Armageddon Averted: The Soviet Collapse, 1970-2000 Read Online Free PDF

later wrote that it ‘altered irrevocably the world as it had grown up in the post-war period’. 8
    Kissinger had in mind the geopolitical balance of power and the new centrality of international economics that complicated diplomacy. So-called stagflation—high unemployment (stagnation) plus inflation—confounded America’s leading economists, and Watergate paralysed and disgraced Washington. Saigon and South Vietnam fell to the Communists in 1975. With much of US industry undergoing a painful overhaul, the superpower appeared 14
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    at a low point, not at a crossroads leading to a resounding triumph in the cold war.
    Oil windfall and institutional shortfall
    From 1910 to 1950, when world oil output rose twelve-fold, Russian production rose only fourfold. One expert, writing in the early 1950s, warned that the oil supply is ‘the Achilles’ heel of the Soviet economy’. After the 1953
    CIA-backed coup in Iran had helped block Soviet access to Iranian oil, the extensive Soviet manufacturing economy appeared to be in a pickle. But in 1959—some thirty years after a Soviet scientist had forecast the presence of vast oil deposits in the forested swamps of West Siberia—a gusher was struck. Between 1961 and 1969, five dozen new oil-fields were identified, and the Kremlin went from being a net importer of oil to an exporter. 9 Even more fortuit-ously, this desperately needed Siberian oil rush broke just as the 1973 Arab–Israeli War and accompanying oil shock caused an unexpected leap in world oil prices, and the greatest economic boon the Soviet Union ever experienced. Without the discovery of Siberian oil, the Soviet Union might have collapsed decades earlier.
    From 1973 to 1985, energy exports accounted for 80
    per cent of the USSR’s expanding hard currency earnings.
    And that was not all. Other oil exporting countries—top customers for Soviet weapons—saw their oil revenues increase from $23 billion in 1972 to $140 billion in 1977.
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    history’s cruel tricks
    Many Arab oil states went on military spending sprees, increasing Moscow’s oil windfall. What to do with all that cash? The Soviet leadership used its oil revenues to cushion the impact of the oil shock on its East European satellites. Oil money also paid for a huge Soviet military build-up that, incredibly, enabled the country to reach rough parity with the US. And it helped defray the costs of the war in Afghanistan, launched in the late 1970s. Oil money also went into higher salaries and better perks for the ever-expanding Soviet elite. And oil financed the acquisition of Western technology for making cars, syn-thetic fibres, and other products for consumers, as well as Western feed for Soviet livestock. In future, the inhabitants of the Soviet Union would look back fondly on the Brezhnev era, recalling the cornucopia of sausages that had been available in state stores at subsidized prices.
    Oil seemed to save the Soviet Union in the 1970s, but it merely delayed the inevitable. The USSR had risen to become the world’s largest producer of oil and natural gas, and the third largest of coal, but it nonetheless suffered chronic energy shortages—what the leading expert aptly called ‘a crisis amid plenty’. That was because Soviet factories consumed energy in horribly gluttonous quantities, as if it were free. Then, in 1983, Siberian oil output began to decline. Output would recover in 1986, but after that it again declined, this time uninterruptedly. Making matters worse, in 1986 world oil prices plummeted by 69
    per cent, to one of their lowest levels in the post-war period. And the dollar, the currency of the oil trade, also 16
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    dropped like a stone. ‘Overnight,’ the expert wrote, ‘the windfall oil and dollar profits the Soviets had been enjoying for years were wiped out’. 10 By this time, hungover from its long oil bender, the Soviet leadership was belatedly trying to address its profound