Virtual History: Alternatives and Counterfactuals (58 page)

At one level, it is clear that Gorbachev’s actions led the bulk of the Communist party to lose faith in itself; but the use of religious analogies to explain why the Communists gave up the ghost is misleading. The Communist party after all was not a hippy cult based on a charismatic leader appealing to a few psychologically vulnerable types. It was a bureaucracy of millions of mediocrities, many of them armed. Nevertheless, even the most self-interested clique needs some ideological cement to hold it together, however cynical the calculations of interest underlying it may be.

Endorsing the end of ideology was Gorbachev’s big mistake. So long as this was a Western slogan promoting the ideological disarmament of Western intellectuals, talk about ‘convergence’ was very useful to the Kremlin, but actually to promote it was suicidal. Yet Gorbachev made it a keynote of his rhetoric. Noting the recent seventieth anniversary of the Bolshevik Revolution and the forthcoming celebrations of 200 years since the storming of the Bastille, he told the UN in December 1988:

In fact, insulation from Western contacts was essential to the stability of the system. Believing that it had to compete on Western terms and yet trying to retain something of its manipulative past, Gorbachev and the KGB blundered into a series of disastrous moves which upset the stability of stagnation without offering any prospects of real gain. Lenin of course had often argued that retreat to a better position was the best route to follow for revolutionaries under pressure, but the pressure on Gorbachev was increasingly self-inflicted. Apathy, such as was commonplace in the USSR, may be frustrating for a government - but it is rarely fatal.

Nobody should doubt that the real impetus for change in 1989 came from within the system, especially from the secret police. Gorbachev’s connections with the KGB are well documented and his favoured reformers throughout Eastern Europe were linked either directly to it or indirectly via their countries’ own security police. Iliescu in Romania, for instance, had apparently been recruited by the KGB during his years of study in Moscow in the 1950s, though he vehemently denies meeting Gorbachev then. Another reform Communist leader who knew Gorbachev in those days was Hans Modrow, the last Communist Prime Minister of the German Democratic Republic and a close friend of Markus Wolf, the Stasi’s shadowy reformer-in-chief. Moreover, it is now clear that the key events in Prague on 17 November 1989 involved a classic
Provokation
. Since the dissidents were not capable of stirring up the necessary discontent to persuade the party’s leaders to change, the secret police (StB) had to organise the protest itself. Of course, the many students who took part in the demonstration (recalling an anti-Nazi protest fifty years earlier) were moved to take part by the events in neighbouring East Germany. But the key event, the so-called ‘Massacre’, was staged. The dead student, Martin Schmid, turned out to be alive and well and a serving undercover officer of the StB. His ‘beating to death’ was the spark for further mass protests and the downfall of the hardliners in Prague.

Multi-party democracy, however, is difficult to manipulate. That is why Stalin had preferred ‘people’s democracy’, in which all the parties accepted the ‘leading role’ of the Communists, even where nominally separate parties existed as they did in Poland and East Germany. In 1989, however, these ‘front parties’ came to life like Pinocchio when suddenly they were given a real role to play. Indeed, in conditions of multi-party elections their previously supine leaders had every reason to play an independent role to distance themselves from the unpopular Communists. From the first multi-candidate elections in the Soviet Union itself in March 1989, via the Polish elections in June, to the next year’s flurry of contested polls, the same phenomenon was repeated. Everywhere they were allowed, people took the opportunity to vote against the Communists. A few years later, they might be disillusioned with the failure of the non-Communists to solve their problems; but in the first flush of freedom, even when granted from above, they liked to deliver a negative verdict on decades of undemocratic rule.

By mid-autumn 1989 it was already clear that the mere removal of Honecker and his closest associates would not calm East Germans’ newly aroused civic courage. The scale of demonstrations grew across the country as the regime made concession after concession. Far from introducing a viable reform-Communist regime, the fall of Honecker emboldened the people for a final push to open the Wall and abolish the state altogether. As the process of reform threatened to unravel the schemes of the Wolf-Modrow group to implement a pseudo-democratisation, Modrow looked around for ways to bring to the front rank of the political process other reform-Communists with Stasi links. The lawyer and informer Gregor Gysi was one of them. On 21 November 1989 Modrow told Stasi leaders: ‘Gysi belongs to the smart brains [
klugen Köpfen
], who are waiting to be mobilised.
⁶

Unfortunately, the ‘smart brains’ bit off more than they could chew, at least in East Germany. Once the regime faltered and started to play at real politics, then all the powers of simulation and manipulation routinely used by Communists lost their force, not least because Gorbachev and Wolf underestimated the dual attraction of nationalism and the Deutsche Mark to East Germans. Too clever for their own good, the would-be manipulators of democratisation were overtaken by events. A shrewd old fox like Brezhnev would never have been naive or overconfident enough to think that the KGB’s experts could let the people off the leash and still keep them dancing to its tune. It takes a very special kind of political cleverness to juggle with the fate of empires - and then drop all the balls.

To be fair to Gorbachev, much of his miscalculation was due to his limited contacts with reality. Kept insulated from Soviet reality by the protocol and privilege surrounding the high priest of the
nomenklatura
(which his palatial dacha at Foros on the Crimea symbolised), his contacts with Western leaders can hardly have encouraged much self-doubt. Lauded and lionised by them, Gorbachev believed his own propaganda - a mistake which his predecessors (so often dismissed as senile over-promoted peasants) never made. After generations of dullard apparatchiks had safely guided the Soviet Union to super-power status, it was the bright-eyed Gorbachev who grabbed the steering-wheel and headed straight for the rocks.

