Unification of Europe and Reorganisation of the World

Unification of Europe

In the immediate aftermath of the World War II, it was clear that there were merits in handling the problems cooperatively and through international organisations. European countries had been victims of competitive nationalistic rivalries. The post-second World War scenario was no longer suitable for any country to have its way. The ensuing Cold War was compelling countries to take sides willingly or otherwise. After the devastation of World War II and especially with the enhanced threat of atomic weapons, the international quest for peace appeared even more imminent.

In the fifth and sixth decades of the 20th century, several cooperative and international organisations were formed. Some of them were military types, such as NATO (an alliance of the USA, Canada, and non-Communist nations of Europe) and its counterpart, the Warsaw Pact (an alliance of the USSR and the Communist nations it dominated in Eastern Europe). The rest were economic in nature, and include the Organisation for European Economic Cooperation (for coordination among recipients of Marshall Plan funds) and the Council for Economic Mutual Assistance (the Soviet counterpart of the Marshall Plan). The most crucial of these organisations were the serious attempts for integration in Western Europe and in the United Nations.

In 1949, a number of Western European countries took the first step towards political integration by setting up the Council of Europe. Many wished that it would grow into a parliament of Europe with real political power. However, the big European nations had been averse to give the council considerable power, and it continues to be an organisation of potential rather than reality.

However, Western Europe had been more successful in moving toward economic integration. In 1950, France and Germany established the French–German Coal and Steel Authority. In 1952, it was transformed into the European Coal and Steel Community with the inclusion of Italy, Belgium, Luxembourg, and the Netherlands. In 1957, these six countries signed the Treaty of Rome setting up the European Economic Community (the Common Market). Its aim was to eliminate tariff barriers, remove restrictions on the flow of labour and capital, and, in general, integrate the economies of the member nations. It was an amazing success in the 1960s because of eliminating tariff and immigration barriers well ahead of schedule, even while its member nations enjoyed relative prosperity. In the 1970s and 1980s, other nations joined the Common Market: Great Britain, Ireland, and Denmark in 1973; Greece in 1981; Portugal and Spain in 1986. Though sometimes additional steps towards integration have become difficult, in 1986, the Common Market consented to remove almost all economic barriers among member states by 1992. This agreement is expected to create a single market of some 320 million people.

What is NATO? The North Atlantic Treaty Organisation (NATO) is a regional military organisation formed in 1949 to give mutual security for its members in the North Atlantic region. Its 14 members (Belgium, Britain, Canada, Denmark, West Germany, Greece, Iceland, Italy, Luxemburg, Holland, Norway, Portugal, Turkey, and the USA) utilise it as a framework for cooperation in military, political, economic and social matters.

The association was primarily meant to prevent the threat of Soviet military aggression in Europe by combined conventional forces and by providing Western European States the protection of the American nuclear deterrent. Its political–military structure has been a useful instrument for resolving many of the issues that have cropped up within the alliance, concerning the reconciliation of the foreign and defense policies of fourteen sovereign nations.

In the 1960s, France pulled out her troops from the integrated NATO command and also her navy from NATO Operational Control. Though France kept her commitment for united action against an aggressor, her actions effectively removed her as a member of NATO. In the 1970s and 80s, however, the alliance has been adversely affected by a growing polycentrism, American preoccupation with Middle East affairs, disagreements over nuclear strategy and policies and an increasing sense of independence in Western Europe.

How did European Community Evolve? The much discussed and desired European integration received further momentum in the post-war period. Appreciating that Europe needed the full cooperation of all its members for becoming competitive in world markets, associations committed to integration began to materialise alongside economic planning mechanisms. Despite not being a supranational body with its own authority, the Council of Europe advocated a federation of European states. However Britain opposed all efforts to develop structures of loose inter-governmental cooperation.

