A2 Unit 3 IR 1945-2004: (13) The condition of the Soviet economy and its impact on the Cold War

Source: BBC History

Problems facing the USSR in the 1980s

  • Afghanistan had become “Russia’s Vietnam”.
  • Russia could not afford the arms race.
  • The Soviet economy was backwards – factories and mines were decrepit and out of date.
  • Backward industry was causing increasing environmental problems – eg pollution, the Chernobyl nuclear power plant explosion of 1986, and the Aral Sea dried up.
  • Many people were much poorer than the poorest people in the capitalist West – unrest about shortages was growing.
  • Crime, alcoholism and drugs were out of control in Soviet towns.
  • The Soviet system had become corrupt and out of date – instead of dealing with problems, the government just covered them up (eg Chernobyl, 1986).
  • Many people were dissatisfied with the Soviet police state and censorship.

Source: http://www.faqs.org/espionage/Co-Cop/Cold-War-1972-1989-the-Collapse-of-the-Soviet-Union.html

Economic stagnation and the arms race.

Youtube documentary: Star Wars 1981-1988

The vigorous Soviet economy of the late-1960s and early 1970s quickly fell victim to the very factors that had contributed to its success, central planning and raw materials allocation. Brezhnev recognized that the Soviet economy was slowing, and attempted to patch problems rather than completely overhaul the system. His efforts failed. Even if Brezhnev had attempted to overhaul the Soviet economy, the highly entrenched special interests that made their living by manipulating the Soviet Union’s centrally planned economy could have defeated Brezhnev’s efforts.

Throughout the 1970s and into the mid-1980s, the Soviet Union’s GNP and industrial output continued to increase, but at a lessening pace, eventually leading to economic stagnation. The Ninth Five Year Plan (1970–1975) saw a growth rate of approximately 3%. The period of 1975–1980 experienced a growth rate of between 1% and 1.9%, depending on whether revised Soviet numbers or the West’s estimate is examined. Likewise, 1980–1985 saw a further decline in economic growth, between 0.6% and 1.8%. Declining economic growth rates were not confined to the Soviet Union. Eastern Europe, with its economies intertwined with the Soviet Union’s, suffered a similar fate.

This declining growth rate in the 1970s and 1980s resulted in the Soviet Union receiving a diminishing rate of return on capital investment. This proved disastrous for the Soviet economy, because by 1980, the Soviet Union was spending nearly one-third of its GNP on capital investment, with most of the sum dedicated to the military. The military was consuming such a large portion of the Soviet economy for two reasons: the Soviet involvement in Afghanistan and the arms race with the United States. These two events would weigh heavily in the Soviet economic demise and lead to its inevitable fall. A weak economy prevented the Soviet Union from reacting appropriately to each experience.

The stagnant Soviet economy of the 1970s would have faired far worse had it not been for vast oil and natural gas production propping up the economy. By the late 1970s, technological backwardness and poor management under the centrally planned Soviet economy resulted in depleted oil and gas reserves. This led Brezhnev to turn his eye towards the oil and gas reserves of Central Asia. Afghanistan had long been a relatively undeveloped country comprised of numerous semi-autonomous ethnic groups. Brezhnev assumed that the Soviet Union could achieve a quick and decisive victory over the country and expand its influence of Communism into Central Asia.

The United States and the rest of the world quickly condemned the Soviet invasion of Afghanistan in 1979. The United States also provided covert support to the mujahideen, or Afghani resistance fighters. Rapid turnover in Soviet leadership following the death of Brezhnev in 1982 also hampered the war effort. The short-lived regimes of Yuri Andropov and Konstantin Chernenko provided for an inconsistent Afghan policy. The Soviet military operation quickly bogged down and faced stiff resistance in the harsh terrain of Afghanistan.

The Soviets erroneously assumed that since the Afghans were economically disadvantaged, they would be quickly defeated and embrace communism. The opposite result happened. As the Afghans had little to lose by continuing to fight, instead of driving Afghanistan to communism, the Soviet invasion forged the Afgani Islamic resistance. A decade after the invasion, Soviet troops withdrew.

The war in Afghanistan had an even more adverse effect on the Soviet Union than the Vietnam War had on the United States. Thousands of Soviet troops died in a conflict that resulted in the defeat of a superpower by a developing country. Moreover, the conflict strained an already weak economy. The conflict angered Soviet citizens, and they began demanding accountability from the state. Brezhnev and his successors intended the war in Afghanistan to reassert the supremacy of the Soviet Union. Instead, the conflict proved that the superpower’s might was waning.

The war in Afghanistan also distracted the Soviet Union from its arms race with the United States, thus allowing America to gain a technological advantage. The United States ratcheted up pressure on the U.S.S.R. through several means. The Reagan administration began placing missiles in Western Europe, primarily in Western Germany, strategically located to intimidate Eastern Europe and the Soviet Union. Reagan also began building up the U.S. military. Reagan commissioned new aircraft carriers and expanded America’s stealth aircraft program. To the Soviets, these actions signaled a widening weapons gap, particularly in terms of technologically advanced weapons.

Perhaps the greatest threat to the Soviet Union was the United States’ Strategic Defense Initiative (SDI), also known conventionally as Star Wars. The SDI was a planned satellite based weapons system that would detect and destroy missiles fired at the United States. Such a technological advancement would have rendered Soviet ICBMs useless. The Soviet Union tried to dissuade the United States from implementing the SDI, but the Reagan administration refused to back away from the proposal. In reality, the SDI was only in the technological planning stages; the Soviets, however, bought America’s bluff, prompting a quick and expensive advance in their lagging military technology. This increased spending further accelerated the Soviet economic decline.

Realizing a weapons gap, the Soviet Union began pushing the Reagan administration for nuclear arms talks following the death of Brezhnev in 1982. The U.S. soon entered negotiations over the Strategic Arms Reduction Treaty (START). However, numerous changes in post-Brezhnev Soviet leadership, Solidarity strikes in Poland, and other issues prevented the completion of the START during the Reagan administration.

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