Part of the explanation thus seems to have been Gorbachev’s own idealism. But no pure idealist ever rose to the top of the Politburo. Gorbachev’s oft-proclaimed Soviet patriotism was not just an expression of genuine socialist commitment but also a reflection of his belief that the USSR had to continue to play a super-power role. It was his wishful thinking that the Soviet Union could compete with the USA in technological prowess that led him to change the tried-and-trusted structures of domestic power inherited from Stalin. Contrary to Western Marxoid academics who insist on the primacy of domestic policy as the basic factor in politics, it was the Kremlin elite’s obsession with international status which led Gorbachev to decry stagnation at home as a threat to the system. He was supported by a gamut of advisers and experts from the KGB who had access to secret intelligence about how advanced the West was in its technological lead over the USSR, but who failed to see that it would be decades before any conceivable US government might seek to use its power directly against the Soviet Union. On the contrary, the West was happy to see the Soviet Union and its system survive in a non-threatening form.

Ironically, by breaking with stagnation, Gorbachev threw away the Soviet Union’s best chance of shifting the balance of power decisively to its advantage while doing little or nothing active itself. His fevered efforts to reform the Soviet economy actually disrupted and distorted its structure and made matters much worse than the legacy inherited from Brezhnevism.
⁷

Was even the GDR bankrupt in 1989? The short answer is ‘Yes’; but only from a capitalist perspective. Of course, in a profitand-loss sense, East Germany had been going down the drain for years. Its efforts to obtain hard currency to service its Western debts were becoming ever more frantic, but the real pressure to satisfy the Western bankers came not from the gnomes of Zurich or the Dresdner Bank, but from the Kremlin. East Germany had little difficulty raising fresh loans from the West.
⁸
Keynes famously noted that if a debtor owed a bank one thousand pounds and fell into difficulties repaying, the debtor had a problem. But if the debtor owed the bank a million pounds and could not pay, then it was the bank which needed to worry. Imagine if East Berlin had adopted a ‘can’t pay, won’t pay’ attitude to its hard currency debt: would the Western banks have sent in the bailiffs? Rescheduling and new loans would of course have been the likely response, or at worst a writing-off of the debts. In fact, it was from the East that economic pressure was felt. Gorbachev wanted to stop the decades of generous subsidy to the Soviet Union’s ‘little brothers’. After the first OPEC oil-price shock in 1973, the Soviet Union had adjusted its energy prices to the East bloc but still left them paying well below world prices.
⁹
The difficulties which the East European states faced adjusting to these price increases were negligible compared with those likely to result from full market pricing for inter-bloc trade. The collapse of much industry and other sectors of the economy across the ex-Communist bloc after 1989 illustrates much of what would have happened to these economies under Gorbachev’s proposed reforms if they had been carried through.

Poland and Hungary stand out from the other Warsaw Pact states because they had already attempted several liberalising economic reforms before 1989. After 1989, their paths diverged quite markedly. Poland pursued the most radical form of shock therapy (even if it was less all-encompassing than many of its admirers admitted or noticed), while Hungary remained relatively slow to privatise. Before the election of the Solidarity-led government in the summer of 1989, Poland’s economy had remained obdurately resistant to stimuli, though Jaruzelski and his ministers offered various incentives to cooperative and
de facto
small-scale private enterprise. Clearly political reform was needed to unleash Polish entrepreneurship, though those who were the first to jump into the market tended to be Communists with accumulated black-market capital and good connections. As Lech Walesa told an audience in Buffalo, USA, on 23 October 1994:

The massive indebtedness of Hungary did not, however, disappear with the election of a non-Communist government in 1990. Nor yet did it vanish with the return to power of the Hungarian reform-Communists in 1994. A
per capita
burden greater than that of Mexico still weighs down on the Hungarian economy, making privatisation of the few profitable parts of the state sector difficult for a government anxious to service the debt above all else. Nevertheless, Hungary has survived.

The markets expected the Soviet Union to survive too. Although the market in capitalism cannot be resisted, it can and does make mistakes. Unfortunately, to misquote Radek on the party’s claim to infallibility, it is always more profitable to be wrong with the market than right against it. Certainly, as late as 1988, the Kremlin’s first issue of Eurobonds (to mature at a tight 5 per cent ten years later) was oversubscribed by the world’s capitalists. The Swiss regulators waived the normal requirement for a state issuing bonds to reveal its debt obligations and foreign exchange reserves, so confident were they of their new business partner.
¹¹
It was the Soviet leadership which precipitated the crisis of confidence among Western lenders and potential aid-donors by unleashing destabilising political change.

Gorbachev and his Prime Minister Ryzhkov had insisted that the Comecon states move from a situation in which they were subsidised by cheap energy and raw material imports from the Soviet Union to a hard-currency settlement system for transactions between the fraternal states. Until July 1989, the other members of Comecon had taken advantage of the mysteries of payments through the transferable rouble system to avoid or conjure away unpleasant trade imbalances. Then with breakneck speed, the Soviet leaders decided to force through the replacement of the transferable rouble with the dollar as the currency of accounting between Comecon members. The speed and brutality of the changeover threatened economic catastrophe for the Warsaw Pact states. In practice, their political systems collapsed before the full impact of the market transitions demanded by the Kremlin became apparent. They were to be borne by the newly elected democratic governments.

Was this necessary? Again from a crude market point of view, naturally it made sense. Subsidising the fraternal republics had depressed the standard of living of the Soviet people. But its purpose was after all not social, nor even economic, but political. The East European states had been tied to the Soviet Union by virtue of their economic dependence as well as its military dominance. Their poverty was in fact a function of the viability of Soviet dominance. If the fraternal republics became market-orientated states paying world prices for their raw materials and fuel, there was no obvious reason why they should buy them from the Soviet Union. Many economic reasons suggested a reorientation to Western suppliers.