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Causes of the Soviet Collapse (1979-1991)

Daniel J. Castellano, M.A.

(2003, rev. 2011)

1. Stagnation in the 1970s
2. Western Engagement with the USSR
3. Gorbachev’s Reforms
4. The Loss of Eastern Europe
5. Dissolution of the Soviet Union
6. Aftermath of the Dissolution

The stunning collapse of the Soviet empire in 1989-91 has often been heralded in the West as a triumph of capitalism and democracy, as though this event were obviously a direct result of the policies of the Reagan and Thatcher governments. This self-congratulatory analysis has little relation to measurable facts, circumstances, and internal political dynamics that were the real historical causes of the deterioration of the Soviet empire and ultimately the Soviet state itself. Fiery political speeches and tough diplomatic postures make good theater, but they are ineffective at forcing political transformation in totalitarian nations, as is proven by the persistence of far less powerful Communist regimes in Cuba and east Asia in the face of punishing trade embargos. The key to understanding the reasons for the demise of the Soviet Union is to be found not in the speeches or policies of Western politicians, but in internal Soviet history.

1. Stagnation in the 1970s

The Soviet Union was already in decline as a world power well before 1980. Any illusions of global Communist hegemony had evaporated with the collapse of Sino-Soviet relations in the 1960s. As the Nixon administration improved American relations with an increasingly independent China, the Soviets saw a strategic need to scale down the nuclear arms race, which placed enormous strains on its faltering economy. The threat of a nuclear confrontation was reduced considerably by the anti-ballistic missile (ABM) and strategic arms limitation treaties (SALT) contracted with the Nixon administration in 1972. This détente, or easing of tensions, allowed Leonid Brezhnev to focus on domestic economic and social development, while boosting his political popularity.

Around 1975, the Soviet Union entered a period of economic stagnation from which it would never emerge. Increasingly, the USSR looked to Europe, primarily West Germany, to provide hard currency financing through massive loans, while the U.S. became a major supplier of grain.[1] Despite moments of anti-Communist grandstanding, the Americans and Western Europeans maintained trade relations with the cash-strapped Soviet Union, which dipped into its Stalin-era gold reserves to increase availability of consumer goods.

Foreign trade and mild economic reforms were not enough to overcome the inefficiencies of the Soviet command economy, which remained technologically backward and full of corruption. Economic planners were frequently unable to diagnose and remedy problems, since they were given false reports by officials who only pretended to be productive. Soviet living standards remained poor by Western standards. By 1980, only 9 percent of Soviets had automobiles, which was actually a vast improvement under Brezhnev. Very little was computerized, due to state paranoia about the use of telecommunications for counterrevolutionary purposes. The USSR was able to endure this technological lag because its closed economy protected it from competition, but its ability to maintain military superiority increasingly depended on the ability to keep pace with Western modernization.

In his radio broadcasts during the late 1970s, Ronald Reagan complained that the capitalist nations propped up the intrinsically flawed Soviet regime, instead of allowing it to naturally collapse from its own inefficiency and inhumanity.[2] In contrast to his later hagiographers, Reagan did not envision defeating the Soviet Union by forceful action, but instead he perceived that the regime would collapse from its own failings once the West removed its financial life support system. It is this early Reagan, far more thoughtful than he is generally credited, who proved to be most astute in diagnosing the state of the USSR. It did not need a foreign enemy to “defeat” it, for it was deteriorating from within.

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2. Western Engagement with the USSR

Although the end of détente is sometimes attributed to President Reagan, it was actually President Carter who first resumed a hostile stance against the USSR in 1979, boycotting the Moscow Olympics, training guerrillas to resist the Soviet invasion of Afghanistan, and using the Soviet menace as a justification for increased military spending. Still, this was relatively mild tension compared to the earlier Cold War, as in the same year both superpowers agreed to abide by the terms of the SALT II talks.

