Gorbachev frowns on East-bloc economic ties with the West
Although the few East Europeans involved in economic reform have tended to welcome Mikhail Gorbachev as a likely reformer, the Soviet leader thus far has said nothing to suggest that he contemplates any radical departures from communist orthodoxy. During his first year as Soviet leader, Mr. Gorbachev has spoken repeatedly about the need for changes to promote production efficiency and quality standards.Skip to next paragraph
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But there is no evidence that he is considering adopting the market-type reforms at work in Hungary.
In fact, Gorbachev has called for closer linkage and enhanced integration within the Soviet-bloc ``common market,'' known as the Council for Mutual Economic Assistance (or Comecon).
The Soviet leader insists that Comecon must advance technologically on its own and avoid ``dependence'' on Western know-how -- even if this means reducing, wherever possible, the extent to which the East-bloc countries already rely upon it.
In Sofia, Bulgaria, last fall, the Soviet leader put new emphasis on ``integration.''
``The better we organize our interaction,'' he told the Bulgarian leaders, ``the better we can all make a big stride forward.''
He praised an agreement -- involving shared capital, and joint production and marketing -- that had just been signed between a Bulgarian machine-tools combine and a Soviet group.
Although its terms may be different, for some East Europeans the deal had an uncomfortable echo of the ``joint companies'' of Joseph Stalin's day, in which the Soviet side of the partnership was clearly much more ``equal'' than its East European partners.
And such East Europeans must have detected a hint that, in Gorbachev's view, ``joint ventures'' are more acceptable within the ranks of Comecon than with the capitalist West or with Japan.
There can be little enthusiasm for that idea in Hungary, the avant-garde reformer in Eastern Europe.
The country already has substantial shared capital partnerships and numerous cooperation agreements with major concerns in West Germany, which is its biggest trading partner after the Soviet Union, and Britain. Similar ties are afoot with Japan.
All these represent increasing access to Western technology.
This year Hungary halved taxation on the profits of such joint ventures, with no tax at all during the first five years.
Of the other Soviet allies, only Bulgaria has made substantive moves in such directions. Since the 1960s it has displayed considerable enterprise in seeking technology-earning trade outlets in the West. In theory it is ready for joint ventures with majority equity for the foreign investor. This year it is opening a Sheraton hotel.
But last September, Gorbachev put a damper on Bulgarian ambitions, saying in no uncertain terms that Soviet goods, such as oil, must be paid for in future with the best Bulgarian products. Not surprisingly, the Bulgarians had been keeping these under the counter for hard-currency marketing to the West.
This undoubtedly was a message for all East Europeans, Hungary included. How far it will be pressed remains to be seen.