In 1987 the external debt of the U.S. rose to $246 billion. On the 19 of October 1987, Wall Street crashed! Only a miracle could save the U.S. in dire straits. And the miracle took place, and the its saviour was Gorbachev.
Gorbachev, by saved the U.S. economy, by ruining that of the USSR.
Would you like to know how?
In January 1987 the restrictions on foreign trade were repealed. These restrictions protected the domestic market of the USSR from collapse. Without them the domestic market of the USSR – with its ridiculously low prices for food and essential consumer goods, in comparison with the foreign markets – could not maintain itself for a single day.
And all of a sudden, companies and individuals were authorised to export overseas foodstuffs, raw materials, electronics equipment, energy, chemical products, just about … everything!
It was as if a powerful hurricane had swept over the vast territory of the USSR. In a moment it sucked outside the country all products of value. Groceries and manufactured objects disappeared from store shelves.
The pillage of the gold reserves
On 21 July 1989 new customs regulations repealed all restrictions on the export of gold and precious stones.
The work of the Soviet customs for the last 70 years was instantly wiped out.
Gold, in quantities up to then unheard of, was thrown onto the internal market, to be bought at an internal price, and then exported overseas.
At the time the newspaper “The Moscow Komsomol” described the jewellery trade thus: “A glittering picture of unrestrained speculation, the sales quota of the State Treasury (Gokhran) for jewellery was allocated over and over … The counters were under assault, the State Treasury was bombed with mail requesting new supplies of gold and precious stones … “.
The newspaper “Izvestia” requested that as a control measure against queues for gold and diamonds: “Be put on the market a formidable quantity of gold such as the State’s gold reserves.”
The newspaper “Soviet culture” called outright for the removal customs barriers for the export of gold.
After some time G. Yavlinsky (responsible for the economy in the government at the time) alarmed the press with a statement about the disappearance of the gold reserves. But it all calmed down rather quickly.
It got worse and worse
That same year individuals exported 500,000 colour televisions and 200,000 washing machines. In 1988 just one single family exported: 392 refrigerators, 72 washing machines, 142 air-conditioning machines… The personnel of one of the thousands of foreign organisations exported: 1,400 irons, 174 fans, 3,500 pieces of soap and 242 kg of washing powder, products that were specifically bought by the State – at the insistence of MPS – with foreign currency supposedly for the use of Soviet citizens.
These data appeared inadvertently in the press at the time. In 1989 alone, at just one of the many customs controls points, individuals exported more than 2 million tons of products that were in short supply in the USSR.
The entire production of the Krasnoyarsk cotton combine was exported. At the time a good bed-sheet cost 5 roubles, a double sheet 8 roubles. The exports of cloth tripled, those of cotton nearly quadrupled, while those of linen multiplied by 7.
These are figures about State exports alone. Private exports surpassed those of the government. Moreover, determining the exact figures of exports was impossible. The same newspaper “Izvestia” wrote at the time: “Our State is one of the few in the world that does not compile customs statistics.”
What is the Balcerowicz miracle about which so many media talk about?
American experts have suggested to Balcerowicz (the organiser and inspirer ideological economic reforms in Poland) to reduce production and normal trade and instead encourage unreservedly small business dealings from hand to hand.
That is to say debase the labouring population and transform it into a “nation of hucksters.” All these downgraded individuals, by the million, flocked into the USSR like grasshoppers and began to export everything they could lay their hands on, from imported furniture to toothpaste, and by the ton.
In the Congress of Deputies there was a terrible scandal and shouting about the lack of toothpaste for the Soviet population. It never occurred to the Representatives of the people to question themselves as to the causes that brought about that glaring penury of toothpaste. They simply decided to buy abroad $60 million worth of toothpaste.
Who got rich with these $60 million?
In France, from where it was imported, the toothpaste tube cost 15 Francs, while in the USSR it sold for a rouble. Of course, in no time, the toothpaste found once again its way abroad. It was sent to Poland in packs of 500 tubes (the original package of the French factory) and again without any restrictions.
It was transported in car boots, entire train compartments, or containers on decks of boats. Just like ants who only leave the skeleton of the body of a dead lion, the “Balcerowicz piranhas” took everything and left the Soviet people with empty store shelves. There was not an article of consumption, from foodstuffs to household appliances that was not exported.
We were left to wonder about how these goods had disappeared, because industry over the years continued to produce at full capacity.
“The Leningrad Pravda» 1992
“In the USSR until 1990-1991, we produced 38 meters of cloth per capita. This represented 75% of the world production of linen cloth, 16% of wool and 13% silk. According to official State figures, only 50% of linen products and 42% of wool products were exported.”
But these figures did not take into account exports by private individuals. Because, like locusts, they exported everything they could buy.
The USSR produced 21.4% of the world production of butter (the Soviet population was 4.88% of the world population). Butter production continued to increase, but because of exports, rationing tickets had to be introduced. In the Soviet Union the production of butter per capita was 26% more than that in Great Britain. This being so, there was no butter in Soviet stores but one could buy it in Britain without any problem. Strange, is it not?
Official statistics regarded as consumed in the USSR all the butter and the meat that were sent to storage warehouses that supplied the grocery stores. For the purchase of butter and meat, passports were not required, consequently products purchased in the USSR, yet exported beyond its borders, were considered as contributing to the well-being of the Soviet people. In fact tons of meat and butter, bypassed the retail stores, and went directly to warehouses abroad by sea in containers, by land (road and rail) and by air.
All the while statistics demonstrated that the insatiable Soviet people had devoured it all.
In the late-80s and early 90s, everything had disappeared. Socks and refrigerators, televisions and plates, sheets and washing machines! The flying grasshopper had devoured it all, the sausages and the fish, the semolina and the sugar. Aluminium pots, soup-bowls and spoons were exported as cheap very valuable material that had gone through the stages that require a lot of energy and polluting treatment. The wood boring insects and exporters eroded the once powerful ship that was the Soviet economy and reduced to dust.
In 1991 it collapsed.
Tatiana Yakovleva 6-07-2012
(French translation YB)
Thanks to George
5 thoughts on “Looter’s feast : The pillage of the USSR”
Nice article and informative too. But, my problem is why the system was not protected by the benificiaries of Glasnost if the private export and its interests were so high. They know that they could mint money as long ase there is Soviet system as they could buy product on subsidised price and export it to other European countries? Secondly, it was against the interest of EC capitalist too as their market was flooded by Russian stuff. That aspect has to be studied then the picture will develop close to reality.
….one more thing, US economy was under debt of $246 Billions, how it got benifited out or USSR’s opening…this aspect is not discussed or justified in the article.
The USA is still a “trusted” debtor–because of the size of its economy, it can accumulate external debt of almost any size and continue to buy abroad. In the future, this situation could conceivably change, if this trust is eroded.
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