During the early years of his presidency, Reagan employed potent rhetoric about the “evil empire”, establishing an openly adversarial stance toward the Soviet Union, apparently abandoning the policy of détente. His confrontational tone caused many to fear he would steer the world toward a repetition of the Cuban missile crisis. These fears were not calmed by Reagan’s massive military spending, particularly in nuclear weaponry, nor by his infamous Strategic Defense Initiative (SDI). Although SDI was supposed to end the fear of nuclear war by creating an umbrella of reliable missile defense, many political analysts saw the “star wars” program as potentially destabilizing and destructive of arms reduction treaties. Worse, SDI could be interpreted as Reagan’s attempt to make nuclear war “winnable”. Despite Reagan’s apparent belligerence, he never engaged the Soviet Union in a showdown that involved heightening the nation’s nuclear alert, nor in any other direct military confrontation. His Strategic Defense Initiative never materialized, though it was taken seriously in Soviet military circles.[3]

Reagan’s exorbitant military spending might have indirectly harmed the Soviet economy, but it also strengthened the hardline elements of the regime. During the Reagan era, Soviet military spending did not appreciably increase as a percentage of GNP.[4] Still, the Reagan buildup made badly needed reductions in military spending politically unfeasible. The American president’s hostile stance strengthened the hand of Soviet hardliners against the reforms of Gorbachev, and led to a greater Soviet emphasis on nuclear weapons and ballistic missile development. Thus Reagan’s strategy had mixed effects on the Soviet regime, but in no way did Reagan force the Soviets’ hand. They were free to respond to his threats in a variety of ways, and determined policy according to their own internal dynamics. It might be true that the Soviet Union could not compete with the United States in an arms race, or at least in certain aspects of an arms race,[5] but this is not enough to account for the loss of its Eastern European empire and its own dissolution.

Conservative think-tanks and advisers recommended that Reagan should combat the Soviet Union by cutting its financial supply lines from foreign governments and businesses. Much of this advice has been preserved in documents that partisans use to prove that the administration had a plan to defeat the Soviet Union. This plan indeed existed, yet it was never implemented, as the administration’s economic policy was determined by political realism. The United States continued to permit trade relations between the Soviet Union and American businesses, and Western capital continued to finance the Soviet command economy.[6] There were no embargos imposed on the USSR, and the Soviets continued to conduct a lucrative arms trade. Like the presidents he criticized, Reagan found himself forced by circumstance to allow Western banks and businesses to continue to support the Soviet economy.

Another front on which Reagan faced the Soviets was the attrition battleground of the Third World. The staunchly anti-Communist Reagan deployed military resources against Communist regimes that were at best obliquely connected to the Soviet Union, such as those of Grenada and Nicaragua. While these minor actions did in some small way stem the spread of Communism, they did little to damage the Soviet empire. The only significant point of military engagement with the Soviet Union was in Afghanistan. American support of Afghan and Arab guerrillas turned the conflict into a costly quagmire for the USSR. The war ended in defeat and humiliation for the Soviets, with great loss of life. Still, these losses were easily absorbed by the Soviet military colossus, and did not necessitate significant increases in the military operating budget.[7] U.S. policy in Afghanistan might be fairly credited for preventing Soviet expansion in the Middle East, but if we consider that in previous decades nearly all Arab nations were Soviet clients, we can see that Soviet imperialism was already in decline long before the Afghanistan debacle. Reagan’s indirect engagement of the Soviet Union did not bring about a Soviet military decline as much as it exposed weaknesses that already existed.

Military and economic reprisals against the Soviet Union in the 1980s were far too mild to account for its demise. Much harsher embargos were imposed on the feeble regimes of North Korea, Vietnam, and Cuba, yet these were all able to survive. The only stresses commensurate with the magnitude of the Soviet collapse are to be found within the Soviet Union and its Eastern European satellites.

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3. Gorbachev’s Reforms

Major reforms of the stagnant command economy and corrupt political structure were not possible as long as the Brezhnev era old guard remained in control. After Brezhnev died in November 1982, he was succeeded by former KGB head Yuri Andropov, who died in early 1984. By then, Brezhnev’s de facto second-in-command, Konstantin Chernenko, was already in failing health when he took over the Communist Party, so there was now a genuine possibility of substantively new leadership.

Chernenko died in March 1985, and was immediately succeeded by Mikhail Gorbachev, a favorite of Andropov. Gorbachev was the youngest member of the Politburo at age fifty-four, a refreshing contrast with the gerontocracy that preceded him. Although he was a devout Marxist, Gorbachev had a history of independent thinking, and had been educated in Western political theory from Aquinas to Rousseau. He had always been a demanding manager, and he now appreciated the need for serious reform in order to halt the economic decline of the USSR, which threatened both its domestic and foreign policy objectives.

Gorbachev immediately proposed a “restructuring” (perestroika) of the economy, with little in the way of concrete reforms. His initial thinking appeared to be that a purely technical improvement in economic planning was needed to solve the Soviet Union’s economic woes. By February 1986, Gorbachev was announcing the need for “radical reform,” but still without specifics.

