The Decline of the Soviet Empire
I've heard lots of theories of why the Soviet Union fell apart, from Reagan's outspending them into oblivion, to the Pope calling on God to destroy it, to Osama and the other mujihaddin in Afghanistan punching an embarrassing hole in the enterprise. This one is a new one though, and one that is at least plausible. The Saudi's did it when they ramped up petroleum production. The source is interesting too - a former Russian prime minister who would be in a position to know. Here's the core of it:
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 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. The Soviet leadership was confronted with a difficult decision on how to adjust.
Very interesting. Their decision was the wrong one, but so were all the other options. Of course, keep the old Russian saying in mind: 'He lied like an eyewitness!'
Labels: history, Russia, Saudis, Soviet Union
posted by Clemens @ 5:28 PM
2 comments
2 Comments:
$20 billion a year was enough to doom the Soviets? Was that a large enough part of their budget to cause a collapse?
Jim,
Good point, though I assume that $20 billion for an economy stretched as tight as the Soviet Union's was, especially after fighting a disastrous war, might have been the straw that broke the camel's back. It's an interesting point in any case and certainly wouldn't have helped the Soviet's any. Still, I don't know if this is a convincing theory or not.
Thanks for the comment.
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