12.6 — The Soviet Collapse

In 1985 the Soviet Union had the world's largest army, a nuclear arsenal, control of eastern Europe, and no organised internal opposition.

Six years later it did not exist.

Almost nobody predicted it. Intelligence agencies, academic Sovietologists and the Soviet leadership itself all failed to see it coming. And it happened, in the end, with very little violence in the centre.

Why the system was failing

The economic problems were structural and had been visible for a decade.

Growth slowed steadily from the 1960s. The Soviet model was good at what Chapter 9.6 identified: mobilising labour and capital into heavy industry. Once the rural labour surplus was exhausted, growth had to come from productivity, and a planned system without prices, competition or bankruptcy had no mechanism for producing it.

Agriculture never recovered from collectivisation (Chapter 11.5). A country with some of the best soil on Earth imported grain.

Consumer goods were scarce and poor. Queueing was a normal daily activity. The shortage economy produced blat — the informal exchange of favours and access — as the real distribution mechanism.

Military spending consumed an estimated 15 to 25 percent of output against around 5 to 6 percent in the United States (Chapter 12.2).

And oil masked it. The 1973 price rise gave the Soviet Union enormous hard currency earnings from Siberian oil, which paid for grain imports and postponed reform. The price collapse of 1986 removed that cushion at precisely the wrong moment.

Afghanistan (Chapter 12.4) was expensive, unwinnable, and destroyed the legitimacy of a leadership that could not admit it was losing.

And Chernobyl, April 1986. A reactor exploded during a badly designed safety test. The initial response was concealment — the world learned of it when Swedish monitoring stations detected the radiation. Gorbachev has said it was decisive in convincing him that the system's secrecy was itself the problem.

What Gorbachev tried

He became General Secretary in 1985 intending to save the system, not to end it.

Glasnost — openness. Censorship was relaxed, the press could report failures, and previously banned literature and history were published.

Its logic: the system's problems could not be fixed if they could not be discussed — Chapter 12.3's information failure, recognised. Its effect: once people could discuss the failures, they discussed all of them, including the famine, the purges, the Nazi-Soviet Pact's secret protocols, and the legitimacy of Soviet rule in the Baltic states.

Perestroika — restructuring. Limited enterprise autonomy, cooperatives, some private activity.

And it produced the worst of both systems. Enterprises gained autonomy over what to produce without price signals to guide them or competition to discipline them. Supply chains built on plan-based obligation broke down before market relationships replaced them. Output fell and shortages worsened.

And the political reforms had a consequence he did not intend. Contested elections in 1989 to a new Congress of People's Deputies produced the public defeat of Party officials and a televised forum in which the Party's record was attacked.

The decisive foreign policy change was the abandonment of the Brezhnev Doctrine — the principle that the Soviet Union would intervene to preserve socialist governments, which had been applied in Hungary in 1956 and Czechoslovakia in 1968.

Gorbachev told the eastern European leaderships that Soviet troops would not be used to keep them in power.

1989

Once that was understood, the eastern European regimes fell within months.

Poland. Solidarity, the trade union movement suppressed under martial law in 1981, was legalised, and semi-free elections in June 1989 produced an overwhelming defeat for the communists.

Hungary opened its border with Austria in May, which allowed East Germans to leave via Hungary.

East Germany. Mass demonstrations in Leipzig grew weekly. On 9 November a spokesman, misreading a note at a press conference, announced that travel restrictions were lifted effective immediately. Crowds went to the crossing points; the guards, without orders, opened them. The wall was breached by a bureaucratic error and by border guards deciding not to shoot.

Czechoslovakia's Velvet Revolution in November, with Václav Havel, a dissident playwright who had been imprisoned, becoming president within six weeks.

And Romania, the exception. Ceaușescu's regime used force; several hundred died; and he and his wife were tried summarily and executed on 25 December.

The Soviet Union itself

The nationalities question destroyed it, and this was the factor most consistently underestimated.

The Soviet Union was a federation of fifteen republics defined on national lines, each with its own institutions, and each with a constitutional right to secede that had never been meaningful. Glasnost made it meaningful.

The Baltic states — annexed in 1940 under the Nazi-Soviet Pact, whose secret protocols the Soviet Union had denied for fifty years and finally admitted in 1989 — moved first. The Baltic Way in August 1989 was a human chain of around two million people across the three republics.