Around the same time, especially after the Chernobyl disaster in the spring of that year, Gorbachev began reducing the degree of state control over media, and encouraged more open intellectual debate. As a token of his sincerity, he released longtime dissident Andrei Sakharov from exile in December 1986. This program of encouraging new ideas and limited free expression was known as glasnost (“openness”).

By January 1987, it had become clear to Gorbachev that the Soviet Union’s poor economic performance was rooted in deeper social and political problems. In his address to the Communist Party’s Central Committee, Gorbachev unleashed a scathing critique of the cynicism, apathy, and corruption that plagued Soviet society and politics, making many of the same diagnoses that Western academics had been teaching for years. He expanded his notion of perestroika to encompass not only economic restructuring, but also social relations and the political system.

Recognizing that Soviet society had matured enough to warrant the political inclusion of ordinary citizens, Gorbachev sought to reduce the power of officials and increase accountability. He proposed multi-candidate elections by secret ballot for the soviets and party organizations, and advocated the development of citizen groups that were independent of the party.

For the first time, economic reforms now explicitly recognized the need for competitive market relations. This was presented as a “law on socialist enterprise” at the Central Committee meeting in June 1987. By 1988, private ownership was permitted in certain manufacturing industries. Ironically, these reforms actually caused the Soviet economy to deteriorate further, as unprofitable private enterprises were now subsidized by the state, and the lack of state oversight of supply lines resulted in shortages of food and clothing, which were unknown even under Brezhnev.[8] To a degree, the reforms actually served to weaken the perceived legitimacy of the government rather than enhance it.

There was resistance to Gorbachev’s reforms from both sides. Democratization and political decentralization were forcefully opposed by party hardliners in the Politburo, led by Second Secretary Yegor Ligachev. Meanwhile, others complained that reforms were proceeding too slowly. In October 1987, Boris Yeltsin expressed his protest by resigning as a Politburo member and as the Moscow Communist Party chief. He and other reform-minded politicians began to perceive that serious dissent could be expressed only from outside the party structure.

By 1988, Gorbachev was able to overcome his adversaries and push through his desired political reforms. In June, the 19th Party Conference approved open elections by secret ballot for congressional deputies and regional governors, as well as term limits for elected officials and reductions in Party bureaucracy and economic powers. In September, Gorbachev reorganized the Party Secretariat, demoting Ligachev and removing other opponents from the Politburo, replacing them with moderates as part of an apparent political compromise. He was able to harbor support for his reforms by imposing limitations on the types of elections allowing multiple candidates as well as rules on nominations, so the Party believed it could remain the dominant force in Soviet politics.

Gorbachev’s political reforms soon took on a life of their own, as new political groups fought Party attempts to exclude their candidates from the ballot. The elections to the Congress of People’s Deputies in February–March 1989 led to the shocking defeat of 35 oblast committee (obkom) Party secretaries and 200 other high ranking Communist officials. Among the victors was Boris Yeltsin, who won 89 percent of the vote to take the Moscow seat from the Communists. Perestroika and glasnost had utterly failed to secure the Party’s claim to legitimacy.

A new political class emerged not only in Russia, but also the other Soviet republics. This rising political class included many of the same men who would later be directly responsible for the dissolution of the Soviet Union. The nationalism of Yeltsin and his counterparts in other republics was motivated not only by a desire to destroy the Communist Party’s mechanisms of power, but by their own political aspirations.

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4. The Loss of Eastern Europe

The political and economic reforms in the USSR encouraged movements in other Warsaw Pact nations to make similar demands. In his 1988 visit to Poland, Gorbachev made clear that he had no intention of using military force to prop up the Communist regime there, in a striking departure from the Brezhnev doctrine. He followed up with a remarkable speech to the UN in December of that year, promising to withdraw tens of thousands of Soviet troops, tanks and artillery systems from Eastern Europe, in order to assure the world that the USSR no longer had large scale offensive military capability in Europe.

This Soviet policy shift weakened the negotiating position of the Polish Communist Party, which agreed to let the independent union Solidarity (Solidarnosc) run candidates against them in free elections in April 1989. Solidarity had long received covert financial and advisory support from the Vatican and the United States, enabling it to survive long enough to reach this accomplishment.[9] Ultimately, however, the outcome was in the hands of the Polish electorate, who were widely expected to support a Communist majority. Instead, Solidarity candidates shockingly won every contested seat, despite having been outspent considerably by their opponents.

