For nearly three decades, the Berlin Wall was a tangible representation of the so-called Iron Curtain and the political divisions in Europe. When Mikhail Gorbachev took control of the Union of Soviet Socialist Republics (USSR) in 1985, he did so with the intention of revamping the country’s economy and government. He dismantled the secret police and introduced perestroika (economic restructuring) in an attempt to begin mending relationships with Western European countries and the United States. By studying the consequences of the collapse of the USSR, students today can gain an understanding of how the end of the Cold War affected U.S. and Soviet relationships, and how it led to the current political and economic climate between the two countries.
The Fall of the Soviet Union
In order to understand the consequences related to the collapse of the Soviet Union, it is critical to first examine the overarching causes for the USSR’s downfall. Gorbachev’s loosening of governmental power created a domino effect in which Eastern European alliances began to crumble, inspiring countries such as Estonia, Lithuania and Latvia to declare their independence. The Berlin Wall fell on November 9, 1989, leading East and West Germany to officially reunite within a year, ending the Cold War. Once the Berlin Wall fell, citizens in Eastern European countries such as Czechoslovakia, Bulgaria and Romania staged protests against their pro-Soviet governments, hastening the collapse of communist regimes across the former Soviet bloc. Other countries—such as the Republic of Belarus, the Russian Federation and Ukraine—followed suit, creating the Commonwealth of Independent States. By the end of 1989, eight of the nine remaining republics had declared independence from Moscow, and the powerful Soviet Union was finally undone. By the summer of 1990, all the formerly communist Eastern European officials had been replaced by democratically elected governments, setting the stage for the region’s reintegration into Western economic and political spheres.
The dismantling of the Soviet Union had many long-lasting effects on the global economy and the region’s foreign trade. Its downfall increased the United States’ influence as a global power and created an opportunity for corruption and crime in Russia. It also prompted many cultural changes and social upheavals in former Soviet nations and smaller neighboring communist countries. Between 1989 and 1991, the gross national product in Soviet countries fell by 20 percent, ushering in a period of complete economic breakdown.
Eastern European Economy, Economic Collapse, and Foreign Trade
By the time Gorbachev took office in 1985, the Soviet economy had been stagnant for 20 years and was badly in need of reform; to wit, the country’s gross national product (GNP) went from 5.8% in 1940 to 2.6% in 1970. Grocery store shelves were often empty, and lines for food were long. The Soviet economy historically had relied little on foreign trade because of the region’s large energy and raw material base; in 1985, exports and imports accounted for just 4 percent of the Soviet GNP. The trading the Soviet Union did engage in was mostly with communist countries, many of which were in Eastern Europe. In 1988, Soviet trade with socialist countries amounted to 62 percent of the country’s total foreign trade, while 15 percent of its foreign trade was made with Third World countries. Soviet trade with Western countries largely consisted of currency and Soviet oil exports, as well as trading one manufactured good for another (Pepsi for Stolichnaya vodka, for example).
In September 1990, Gorbachev rejected Russian economist and politician Grigory Yavlinsky’s 500-day economic reform plan, which lost the former any remaining support he had from the Soviet people, leaving him with few allies. Gorbachev’s attempts to modernize the Soviet system failed, in part, because he was unable to implement a complete overhaul, instead of making a series of minor reforms. For example, he tried to stop the production and sale of alcohol, forcing the industry underground. He also began leasing state-owned land to farmers and cut state spending on the military. Gorbachev’s continued promises that his reforms would drastically improve living conditions alienated citizens who didn’t see the promises come to fruition. Gorbachev’s failed plan for a slow, gradual economic reform negated any positive effects the reforms may have had, and the economy fully collapsed.
A few years prior, in April of 1988, Soviet and American trade delegations met in Moscow to examine possibly expanding trade relations. The Soviet government’s hope was to gain an understanding of Western management and marketing processes and learn new manufacturing skills. That same year, the Soviet Union signed a normalization agreement with the European Economic Community. Gorbachev’s economic policies of Soviet expansion and cooperation with the Western world changed the attitude of the country from one that regarded foreign trade as a means to compensate for short-term scarcities to one that considered imports to be long-term alternatives to domestic production. This helped open the door to Soviet expansion into the world market, bolstering relations with not only former Soviet bloc nations, but also Western powers such as the United States and the United Kingdom. In the mid-1990s, Russian President Boris Yeltsin and U.S. President George H.W. Bush signed trade agreements designed to make it easier for U.S. citizens to conduct business in Russia. In 1997, for the first time, Russia participated in economic discussions at the G7 summit in Denver, Colorado. The following year, Russia was integrated as a full member, and the G7 became the G8. By the early 2000s, Russian President Vladimir Putin was working to create a free-trade zone in Russia, and the country eventually joined the World Trade Organization in 2012.
