Sunday, June 17, 2007

The Price of Oil

L'Ombre de l'Olivier writes of the real reason for the collapse of the Soviet Union and is our first guest blogger:

Excellent SF writer Charlie Stross has a post where, inter alia, he links to a fascinating paper by Yegor Gaider (former PM of Russia) on the reasons why the Soviet Union collapsed. It is well worth reading in its entirety but I'll summarize it as:
  1. The collectivization of Soviet agriculture meant the Soviet Union could not feed itself
  2. To buy food it needed hard currency
  3. Hard currency was available by selling oil
  4. Unfortunately in the mid 1980s Saudi Arabia decided to drastically increase production and thereby wrecked the sums of the Kremlin and left them in a total mess. The Saudis did this because they perceived that as the best way to stop the Russians gaining more influence on the Arab world and as revenge in part for Afghanistan.
  5. The Kremlin tried to borrow money from international banks but in about 1989 the banks decided the Kremlin was a bad credit risk
Thereafter the Kremlin got money with lots of strings (e.g. about not using force in E Europe) that led to the collapse of the Soviet Union. This story doesn't mention the "Reagan outspend the military" idea that many Americans are keen on but it doesn't matter directly as indirectly, that idea is true. The Americans made it clear that military attempts to get at more food (or control of oil wells) wouldn't work hence non-military means had to be used. And non-military means meant loans that would be cancelled if the Kremlin did things the bankers didn't like. QED.

There are a bunch of lessons that can be drawn from this. One is that if we in the "West" want to kill Islamic fundamentalism, dictatorial totalitarianism and the like probably the best thing we can do is find an alternative energy source that is as cheap as oil and which we can produce ourselves. Another is that a country that can't feed itself is dreadfully vulnerable.

(This post also appears at my own blog l'Ombre de l'Olivier )


  1. This is a sound case. But I thnk the reasoning is not all encompassing enough.

    The political control of marxism had failed. Not just agriculture but industry too was in a complete mess. the army had also proved in Afghanistan that it could not really win a large war. The ex-vets, like Amercia after Vietnam, were around to tell people of the disaster.

    Yes the west hindered the attempts at glasnost in order to hurray up the decline; but glasnost was not caused primarily but food shortages. These had not stopped stalin and kruschev had they?

  2. Thanks so much to l'Ombre and for the comment from CUS. The conventional wisdom here was that the arms race, the primitive bureaucratic lines of communication and the lack of exports other than oil were major factors.

    This might or might not be my last comment for two weeks.

  3. "The ex-vets, like Amercia after Vietnam, were around to tell people of the disaster."

    Have yet to meet an ex-vet that tells of any disaster in Vietnam. I have met many journalists that tell of it (and have seen/read/heard it said many times by media, political and activist-type people).

    USSR collapsed because the goverment will not work with human nature. If you want everyone to be equal in ALL things, you must bring the best down, you can't prop the worst up. Eventually you have everyone on the bottom and then what?

  4. To follow Lord Nazh, I can say that I have met a number of Soviet vets of Afghanistan who were quite clear about how screwed up that conflict was. They mostly didn't directly criticize the government (I met these folks in ~1990) but they did point out that the effort was undermined on the Soviet side by, amongst other things, massive corruption in the logistics part, a willingness to use conscripts as cannon fodder in such ways as to induce huge loss of moralle and rigid adherence to tactics that were designed for the N German plain. To the extent that Chechnya has been better it seems to be because the Russian military has at least done some thought about tactics.

  5. I would like to think Saudi Arabia and its Western Allies were as clever and determined as that. I fear Mr. Gaider overestimates us.


Your thoughts on this?