Comecon

The Council for Mutual Economic Assistance (COMECON / Comecon / CMEA / CEMA; in Russian: Sovjet Ekonomicheskoj Vzajmopomoshchi – SEV, in Czech: Rada vzájemné hospodářské pomoci – RVHP), 19491991, was an economic organisation of Communist countries and a kind of Eastern European equivalent to the European Economic Community. The military counterpart to the Comecon was the Warsaw Pact.

Table of contents
1 Characteristics
2 History
3 Membership
4 Structure
5 Nature of Operation
6 Comecon Versus the European Economic Community
7 Prices, Exchange Rates, Coordination of national plans
8 International relations within the Comecon

Characteristics

Seat: Moscow

Full Members in the late 1980s: the Soviet Union, Bulgaria, Czechoslovakia, the German Democratic Republic (East Germany), Hungary, Romania, Poland, Cuba, the Mongolian People's Republic(Mongolia), and Vietnam.

Primary documents governing the objectives, organization, and functions:

  • the Charter of the Council for Mutual Economic Assistance (first adopted in 1959 and subsequently amended; all references herein are to the amended 1974 text)
  • the Comprehensive Program for the Further Extension and Improvement of Cooperation and the Further Development of Socialist Economic Integration by the Comecon Member Countries, adopted in 1971 (see Comprehensive Program for Socialist Economic Integration)
  • the Comprehensive Program for Scientific and Technical Progress up to the Year 2000, adopted in December 1985

Comecon served for four decades as a framework for cooperation among the planned economies of the Soviet Union, its allies in Eastern Europe, and, later, Soviet allies in the Third World. Over the years, the Comecon system has grown steadily in scope and experience. The organization later encompassed a complex and sophisticated set of institutions that represented a striking advance over the capabilities of the organization in the early 1960s.

This institutional evolution has reflected changing and expanding goals. Initial, modest objectives of "exchanging experience" and providing "technical assistance" and other forms of "mutual aid" have been extended to the development of an integrated set of economies based on a coordinated international pattern of production and investment. These ambitious goals are pursued through a broad spectrum of cooperative measures extending from monetary to technological relations.

At the same time, the extraregional goals of the organization have expanded; other countries, both geographically distant and systemically different, were being encouraged to participate in Comecon activities. Parallel efforts have sought to develop Comecon as a mechanism through which to coordinate the foreign economic policies of the members as well as their actual relations with nonmember countries and such organizations as the EEC and the United Nations.

Asymmetries of size and differences in levels of development among Comecon members have deeply affected the institutional character and evolution of the organization. The overwhelming dominance of the Soviet economy has necessarily meant that the bulk of intra-Comecon relations took the form of bilateral relations between the Soviet Union and the smaller members of Comecon.

These asymmetries have served in other ways to impede progress toward multilateral trade and cooperation within the organization. The sensitivities of the smaller states have dictated that the sovereign equality of members remains a basic tenet of the organization. Despite Soviet political and economic dominance, sovereign equality has constituted a very real obstacle to the acquisition of supranational powers by Comecon organs. Nevertheless, the 1985 Comprehensive Program for Scientific and Technical Progress up to the Year 2000 took steps to instill some organizations with supranational authority.

The planned nature of the members' economies and the lack of effective market-price mechanisms to facilitate integration have further hindered progress toward Comecon goals. Without the automatic workings of market forces, progress must depend upon conscious acts of policy. This tended to politicize the processes of integration to a greater degree than was the case in market economies.

History

Main article: History of the Comecon

The Comecon was founded in 1949 by the Soviet Union, Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. Joseph Stalin's desire to enforce Soviet domination of the small states of Eastern Europe and to mollify some states that had expressed interest in the Marshall Plan were the primary factors in Comecon's formation.

Until the late 1960s, cooperation was the official term used to describe Comecon activities. In 1971, with the development and adoption of theComprehensive Program for the Further Extension and Improvement of Cooperation and the Further Development of Socialist Economic Integration by Comecon Member Countries, Comecon activities were officially termed integration (equalization of "differences in relative scarcities of goods and services between states through the deliberate elimination of barriers to trade and other forms of interaction."). Although such equalization has not been a pivotal point in the formation and implementation of Comecon's economic policies, improved economic integration has always been Comecon's goal.

The 1985 Comprehensive Program for Scientific and Technical Progress and the rise to power of Soviet general secretary Mikhail Gorbachev have increased Soviet influence in Comecon operations and have led to attempts to give Comecon some degree of supranational authority. The Comprehensive Program for Scientific and Technical Progress was designed to improve economic cooperation through the development of a more efficient and interconnected scientific and technical base.

Membership

In the late 1950s, a number of other communist-ruled countries--China, the Democratic People's Republic of Korea (North Korea), Mongolia, Vietnam, and Yugoslavia--were invited to participate as observers in Comecon sessions. Although Mongolia and Vietnam later gained full membership, China stopped attending Comecon sessions after 1961. Yugoslavia negotiated a form of associate status in the organization, specified in its 1964 agreement with Comecon.

