Soviet Union

Russia and various connected states.

Created in 1922 after the Russian Revolution of 1917.

Dissolved Dec'1991 into the CommonwealthOfIndependentStates - CIS

Yegor Gaidar says In a simplified way, the story of the collapse of the Soviet Union could be told as a story about grain and oil. As for the grain, the turning point that decided the fate of the Soviet Union began with the economic debate of 1928-29, when the discussion centered on what would later be called the "Chinese path" of development... The result of the disastrous agriculture policy implemented between the late 1920s and the early 1950s was the sharpest fall of productivity experienced by a major country in the twentieth century... The picture was bleak. Russia, which before World War I was the biggest grain exporter--significantly larger than the United States and Canada--started to be the biggest world importer of grain, more so than Japan and China combined... Unlike the Soviet Union, however, these nations were able to export products from their machine-building and processing industries. Why could the Soviet Union not pursue the same (export) policy? Because "socialist industrialization" had resulted in the Soviet industry being unable to sell any processed (value-added) products. Nikolai Ryzhkov, chairman of the USSR Council of Ministers, expressed the sentiment clearly at another meeting of the Soviet leadership: "No one will take our machinery production. That is why we are exporting mainly raw materials." The Soviet economy thus hinged on its ability to produce and export raw commodities--namely, oil and gas... In the United States, the world's largest economy, the biggest external shock during the last fifty years was in 1974, when oil prices quadrupled and terms of trade worsened by 15 percent. For the Soviet Union, skyrocketing oil prices had a much more substantial effect on GDP, which could be measured in hundreds of percentage points. Thus began the collapse of the Soviet empire (because they let themselves get dependent on high oil prices) ... Yury Andropov, facilitated contacts between the KGB and the Arab terrorists, who sought assistance for terrorist attacks on oil fields in order to keep energy prices high... Yet one of the Soviet leadership's biggest blunders was to spend a significant amount of additional oil revenues to start the war in Afghanistan. The war radically changed the geopolitical situation in the Middle East. In 1974, Saudi Arabia decided to impose an embargo on oil supplies to the United States. But in 1979 the Saudis became interested in American protection because they understood that the Soviet invasion of Afghanistan was a first step toward--or at least an attempt to gain--control over the Middle Eastern oil fields. The timeline of the collapse of the Soviet Union can be traced to September 13, 1985. On this date, Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically. The Saudis stopped protecting oil prices, and Saudi Arabia quickly regained its share in the world market. During the next six months, oil production in Saudi Arabia increased fourfold, while oil prices collapsed (Cheap Oil) by approximately the same amount in real terms. As a result, the Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive... Instead of implementing actual reforms, the Soviet Union started to borrow money from abroad while its international credit rating (Debt Financing) was still strong. It borrowed heavily from 1985 to 1988, but in 1989 the Soviet economy stalled completely.

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