Soviet-Bloc Controversies over East-West Trade
Europe is divided into two blocs
At the beginning of the Cold War, Europe was divided into two antagonistic camps. The Iron Curtain was epitomized by the construction of the Berlin Wall in 1961. An ideological, systemic, and mental division line separated the capitalist West and the socialist East. Both sides of the conflict embarked on an alliance-building process and proceeded with economic integration. In the socialist camp, the process led as early as January 1949 to the establishment of the CMEA. In Western Europe, the integration process culminated in the establishment of the European Economic Community, the EEC, in 1957. The two alliances had military pillars as well, the North Atlantic Treaty Organization (NATO) was established in April 1949, and the Warsaw Pact in May 1955.
The CMEA is established to coordinate trade flows
The Soviet Union came out of World War II victorious but shattered. Among the main tasks for its post-war recovery was the institutionalising of its newly-gained empire. It needed to come up with measures to implement its own system within the new alliance and to find tools to control these mechanisms.
The economic model that had been introduced in the Soviet Union in late-1920s was copied in all the People’s Democracies in Eastern Europe during the Stalinisation period. The five-year-plans were in practice a system of forced industrialisation and economic centralisation. In its initial stages, the planned economy induced growth through the extensive use of resources such as inputs in labour, capital and...
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