Although the Reagan administration certainly played a role in the support of Solidarity—though not enough for them to have adequate campaign financing—;there was little expectation of an immediate domino effect as dramatic as what actually occurred. Secret intelligence briefings that year gave no hint that regime overthrow in East Germany was a realistic possibility.[10] Indeed, months passed before the fall of the Berlin Wall, which was the immediate catalyst of similar uprisings in Hungary, Czechoslovakia and Romania. The USSR declined to intervene in any of these revolutions, as it was already committed to unilateral withdrawal from Eastern Europe.

The U.S. has a long history of provoking coups and economic crises through a variety of methods, but with limited success, even in relatively small countries. Massive resources would have been needed to orchestrate a collapse in Eastern Europe. Such an operation could not remain invisible for very long, nor could agencies responsible for such a project fail to anticipate the possibility of its success. The collapse of the East must be understood by studying the East, not the speeches of Western politicians, which at best had an inspirational effect, but provided no tangible aid to independence movements.

A key to the success of national anti-Communist movements was the refusal of the Soviets to exert military force to maintain control. A variety of factors went into this decision, including the relative cost and benefit of direct military occupation, the weaknesses exposed in Afghanistan, and the liberalizing tendencies of Gorbachev. It is not clear how much of the bloc the Soviets would have been able to retain by force, but they certainly made a deliberate strategic decision in relinquishing all of it.[11] For their part, Communist governments were under popular pressure not to rely on foreign military support, so they asked for Soviet withdrawal as a last attempt to preserve the legitimacy of their rule. If the Soviets hoped the Communist regimes would survive without military intervention, this proved to be a miscalculation.

Eastern Europeans did not need Western propaganda to teach them to despise their dictatorial governments; the everyday facts of life provided ample cause. As Reagan had contended back in the 1970s, the Communist regimes could not survive because they were “inhuman,” and would not be tolerated indefinitely. Although the Romanian dictator Nicolae Ceaucescu tried to blame his country’s woes on Western economic sabotage, the populace could experience for themselves the corruption and inefficiencies of the Communist system. Romania was even more economically isolated than most Warsaw Pact nations, making foreign economic sabotage unfeasible.[12]

Even after the loss of its European buffer zone, the Soviet Union remained formidable. On the basis of its strategic nuclear capability and troop strength, it could reasonably claim to be the world’s greatest military power.[13] By the mid-1980s, the Warsaw Pact satellites had ceased to be an economic asset to the Soviet Union, and in fact Gorbachev’s withdrawal had been motivated in part by economic considerations. There was no longer a real danger of war with Western Europe, so the bloc had lost its strategic significance as well. It would be a mistake, then, to perceive the loss of Eastern Europe as a severe wound to the domestic Soviet economy or military. On the contrary, it enabled the Soviet government to focus its resources on more critical areas.

At the end of the 1980s, the Soviet Union had serious economic problems, but it was still financially sound, due to its enormous assets in gold, oil and natural gas.[14] State budget deficits were a concern because they might require a slowdown of perestroika, not because the USSR was in any danger of default.[15] As bad as the Soviet economy was by Western standards, it was in much better shape than other debtor nations. Western intelligence agencies were reasonable in their assessment that the regime would struggle, while expecting that it would persist.

It can be tempting to draw a simplistic connection between Reagan’s famous “tear down this wall” in 1987 and the actual destruction of the wall in 1989. In fact, Reagan’s famous phrase was directed to Gorbachev, urging the Soviet leader to make good his promise of greater openness. What actually happened in 1989 was not the top-down reform demanded by Reagan, but something far more radical. A broad popular uprising took matters into its own hands, abolishing the East German regime altogether. No serious analyst anticipated such a breathtaking turn of events. While Reagan and his cabinet certainly wished for the demise of Communism and did everything in their power to hasten that end, in fact they had very limited means at their disposal. The collapse of Communism in Eastern Europe was caused principally by the people of Eastern Europe. Western powers played only a marginal role in the events of 1989, as in the aforementioned covert operations in Poland.

Still, Reagan deserves credit, if not for causing the Communist collapse, then at least for astutely perceiving the internal weakness of the Communist regimes. His conviction in the unsustainability of the Communist system encouraged him to take a firm diplomatic stand with Warsaw Pact nations, refusing to make things easy for them. Reagan’s anti-Communism was not purely pragmatic, but also had a moral dimension, as he recognized how deeply unpopular and injurious Communism was to the people who labored under it.

