Comecon

The Council for Mutual Economic Assistance, often called Comecon or CMEA, was an economic group that existed from 1949 to 1991. It was led by the Soviet Union and included countries from the Eastern Bloc and other communist states around the world.

Comecon helped these countries work together on trade and economic plans. Its name was often used to describe any joint activities among its members. Even relationships between two member countries were sometimes seen as part of Comecon’s work because many big agreements were carried out through smaller, two-country deals.

Comecon was created as a way for Eastern Bloc countries to support each other, similar to how Western European countries helped one another through the Marshall Plan and the OEEC, which later became the OECD. It played an important role in shaping the economy of communist countries during its time.

History

Foundation

The Comecon started in 1949. It was created by the Soviet Union and its friends: Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. They wanted to help each other with trade and work, especially after World War II.

At first, they just tried to work together without strict rules. But the Soviet Union later took more control. They made a rule that inventions could be shared for a small fee. This helped some countries but made others less likely to invent new things.

Nikita Khrushchev era

After the first leader passed away, Comecon tried to work better together. They talked about trading oil for goods. But some countries, like Poland and Hungary, had big protests. Romania also wanted to make its own choices. Plans to work closer did not work well, and countries started trading more with the West.

Leonid Brezhnev era

In 1967, Comecon changed its rules. Countries could now choose not to join some projects. This was to give Romania more freedom. The goal was better teamwork, but it was hard because each country had its own ways. The Soviet Union was also much bigger and stronger than the others.

In the 1970s, the Soviet Union made more oil. This helped other countries because they got oil for cheaper prices. This helped their economies grow for a time. But later, many countries borrowed money from the West and had trouble paying it back. By the early 1980s, most Comecon countries were having money problems.

Perestroika

In the 1980s, a new Soviet leader tried to make Comecon stronger. He wanted to improve technology and science. But these plans did not work well. The Soviet Union asked other countries to invest in projects that mostly helped itself. This made others unhappy. By 1990, Comecon was not working well anymore. Countries started trading with regular money instead of special Comecon money. The last meeting to end Comecon was in 1991. The Soviet Union also ended around that time.

Post-Cold War activity after Comecon

After the Soviet Union ended, many former Comecon countries joined groups like the European Union or the Organisation for Economic Co-operation and Development. Russia and some others made new groups to work together, such as the Commonwealth of Independent States. Other countries, like Vietnam and Laos, joined groups in Southeast Asia.

Membership

Albania stopped working with Comecon in 1961 and left in 1987. East Germany joined with West Germany in 1990 and left Comecon that same year.

Yugoslavia had a special associate status with Comecon starting in 1964.

Several other countries watched Comecon meetings as observers. These included the People's Republic of China from 1949 to 1961, North Korea in 1949, North Vietnam from 1949 to 1978, Finland from 1973, Iraq from 1975, Mexico from 1975, Angola from 1976, Nicaragua from 1984, Mozambique from 1985, Afghanistan from 1986, Ethiopia from 1986, Laos from 1986, and South Yemen from 1986.

In the late 1950s, some communist countries that were not members, like China, North Korea, Mongolia, Vietnam, and Yugoslavia, were asked to watch Comecon meetings. Mongolia and Vietnam later became full members, but China stopped attending after 1961. Yugoslavia agreed to a special associate status in 1964.

Comecon had ten full members in the late 1980s: the Soviet Union, six East European countries, and three others far from Europe. The members were very different in size and development, which made it hard for them to work together closely. However, they shared political beliefs and economic ideas, which helped keep them united. The Soviet Union led Comecon and used it to strengthen economic ties with its allies. The East European members were also part of a military alliance called the Warsaw Pact.

Comecon had three types of relationships besides full membership:

• Yugoslavia was the only associate member. Under a 1964 agreement, Yugoslavia took part in many Comecon activities almost like a full member.
• Finland, Iraq, Mexico, and Nicaragua had a cooperant status. Their governments could not sign agreements for private companies, so they were represented by groups including government and business leaders. These groups could sign framework agreements with Comecon.
• After 1956, Comecon let some countries with communist or pro-Soviet governments watch its meetings. In 1986, Afghanistan, Ethiopia, Laos, and South Yemen attended a Comecon meeting as observers.

