Growing crisis faces E. European economies

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The Stalinist bureaucracies perfer to control supply and demand through queues rather than price rises which could lead to riots like these in Poland in 1970 Soviet agriculture is unable to meet demand. The USSR has granged to import up to 20 million tonnes of grain from On August 1 the Romanian ruling bureauCracy suddenly announced that motorists from other Comecon countries would not be allowed through Romania unless they were able to pay for their petrol in hard currency (which in effect means US dollars).

This surprise announcement, which breaks Comecon agreements, resulted in chaos on the borders of Romania with Hungary, Bulgaria and the Romania is a major tourist resort itself, and is also on the route for holidaymakers going to the Bulgarian coast of the Black Sea.

Eastern European tourists are not allowed to travel abroad with hard currency- indeed in many cases they are never allowed to possess it.

Thousands of tourists were therefore left stranded on the Romanian borders.

This incident is the most graphic illustration of the severity of the economic problems now faced by the workers' states of Eastern Europe and the USSR, and of the way these problems have exacerbated the splits and divisions within the Stalinist bureaucracies.

Failure

it also underlines the complete failure of Comecon to integrate the economies of the deformed workers' states-the refusal of the Romanians to accept Comecon currencies amounts to an admission that they are not convertible on the world market and are therefore inferior to US dollars.

The figures for industrial production coming out of the USSR • recently indicate that industrial performance is the worst since at least 1951.

Romania's experience

these economic difficulties has probably been no greater than other Comecon countries, but President Ceaucescu 'has chosen to respond in a typically anti-Soviet manner.

Ceaucescu has already established a reputation for independence from the Soviet bureaucracy-his refusal to increase Romania's military commitment to the Warsaw Pact is the most obvious example.

Double purpose

These conflicts with the USSR land now with the other Eastern European states) serve a double purpose for Ceaucescu: he uses the 'exploitation' of Romania by the USSR as a scapegoat for Romania's economic difficulties, using Romanian nationalism to bolster his own regime; at the same time, unrest among Romanian workers at low living standards is enough of a threat for the bureaucracy to attempt Brezhnev to divert more resources from military expenditure to consumption.

The recent crisis measures for oil conservation have been provoked by the drop in world oil production. Romania has its own oil, but the reserves are running out.

This year, domestic output of oil has fallen and Romania was hit by the Iranian crisis and the subsequent reduction in oil supplies.

It is rumoured that the Soviet Union has refused to supply extra oil to cover the shortfall that the cut in Iranian supplies has left, because of the tension in Soviet-Romanian relations, and particularly because Romania refused to buy nuclear reactors from the USSR some years ago.

The short-term measure of refusing to accept Comecon currencies is unlikely to benefit Romania in the long-run.

The tourist industry is important to the Romanian economy and is largely kept going by tourists from other Eastern European countries.

Serious blow

More importantly, other countries are beginning to retaliate. Hungary has already banned Romanian lorries which cannot buy petrol in dollars.

Since a large proportion of Romanian agricultural exports has to travel through Hungary by road, this could be a serious blow to Romania's trade.

The economic problems of the workers' states have been expressed in a siowing down of the growth rates.

Between 1960 and 1975, the anual rates of growth of the Eastern European countries as a whole (excluding Albania) have been steadily increasing.

Between 1961-65, the combined average annual growth rate for these countries was 4.9%, for 1966-70, 6.5% and for 1971-75, 7.8%.

However, this steady acceleration of growth is now being interrupted. In Romania, for instance, (where the average annual growth rate for 197175 was 11.3%) the target for the coming five-year period has been reduced to between and 7.4%.

The reduction in world oil supplies and the increase in OPEC prices have hit all the Eastern European countries, despite the continuing supply of oil from the USSR.

The Stalinist bureaucracies have reacted not by rationing, until alternative sources of energy are found, but by increasing prices to reduce demand.

In the last few months, petrol prices have been increased by 50% in Czechoslovakia, 100% in Bulgaria, 45% in Hungary, and by 60% in Romania.

The USSR has been unable to accelerate the growth of oil production-in fact oil exports have been frozen and the increase in production slowed down.

However, the balance between exports to Comecon and to capitalist countries has been weighted more in favour of Comecon.

Since the mid-1960s the Stalinist bureaucracies have attempted to shift resources to consumption and away from investment, in an effort to 'reform' the economies and to increase the living standards of workers who were beginning to show dangerous signs of militancy.

Imports

However, " it has become increasingly evident that this shift of resources has not been accompanied by any significant increase in productivity in the agricultural sector.

The inevitable result has been an increase in food imports into the Comecon bloc as a whole. inclines the Soviet bureaucracy to prefer putting up with queues instead of raising prices.

The Stalinists' response to these deepening economic difficulties has been to turn to capitalist multi-national firms and governments for assistance.

Besides asking for loans from capitalist governments and bankers, capitalist firms are increasingly invited to invest in Soviet and Eastern European projects.

This kind of involvement has gone to the greatest extreme in Yugoslavia, but is also increasing in the Soviet Union.

For example, the Soviet bureaucracy has decided to hire a Western capitalist car manufacturer to modernise the Soviet car industry.

At present, Volskwagen and Peugeot-Citroen are competing for the contract.

The economic problems of the workers' states, which stem from bureaucratic mismanagement of the economy, will not be solved by investment from capitalist firms, or the sort of nationalist measures . that Ceacescu is pursuing.

The only long-term solution would be a political revolution that restores political power to the working class, thus opening the way for rational and democratic planning of the economy in the interests of the workers and not the bureaucracy.