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5. Dissolution of the Soviet Union

Despite his bellicose rhetoric, Reagan actually developed a cooperative relationship with the Soviet Union and a respectful understanding with Gorbachev. The Reagan era was marked with significant bilateral arms control agreements, as well as greater economic openness between the West and the Soviet bloc. This warming of relations continued under President George Bush, who made plain his commitment to a unified Soviet state, even as nationalist fervor aroused separatist sentiments in the Baltics and the Ukraine. Bush was concerned that a sudden breakup of the Union would have negative consequences for global security and free trade, though he was not opposed to republican independence in principle. He studiously avoided taking sides in the emerging conflict between the central government and the Soviet republics.[16]

There had been nationalist rumblings within the Soviet Union as early as 1988, when the Armenians protested the treatment of their fellows in Karabagh, a territory that Stalin had reallocated to the Azerbaijan republic. Although there was no talk of seceding from the Soviet Union, Gorbachev’s handling of the issue made clear that he was not willing to use military force to suppress nationalist unrest.[17]

The Soviet republics did not have a long history of nationalist sentiment; rather, secessionism arose because of deep dissatisfaction with the Communist central government in the political and economic spheres. Apart from Communism, there was little reason for the Union to persist in its integrity. In 1989, secessionist movements were strongest in the Baltic republics, which had a history of independence prior to their forcible annexation in 1940. Yet decentralizing inclinations would soon arise even in those republics that had no recent history of autonomy, having been part of the old Russian empire. We cannot explain these movements simply in terms of nationalistic identity.

Most of the decentralizing actions taken by the republics, including the declarations of sovereignty made in 1990, were motivated by frustration with the rule of the actual Communist government, rather than intractable ethnic differences. By making republican law take priority over Soviet law, the republics hoped to free themselves to accelerate political and economic reforms, and assert their institutional independence from the Communist party. During this “war of laws,” the republics assumed control of some industries that had formerly belonged to the Soviet state, and ceased to pay taxes to the Union, depriving it of critical revenue.

Alarmed by the prospect of the Union disintegrating, Gorbachev put perestroika on hold, and proposed a more decentralized Soviet Union that would be more like a confederation, with the republics having a degree of autonomy and sovereignty. Apart from the Baltic republics and some of the Caucasus nations (e.g., Georgia and Armenia), there was little appetite for outright secession among most Soviets. This was proven by a March 1991 referendum on preserving the Union, which was favored by over 70 percent of the vote in each of the nine republics that considered it: Russia, Ukraine, Byelorussia, Azerbaijan, Tajikistan, Turkmenistan, Uzbekistan, Kazakhstan, and Kyrgyzstan. (Armenia, Georgia, Moldavia, and the Baltics abstained.) A less centralized, yet still united USSR was still a viable possibility, if the will of the Soviet people was to be respected. By August, eight of the nine republics had signed onto the new union treaty. Ukraine still disputed the terms of the treaty, though 70 percent of its voters supported joining the Union in some form.

While Gorbachev saw the treaty as the best hope for preserving the Union, Communist hardliners perceived that it would lead to the weakening and destruction of the USSR. To prevent the signing of the treaty, eight high-ranking Soviet officials, including the Minister of Defense, the Minister of Interior, the head of the KGB, and the head of the Peasant’ Union (supporting collectivization of farms), orchestrated a coup against Gorbachev. On August 18, five officials visited Gorbachev’s dacha in the Crimea, where he was vacationing, and tried to persuade him to declare a state of emergency. He adamantly refused, so the following day he was held prisoner in his vacation home while tanks and troops were sent into the streets of Moscow. This was eerily reminiscent of the 1964 coup against Khruschev, when the premier returned from a trip abroad to find himself asked to “retire.” Now the people were told that Gorbachev was ill or incapacitated. Some leaders of the republics assented to the coup, or at least remained silent.

It was not so with Boris Yeltsin, who declared the coup unconstitutional and led a public protest in the streets of Moscow. Soviet troops refused to take any action against the protestors, so the coup leaders relented on August 21, just two days later. When Gorbachev returned to Moscow, he found himself forced by Yeltsin to agree to the dissolution of the Communist Party of the Soviet Union (CPSU), which was collectively held responsible for the coup. He resigned as head of the party, while retaining his office as President of the Soviet Union. Yeltsin banned the CPSU throughout the Russian republic by decree on November 6.

