Soviet exports jumped 55 percent, and imports jumped percent.
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The new charter stated that the commission's role was "to formulate and implement the country's foreign economic strategy so as to enhance its potential contributions to acceleration uskorenie --see Glossary , strengthen the Soviet position in the world economy, and promote structured and organized development of economic cooperation with all groups of countries. In the ministry lost control of 20 percent of Soviet foreign trade turnover.
The government granted direct foreign trade rights to twenty-one ministries and state committees, sixty-seven industrial enterprises, and eight interbranch scientific production complexes. Exporting enterprises gained the right to retain part of their hard-currency earnings. Each ministry or enterprise was to pay for its investment imports with its own hard currency, and the heads of ministries and enterprises became personally responsible for the efficient use of hard-currency funds.
These measures gave enterprises more influence in import decision making. This legislation opened up enterprises inside the Soviet Union for the first time since the Bolshevik Revolution see Glossary , to foreign participation. Joint ventures were to facilitate the acquisition and assimilation of Western technology, managerial know-how, and marketing abilities. Optimistic about the economic effects of their new undertaking, Soviet officials declared that 85 to 90 percent of ""the most important types of machinery"" would meet world technical standards by The Soviet Union's vast natural resources and its lucrative, previously closed, domestic market attracted Western companies.
By August , more than 50 joint ventures were registered in the Soviet Union, and approximately were under negotiation. Complaints by Western partners dealt with uncertainties concerning Soviet trade regulations, problems with the supply of goods, the dilemma of the nonconvertibility of the ruble, difficulties finding qualified Soviet managers, problems in projecting production costs as of Soviet domestic prices were administratively set and not based on market forces , and even complications finding office space in Moscow.
Soviet trade officials' efforts to accommodate these complaints have included the decentralization of the foreign trade bureaucracy, the establishment of a management institute in Moscow, price reforms, and various legal reforms.
The name change did not signify a major change in the bank's duties but simply more accurately reflected the nature of its operations. Vneshtorgbank had branched out from the simple management of foreign trade transactions to provide currency, credit, and accounting services as well. In a change from its previous duties, Vneshekonombank was required to administer new procedures dealing with Soviet firms that had recently acquired direct foreign trade rights.
According to this law, the government had the power to disband unprofitable businesses, and each ministry and its subordinate enterprises gained the responsibility for their own foreign trade activities. Finally, the Ministry of Foreign Trade lost control of 15 percent more of its foreign trade turnover when fourteen additional enterprises and four other ministries acquired direct foreign trade rights.
Katushev, former head of the GKES, assumed the duties of the two agencies. In general, the chamber monitored foreign trade conducted outside the new Ministry of Foreign Economic Relations. In addition, the chamber assisted Soviet production enterprises in locating Western partners and learning foreign trade practices.
The political and economic relationships between the Soviet Union and these countries determine the four groups into which these countries can be divided: Soviet oil exports to these countries bought machinery and equipment and industrial consumer goods, as well as political support without the expenditure of freely convertible foreign currency.
In addition, Soviet aid programs, which took the form of direct loans or trade subsidies, almost exclusively involved socialist countries.
Ostensibly, Comecon was organized to coordinate economic and technical cooperation between the Soviet Union and the member countries. In reality, the Soviet Union's domination over Comecon activities reflected its economic, political, and military power. In Comecon comprised ten countries: Albania, although it joined in February , has not participated in Comecon activities since In the Soviet Union sent 56 percent of its exports to and received 58 percent of its imports from Comecon members.
From that time, the volume of this trade has steadily increased, but the proportion of Soviet trade with Comecon members decreased as the Soviet Union sought to increase trade with Western industrialized countries. In contrast to , trade with Comecon members accounted for only 42 percent of Soviet exports and 43 percent of Soviet imports in Because of the peculiarities of the Comecon pricing system, throughout the s and early s Comecon prices for Soviet oil were lower than world oil prices.
Western specialists have debated the political motivation of this implicit price subsidy to Comecon members. The cohesiveness within Comecon members seemed remarkable when in the fall in the world price left Comecon members paying above-market prices for Soviet oil.