Belgium, the Netherlands, and Luxembourg became the first European states to create an economic unit – Benelux. They removed internal custom duties among themselves and erected a common external tariff barrier. In 1950, the Schuman Plan brought France and West Germany together in economic cooperation by pooling all coal and steel resources. The formulators of the plan, Jean Monnet (1888–1979) and Robert Schuman (1886–1963) of France, viewed it as the initial step in the process of removing all economic barriers among European states and as a move toward final political integration.

In 1951, Belgium, France, Italy, Luxembourg, West Germany and the Netherlands established the European Coal and Steel Community (ECSC). Despite facing relentless domestic opposition on nationalist grounds, the ECSC managed to establish a 'common market' in coal and steel among its member states. In 1957, these six countries founded the European Economic Community (EEC) and dedicated themselves to widening the integration of markets. Thus came into existence the so-called Common Market.

The Common Market was meant to facilitate among its member states a free movement of labour and capital, the removal of restrictions on trade, common investment practices, and coordinated social welfare programs. National agricultural interests were to be safeguarded. With Great Britain becoming a member of the Common Market in 1973, all European nations jointly started defining common economic policies.

Why and how did European Union Emerge? The European Community was set up in 1967 by bringing together the three transnational European bodies – the European Coal and Steel Community, the European Economic Community, and the European Atomic Energy Community. It came to have its own commission, parliament, and council of ministers, but could hardly control the operations of member states. In 1974, a 'European Council' was established within the European Community. It was made up of heads of government who met three times a year. From the beginning, the European Community has been dedicated to European integration.

In 1985, the European Community succeeded in passing the Single European Act, which by 1987 had been ratified by the parliamentary bodies of all the member nations. The crucial final steps were undertaken to create a fully integrated market by 31 December, 1992. The 12 members of the European Community wanted to remove internal barriers and to establish a huge open market among the member states with common external tariff policies. Additionally, the removal of internal frontier controls with a single-format European Community passport was proposed to make travel easier and to evade shipping delays at frontiers, thereby lowering costs. The aim was to make the European Community think and act as a single country. Comparisons were made to the 50 individual American states participating in one nation.

By 1989, around 320 million European citizens belonging to the 12 countries formed the European Community: the original Common Market six countries (France, West Germany, Belgium, the Netherlands, Luxembourg, and Italy) were joined by Britain, Denmark, and Ireland in 1973, Greece in 1981, and Portugal and Spain in 1986. Plans for European economic integration got intensified in October 1991 when the 12-nation European Community and the seven nations of the European Free Trade Association (EFTA) came together to establish a new common market to be called the European Economic Area. The EFTA countries that joined forces with the EC consist of Austria, Finland, Iceland, Liechtenstein, Norway, Sweden, and Switzerland. Several of the EFTA nations wished to join the EC as well.

The European Economic Area constituted the world's largest trading bloc, stretching from the Arctic Circle to the Mediterranean and boasting of around 380 million consumers. The EFTA nations consented to accept EC's plans for economic integration and adopted the vast array of laws and regulations that governed the European Community.

The European Community plan mainly aimed at the adoption of a single currency (based on the European Currency Unit) by all the member nations. Meeting in Maastricht, the Netherlands, in December 1991, the heads of the 12 EC countries decided that a common currency, the ECU, presently known as the Euro, would replace the national currencies of eligible nations by 1997 and not later than 1999. Further, a single central banking system, called the European Monetary Institute, would commence operations on 1 January, 1994, for helping member nations in reducing inflation rates and budget deficits.

Economic union would be followed by political union, with member states sharing a common European defense system and common social policies regulating immigration and labour practices. Soon three East European states – Poland, Czechoslovakia, and Hungary – were admitted with the status of associate members.

A united Europe, boasting of the world's largest volume of trade and highest productivity, was expected to become a formidable presence in the world arena. With the end of the Cold War as well as the bloc politics of East versus West, the move placed Europe at the centre of world politics. However, by the mid-1990s, roadblocks slowed the move toward European integration. The Great Recession of 2007–08 and the subsequent Euro Zone Crisis further put question marks on the future of European integration.