Once the coup was defeated, Yeltsin and the other republic leaders no longer contemplated joining the confederation proposed in the spring, which had been supported by large majorities of voters. Instead, he met with the leaders of the Ukraine and Byelorussia (now renamed Belarus) and agreed to dissolve the Soviet Union completely. This was done without consulting the voters or even the Supreme Soviets of their respective republics. Faced with this fait accompli, the remaining republics agreed to the formation of a Commonwealth of Independent States for the purpose of maintaining joint security and international treaty commitments. In this way, even the Central Asian republics, which had been united to Russia even under tsars, and had voted 95 percent in favor of the Union referendum, were now dismembered from the whole.

The dissolution of the Soviet Union, which was formalized on December 25, was not driven by any practical necessity, nor by the goal of democratization. On the contrary, this last phase of the empire’s decline, by far the most surprising precisely because it was so unnecessary, was conducted by entirely undemocratic means. The individual leaders of a minority of republics set in motion a precipitous chain of events that destroyed any chance of the confederation that supermajorities of their constituents had advocated. Even today, many millions of citizens in the former Soviet republics regret the loss of the Union, if not its Communist leadership. The beneficiaries of this dismemberment were not the republics, several of which are hardly viable as independent nations, but the new political elites that gained the wealth and power of the Soviet state at their disposal.

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6. Aftermath of the Dissolution

Russia would become a much lesser geopolitical and economic power than the USSR, particularly because of its loss of the Ukraine, yet the Russian government would profit immensely from the spoliation of the Soviet state. As the largest and most central republic, Russia naturally took over the lion’s share of state assets, which include not only the formidable Soviet military, but countless state industries. The state industries were privatized under Yeltsin in the early nineties, via a process that is best characterized as plunder. For a predominantly socialist country to sell of all its assets in such a short period of time was, needless to say, irresponsible. The industries were bought up by insiders who made billions and became the much maligned “oligarchs” who dominated the Russian economy. Meanwhile, much of the Soviet Union’s liquid assets such as gold, silver, platinum and paper currency mysteriously disappeared.

Under Yeltsin’s rule, the Russian economy went into a disastrous tailspin of hyperinflation and 50 percent GDP loss. For all the problems of Gorbachev’s USSR, it at least had stagnant growth of 2 percent per annum, and was projected to continue to do so before the political crises of 1989-91. To blame the USSR’s dissolution on the Russian economic disaster would be to put the effect before the cause. The inefficiencies of the command economy, though serious, were not sufficient to precipitate the economic chaos of Yeltsin’s Russia. The West was reluctant to admit this, since Yeltsin was only following the disastrous one-size-fits-all free market prescriptions of the so-called “Washington Consensus,” as the neoliberal policies of the IMF and World Bank were termed. In the climate of the time, it was easier to blame the USSR for Russia’s woes than to admit that capitalism could ever go bad, especially when the West was profiting from the debacle.

Prior to the dissolution of the Soviet Union, CIA reports on Yeltsin indicated that the man, though admittedly vain and opportunistic, nonetheless was sincerely motivated by the desire for a more democratic society. In other words, he was not merely playing a role in order to position himself for greater power. However accurate that assessment may have been, it can hardly be denied that Yeltsin was a disappointment to those expecting a democratic Russia to emerge. An early indication of Yeltsin’s autocratic tendencies was his famous confrontation with the Russian parliament in 1993. As the majority of the Russian legislature by then opposed the president’s policies, Yeltsin sought to draft a new constitution, which would dissolve the legislature and grant him greater powers. On September 21, he dissolved the Russian Supreme Soviet and claimed extraordinary executive powers.

Undeterred by this attempt at a coup, the Congress of Peoples’ Deputies convened and impeached Yeltsin. Tens of thousands of demonstrators took to the streets in Moscow to support the parliament and protest Yeltsin’s economic policies, which had led to a steep GDP decline, in contrast with the slow growth of the late Soviet period. Privatization had led to disruption of social services, including medical care, and organized crime and corruption were rampant. By October 3, parliament supporters were violently engaged with Interior Ministry troops, and dozens were killed.

