by Will Podmore
In Poland, the anti-Soviet opposition constantly alleged that a ‘Jewish-communist clique’ ran the country. (Jan Gross noted “the nearly universal presence and the intensity of anti-Jewish prejudice in Polish society.”14) Consequently, several hundred Jews were murdered.15 This opposition linked up with the CIA, which provided $1 million and subversion training. The terrorist ‘National Armed Forces’ sought ‘the liquidation of the workers of the Department of Public Security’ using either ‘quiet disappearances (drowning, kidnapping, torture) or open shooting’.16 Remnants of the ‘Home Army’ carried on a war of sabotage and assassination against both the Soviets and their Polish allies. They had killed 15,000 Polish communists by 1946.
In Ukraine, Belarus and the Baltic states too, the governments had to defeat US- and British-backed counter-revolutionary terrorist organisations. They did this by combining social reforms, primarily land reform, with repression. Statiev noted that the Soviet Union ‘put more effort into social reforms than have most other states conducting counterinsurgency’.17 The OUN continued to operate in Ukraine. The Latvian Central Council, founded in 1943, operated until 1948.18 The Nazi-created ‘Lithuanian Defense Force’ was active until 1949.19 The Armed Resistance League, formed in Estonia in 1947, was active until 1951.20 As Mart Laar, Prime Minister of Estonia 1992-94 and 1999-2002, wrote of these anti-Soviet ‘Forest Brothers’, “The first to gather in the forest were those who had fought in the German army …”21
In 1944-46, these anti-Soviet terrorists killed thousands of civilians and Soviet personnel – in Ukraine, 5,890 civilians and 7,182 Soviet personnel; in Belarus, 507 civilians and 699 Soviet personnel; in Lithuania, 3,929 civilians and 2,994 Soviet personnel; in Latvia, 439 civilians and 740 Soviet personnel; and in Estonia, 323 civilians and 314 Soviet personnel.22
Counter-revolutionaries agitated for World War Three. Paczkowski pointed out, “Many émigré groups (not just Polish) once again began hoping – especially after the outbreak of the Korean War – for an outbreak of worldwide conflict.”23 Laar noted, “Estonians hoped that with the end of the war in Europe, a new world war would start, which would bring liberty to Estonia.”24 Ukrainian Nationalist policy in 1945 was ‘to hope for a new war between the Allies and the Soviets’.25
Despite all this, the peoples of Eastern Europe defended their countries’ independence, broke up the huge landed estates that had been the economic basis of fascism and ran their industries in the national interest. The US Chamber of Commerce complained, “We have lost virtually all oil-wells and refineries in the Balkans, as well as giant industrial plants in Germany and Hungary.”
Poland’s national income grew by 76 per cent between 1947 and 1950; farm and industrial output more than doubled. Its Six Year Plan of 1950-55 brought vast increases in investment, especially in industry, and in industrial output, and big rises in national income and farm output.26 In addition to its popular land reform, the government started a house-building programme that won much respect. Most Poles preferred rebuilding to terrorism and civil war and therefore supported a government that worked for national unity, reconstruction and social reform.
Land reforms across Central and Eastern Europe were widely popular. The Times noted that the GDR’s land reform was ‘an outstanding political success’.27 Large cooperative farms were successful, raising rural incomes to urban levels. To assist, the Soviet Union exported more than 100,000 tractors to East Central Europe and the Balkans between 1946 and 1962. The Control Council set up by the Allies to carry out the Potsdam conference decisions reported in 1947, “land reform has been practically completed only in the Soviet zone.”
Before the war, the Roman Catholic Church had owned 720,000 hectares of Hungary’s best farmland, while 40 per cent of peasants had no land. The new government distributed two million hectares, including the Church’s holdings, to 600,000 peasants. Cardinal József Mindszenty said this was ‘robbery’. In Poland, one million families received land and 145,000 peasants worked land formerly owned by the Church. The Baltic states built on the successes of the earlier land reforms. In Lithuania, between 1944 and 1948, 96,330 farmer families gained land.
