Foreign Trade

Abstract

Gorbachev’s domestic restructuring, both economic and political, would be much easier if the USSR were earning the huge profits on energy and gold on which Brezhnev drew in the 1970s. He is well aware of the protection from the realities of the command economy which the oil and gas boom afforded his predecessor. He pointed out in a speech to the February 1988 Plenum of the Central Committee that the increase in the increments to Soviet national income over twenty years were attributable to sales of energy and vodka. Merely between 1977 and 1981, the USSR doubled the value of its exports to the industrial West but decreased the volume of those exports by 10 per cent (that is, earning twice as much for quantitatively one-tenth less) and importing over one-third more in real terms. Such windfall gains, if available today, would enable Gorbachev to buy Western consumer goods to offer workers and farmers as incentives under his restructuring, but he has had no such luck. In addition, after a somewhat better showing in the first years of his administration, Soviet agriculture still produces much less than the country needs, making hard-currency imports a heavy drain on earnings. The 1988 harvest of 195 million tonnes of grain was well down on the 211 million tonnes achieved in 1987.

Acknowledgement is made to the ESRC for the three-year grant for research into the contemporary Soviet reforms at the Institute of Russian, Soviet and East European Studies at the University of Oxford, and to Tom Adshead for research assistance within that project.