Chris Harman


Biting the hand

(September 1984)

From Socialist Worker Review, No. 68, September 1984, p. 5.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

Dummy bites Ventriloquist. Well, not quite. But the arguments which have broken out between East Germany and Russia look a bit like it.

The cause of contention is a new DM 950m (about £300m) loan which a consortium of West German banks have raised for the East German government. The East Germans are to repay the loan, and 7.5 percent interest, over a period of five years. On top of this a condition for the loan were a number of concessions about things like visits to East Germany by West Germans and access to West German TV in East Germany.

There is nothing particularly new about any of this. East Germany has borrowed a total of 10 billion dollars from Western banks and governments in recent years. A similar loan last year created no problems with Moscow, even though a key role in the negotiations was played by the right wing Bavarian politician, Franz Joseph Strauss. Inter-German trade has been a vital ingredient for the East German economy for decades and now totals more than £2 billion every year.

Yet articles have appeared in the Russian press which are clearly critical of the latest loan and which imply that the East German leader Hoenecker should cancel this month’s visit to West Germany.

And the East German government has deliberately seemed to snub the Kremlin. It has broken with tradition by failing to reprint the Russian articles in its own press, instead publishing articles from Hungary and elsewhere which praise East/West economic ties.

Russia’s economic dominance

Articles appearing or not appearing in the official press may not, on the face of it, seem a big issue but on occasions in the past such shadow boxing has been the prelude to major bust-ups in the Eastern bloc (for instance, the Sino-Soviet split in the early 1960s and the Czechoslovak crisis of 1968). So inevitably there is speculation about a major rift between Russia and its most faithful client state.

However, speculation apart, there are important points to be made about the squabble.

Russia’s rulers have been following a policy in the last few years of getting the Eastern bloc to cut back on its ties with the rest of the world economy. Instead, the stress is on trying to avoid the effects of the world crisis by integrating the economies of the Eastern states with each other.

This policy appeals to Russia’s rulers because the overwhelming weight of their own economy compared to the others means that they are bound to dominate such an arrangement. At the same time, they believe they have sufficient resources inside Russia to be able to keep the economy expanding into the 1990s despite losing the advantages in terms of access to new techniques and economies of scale which integration with the rest of the world would give.

This does not mean they do not want deals with individual Western states or companies (like the gas pipeline into Western Europe). But they want those deals to be under their own centralised control, believing this will enable them to enforce terms favourable to themselves. So they have wanted increased economic links between West and East Germany to be dependent on the West Germans making concessions to themselves over the question of missile deployment.

The policy harks back to that pursued by all the great capitalist powers in the 1930s of responding to world slump by building up militarised, economically self-contained blocs. The Russians think their size enables them to get away with a modern version of this policy (just as Reagan thinks the US’s size enables it to get away with a Keynes-style armaments-led boom).

But this approach cannot appeal to the smaller fry in the Russian bloc. They believe that their economies will stagnate and even decline unless they can get access to the most modern technology. East German’s links with West Germany have been an important ingredient in the formula that has made it the most economically successful of the Eastern bloc states in recent years. Its rulers cannot be happy about having to abandon that formula under Russian pressure. And the rulers of other countries like Hungary, Bulgaria, and Poland feel very much the same.

The present disagreements between Russia and East Germany are important not because a major rift between the two countries is likely but because they point to a source of division between Russia and the other East European states which we can expect to come to the fore again and again in the next few years.

They are an expression of a world capitalist crises that individual states cannot simply turn their backs on.

Last updated on 8 October 2019