Exchange

Comecon countries did not use normal exchange rates or market prices. Instead, they used world market prices as a guide, but these prices stayed the same for many years. This helped with planning, but raw materials were often cheaper than the goods made in these countries.

Bartering goods helped Comecon countries save their limited hard currency. While this system was not perfect, it gave stability and helped governments appear stronger. There were debates about how this system should work.

Foreign trade was controlled by the state, and there was often corruption. Because of this, it was hard for producers to learn from foreign customers. Also, countries often kept their best products for themselves. As a result, trade between Comecon countries, except for Soviet oil, decreased from the 1950s until Comecon ended in the early 1990s.

Oil transfers

From the early 1970s, the Soviet Union sent oil and natural gas to other Comecon countries at prices lower than world market rates. Some believe this was to support weaker economies. Others think it was an unintended result of slow price adjustments.

Cuba, considered an underdeveloped member, received oil in exchange for sugar at very favorable rates.

Ineffective production

Comecon aimed to boost economic growth and cooperation, but its planning often ignored market needs and specific country requirements. For example, Czechoslovakia developed an advanced underground train in the 1970s, but was forced to use older Soviet models to benefit the Soviet Union.

However, some Czechoslovak products, like trams and jet trainers, became standard across Comecon countries. Other countries could develop their own designs, but only for their own use. Poland made light helicopters for Comecon countries, while the Soviet Union and Romania developed their own models.

Structure

Comecon had big meetings with leaders from each country. These leaders met often to discuss important topics. Because they were leaders, their choices guided Comecon's actions.

Comecon had a main meeting named the Session. In this meeting, leaders talked about big economic issues and made plans for other groups. These meetings happened once a year in different capital cities. Each country had a permanent representative to keep communication open between the yearly meetings.

There was also an executive committee that helped organize and watch Comecon's work between the big meetings. This group met every three months and had one person from each country, often a deputy prime minister.

Comecon had many committees and groups to handle different areas such as planning, science, and technology. These groups helped coordinate projects and share knowledge among the member countries. There were also special groups for topics like water management, trade, and legal matters, which discussed shared problems and gave advice.

There were also many other organizations linked to Comecon that helped member countries work together more directly. Some focused on large economic projects, while others dealt with specific industries like machinery production.

Nature of operation

Comecon was a group of countries that worked together to help each other with economic activities. The group believed in the equal rights of all its members. Each country had the same say, no matter its size. Decisions were made only when the countries involved agreed. Any country could choose not to take part in a specific project without stopping it.

Over time, Comecon focused more on helping each other rather than creating a unified economic system. Unlike other groups that aimed to improve trade and efficiency, Comecon mainly provided support to meet each country's planning goals.

Comecon versus the European Economic Community

Comecon was sometimes called the European Economic Community for Eastern Europe, but it was very different from the EEC. Both groups worked on economic ties, but they had many differences.

In the 1980s, the EEC included many people and used agreements to help businesses grow. The EEC could make decisions, like removing taxes on trade, and enforce them. Members acted based on their own ideas and business needs.

Comecon included people from ten countries across three continents. The Soviet Union was the most powerful member and provided raw materials, while Eastern European countries supplied finished products like machines. Comecon focused more on political goals than economic ones. Unlike the EEC, Comecon did not have the power to make decisions for everyone. Instead, it made suggestions that all members had to agree to. Trade in Comecon was mostly controlled by governments. This was different from the EEC, where private trade helped reduce rivalries between countries.

Prices, exchange rates, coordination of national plans

Main article: Comprehensive Program for Socialist Economic Integration

This part of the Comecon helped set prices and exchange rates. It also let countries work together on their economic plans. The goal was to help these countries support each other better.

International relations within the Comecon

Main article: International relations within the Comecon

The Soviet Union had a lot of power in Comecon. This was because it had many resources, a large population, and a big economy. Many important offices were in Moscow, and many Soviet people were leaders.

But the Soviet Union could not always make its partners do what it wanted. Comecon members could choose not to join a project if they did not want to. This meant that while Comecon had some control, it could not always work as smoothly as possible.