Albania used Stalin’s Economic Problems of Socialism in the USSR as the programme for building its economy and society. The country’s gross domestic material product, taking 1938 as 1, rose to 1.7 in 1950, 4 in 1960, 8.3 in 1970 and 10.7 in 1973. Its farm production rose to 1.2, to 1.7, 3.1 and then 3.5, its industrial production to 4, 25, 64 and 86.28 Industrial output grew between 1950 and 1975 by more than 10 per cent a year. Consumption per head in 1951-55 grew by 45 per cent, in 1956-60 by 27 per cent, in 1961-65 by 9 per cent, in 1966-70 by 33 per cent and in 1971-75 by 20 per cent.29 These growth rates were greater than anywhere else in Europe.30 Average life spans rose from 38 in 1938 to 71 in 1985. On this evidence, historian Adi Schnytzer argued that Stalin’s book ‘provides a reasonably clear and unambiguous development strategy’.31
By the 1950s, import-substituting industrialisation had transformed the incomes, jobs and production potentials of the Balkan and Eastern European countries. In the early 1950s, national income grew by 11 per cent a year in Poland, 14 per cent a year in Romania, 9.5 per cent a year in Czechoslovakia, 10 per cent a year in the GDR and 8.5 per cent a year in Hungary.32 Industrial output grew from 1940 to 1975 (counting 1940 as 1) to 37 in Latvia, 46 in Lithuania and 39 in Estonia, compared to a growth to 17 in the Soviet Union, which proved that the Soviet Union did not exploit its Baltic allies.33 In all Eastern Europe’s countries, incomes were more equitably distributed than before the war and there was far more equality of opportunity. The production of consumer goods was satisfactory in Czechoslovakia and the GDR, and rather good in Hungary.34
British historian Hugh Seton-Watson wrote of Eastern Europe’s countries, “These far-reaching plans strike the imagination. Even a foreign observer cannot fail to be affected by the enthusiasm and optimism of the planners. Moreover it is certain that large-scale industrialisation, public works and mechanisation of agriculture are the right remedies for the rural overpopulation and poverty, and the lack of manufactured goods, which were so striking in the old Eastern Europe. It is also understandable that the new regimes should wish, from a general feeling of patriotism, to diminish their countries’ economic dependence on foreign countries.”35
Yugoslavia: a different path
On 11 April 1945, the Soviet Union and the Yugoslav government signed a Treaty of Friendship, Mutual Assistance and Post-war Collaboration. The UN reported, “Of special importance for the implementation of the Five-Year Plan is the conclusion of a trade agreement with the Soviet Union, officially reported on July 30, 1947. According to the terms of this agreement, Yugoslavia will receive metallurgical plants and equipment, both ferrous and non-ferrous, and plants for oil and chemical industries and for coalmining. Yugoslavia’s deliveries of goods will not take place until 1950 …”36 President Josip Tito acknowledged in 1946, “the principal and most substantial aid came from our great ally, the Soviet Union.”37 In 1947, the Soviet Union met Yugoslavia’s wishes and dropped a plan to set up joint stock companies. Instead it supplied equipment and technical aid to build industrial enterprises in Yugoslavia.38
But after this good start, Yugoslavia took a different path. In 1948, the Tito government broke away from the socialist camp, causing ‘a second civil war’ in which 51,000 people were arrested or disappeared.39 As early as January 1945, Tito had tried to get the Soviet Union to back his territorial claims against Austria, Hungary, Italy and Romania, but Stalin told him to moderate his claims. Tito also sought to ‘swallow’ Albania, ordering his troops to occupy it.40 The Soviet Union stopped this aggression.
Tito said in June 1951, “in the event of a Soviet attack anywhere in Europe, even if the thrust should be miles away from Yugoslavia’s own borders”, he would “instantly do battle on the side of the West … Yugoslavia considers itself part of the collective security wall being b
uilt against Soviet imperialism.”41 In 1952, Tito called the Soviet Union ‘state capitalist’ and imperialist, saying it had ‘colonies’ in Eastern Europe.