Collapse of Soviet Union (1985–91)

From the 1930s and to the 1970s, the economy of the USSR had been dominated by heavy industry and the military – production with a lot of steel and cement. It was a 'command' economy, controlled by a central planning commission. Agriculture was chiefly collective, with farm workers being permitted to have small private plots. The technical education was emphasised, with the Soviet Union turning out engineers in great numbers, along with scientists, doctors and other professionals.

Although by 1938 Soviet manufacturing had jumped to 17.6 per cent of the world share (behind a 28.7 per cent share for the United States), from 1960s there were doubts about future growth. USSR had suffered the loss of 26 million people in World War II, but by 1970, its population reached 228 million, up from 190 million in 1937. It accounted for one-sixth of the land area of the world, while its arable land was equal to that of the United States and Canada combined.

Moreover, it was endowed with abundant natural resources, and had been producing more oil, natural gas, iron, coal, lead, nickel, silver, copper and zinc than any other country. It possessed the largest long-range fishing fleet and was second in the production of gold and chromium. In the mid-50s, it was the most advanced nation in rocketry. In 1957, it became the first nation to send a satellite into space, and in 1961 sent the first man into space.

During this time, Soviet economy's Gross National Product (GNP) was growing at about six per cent per annum. Around this period, global growth rate was also high. By 1960, USSR could account for 12.5 per cent of the world's production (manufacturing and agriculture), which was just under half that of the United States (25.9 per cent) and the European Economic Community (26 per cent). These figures more or less would continue till 1970, whereas Japan's share jumped from 4.5 per cent in 1960 to 7.7 per cent in 1970.

From the 1960s Soviet manufacturing started witnessing a shift in work. It was more toward the production of consumer items. From 1966 to 1970 under Leonid Brezhnev the GNP grew at 5.3 per annum, but between 1971 and 1975 the GNP growth fell to 3.7 per annum. After 1975, it fell to a growth of 2.6 to 2.7 per cent per year. Unfortunately for USSR, the global growth during these years was rapid, with the average annual rate hovering around 6.2 per cent. The Soviet Union was simply falling behind the rest of the world.

Why and how did Soviet Union Decline under Brezhnev and Others? The new regime under Brezhnev wanted Soviet citizens to be as prosperous as those in the capitalist countries. In order to produce more for consumers, it tried to incorporate western innovations, but could not keep up with sophisticated techniques in computers, software and communications electronics or the design and manufacturing of automobiles. Stalin's command economy was so rigid that it was not suitable for the rapid ideas and fast changing technologies that had been developing in free enterprise economies. The biggest customer for Soviet manufacturing was the military which continued to monopolise its most skilled people to the detriment of production for civilians.

In the USSR, there were no individuals wealthy enough to bankroll a new business with a new idea. Central government had the monopoly of investing not only in the military but also in social programs, while money to modernise manufacturing was non-existent. There was no competition to the managers at various production plants and their thinking was not geared to consumer choice. Instead of the consumers, it was bureaucrats who were deciding what was to be manufactured. During the 1970s, low morale among the workers was hurting its economy. Cynicism and alcoholism was rampant among Soviet workers. There was much criticism among commoners towards people in power for not responding to their needs.

The Soviet agricultural sector was also similarly inefficient. Up to Brezhnev era, farming continued to be mostly collective. A mere four per cent of Soviet Union's arable land was farmed as privately owned plots, but it produced almost 25 per cent of the entire agricultural output. From being one of the world's greatest food exporters before World War I, it had now become one of the greatest importers of food in the world. After decades of collective farming, agricultural workers, like their industrial counterparts, had developed poor work habits. With distribution and transportation being a major problem, harvests frequently rotted on their way to market. Occasionally almost 40 or 50 per cent of a crop would perish in the fields.

USSR's energy use had also not been efficient either, with scarcer supplies of fuel being added to the cost of production. A fall in sales of its oil abroad and the procurement of food from abroad were adversely affecting trade imbalance, which was costing the Soviet Union hard currency and gold. Consequently, government agencies were resorting to more deficit spending than bureaucrats were admitting. Naturally such increases in the printing of money were causing a rapid decline in value of Soviet money – the ruble.

