallas, 03 1972)Google Scholar.

27 Marer, Paul, “Has Eastern Europe Become a Liability to the Soviet Union—The Economic Aspects,” paper presented at the Conference on the International Politics of Eastern Europe (Columbia University, 03 1975)Google Scholar; Montias (fn. 25), 676.

28 Marer (fn. 27), 16-21. See also Zygmunt Szeliga, “Nowa formula cenowa” [The New Price Formula], Polityka (Warsaw), February 22, 1975.

29 The agreement to develop the Orenburg gas deposit and to build a 2,750 kilometerlong pipeline connecting it with the western border of the U.S.S.R. was signed at the 28th Session of the CMEA Council in Sofia, June 18-21, 1974. Pravda, June 22, 1974.

30 Soviet attempts to take advantage of its role as main supplier of raw materials to CMEA in order to extract price and other concessions from its junior allies go back to the mid-1960's. See Bogomolov, O., “Khoziaistvennye reformy i ekonomicheskoe sotrudnichestvo sotsialisticheskikh stran” [Economic Reforms and Economic Cooperation of Socialist States], Voprosy ekpnomihi, No. 2 (1966), 76–86; andGoogle Scholar“Aktualne problemy ekonomicheskogo sotrudnichestva sotsialisticheskikh stran“ [Current Problems of Economic Cooperation of Socialist States], Mirovaia ekonomika i mezhdunarodnye otnoshenia, No. 5 (1966), 15–26;Google ScholarLadygin, V. and Shirayev, Y., “Voprosy sovershenstvovania ekonomicheskogo sotrudnichestva stran SEV” [Problems of Improving the Economic Cooperation of CMEA Countries], Voprosy ekpnomiki, No. 5 (1966), 81–89. See alsoGoogle ScholarMarer, Paul, “Soviet Policy in Eastern Europe,” in Reorientation (fn. 17), esp. 149–50 and 154-59Google Scholar.

31 See Marer (fn. 27), 2-3.

32 Montias (fn. 25), 676. Although estimates differ, Western observers believe that by 1980 the Soviet Union will not be able to supply all the oil needs of the CMEA countries, and that the smaller East European countries will be forced to import between 50 and 100 million tons from non-Soviet sources, placing a heavy burden on their balances of payments. See Lee, J. Richard, “Petroleum Supply Problems in Eastern Europe,” in Reorientation (fn. 17), 417Google Scholar; Trend, Harry, “Comecon Oil and Gas Crisis by 1980,” Radio Free Europe Research, Eastern Europe/7, 04 13, 1973Google Scholar.

33 By the end of 1975, CMEA countries including the Soviet Union had run up a debt in the West of some $32 billion, up $7-9 billion from the end of 1974. The increase was due to the growing trade deficit which amounted to $12 billion in 1975, half of it incurred by the smaller East European countries. New York Times, December 15, 1975.

34 Good examples of “political” credits are provided by those granted to Poland. A credit of 7 billion francs was announced by President Giscard d'Estaing on the occasion of his visit to Warsaw in May 1975, and a credit of I billion marks was made public following a meeting between Chancellor Helmut Schmidt and First Secretary Gierek at Helsinki in August 1975.

35 For a background discussion, see Bräker, Hans, “Die wirtschaftliche Öffnung der Sowjetunion und des RW G nach Westen” [The Economic Opening of the Soviet Union and CMEA Toward the West], Berichte des Bundesinstituts für ostwissenschajtliche und Internationale Studien, No. 56 (1974), 27–28Google Scholar. The embargo on the import of beef cattle imposed by the EEC between July and October 1974 was estimated to have cost Hungary alone the equivalent of $100 million. Radio Free Europe Research, Situation Report, Hungary/3, 01 21, 1975Google Scholar.

36 The only two oil-producing Arab countries that showed interest in Eastern Europe were Kuwait and Libya. Kuwait granted a credit of $40 million to Hungary in November 1974 (Radio Free Europe Research, Situation Report, Hungary/47, 12 3, 1974)Google Scholar, and another one of $125 million to Yugoslavia in August 1975, for the construction of the so-called Adria pipeline which was to serve Yugoslavia, Hungary, and Czechoslovakia, and possibly other CMEA countries. Libya's contribution to the construction of the pipeline was $75 million. Antic, Zdenko, “Financing for Yugoslav Hungarian Oil Pipeline Arranged,” Radio Free Europe Research, RAD Background Report/ 125 08 12, 1975Google Scholar.

37 For an excellent discussion of the centripetal forces stimulating closer CMEA integration, see Marer, Paul, “Economics and Integration,” paper presented at a conference on “Eastern Europe: Stability or Recurrent Crises?” (Airlie House, Virginia, 11 1975), 16–19Google Scholar.

38 The February 1975 visit of EEC representatives to Moscow, where they met with their CMEA counterparts, apparently proved inconclusive although further meetings were being planned. New York Times, 02 8, 1975Google Scholar.

39 For an interesting discussion of current U.S. policy toward Eastern Europe, see Gati, Charles, “The Forgotten Region,” Foreign Policy, No. 19 (Summer 1975), 135–45CrossRefGoogle Scholar.