Crime, Cultural Changes and Social Upheavals
The Soviet Union’s collapse not only threw economic systems and trade relations throughout Eastern Europe into a tailspin, it also produced the upheaval in many Eastern European countries and led to increased crime rates and corruption within the Russian government. When the Soviet government fell, the Russian mafia, which had struggled to survive during the height of communism, stepped in to fill the power void. Government infrastructure—ranging from basic public utilities to police services—mostly evaporated during the collapse. Additionally, government payroll services almost completely disappeared, so ex-KGB officers, police officers and Soviet Army soldiers flooded the mafia’s ranks in search of steady employment. Mafia oligarchs seized state-owned assets and enterprises throughout Russia, such as telecommunications and energy networks and industries, and the mafia extorted the public in exchange for providing security and enforcing laws wherever the Russian government was unable to. Though the current Russian administration has had some success combating organized crime, the Russian mafia is still extremely powerful and well-connected. However, in an autocratic society such as that of Russia, anyone who speaks in opposition to government corruption will be arrested, exiled or even murdered under mysterious circumstances. This oppression stymies Russia’s chances of establishing a true democracy and allows government corruption to continue to expand.
The fall of the Soviet empire also had far-reaching effects on the world as a whole, particularly among its former Soviet satellite nations. For some countries, such as Azerbaijan and Kazakhstan, oil and natural gas exports have created prosperity but have also enabled corruption. Countries such as Lithuania and Latvia underwent dramatic transformations by quickly turning to the West, adopting Western ideals and political leanings, while other countries, such as Armenia and Tajikistan, have struggled to flourish in the post-Soviet era and many citizens remain poverty-stricken while the states and their politics remain in flux.
The Soviet Union’s collapse also affected countries outside the former Soviet bloc; for instance, since the end of the Cold War, China has expanded to become a major world superpower and the European Union has extended its influence into areas that Moscow once controlled. In the quarter-century since the Soviet Union collapsed, U.S.-Russia relations have been tenuous. While the United States under President Bill Clinton provided assistance to Russia, policymakers at home feared Russia could re-emerge as an enemy if nationalists were allowed to regain power.
While the United States was able to become the dominant global superpower in the years following the Soviet Union’s collapse, Russia has gained ground in the past several years. A recent study by the U.S. Army War College’s Strategic Studies Institute indicates that the United States’ power is declining because the world is entering a new phase in which the authority of traditional governments worldwide is destabilizing, stating that the United States “can no longer count on the unassailable position of dominance, supremacy, or pre-eminence it enjoyed for the 20-plus years after the fall of the Soviet Union.” The dissolution of the USSR left the U.S. as the only true world superpower, freeing the U.S. government from the constraints imposed by the existence of any threat from a powerful rival. This allowed the U.S. government to intervene militarily and otherwise in foreign countries without fear of major retaliation.
Though the collapse of the Soviet Union allowed the United States to gain power, recent years have seen Moscow take a stronger stance in world affairs—by forgiving $10 billion of Soviet-era debt due from Pyongyang, for example, and selling oil to North Korea—in an attempt to, as Samuel Ramani, journalist and international relations expert, noted in the Washington Post, “once again project itself as a global power.” Achieving that superpower status, according to Ramani, would make it far easier for Russia to directly influence conflicts across the world.
By studying the immediate effects of the Soviet Union’s collapse, and keeping current on the effects of post-Soviet development, historians and students can understand how the end of the Cold War, Russia’s fall from dominance and its recent bid to return to the stage as a global power have all affected the United States and the course of the current geopolitical climate.
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Fall of the Soviet Union, History
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Perestroika and the Soviet Economy, On This Day
Soviet Union Chapter 15. Foreign Trade, Country Data
Russia Trade Policy, PBS
Critical Issues Facing Russia and the Former Soviet Union: Governance and Corruption, American Security Project
Treasury Targets Chinese and Russian Entities and Individuals Supporting the North Korean Regime, U.S. Department of the Treasury
25 Years After the Fall, U.S. News & World Report
At Our Own Peril: DoD Risk Assessment in a Post-Primacy World, Strategic Studies Institute
Russia Resurgent, Slate
Organized Crime in Russia, Stratfor Worldview