Through all this, the nations of the West unabashedly supported Yeltsin, proving that they loved capitalism much more than democracy. The deciding factor in the president’s favor was the support of the Russian army, which stormed the congressional building with tanks and dispersed the protesters, killing hundreds. Since many of the opposing deputies were Communists, Yeltsin was able to characterize them as reactionaries or revanchists, playing to the West’s prejudices. We have seen, however, that Communism, with all its failings, did not lead Russia into the economic precipice that was the result of “shock therapy” privatization, where the vast assets and industries of the Soviet state were auctioned to a few unscrupulous oligarchs, while a society that had been structured around a state-dependent economy was suddenly stripped of its publicly owned capital. This neoliberal policy stroked Western egos about the intrinsic superiority of liberal capitalism, while at the same time enabling foreign investors to profit immensely. It was a small matter that parliamentary democracy was forcibly suppressed in favor of a new tsar.

A cunning realist, Yeltsin spoke democratic language while acting autocratically, and lauded the free market while promoting crony monopolism. Rejecting Communism made Yeltsin the favorite of the West, whose financial support he would need more than ever. The plundering oligarchs of Russia were rewarded with unprecedented financial aid from Western nations, so that a few became kings while the nation as a whole was humiliated and stripped of its great power status.

The Soviet Union had serious economic problems, but none were grave enough to account for the total collapse that followed its dissolution. Prior to 1990, no Western economist predicted such a debacle; some forecasts for Soviet growth were even mildly encouraging. Economists are well aware of the market’s sensitivity to minor government policy changes, so it should be unsurprising that the wholesale liquidation of state industries and assets would cause cataclysmic economic upheaval. No one predicted such a sell-off because it made little political or economic sense, but the Russian oligarchs acted without regard for the welfare of the nation. There was no historical precedent for the plundering of a state the size of the Soviet Union, and uncertainty is always bad for markets. The economic disaster of privatization was worsened by the neoliberal austerity measures promoted by the IMF, the World Bank, and “free market” ideologues in Washington, who have destroyed more than a few economies through uncritical deregulation of markets and demolition of social welfare programs. The independent Russian Central Bank furthered the crisis by monetizing much of its debt and causing hyperinflation.

Russia entered a period of chaos that political realists like George Bush had sought to avoid, though fortunately the issue of nuclear security was soon resolved by moving Ukrainian warheads into Russia. Once the moment of nuclear peril had ended, the United States could look back upon the collapse of the Soviet Union as a definitive victory for American policy. As I have tried to show, the reality is not nearly that simple.

The United States did not seek to destabilize the Soviet Union politically or economically. This was true even of Reagan, who oversaw economic and strategic rapprochement with the Soviets despite the saber-rattling of his early presidency, so by his second term he repudiated the “evil empire” moniker, as it no longer applied to the reformed Soviet Union.[18] Bush was openly supportive of a unified Soviet Union as late as 1991. Thus it is revisionism of the first order to claim that the United States caused the Soviet collapse through its deliberate policies.

It is possible that the United States accelerated the Soviet downfall incidentally, through economic competition or financial penetration. This scenario is unlikely, however, since the United States has had much more lopsided economic relations with Third World countries, yet has seldom been able to force political reform this way. The breakup of the Soviet empire would not have been possible without the potent force of Eastern European nationalism and the heavy yoke Communist rule imposed on the people economically and culturally.

The destruction of the Soviet Union itself was not foreordained, even after the loss of its satellites. Here it was victimized by a political structure that lacked all legal accountability, inhabited by men without scruples. Socialism did not deal the death blow, but instead a complete lack of social consciousness among former Soviet officials made possible the looting of the state. The collectivist spirit of Marxism had long been dead in Moscow; the events of 1991 merely formalized this reality.

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See also: CIA Activities in Chile | Arab-Israeli Conflict


[1] From 1976 to 1981, the Soviets imported 69 million tons of corn and 64 million tons of wheat, 40 percent of it from the U.S. The Dilemma of Reform in the Soviet Union, p. 22.

[2] Reagan in His Own Voice, audio recordings.

[3] Andropov’s advisors believed that SDI could provide partial defense against a second strike, and that it was threat to land-based ICBMs, the bulk of the Soviet nuclear arsenal. Mira Duric, Strategic defence initiative: US policy and the Soviet Union (Cornwall, UK: Ashgate, 2003), p. 41.

[4] Soviet military spending remained around 13 percent of GNP, according to U.S. Arms Control and Disarmament Agency, “World military Expenditures and Arms Transfers,” 1995. Other estimates are in the 15-17 percent range, depending on how GNP is computed, but still relatively constant.

