Page 85 - Encyclopedia Of World History Vol V

1862 berkshire encyclopedia of world history

was Transylvania, to enlarge Romania. Soviet Russia ances. In essence they were financing that arms drive.
after Lenin’s 1917 revolution lost territory to Poland and Beginning with the annexation of Sudetenland from
Romania. The immediate economic damage of the new Czechoslovakia in 1938, German (and in the Balkans,
frontiers was the disappearance of the Austro-Hungarian Italian) occupation policies, and those of its client states,
customs area: at the Portorosa Conference (1921) the subordinated eastern Europe to German economic
successor states negotiated a set of protocols that could requirements, formulated as a Grossraumwirtschaft (the
have restored a low-tariff basis, but governments never economy needed to support German territorial expan-
ratified them, and by the time of another failed attempt, sion).The region, and the western USSR after the 1941
the Geneva Conference of 1927, mutual tariffs were 39 invasion, were to be tributaries of farm produce and raw
percent of price.The reason lay in the smaller states’ fear materials to a German “core” of heavy industry, into
of economic and financial domination by Budapest and which only the German “protectorate” of Bohemia-
Vienna: Czechoslovakia, Romania, and Yugoslavia were Moravia was economically incorporated.
concerned lest Hungary reinstate itself territorially or
commercially. Nevertheless the foreign trade turnover of The COMECON Era
all seven, like that of the USSR (the title formally adopted Eastern Europe endured a further occupation when the
by that nation in 1924) during its New Economic Policy Soviet armies swept to victory in 1945. By 1947 the gov-
(1921–1928), expanded during the 1920s. The reverse ernments of eight states were under Communist rule
was true of the 1930s.The industrial exports of Czecho- (Albania, Bulgaria, Czechoslovakia, Hungary, Poland,
slovakia and Poland were worst hit by the world depres- Romania, the USSR, and Yugoslavia), and in 1949 the
sion after the 1929 stock market crash, but all of the USSR adapted its Zone of Occupation in Germany into
countries concerned lost export earnings as raw material the German Democratic Republic. If the decisive break
and agricultural prices collapsed. Over the two interwar with the Western market economies is to have a date, it
decades most exported only one-tenth of their national would be 1947, when the Soviet Union and its subordi-
product (but almost double that in Czechoslovakia and nate states rejected participation in the Marshall Plan and
Hungary), while after 1928 the Soviet Union retreated in the ensuing Organization for European Economic
into near autarky under Stalin’s five-year plans (by 1937 Cooperation. In ostensible compensation for the absence
it exported only 0.5 percent of an enlarged national prod- of a corresponding body for Eastern Europe, the USSR
uct).The Eastern European reaction to the depression, as sponsored the establishment of a Council for Mutual Eco-
elsewhere in the developed world, was to erect higher nomic Assistance, commonly abbreviated to COME-
protective tariffs and restrict currency convertibility.Apart CON, in 1949. By then Yugoslavia had broken with the
from Czechoslovakia, which was a net capital exporter in USSR and Albania had changed allegiance from
the 1920s, the region borrowed substantially from West- Yugoslavia to the Soviet Union. COMECON included
ern Europe, but creditor-currency devaluation and the Albania briefly in its membership, and later two other
shrinkage of financial markets brought the ratio of the Soviet allies, Cuba and Mongolia. In the 1950s and
Eastern European countries’ external debt down to 18 1960s a steady 60 percent of members’ exports were
percent of GNP by 1938. Overall, the interwar years were directed to each other—exports predominantly of Soviet
an abnegation of regional globalization. raw materials against Eastern European equipment and
Already before World War II Nazi Germany had manufactures. Trade was underwritten among COME-
imposed a Reichsmark clearing system on its Eastern CON members by a mutual coordination of annual and
European trade partners except for Poland; this at least longer-term plans for each economy, and trade with the
assured them of markets in a depressed world, but Ger- West deterred by strategic embargoes and restrictions
many’s rearmament left few goods and services upon imposed by NATO members through a Consultative
which they could spend otherwise inconvertible bal- Group Coordinating Committee (CoCom).As the imper-