In the late 1980s there were ten full members: the Soviet Union, six East European countries, and three extraregional members. Geography, therefore, no longer united Comecon members. Wide variations in economic size and level of economic development have also tended to generate divergent interests among the member countries. All these factors have combined to give rise to significant differences in the member states' expectations about the benefits to be derived from membership in Comecon. Unity was provided instead by political and ideological factors. All Comecon members were "united by a commonality of fundamental class interests and the ideology of Marxism-Leninism" and had common approaches to economic ownership (state versus private) and management (plan versus market). In 1949 the ruling communist parties of the founding states were also linked internationally through the Cominform, from which Yugoslavia had been expelled the previous year. Although the Cominform was disbanded in 1956, interparty links continued to be strong among Comecon members, and all participated in periodic international conferences of communist parties. Comecon provided a mechanism through which its leading member, the Soviet Union, has sought to foster economic links with and among its closest political and military allies. The East European members of Comecon were also militarily allied with the Soviet Union in the Warsaw Pact.

There were 3 kinds of relationships - besides the 10 full memberships – with the Comecon:

  • Yugoslavia was the only country considered to have associate member status. On the basis of the 1964 agreement, Yugoslavia participated in twenty- one of the thirty-two key Comecon institutions as if it were a full member.
  • Finland, Iraq, Mexico, Nicaragua, and Mozambique had a nonsocialist cooperant status with Comecon. Because the governments of these countries were not empowered to conclude agreements in the name of private companies, the governments did not take part in Comecon operations. They were represented in Comecon by commissions made up of members of the government and the business community. The commissions were empowered to sign various "framework" agreements with Comecon's Joint Commission on Cooperation.
  • Since 1957 Comecon has allowed certain countries with communist or pro-Soviet governments to attend sessions as observers. In November 1986, delegations from Afghanistan, Ethiopia, Laos, Nicaragua, and the People's Democratic Republic of Yemen (South Yemen) attended the 42d Council Session as observers.

Structure

Main article:
Structure of the Comecon

The official hierarchy of Comecon consisted of the Session of the Council for Mutual Economic Assistance, the Executive Committee of the Council, the Secretariat of the Council, four council committees, twenty-four standing commissions, six interstate conferences, two scientific institutes, and several associated organizations.

Nature of Operation

Comecon was an interstate organization through which members attempted to coordinate economic activities of mutual interest and to develop multilateral economic, scientific, and technical cooperation:

The descriptive term Comecon applies to all multilateral activities involving members of the organization and is not restricted to the direct functions of Comecon and its organs. This usage may be extended as well to bilateral relations among members, because in the system of socialist international economic relations, multilateral accords--typically of a general nature--tended to be implemented through a set of more detailed, bilateral agreements.

Comecon Versus the European Economic Community

Although Comecon was loosely referred to as the "European Economic Community (EEC) of Eastern Europe," important contrasts existed between the two organizations. Both organizations administered economic integration; however, their economic structure, size, balance, and influence differed:

In the 1980s, the EEC incorporated the 270 million people of Western Europe into economic association through intergovernmental agreements aimed at maximizing profits and economic efficiency on a national and international scale. It was a regionally, not ideologically, integrated organization, whose members had all attained an accomplished level of industrialization and were considered to be roughly equal trading partners. The EEC was a supranational body that could adopt decisions (such as removing tariffs) and enforce them. Activity by members was based on initiative and enterprise from below (on the individual or enterprise level) and was strongly influenced by market forces.

Comecon joined together 450 million people in 10 countries and on 3 continents. The level of industrialization from country to country differed greatly: the organization linked three underdeveloped countries--Cuba, Mongolia, and Vietnam--with some highly industrialized states. Likewise, a large national income difference existed between European and non-European members. The physical size, military power, and political and economic resource base of the Soviet Union made it the dominant member. In trade among Comecon members, the Soviet Union usually provided raw materials, and East European countries provided finished equipment and machinery. The three underdeveloped Comecon members had a special relationship with the other seven. Comecon realizes disproportionately more political than economic gains from its heavy contributions to these three countries' underdeveloped economies. Socialist economic integration or "plan coordination" formed the basis of Comecon's activities. In this system, which mirrored the member countries' planned economies, the decisions handed down from above ignored the influences of market forces or private initiative. Comecon had no supranational authority to make decisions or to implement them. Its recommendations could only be adopted with the full concurrence of interested parties and do not affect those members who declare themselves disinterested parties.

Prices, Exchange Rates, Coordination of national plans

See: Comprehensive Program for Socialist Economic Integration

International relations within the Comecon

See: International relations within the Comecon

Soviet domination of Comecon was a function of its economic, political, and military power. The Soviet Union possessed 90 percent of Comecon members' land and energy resources, 70 percent of their population, 65 percent of their national income, and industrial and military capacities second in the world only to those of the United States. The location of many Comecon committee headquarters in Moscow and the large number of Soviet nationals in positions of authority also testify to the power of the Soviet Union within the organization.

Soviet efforts to exercise political power over its Comecon partners, however, have been met with determined opposition. The "sovereign equality" of members, as described in the Comecon Charter, assured members that if they did not wish to participate in a Comecon project, they might abstain. East European members have frequently invoked this principle in fear that economic interdependence would further reduce political sovereignty. Thus, neither Comecon nor the Soviet Union as a major force within Comecon had supranational authority. Although this fact ensured some degree of freedom from Soviet economic domination of the other members, it also deprived Comecon of necessary power to achieve maximum economic efficiency.

Parts of this article are from the Library of Congress federal research division; [1]


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