Word: comecon
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Dates: during 1980-1989
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This gulf isn't the physical distance across the no-man's land behind the Wall, but the political distance between Comecon and the EEC, between the Warsaw Pact and NATO. For now, East Germany remains a vital part of the frontline forces of the Warsaw Pact, and West Germany provides the crux of NATO forces in Western Europe...
...based on a brutal currency reform that in 1948, under Allied military government, destroyed all savings and, by restoring the scarcity value of money, ended the barter economy. Eastern Europe suffers from another economic distortion: the incestuous trade patterns that are a legacy of the Stalinist years. Trade under Comecon, the Council for Mutual Economic Assistance, was based on a curious reverse mercantilism: the imperial country (the Soviet Union) supplied energy and raw materials that the colonies (the satellites) paid for in manufactured goods. Since the Soviet Union was chronically short of almost everything, it was an undemanding market, providing...
Germany itself might challenge that. Even without reunification or major changes in the present alliance system, West Germany is set to become the overwhelming economic power of Middle Europe. It is already the most important Western trading partner of all seven Warsaw Pact countries. And the slow disintegration of Comecon, the Moscow-based council that brokers East bloc trade, coupled with Eastern Europe's desperate need for capital and expertise, will open up enormous new economic opportunities that West Germany is poised -- financially, geographically and politically -- to exploit. "Between the two superpowers, there shall be a union of European states...
...each country sets about easing central economic controls, new tensions appear. Since the 1950s, the Moscow-based Council for Mutual Economic Assistance, known as Comecon, has brokered the bulk of East bloc trade. Comecon encourages individual countries to specialize in the manufacture of specific goods and sets production goals to meet the bloc's needs and those of other members, including Cuba and Viet Nam. Since all trade is accounted for in rubles, Comecon has built a wall around itself that promotes inefficiency and the production of shoddy goods...
...bilateral trade arrangements. Budapest, in particular, nurtures hopes of eventually joining the European Community. That remains years away, but a halfway step might be membership in the European Free Trade Association, which has special tariff agreements with the European Community. Such moves would come at the expense of traditional Comecon commitments. Given the glue that binds Eastern Europe -- including everything from heavily subsidized Soviet energy supplies and raw materials to inefficient plants unable to compete in world markets -- the dissolution of Comecon is certain to be a slow, clumsy affair...