In the midst of all depressing trends, ironically, there was unprecedented growth in Soviet bureaucracy and Communist Party – with many Party members working in bureaucracies. Keeping up were the number of vacation residences, pensions, perks and privileges for Party members. From the commoner's point of view, corruption was increasing along with economic stagnation.

Brezhnev's death in November 1982 led to the succession of Yuri Andropov, who attacked the moral rot on several fronts. He launched a campaign against corruption and alcoholism, imprisoning people who should have been at work but were in drinking places and criticising their managers for poor supervision of their work force. He experimented with the issue of incentives and decision-making for enterprise managers with little success. Andropov died after only 13 months in office, and was replaced by Konstantin Chernenko who also died in harness barely after a year.

How did Gorbachev Try to Implement Glasnost? Mikhail Gorbachev, who became the General Secretary of the Communist Party in 1985, believed that more Liberalism was the solution to the Soviet Union's socio-economic problems. By now the Soviet economy came to have a negative GNP. In other words, instead of growing more slowly than others, Soviet economy was in decline. Gorbachev was keen to demonstrate that Socialism could adapt, innovate, and be as productive as Capitalism.

Having firm conviction in Socialism, Gorbachev strove to tinker with the Soviet economy rather than radically change it. He believed that reducing corruption would help and condemned 'unearned incomes'. In order to improve the Soviet workforce, he started another crackdown against Alcoholism. Still having faith in central planning, he wanted to improve the efficiency in central planning management. Economic planning was sought to be made more effective and efficient by setting up new super-agencies to supervise economic developments.

In order to facilitate rapid economic growth, Gorbachev pushed for mass participation, higher morale among the work force, and more freedom and openness – glasnost. He considered the economy to a family's home, and democracy to ownership of the home. To enable freedom of expression, he started releasing political prisoners. Andrei Sakharov, the father of the Soviet Union's hydrogen bomb and the most outspoken dissident, was welcomed back to Moscow from exile in the city of Gorky.

The new regime permitted openness in newspapers and on television. Consequently, Gorbachev's popularity was rising among the masses, whereas a few anti-Communist observers in the USA were describing Gorbachev's policies as merely cosmetic. Believing that drastic cuts in military spending were necessary to improve the economy, Gorbachev allowed military spending decline with the general economic decline. He even surprised Americans by accepting disarmament proposals that they had put forth merely as a bargaining ploy. To top it all, Gorbachev won the Nobel Peace Prize.

The Chernobyl nuclear disaster on April 25, 1986, killed hundreds of women and children, polluted rivers and streams and destroyed local agriculture. The whole episode was captured and transmitted to the world by a French satellite, destroying all hopes of nuclear energy as an inexpensive source of power. Although grain harvests were good during 1986–87 that permitted a reduction in grain imports, the Soviet economy continued to decline. To counter reduced oil sales abroad, the government cut down imports of consumer goods.

No doubt the incomes of consumers had been steadily increasing. Yet with hardly anything on the shelves for people to buy, and too much money chasing too few goods, prices started spiraling. It was exactly in contrast to what Capitalist nations had experienced in the Great Depression, when the main issue was too little money in the hands of consumers relative to what was available. Deficit spending, which was a major solution during the Great Depression, was for the Soviet Union a disaster. To make up for the inadequate tax revenues, the government continued to print more money.

Why did Gorbachev's Perestroika Fail? Gorbachev made big plans for the so-called perestroika or 'restructuring' of the economy. New bureaucracies were set up to supervise planning and investments. Orders were passed for producing quality goods. New laws were enacted permitting more initiative by managers. Cooperatives of producers were allowed, along with joint ventures with foreign companies. However, none of these were bound to turn the economy around.

With these new bureaucracies, the Soviet economy became even more of a tangle of confusion. After half a century of being dictated to do things, and scared to take responsibility, managers were not willing to take full advantage of production opportunities.

