Hobbes once remarked that if you are forced at gunpoint to go through a door, you are still free to go through it: you can be forced and be free. For most of us today this is a perversity that smacks of Stalinism. But what if someone throws walls around you on three sides and then leaves you to decide for yourself what to do? Are you still free to determine your future, assuming that the wall builder has at least as much right to build the walls as you do? Issues of this sort come to mind from a study of current Western economic policy towards the new regimes in Eastern Europe. But unfortunately most conventional discussion of the topic either fails to spot the walls or assumes that they are natural structures deriving from the very substance of market economics, rather than the work of political hands. As a result, conventional wisdom does not for a moment doubt that the peoples of Eastern Europe have at last entered the realm of freedom and self-determination. The following survey of West–East economic diplomacy suggests that while the people of Eastern Europe may have rid themselves of Hobbes’s freedom, the world they are entering is not adequately captured by such notions as political sovereignty and self-determination; markets as free spaces liberated from politics; and Western diplomacy as the spirit of liberalism abroad.footnote1

The unstated premiss of most of the news about current East–West economic relations is that the West has had little or nothing to do with Eastern Europe in the past. So we are left with one definition of the situation: a beginning of relations, a start of help; and one problem to debate: is the help enough? In reality, of course, the West had a complex and highly structured economic relationship with Eastern Europe before the summer of 1989, albeit a predominantly conflictual one. To appreciate today’s new policies, we must very briefly remind ourselves of this background.

The relationship embraced the following elements: (1) An embargo on exports to Eastern Europe organized through Cocom, a body without legal status, but no less effective for that, run from the basement of the us embassy in Paris; while publicly presented as a system of sanctions against the export of military technology to the Warsaw Pact, it was, in fact, a generalized instrument of technological warfare, covering half of all items traded on the world economy. Western states which broke this export blockade would be punished by the usa. (2) A system of tariffs, quotas (quantitative limitations) and outright bans on imports of a very wide range of goods from the Warsaw Pact countries to the ec and other Western states. (3) Some limited trade and cooperation agreements between the ec and individual East European states, notably Romania and, in 1988, Hungary. These allowed more favourable treatment of imports to the ec, though by no means removing the very substantial barriers. They also, particularly in the case of the pioneering Hungarian agreement, gave special rights to ec companies in these countries. There was also an industrial trade agreement with Czechoslovakia, mainly to allow certain Czech exports wanted by the ec to enter the Community. (4) Poland, Hungary, Romania and Yugoslavia, as members of the imf and the World Bank, were already to an extent subject to invigilation by these strategic financial institutions. (5) All the East European countries, with the exception of Romania and to a lesser extent Czechoslovakia, were heavily indebted to Western governments and private banks. The heaviest debt burdens were those of Poland (now $41 billion) and Hungary (now $11 billion). This debt burden had started to accumulate in the 1970s at a time when Cocom controls and import barriers had been to some degree relaxed, only to be reimposed with new severity at the start of the 1980s. (6) Against this general background, there had been a consistent Western policy since the early 1970s of insisting on the establishment of bilateral relations between the ec and Western states on the one hand, and individual Comecon countries on the other, in the field of economic relations. The West, in other words, never accepted multilateral links between Comecon and the ec. Linked to this was a determination on the West’s part to discriminate between the East European countries according to the responsiveness of each to Western political objectives in the region. At first these objectives were primarily in the military-diplomatic field, and Romania was singled out for special treatment. But during the 1980s the criterion for discrimination has become the degree of openness to the capitalist world in domestic economic arrangements. (7) There was finally the military confrontation. The International Institute of Strategic Studies in London maintained throughout the 1980s that there existed a rough parity of ground, air and sea forces in the European theatre. This meant that the military drain on resources took a far heavier toll in the Warsaw Pact than in the West for the simple reason that gross domestic product in those states was far smaller than gdp in the West—probably about one third the size.

This catalogue demonstrates that economic relations between the Comecon states and the world capitalist market were, and are, governed by political institutions in the West. The key political actors in this field are, of course, the Western states themselves, the governments of the oecd countries—most importantly the United States and West Germany. But these foreign offices and finance ministries decide such matters in conclave in a number of multilateral institutions with a seemingly non-political role. This illusion is sustained by the fact that the public spokespeople for these bodies are not the leaders of states at all, but international civil-servant types who command few column inches in the press, while the intergovernmental battles within the institutions remain for the most part shrouded in secrecy.

The overall gatekeeping body is the imf and its sister organization, the World Bank, in both of which the usa has an ultimately controlling voice. No significant new policy departures towards Eastern Europe that involve financial questions are supposed to occur without first receiving the imf’s seal of approval for the given East European state’s eligibility. Similarly, the usa has an ultimately controlling voice in Cocom. The main institutional forum for policy discussion and harmonization across the whole field of economic relations with Eastern Europe is the oecd, otherwise known as the ‘Group of 24’ (g24). But the oecd is an intergovernmental discussion forum rather than a political actor, and therefore, last summer, it delegated the authority to implement Western trade and aid policy toward Eastern Europe to the ec Commission. Flanking the Commission are two intergovernmental banks: the European Investment Bank (eib) and the newly established European Bank for Reconstruction and Development (ebrd). The latter, proposed by the French government before the Strasbourg ec summit of December 1989 (whose constitution was signed in the spring of 1990), will not be fully operative until autumn 1991. Finally, the ec itself retains jurisdiction over trade and cooperation policy towards Eastern Europe on the part of the Twelve.