Kennan wrote, “Tito in being is perhaps our most precious asset in the struggle to contain and weaken Russian expansion.”42 As Business Week noted in 1950, “For the United States in particular and the West in general this encouragement of Tito has proved to be one of the cheapest ways yet of containing Russian Communism. To date the West’s aid to Tito has come to $51.7 million. This is far less than the billion dollars or so that the United States has spent in Greece for the same purpose. … Yugoslavia has had to settle for a Western credit policy based on these two principles: (1) Priority assistance for industries having the best potential for volume exports readily marketable in the West: minimum of aid for basic industries … just enough to meet security needs and to facilitate exports. (2) Extension of credit in instalments. This would act as incentive to put their best efforts into foreign-aided projects. The better their efforts, the better their chances of getting favourable consideration on further dollar requests.”43
Tito’s counter-revolution opened the country to IMF loans and credits. The leading historian of Yugoslavia, Susan Woodward, wrote, “The regime survived thanks to U.S. military aid; U.S.-orchestrated economic assistance from the International Monetary Fund, World Bank, U.S. Export-Import Bank, and foreign banks; and the restoration of trade relations with the West after August 1949. In exchange, socialist Yugoslavia played a critical role for U.S. global leadership during the cold war: as a propaganda tool in its anticommunist and anti-Soviet campaign and as an integral element of NATO’s policy in the eastern Mediterranean. Yugoslavia became an important element in the West’s policy of containment of the Soviet Union.”44
In 1951, the Tito government abolished Yugoslavia’s planning body. It adopted ‘market socialism’, with profit-making enterprises, decentralised investments and material incentives. It gave workers’ councils control of enterprise funds and investment.45 This favoured the more profitable enterprises, causing uneven growth and unequal incomes. The goal of profit maximisation encouraged enterprise members to use the profits to pay themselves short-term wage rises rather than invest in the future. Where they did invest in their enterprises, they financed these investments by borrowing rather than by setting aside savings from their earnings. This caused a low rate of savings, high inflation, ever-higher levels of debt, and inadequate investment.
The Economist enthused, “the federal government … proposes to relinquish detailed economic planning to the separate republics, and they in turn will delegate to the local authorities and the individual ‘economic enterprises’. … the enterprises themselves are to be allowed to retain their net profits.”46 The Daily Mail too praised Tito’s policies: “price of goods … determined by the market – that is, by supply and demand … wages and salaries … fixed on the basis of the income or profits of the enterprise” which “decide independently what to produce and in what quantities” and rightly concluded, “there isn’t much classical Marxism in all of that.”47 The Economist also praised the collective farms, run by kulaks.48 Yugoslavia, unlike the Soviet Union, encouraged bourgeois nationalism in its republics. Labour Minister Hector McNeil said in 1949, “It is of the utmost importance ‘to encourage the line of thought developed by Marshal Tito in opposing Russia’s attempt to eliminate nationalism among the peoples of Eastern Europe’.”49
Threats of counter-revolution
After Stalin’s death, Khrushchev and Malenkov invited the Hungarian leadership to Moscow. Contrary to Stalin’s practice, they chose which Hungarians came and excluded József Revai and Mihály Farkas, Prime Minister Matyas Rakosi’s two closest colleagues. They then ousted Rakosi and appointed Imre Nagy Prime Minister.
In 1956, the US government raised its spending on de-stabilising Eastern Europe to $125 million, focusing on Hungary, where it produced ‘a revolt plotted for a year’, as the Daily Mail admitted.50 MI6’s historian Michael Smith noted, “MI6 had been active behind the scenes for some time providing covert assistance to potential Hungarian rebels.”51 One rebel slogan was ‘Down with the Jews’. Khrushchev let the counter-revolution grow to the point where the Soviet Union had to send forces into Hungary to defeat it.
In 1950-70, the first two decades of central planning, the socialist countries in Eastern Europe grew by 7 per cent a year, better than the best inter-war year.52 Their average annual GDP per head grew by 3.81 per cent between 1950 and 1973, as against the Soviet Union’s 3.35 per cent and Western Europe’s countries’ 4.05 per cent. The percentage of the net material product originating in industry rose from 23 in 1948 to 55 in 1970. This was partly because the Soviet Union supplied energy ‘on the most generous of terms until the second half of the 1980s’.53 Wilfried Loth concluded, “Altogether, the modernization of the Eastern Bloc proceeded even more rapidly than that of Western Europe.”54
But later, under worse policies, Eastern Europe’s countries contracted large external debts. Their governments borrowed not to invest but to prop up consumption. In the 1970s, cheap loans encouraged import-led growth, luring them to depend on outside demand and on sucker loans. For example, Poland’s debt to the West rose from $8.4 billion in 1975 to $33.5 billion in 1986. So the 1980s’ high interest rates hit hard. In 1986, Gorbachev ruled that market forces would govern relations between the Soviet Union and Eastern Europe’s countries: he then charged them world prices for Soviet oil and gas, adding hugely to their production costs.