Before 1986, USSR had been frowning upon China's economic reforms. Now with Soviet Union staring at a crisis, new interest was being expressed in Chinese developments. Soviet economists started speculating as to why Chinese reforms were faring better than Soviet reforms. A Soviet economist even grumbled that 'Chinese worked hard while Russians talked hard'. One important difference was that China's reforms took place in the rural areas with peasants resorting to free enterprise with confidence.

In 1988, Gorbachev launched some political reforms. He weakened the power of the Central Committee Secretariat and removed the Party from overseeing the economy, leaving this to local soviets. He also made preparations to withdraw Soviet troops from Afghanistan. By the close of 1989, all the Soviet republics had acquired their own parliaments, with their own presidents. However, tensions in the Soviet Union had peaked. The deteriorating economy was causing frequent strikes by labour, and there were instances of ethnic violence, with people in some of the Soviet republics attributing their misery to the Russians.

In the Baltic region, Latvia, Lithuania and Estonia were making a move toward independence. Decades of Russian control had not been able to erase a desire for self-rule among these peoples. By now, Soviet hegemony was practically evaporating in Eastern Europe. The year 1989 proved to be momentous with freedom breaking out in the Warsaw Pact (or satellite) nations. It was also the year that the Berlin Wall was torn down.

How did the Soviet Union Breakup? More than anything else, Gorbachev desired to preserve the Soviet Union, but events were taking Soviet Union in a different direction. In the 1990 parliamentary elections in the Baltic republics of Estonia, Latvia and Lithuania, overwhelming victories were scored by parties favouring independence. Most importantly, Russia led by Boris Yeltsin, was also on the way to independence.

Gorbachev was trying to steer a middle ground for which he was criticised by both the reformers and conservatives of the Communist Party. For majority of them, Gorbachev appeared weak and unable to make up his mind. The continuing failure of the Soviet economy was squarely blamed on him.

Although Gorbachev's popularity in the West was at an all time high in 1991, his endorsement rating in the USSR was at an all-time low. This was not only because of the economic situation but also because of the fall of Communism in the satellite countries. Many Russians were blaming Gorbachev for allowing German unification again (October, 1990).

The new freedom that was permitted by Gorbachev was now destroying him. Observing the crumbling power of the Soviet government, he turned his strategy in the direction of preservation. He indicated to the conservatives that they were free to resort to whatever emergency action was necessary to preserve the Union. Consequently, they obliged him by staging the so-called coup in August

1991, while Gorbachev was vacationing in the Crimea. Coup leaders claimed that Gorbachev was ill. Playing along, Gorbachev pretended that he was under house arrest.

Shocked by the coup, Russians resorted to protest in the streets. Crying for the protection of democracy, Yeltsin marched with people against the coup. The armed forces were easily persuaded to side with Yeltsin and the people. Coup leaders did not believe in the coup to such an extent that they would resort to military action against people.

The Communist Party of Russia was banned by a presidential decree, and by year end, the other former Soviet Republics followed the Russian Republic into independence. All Soviet embassies and consulates abroad became Russian embassies and consulates. With this, Soviet Union had ceased to exist as a legal entity.

Collapse of Soviet Union

Political Changes in Eastern Europe After 1989

How was Eastern Europe in Early 1989? The East European socialist economies had been similarly affected like that of the Soviet Union. Even in Hungary, which was one of the more economically advanced satellite nations, as much as 25 per cent of the population was living below poverty line. Gorbachev announced in the United Nations his intension to pull Soviet troops out of Hungary. This was welcomed by the Hungarians, who demanded freedom to create independent political parties.

In Czechoslovakia, the Communist government's judicial system prosecuted the playwright Vaclav Havel and sentenced him to remain in prison until September or October. Other Czech dissidents were also being tried and sentenced. With the growing unrest, the government realised that leniency would be prudent and accordingly acted by releasing dissidents.

