The End of Bipolarity- Part 4 -CONSEQUENCES OF DISINTEGRATION

CONSEQUENCES OF DISINTEGRATION

The collapse of the second world of the Soviet Union and the socialist systems in eastern Europe had profound consequences for world politics. Let us note here three broad kinds of enduring changes that resulted from it. Each of these had a number of effects that we cannot list here.

First of all, it meant the end of Cold War confrontations. The ideological dispute over whether the socialist system would beat the capitalist system was not an issue any more. Since this dispute had engaged the military of the two blocs, had triggered a massive arms race and accumulation of nuclear weapons, and had led to the existence of military blocs, the end of the confrontation demanded an end to this arms race and a possible new peace.

Second, power relations in world politics changed and, therefore, the relative influence of ideas and institutions also changed. The end of the Cold War left open only two possibilities: either the remaining superpower would dominate and create a unipolar system, or different countries or groups of countries could become important players in the international system, there by bringing in a multipolar system where no one power could dominate. As it turned out, the US became the sole superpower. Backed by the power and prestige of the US, the capitalist economy was now the dominant economic system internationally. Institutions like the World Bank and International Monetary Fund became powerful advisors to all these countries since they gave them loans for their transitions to capitalism, Politically, the notion of liberal democracy emerged as the best way to organize political life.

Third, the end of the Soviet bloc meant the emergence of many new countries. All these countries had their own independent aspirations and choices. Some of them, especially the Baltic and east European states, wanted to join the European Union and become part of the North Atlantic Treaty Organization (NATO). The Central Asian countries wanted to take advantage of their geographical location and continue their close ties with Russia and also to establish ties with the West, the US, China and others. Thus, the international system saw many new players emerge, each with its own identity interests, and economic and political difficulties. It is to these issues that we now turn.

SHOCK THERAPY IN Post-COMMUNIST REGIMES

The collapse of communism was followed in most of these countries by a painful process of transition from an authoritarian socialist system to a democratic capitalist system. The model of transition in Russia, Central Asia and east Europe that was influenced by the World Bank and the IMF came to be known as 'shock therapy'. Shock therapy varied in intensity and speed amongst the former second world countries, but its direction and features were quite similar. Each of these countries was required to make a total shift to a capitalist economy, which meant rooting out completely any structures evolved during the Soviet period. Above all, it meant that private ownership was to be the dominant pattern of ownership of property. Privatization of state assets and corporate ownership patterns were to be immediately brought in. Collective farms were to be replaced by private farming and capitalism in agriculture. This transition ruled out any alternate or 'third way, other than state-controlled socialism or capitalism.

Shock therapy also involved a drastic change in the external orientation of these economies. Development was now envisaged through more trade, and thus a sudden and complete switch to free trade was considered essential. The free trade regime and foreign direct investment (FDI) were to be the main engines of change. This also involved openness to foreign investment, financial opening up or deregulation, and currency convertibility.  Finally, the transition also involved a break up of the existing trade alliances among the countries of the Soviet bloc. Each state from this bloc was now linked directly to the West and not to each other in the region. These states were thus to be gradually absorbed into the Western economic system. The Western capitalist states now became the leaders and thus guided and controlled the development of the region through various agencies and organizations.