Internal weakness brought yet more pressure from outside. The NATO powers never ceased their attacks. In Poland, the US government secretly aided Solidarity, an anti-socialist political party masquerading as a trade union.55 American historian Charles Gati admitted that the Soviet government’s claim that there was a ‘plot’ to end socialism in Poland was true.56
Chapter 8
China
Feudal China
In ancient and feudal China, famine was ever-present. From 100 BC to 1911, the Chinese people suffered 1,828 major famines. From 1850 to 1932, 4.5 per cent of each generation died of hunger. The 1876 famine in northern China left 15 million dead.
After its defeats in the Opium Wars, China endured a ‘century of humiliation’, foreign occupation, defeat and disunity. In 1850, China’s GDP per head was $600; by 1950, it was just $439. Lucien Bianco wrote, “[F]rom one end of rural China to the other … poverty, abuse and early death were the only prospects for nearly half a billion people.”1
A French correspondent, Robert Guillain, wrote of China before the revolution, “Before, it was appalling – that truth predominated over every other. Poverty, corruption, inefficiency, misery, contempt for the people and for the commonweal, these were the elements which made up the most wretched nation on earth. And I knew China then.”2 Life expectancy in 1930 was 24. In the 1930s, millions died every year in famines, epidemics and floods. China was the most oppressed of the world’s semi-colonies, the most under attack and the most backward. Foreign powers ran China through their vast economic interests, the treaty ports, the leased territories, foreign residents’ and diplomats’ privileges, armed forces, missionaries, the foreign-run Maritime Customs Service, the Post Office and the Salt Administration.3
In September 1926, Royal Navy warships shelled Wanhsien, killing 2-3,000 civilians. The Foreign Office admitted, “our naval people … were spoiling for a fight.”4 In January 1927, the British government sent 15,000 troops, the biggest British deployment between the world wars, to secure British finance’s interests in Shanghai. In April, Chiang Kai-Shek carried out his coup. On 6 April, the forces of Chinese warlord Chang So-lin (whose adviser was a British officer, Captain Sutton), aided by White Russians, raided the Soviet Embassy in Peking. The British government had agreed to the raid, which resulted in ‘executions’ of embassy staff. The same day, Chiang’s forces, again aided by White Russians, raided the Soviet Consulate in Sh
anghai. On 13 December, Chang’s forces raided the Soviet Consulate in Canton, destroyed the building and killed six of its staff in the street. On 27 May 1929, Chinese police stormed the Soviet Consulate in Harbin.
In July, Chiang said, “We want first to take the Chinese Eastern Railway [CER] into our hands …”5 This railway was the Soviet Union’s single dependable link with Vladivostok and the Maritime Provinces. Sino-Soviet treaties of 1924 had acknowledged Soviet ownership of the CER. On 10-11 July, Chiang’s forces seized the railway and arrested its Soviet employees. Then Chinese forces and White Russian bandits launched raids into the Soviet Union.6 In October-November, Soviet forces responded in self-defence with a limited invasion of Manchuria, to restore the status quo ante on the basis of the treaties.7 They defeated and disarmed the bandits, making further attacks impossible, then promptly withdrew to Soviet territory.
On 18 September 1931, Japanese forces invaded and occupied Manchuria. Western newspapers forecast that they would go on to attack the Soviet Union. Japan’s Imperial Way Faction, a fascist military group, openly urged such a war. In December, the Soviet Union proposed a non-aggression pact, as it had in 1926, 1927 and 1928, which the Japanese government yet again refused.
Chiang’s government failed to defend China against Japanese aggression.8 The Japanese empire’s war on China killed 18 million Chinese civilians and three million soldiers and displaced 100 million people from their homes. It wrecked 55 per cent of China’s industry and mines, 72 per cent of its shipping and 96 per cent of its railway lines.
From 1937 to 1940, China fought alone against a Japanese aggressor that was armed and aided by its Axis allies and also by the USA and the British Empire. Then throughout the Second World War, the Chinese people held down half of Japan’s fighting strength. As British historian Andrew Roberts observed, “Western accounts of the war often minimize, to the point of ignoring it altogether, the experience of China, despite the fact that 15 million of those who died in the conflict – a full 30 per cent – were Chinese.”9 The Chinese people, led by their Communist Party, were our ally, fighting the same enemy, the Japanese empire.