Council for Mutual Economic Assistance (COMECON)

The end of World War II saw the United States and the Soviet Union in a struggle for dominance in Europe. The United States offered European states the Marshall Plan as a program to rebuild the war-ravaged economies and their infrastructure. Invitations to participate were offered to Czechoslovakia, Hungary, and Poland, but under pressure from the Soviet Union, they declined. As a response, the Soviet Union formed the Council for Mutual Economic Assistance (COMECON). The majority of members were European, but as Soviet efforts to influence other countries gained ground, others in southeast Asia, southwest Asia, and Latin America established relationships, if not full-fledged membership (see Table 1 for membership).

Table 1 COMECON membership

Source: Author.

Council Session: This was the main body of COMECON, whose decisions were not necessarily binding.

Executive Committee: Composed of deputy prime ministers, the group met quarterly. The body worked as the chief executive organ of the Council Session. Primarily, the Committee served to elaborate on policies and oversee their implementation between meetings of the Council Session.

Council Committees: These dealt with a range of issues, such as planning, metrical-technical supply, [Page 594]and cooperation in scientific and technological development.

Permanent Secretariat: This body has been likened to a form of civil service, creating agendas for meetings and preparing statistical papers for use.

Standing Commissions: Several were created, focusing on issues such as the chemical industry, agricultural policy, and construction. Later in COMECON's history, a commission on environmental protection was established.

From COMECON's inception, multilateral trade was deliberately restricted by Joseph Stalin. After his death, the 1950s saw a trend toward increasing coordination of plans and economic integration. This resulted in attempts to foster specialization by the various members based on perceived comparative advantages. These efforts were hampered by the concept of the interested-party principle, where a member state could opt out of projects. Romania, for example, rejected the idea that it should focus on agriculture and instead sought to diversify and industrialize the domestic economy.

Bilateral trade (trade between two countries) dominated trade among COMECON members, affecting a state's ability to seek better prices within the COMECON sphere. This was partly a function of the inconvertibility of currencies to the so-called hard currencies of Western Europe. Emphasis on domestic 5-yr. (year) plans at the expense of COMECON goals was the norm. It was claimed that trade would occur when 5-yr. plans were evaluated and countries would see what other members were producing that could meet domestic shortages.

In the absence of normal price-setting markets, barter became an important process in COMECON trade. This clearly benefited countries lacking technology as they parlayed agricultural commodities and raw materials into finished goods produced by other members. This would extend to oil and natural gas exported from the Soviet Union in the 1970s and sold at submarket prices to support other member states.

Due to problems in coordinating trade prices between states, most COMECON members practiced autarchy (efforts at self-sufficiency) at many levels, seeking to insulate their citizens from shortages stemming from missed production targets. Another issue was the tendency for the best-quality goods to be reserved for domestic consumption, resulting in shoddy, substandard goods and materials being traded with other member states.

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