A week or so ago I had dinner with an Eastern European politician whose work brings her into daily contact with EU policy-makers. The conversation started to drift away from the Eurozone crisis and strayed into memories of the Soviet and Yugoslav collapses. Then she said: “Having already lived through the experience of where everything is forever until it is no more, I am starting to become extremely worried about the EU.”
No parallels are perfect – and any comparisons between the collapse of a democratising totalitarian socialist empire and the financially palpitating EU should not be taken as direct analogies. But maybe they open up new ways of looking at the problem of complex political systems in crisis. Drawing from the conversation I had that evening and my own thoughts here are ten lessons from perestroika for the would-be builders of fiscal union:
A systemic crisis begins with a loss of economic truth
The Soviet and Yugoslav crises began with the discrediting of socialist economic truths, although discussion of this tended to happen in private kitchens rather than in public debate, where the familiar (but now empty) mantras were repeated.
The logic of impossibility
Elites in the USSR thought it was inconceivable that the Union could collapse, and so did not try to take drastic action to save or reform it until it was too late. Much of the Eurozone currently operates under a similar logic of impossibility.
There is an imperfect but real parallel between ‘political contagion’ in the USSR and ‘economic contagion’ in the Eurozone – the first stirrings of revolution in the Baltics in 1987-1991 were viewed as local and specific.When Moscow showed it was unable to deal with the situation, more ‘People’s Fronts’ sprung up in the Caucasus and Moldova. The parallel with the EU’s failure to deal with Greece, and subsequent contagion, is striking.
The point of no-return goes unnoticed
My own view is that the USSR passed the point of no-return when it failed to implement the ambitious ‘500 day programme’ for the transition to a market economy in August 1990. Wrangling between Gorbachev, Yeltsin and the Supreme Soviet produced a watered-down version that proved incapable of tackling the systemic rot. Similarly, EU leaders seem more capable at kicking a can down the road than understanding that they may already have failed to save the euro.
Disintegration comes from no longer wanting to pay for the neighbours
In Soviet Russia the lack of food was often blamed on it all being sent to Cuba, Angola and Central Asia. Disintegration was driven by a Russian desire to discard Union Republics in favour of keeping ‘Russian money for the Russians’. A similar dynamic is at work in the EU today.
Aggregate power means nothing in political paralysis
The fall of the USSR was considered unthinkable because of its aggregate military and economic strength. As one Russian analyst told me, “Our USSR collapsed with our warheads in perfect order”. The EU may find that figures like aggregate debt ratios cannot be deployed if a political system is paralysed.
Treaty change (not just a coup) doomed the USSR
In early 1990 a New Union Treaty was proposed that would give a constitutional answer to the USSR’s economic and political crisis. This Treaty then ended up dominating discussion, diverting political attention from saving the USSR.
Gorbachev can be blamed for a personal failure to act decisively from 1987 onwards, instead looking to preserve a consensus and reorganise the Soviet Union on his own terms. By the time came when he tried to act decisively it was too late. Might the same happen to Mrs Merkel?
Secessionist chain reactions
The warning from the Soviet Union is that once one domino falls, others follow – just as Estonia’s declaration of independence in August 1991 was followed by nine others by September. An ‘orderly’ Greek default and Eurozone exit might not be the last.
Multinational identities survive only on success
A successful single currency requires an identity. The warning from the Soviet Union – and Habsburg, Ottoman and Yugoslav projects – is that such identities quickly collapse when things are going badly.
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