- Byname of:
- Council for Mutual Economic Assistance (CMEA)
- Also called (from 1991):
- Organization for International Economic Cooperation
- Date:
- January 1949 - present
- Areas Of Involvement:
- economic growth
- economic integration
Comecon
-
What was Comecon?
Comecon was an organization established in January 1949 to facilitate and coordinate the economic development of the eastern European countries belonging to the Soviet bloc. Its original members included the Soviet Union, Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. Over time, Albania, the German Democratic Republic, the Mongolian People’s Republic, Yugoslavia, Cuba, and Vietnam joined as well.
Comecon's activities were initially restricted to the registration of bilateral trade and credit agreements among member countries. Later, it promoted industrial specialization and undertook efforts to integrate the economies of its member states. Some successes of Comecon included the organization of eastern Europe’s railroad and electric-power grids, the creation of the International Bank for Economic Cooperation, and the construction of the Friendship oil pipeline. After the collapse of communist governments in eastern Europe, Comecon was renamed the Organization for International Economic Cooperation.
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Which countries were members of Comecon?
The Council for Mutual Economic Assistance (Comecon) was established in 1949 to facilitate economic development among countries in the Soviet bloc.
Original members included the Soviet Union, Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. Albania joined in February 1949 but stopped participating at the end of 1961. The German Democratic Republic became a member in September 1950, and the Mongolian People’s Republic in June 1962. Yugoslavia was enabled to participate on equal terms with Comecon members in 1964 in areas of trade, finance, currency, and industry. Cuba became a full member in 1972, and Vietnam in 1978.
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Why was Comecon created?
Comecon, or the Council for Mutual Economic Assistance, was established in January 1949 to facilitate and coordinate the economic development of Eastern European countries within the Soviet bloc. It was formed under the Soviet Union's aegis in response to the Committee of European Economic Cooperation in Western Europe in 1948.
Initially, Comecon focused on registering bilateral trade and credit agreements among member countries. Later, it aimed to promote industrial specialization and reduce redundancy in Eastern European economies. Despite facing challenges such as incompatible price systems and centralized planning, Comecon achieved successes in organizing Eastern Europe's railroad and electric-power grids and constructing the "Friendship" oil pipeline. After the collapse of communist governments in Eastern Europe in 1989–90, Comecon's purpose diminished, leading to its renaming and eventual disintegration.
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How did Comecon help its member countries?
The Council for Mutual Economic Assistance (Comecon) was formed in 1949 to facilitate and coordinate the economic development of Eastern European countries within the Soviet bloc.
Comecon's successes included organizing eastern Europe’s railroad grid and electric-power grid. It also created the International Bank for Economic Cooperation in 1963 to finance joint investment projects and constructed the Friendship oil pipeline, which made oil from the Soviet Union’s Volga region available to Eastern European countries.
However, Comecon faced challenges such as incompatible pricing systems among member countries, which made trade difficult and led to barter agreements. Additionally, nationalistic tensions and over-centralized economic planning hindered its objectives.
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How was Comecon different from other economic organizations like the European Economic Community?
Comecon, established in 1949, aimed to coordinate the economic development of Soviet bloc countries. In contrast to the European Economic Community (EEC), which facilitated decentralized integration via a common market regulated by uniform laws, Comecon sought cooperation among centrally planned economies.
Unlike the EEC, trade within Comecon was mainly on a barter basis due to incompatible pricing systems among member countries. Despite its goals, Comecon faced hindrances such as the absence of flexible price systems, centralized economic planning, and nationalistic tensions. Some of Comecon's successes included railroad coordination, a high-voltage electricity grid, and the "Friendship" oil pipeline. Following the collapse of communist governments in eastern Europe in 1989–90, Comecon's system was undermined, leading to its disbandment in 1991.
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What led to the end of Comecon, and what happened after it dissolved?
The end of Comecon was precipitated by the collapse of communist governments in eastern Europe between 1989 and 1990, which led to a shift towards market-based economies. This transition undermined Comecon's trade system, rendering the organization obsolete by 1991.
In early 1991, Comecon was replaced by the Organization for International Economic Cooperation, designed to aid the transition from centralized to market economies. Member nations were granted the freedom to pursue their own trade outlets, with only a loose commitment to coordinate policies on quotas, tariffs, international payments, and relations with other international bodies. Subsequently, former Comecon countries moved away from Soviet-era trade restrictions and cultivated trade relationships with other nations, especially those within the EU.
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Comecon, organization established in January 1949 to facilitate and coordinate the economic development of the eastern European countries belonging to the Soviet bloc. Comecon’s original members were the Soviet Union, Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. Albania joined in February 1949 but ceased taking an active part at the end of 1961. The German Democratic Republic became a member in September 1950 and the Mongolian People’s Republic in June 1962. In 1964 an agreement was concluded enabling Yugoslavia to participate on equal terms with Comecon members in the areas of trade, finance, currency, and industry. Cuba, in 1972, became the 9th full member and Vietnam, in 1978, became the 10th. Headquarters were established in Moscow. After the democratic revolutions in eastern Europe in 1989, the organization largely lost its purpose and power, and changes in policies and name in 1990–91 reflected the disintegration.
Comecon was formed under the aegis of the Soviet Union in 1949 in response to the formation of the Committee of European Economic Cooperation in western Europe in 1948. Between 1949 and 1953, however, Comecon’s activities were restricted chiefly to the registration of bilateral trade and credit agreements among member countries. After 1953 the Soviet Union and Comecon began to promote industrial specialization among the member countries and thus reduce “parallelism” (redundant industrial production) in the economies of eastern Europe. In the late 1950s, after the formation of the European Economic Community in western Europe, Comecon undertook more systematic and intense efforts along these lines, though with only limited success.
The economic integration envisaged by Comecon in the early 1960s met with opposition and problems. A major difficulty was posed by the incompatibility of the price systems used in the various member countries. The prices of most goods and commodities were set by individual governments and had little to do with the goods’ actual market values, thus making it difficult for the member states to conduct trade with each other on the basis of relative prices. Instead, trade was conducted mainly on a barter basis through bilateral agreements between governments.
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Comecon’s successes did include the organization of eastern Europe’s railroad grid and of its electric-power grid; the creation of the International Bank for Economic Cooperation (1963) to finance investment projects jointly undertaken by two or more members; and the construction of the “Friendship” oil pipeline, which made oil from the Soviet Union’s Volga region available to the countries of eastern Europe.
After the collapse of communist governments across eastern Europe in 1989–90, those countries began a pronounced shift to private enterprise and market-type systems of pricing. By January 1, 1991, the members had begun to make trade payments in hard, convertible currencies. Under agreements made early in 1991, Comecon was renamed the Organization for International Economic Cooperation, each nation was deemed free to seek its own trade outlets, and members were reduced to a weak pledge to “coordinate” policies on quotas, tariffs, international payments, and relations with other international bodies.