**Then Georgia, Armenia, Azerbaijan, Ukraine and the rest.

The August 1991 coup attempt by hardliners, who detained Gorbachev at his holiday house and declared an emergency, collapsed in three days. The army would not act decisively, crowds gathered in Moscow, and Boris Yeltsin — president of the Russian republic, standing on a tank outside the parliament — became the centre of resistance.

And the coup destroyed what it meant to save. It discredited the Party and the central institutions completely, and transferred authority to the republics.

On 8 December 1991 the leaders of Russia, Ukraine and Belarus met in a forest lodge and agreed that the Soviet Union had ceased to exist. Gorbachev resigned on 25 December. The flag came down over the Kremlin.

A superpower dissolved by agreement, without a war.

The 1990s in Russia

This is the part that explains Russian politics now and it is frequently omitted from Western accounts.

Shock therapy. Price liberalisation in January 1992, rapid privatisation, and macroeconomic stabilisation, on advice from Western economists and institutions.

What happened.

Output collapsed. Russian GDP fell by around 40 percent over the decade — a larger contraction than the American Great Depression (Chapter 9.9).

Hyperinflation destroyed savings. Prices rose by well over 2,000 percent in 1992 alone. A lifetime's savings became worthless in months — Chapter 9.8's German lesson, repeated.

Life expectancy fell sharply. Male life expectancy dropped from about 64 to about 57 between 1990 and 1994, driven by alcohol, cardiovascular disease, suicide and violence. Demographers have described it as the largest peacetime mortality crisis in an industrialised country in modern times.

And privatisation created the oligarchs. Vouchers were distributed to citizens who, needing money, sold them cheaply. The loans-for-shares scheme in 1995 transferred major resource companies to a small group of businessmen in exchange for loans to a government that was broke, on terms widely regarded as a giveaway. A handful of people acquired a large share of the country's natural resource wealth.

The 1998 default on domestic debt completed the decade.

And the political consequence is direct. For a very large number of Russians, the words democracy, reform and the West are associated with the 1990s — with poverty, humiliation and criminality. Putin's popularity from 2000 rested substantially on rising oil prices and on restoring order and state authority after that decade. Any account of Russian politics that does not include this is incomplete.

What was and was not promised

A specific historical dispute worth stating because it recurs in current argument.

In February 1990, during negotiations over German reunification, the American Secretary of State James Baker asked Gorbachev whether he would prefer a united Germany outside NATO or a united Germany in NATO with a guarantee that NATO's jurisdiction would not shift one inch eastward.

Declassified documents confirm such assurances were given verbally in the context of German reunification.

No treaty commitment was made, and Western officials argue the discussion concerned East German territory rather than eastern Europe, and that the Warsaw Pact still existed at the time so the question of its former members joining did not arise.

Russian officials argue the assurances were general and were broken.

Both positions have documentary support for their narrower claims. What is not disputed is that NATO enlarged eastward in several rounds from 1999, and that Russia objected consistently and increasingly forcefully. Chapter 12.10 places it in the current situation.

Why nobody predicted it

Worth asking, because it is a lesson about forecasting.

Intelligence services measured what was measurable — tanks, missiles, industrial output — and those numbers looked strong.

Legitimacy is not measurable. A system can appear stable until the moment enough people stop behaving as though it is, and that transition is fast and is invisible in advance. Timur Kuran's concept of preference falsification describes it: when everyone conceals their true view for fear of the consequences, nobody knows how many others share it, and a small shock can produce a sudden cascade.

And Chapter 16.4 takes the general lesson: the absence of visible opposition is weak evidence of consent, and systems that suppress dissent make themselves unpredictable to their own rulers.

Where this shows up in your life

Fifteen states, several unresolved conflicts, and a European security situation whose lines were drawn in these years.

India's foreign policy had to be rebuilt — the Soviet Union had been its principal defence supplier and a reliable Security Council vote, and its disappearance in 1991 coincided with India's economic crisis and is part of the context for the reforms of Chapter 6.28.

And the general finding. Empires and systems that appear permanent are not. This is the third time in this volume — Rome, the Mughals, the Soviet Union — that a structure everyone treated as fixed dissolved within a generation, and in each case the causes were visible beforehand and the timing was not. Chapter 16.2 makes it the general model.

What the next page covers

While the Soviet Union collapsed, the other communist great power was growing at rates nobody had seen. Chapter 12.7 covers China after Deng — the reform sequence, what has actually been built, the political settlement of 1989, the Belt and Road Initiative, the current economic problems, and the honest assessment of whether the model is sustainable.