[5] The Reagan buildup only resulted in the U.S. catching up to the USSR in military spending (in dollars), while Soviet spending remained on a slight growth trajectory. See attached chart, taken from “A Comparison of Soviet and US Defense Activities, 1973-87,” CIA, July 1988.

[6] C.R. Neu, John Lund, “Toward a Profile of Soviet Behavior in International Financial Markets,” RAND Corporation, Aug. 1987.

[7] See notes 4 and 5.

[8] Soviet GNP grew only 2 percent per year under Gorbachev, as it did under his predecessors since the late 1970s. The state budget deficit grew to 13 percent of GDP by 1989. “Gorbachev’s Economic Programs: The Challenges Ahead” (NIE 11-23-88), CIA, Dec. 1988.

[9] Carl Bernstein, “The Holy Alliance,” Time, Feb. 24, 1992.

[10] The CIA expected that the unpopular East German leader Erich Honecker would retire in May 1990, while his successors “will approach political and economic liberalization with great caution.” “National Intelligence Daily,” CIA, 27 March 1989.

[11] U.S. intelligence acknowledged, “All of this [withdrawal] activity is totally unilateral. The Soviets are under no formal obligation to carry through and are free to adjust the process as they proceed.” “Status of Soviet Unilateral Withdrawals” (NIC M 89-10003), National Intelligence Council, Oct. 1989.

[12] In contrast, the U.S. has been able to exert economic coercion against export-dependent Latin American nations, yet even here with only limited success.

[13] From 1985 to 1988, Gorbachev actually increased spending on military hardware (3 to 4 percent per year in real terms), and continued to develop new weapons systems at the same pace as the early 1980s. In 1988, he reduced the size of the army by 500,000 men (from about 4.5–5 million) to save cost. “USSR: Trading Guns for Butter” (SOV 89-10008X), CIA, Jan. 1989.

[14] Soviet foreign debt in hard currency was $41 billion at the end of 1987, compared to $22 billion in 1984. “The debt service ration still is a healthy 26 percent—about the same level as recorded in the late 1970s—and the Soviets maintain sizable reserves of both gold and assets on deposit in Western banks.” The CIA projected the debt to grow to $45–$55 billion by 1990, assuming moderate import growth. Even if Moscow were to indulge in exports and drive the debt up to $70 billion, it would “encounter few financing problems.” Western banks would still underwrite loans because of Soviet assets in gold, oil, and natural gas. “Indeed, under such a scenario the investment climate in the USSR would still look quite attractive compared with the debt problems of many of the world's major debtors.” “USSR: Coping with the Decline in Hard Currency Revenues” (SOV 88-10014X), CIA, April 1988.

[15] The state budget deficit in 1987 was 7 percent of Soviet GNP. The deficit was attributable to increases in state subsidies and reduced tax income due to anti-alcohol programs and fewer imported goods. By comparison, the U.S. deficit in FY1986 was 3.5 percent of GNP. “USSR: Higher Budget Deficits Threaten Perestroyka” (SOV 88-1004U), CIA, Sept. 1988.

[16] In a speech to the Supreme Soviet of Ukraine on August 1, 1991, Bush said, “Americans will not support those who seek independence in order to replace a far-off tyranny with a local despotism. They will not aid those who promote a suicidal nationalism based upon ethnic hatred.” This was widely interpreted as expressing opposition to Ukrainian independence, though Bush later clarified in a 2004 visit to Kiev that he had been worried any rash nationalism would result in a crackdown from Moscow. “Bush Sr. Clarifies ‘Chicken Kiev’ Speech,” Washington Times, May 23, 2004.

[17] Regarding the unrest in Armenia, the CIA observed, “All factions within the Politburo recognize that failure to enforce central discipline on important issues would lead to a revolution in relations between Moscow and the republics, with the latter gaining a degree of autonomy they have not enjoyed since the 1920s.” And: “[Gorbachev] apparently believes that Moscow no longer has the resources to govern [non-Russian populations] through the exercise of raw force.” “Unrest in the Caucasus and the Challenge of Nationalism” (SOV 88-10059D), CIA, 11/1/1988, p.25.

[18] “Soviets Not the Evil Empire Anymore, Reagan Declares: Euphoric President Hails Pact,” Los Angeles Times / Associated Press, Dec. 11, 1987.

© 2006, 2011 Daniel J. Castellano. All rights reserved.