In general, the more economically developed European members have supported the three less developed members by providing a large market for their exports, often at above-market prices. Most of Cuba's sugar and nickel and all of Mongolia's copper and molybdenum have been imported by the Soviet Union. In addition, the Soviet Union has established naval and air bases in Cuba and Vietnam.
This program stressed the self-sufficiency of Comecon countries in five key areas: It also called for improvement of plan coordination, joint planning, Comecon investment strategy, production specialization, and quality of machinery and equipment exported to the Soviet Union.
This relationship allowed Yugoslavia to maintain its nonaligned position while acquiring almost all the rights and privileges of a full Comecon member. In the s, the Soviet Union's trade relationship with Yugoslavia resembled its relationship with full members of Comecon. The Soviet Union exported fuel, ferrous metals, plastics, and fertilizer to Yugoslavia. Yugoslavia's machine-tool, power-engineering, shipbuilding, and consumer goods industries supplied the Soviet Union with soft-currency goods.
In addition, from well into the s actual trade with the Soviet Union exceeded planned trade volumes. Thus, in the Yugoslav government informed Soviet Prime Minister Nikolai Tikhonov of its desire to decrease trade with the Soviet Union in the mid-to-late s.
Because of the huge foreign currency debt accumulated by Yugoslavia from to , however, the Soviet Union remained its most important trade partner in the late s. In fact, for some Yugoslav products, such as shoes, the Soviet Union was the sole foreign buyer.
The political rift that developed between the two countries in the late s culminated in with the withdrawal of more than 1, Soviet specialists from China and an official break in trade relations in Although it had been only an observer, China stopped attending Comecon sessions in Economic relations between the Soviet Union and China resumed in Primarily as a result of Soviet political concessions and pressures on the Chinese to expand trade, trade volume between the two countries increased tenfold between and China's exports were not competitive on the world market, and its foreign currency reserves were severely depleted by record foreign trade deficits in and Likewise, the Soviet Union, producing dated technology that was difficult to market in more industrially advanced countries and acquiring a growing hard-currency debt, eagerly pursued the Chinese market.
Each country would sell the other goods it could not market elsewhere, and each could conserve scarce hard currency by bartering. The Soviet Union possessed machinery, equipment, and technical know-how to help China develop its fuel and mineral resources and power, transportation, and metallurgical industries. China could offer a wealth of raw materials, textiles, and agricultural and industrial consumer goods.
By mid Gorbachev was speaking of reducing Soviet troops on the Chinese border, Vietnam had removed half of its troops from Cambodia, and Soviet troops had begun their withdrawal from Afghanistan. Reforms of the Soviet foreign trade complex established free trade zones see Glossary in the Soviet Far East and Soviet Central Asia, simplifying border trade between the two countries.
Soviet trade officials persuaded the Chinese to expand business ties beyond border trade into joint ventures, coproduction contracts, and the export of surplus Chinese labor to the Soviet Union. In April , China's minister of foreign economic relations and trade, Zheng Toubin , stated that China would continue to expand trade with the Soviet Union ""at a rapid pace,"" thus rewarding Soviet persistence in expanding trade with China.
In approximately 85 percent of Soviet aid went to the communist Third World. By far the largest share of these funds was absorbed by Cuba, Mongolia, and Vietnam. The rest was left to Cambodia, Laos, and North Korea. Pledges of Soviet aid increased steadily from through and were divided evenly between direct aid and trade subsidies.
Commodity exchange was characterized by the Soviet Union's providing machinery, fuel, and transportation equipment in return for Laotian ores and concentrated metals, North Korean rolled ferrous metals and labor, and Cambodian rubber. Soviet trade with industrialized countries, except Finland, consisted of simple purchases paid for on a cash or credit basis, direct exchange of one good for another Pepsi-Cola for Stolichnaya vodka , for example , or industrial cooperation agreements in which foreign firms participated in the construction or operation of plants in the Soviet Union.
In the latter instances, payments were rendered in the form of the output of new plants. By contrast, trade with Finland, which did not have a convertible currency at that time, was conducted through bilateral clearing agreements, much like Soviet trade with its Comecon partners.
In the s, the Soviet Union gave domestic priority to gas, coal, and nuclear power in order to free more oil reserves for export. This was necessary because of higher production costs and losses of convertible currency resulting from the drop in world oil price.
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