The Polish Communist regime as well had been compromising with public opinion. Unable to suppress the dissident movement called Solidarity, it tried to absorb Solidarity into a legitimate part of national affairs. When the Solidarity leaders cooperated with the Communist regime, their candidates were allowed to contest in the elections. Solidarity became the first freely elected opposition party in a country with a Communist regime. Some American anti-Communists had been arguing that Communists would never liberalise voluntarily and hence had to be forced. Now they were being proven wrong.

State of Eastern Europe in Late 1989

By early July of 1989, Gorbachev announced that the Poles and Hungarians were masters of their own destiny. He advised that Communist leaders in the Warsaw Pact countries should try to retain power by being good Communists with mass support. He was of the opinion that the Warsaw Pact countries were not worth hanging onto, that they were draining the Soviet Union.

In Hungary, Communist leaders were able to see their future clearly and started replacing conservative leaders by younger and more liberal ones. The Communist Party changed its name to Socialist Party declared itself a republic. Hungarians were now free to travel abroad without any special permission. President Bush, who was on a visit to Poland, also visited Hungary and assured economic help.

The above developments inspired people in neighbouring Czechoslovakia. On 21 August 1989, in celebration of the 21st anniversary of the Prague Spring against Soviet tanks rolling into the city, former Communist leader, Alexander Dubcek, spoke encouraging words to the crowd. Czech Communist leaders were more conservative than were those in Hungary. Believing in ruthless repression, they began imprisoning protestors and rounding up dissidents, including Vaclav Havel.

How did the Berlin Wall Fall? The wave of freedom touched East Germany as well. The Eric Honneker regime there, however, got increasingly upset with Gorbachev's liberalisations, and since 1988, Soviet publications had been banned in East Germany. However, it was all futile. For, East Germans had been free to travel within the Warsaw bloc and that is where many of them usually had their annual vacations. Several Germans desiring to go to West Germany crowded into the West German embassies in Prague and Hungary, demanding entry into West Germany. The exodus of Germans from Hungary into Austria multiplied by thousands, and the East German Communist regime panicked because of the loss of educated and talented young people.

In mid-October 1989, the Politburo in East Germany shunted out Eric Honneker with the hope that this would quell dissent. Honneker's successor proved to be an equal hardliner, and the dissent continued. Pressurised by a far more mutinous public, the East Germany regime finally tried appeasement and reduced the contradiction between the Party line and public perceptions by publicly admitting that its regime was not popular.

On November 9, 1989, the Communist regime further appeased the public by announcing liberalised travel regulations. The East Berlin public interpreted this to mean that they could travel freely into West Berlin. A large mass crowded the border crossing points. The overwhelmed guards had no option than letting the joyous crowd pass. The freedom to cross into West Germany further inspired East Germans, and the Communist regime capitulated to an aroused populace. In November, 1989, the Berlin Wall came down to everybody's surprise.

How did Czechoslovakia and East Germany Change? In Prague, however, the strategy of Communist leaders continued to be that of repression. In mid-November, after four days of demonstrations, the police physically attacked demonstrators. The following day, the demonstration attracted 10,000 strong crowd. This inspired a bigger demonstration by an estimated 200,000 people. Encouraged by resignation of the Czech Communist Party leader, an estimated 500,000 people marched for the end of Communist Party rule.

Finally millions of Czechs went out on a two-hour general strike to express solidarity with the demand for political freedom. In response, the Communist regime pledged free elections within a year. In early December, the Politburo admitted that the Soviet invasion had been a mistake and conducted elections within a few days. By the end of December, Czechoslovakia had a new parliament. Its president was Vaclav Havel, and the chairman of parliament was Alexander Dubcek.

Political Changes in East Europe

The East Germans promoted a reformminded Communist, Hans Modrow, to power, and under him, the Communists continued to appeal to the public. In a Party congress, many Communists confessed their mistakes and preferred a complete break with the Stalinist past. Hans Modrow promised free elections for May, and the Communist Party changed its name to Reformed Party of Democratic Socialism. In the elections that were held March itself, the Reformed Party of Democratic Socialism met a humiliating defeat. The new government of East Germany began lobbying for unification with West Germany. The unification of Germany was formally achieved in October 1990.