All of these years, I’ve been taught that it was the sainted Ronald Reagan who single handedly brought the Russian Bear to his knees in spite of the Democratic Congress, communist sympathizers, one and all. Now I come across this article by Yegor Gaidar that suggests it was something more mundane: grain and oil.
Basically, Mr. Gaidar argues that grain production was stagnant due to limitations associated with forced collectivization of agriculture. The Soviets had to eat, so they had to import grain. Having no real industrial exports to offer, they relied on raw commodities, mainly oil and gas, to purchase their grain. When oil prices collapsed in the 80s, the Soviets were in a bind. They needed money to eat. The only money available was from Western governments. Their money came with strings attached. One string, for example, was a prohibition on crushing democratic initiatives in Socialist bloc countries. And, while there was no direct support of independence movements inside the Soviet Union, home grown ones were assisted by a realization that the Soviet Union would not get its grain loans if it used military force to crush such movements.
Of course, the West was still careful about directly supporting independence movements inside the Soviet Union. When the Lithuanian authorities approached the American embassy in Moscow to ask whether the United States would lend support to the independence of Lithuania, the immediate response was negative. When the Soviet Union tried to use force to reestablish control in Baltic states in January 1991, however, the reaction from the West–including from the United States–was fairly straightforward: “Do as you wish, this is your country. You can choose any solution, but please forget about the $100 billion credit.”
What were Gorbachev’s options at the time? He could not easily dissolve the Soviet empire; the conservative elements inside the Soviet leadership were strongly against this notion. Yet he could not prevent the dissolution of the empire without a massive use of force. But if force was employed, the Soviet state would not get the necessary funds from the West, without which Gorbachev had no chance of staying in power.
This conundrum was the source of Gorbachev’s dilemma, forcing him to strike a deal with both the military and Boris Yeltsin. Hardliners from the KGB and the army who perceived that Gorbachev was simply too weak of a leader staged a coup in August 1991 under the banner of the State Committee for a State of Emergency (GKChP).
Within three days it was clear, however, that the plot had failed because its leaders did not know how to deal with the situation. Even if they found one division able to crush all the people who demonstrated against the GKChP, would the grain appear? Where would they find the food necessary to feed the larger cities? Would the West rapidly give the $100 billion? Their case, like the Soviet state itself, was entirely lost.
On August 22, 1991, the story of the Soviet Union came to an end. A state that does not control its borders or military forces and has no revenue simply cannot exist. The document which effectively concluded the history of the Soviet Union was a letter from the Vneshekonombank in November 1991 to the Soviet leadership, informing them that the Soviet state had not a cent in its coffers.[11]