Eastern Bloc

[26] In 1939, the USSR entered into the Molotov–Ribbentrop Pact with Nazi Germany[27] that contained a secret protocol that divided Romania, Poland, Latvia, Lithuania, Estonia and Finland into German and Soviet spheres of influence.

While Joseph Stalin tried to get as many states under Soviet control as possible, British Prime Minister Winston Churchill preferred a Central European Danube Confederation to counter these countries against Germany and Russia.

[60] The parties at Yalta further agreed that the countries of liberated Europe and former Axis satellites would be allowed to "create democratic institutions of their own choice", pursuant to "the right of all peoples to choose the form of government under which they will live".

[65] Stalin felt that socioeconomic transformation was indispensable to establish Soviet control, reflecting the Marxist–Leninist view that material bases, the distribution of the means of production, shaped social and political relations.

[73] In one of the clearest signs of Soviet control over the region up to that point, the Czechoslovakian foreign minister, Jan Masaryk, was summoned to Moscow and berated by Stalin for considering joining the Marshall Plan.

[81] The Soviets mounted a public relations campaign against the western policy change and communists attempted to disrupt the elections of 1948 preceding large losses therein,[82] while 300,000 Berliners demonstrated and urged the international airlift to continue.

[97] Those who secured membership in this selective group received considerable rewards, such as access to special lower priced shops with a greater selection of high-quality domestic and/or foreign goods (confections, alcohol, cigars, cameras, televisions, and the like), special schools, holiday facilities, homes, high-quality domestic and/or foreign-made furniture, works of art, pensions, permission to travel abroad, and official cars with distinct license plates so that police and others could identify these members from a distance.

[97] In addition to emigration restrictions, civil society, defined as a domain of political action outside the party's state control, was not allowed to firmly take root, with the possible exception of Poland in the 1980s.

Western countries invested heavily in powerful transmitters which enabled services such as the BBC, VOA and Radio Free Europe (RFE) to be heard in the Eastern Bloc, despite attempts by authorities to jam the airways.

Wishing to reinforce the role of the state in the 1970s and 1980s, Nicolae Ceaușescu enacted the systematisation programme, which consisted of the demolition and reconstruction of existing hamlets, villages, towns, and cities, in whole or in part, in order to make place to standardised apartment blocks across the country (blocuri).

[92] Initially, Stalin directed systems that rejected Western institutional characteristics of market economies, democratic governance (dubbed "bourgeois democracy" in Soviet parlance) and the rule of law subduing discretional intervention by the state.

[167] Before World War II, the Soviet Union used draconian procedures to ensure compliance with directives to invest all assets in state planned manners, including the collectivisation of agriculture and utilising a sizeable labor army collected in the gulag system.

[113] Stalin felt that socioeconomic transformation was indispensable to establish Soviet control, reflecting the Marxist–Leninist view that material bases, the distribution of the means of production, shaped social and political relations.

[180] Because of the lack of market signals in such economies, they experienced mis-development by central planners resulting in those countries following a path of extensive (large mobilisation of inefficiently used capital, labor, energy and raw material inputs) rather than intensive (efficient resource use) development to attempt to achieve quick growth.

[183] Factories were sometimes inefficiently located, incurring high transport costs, while poor plant-organisation sometimes resulted in production hold ups and knock-on effects in other industries dependent on monopoly suppliers of intermediates.

[185] Many premium goods could be bought either in a black market or only in special stores using foreign currency generally inaccessible to most Eastern Bloc citizens, such as Intershop in East Germany,[186] Beryozka in the Soviet Union,[187] Pewex in Poland,[188][189] Tuzex in Czechoslovakia,[190] Corecom in Bulgaria, or Comturist in Romania.

[195] In addition to eradicating the perceived inefficiencies associated with small-scale farming on discontiguous land holdings, collectivization also purported to achieve the political goal of removing the rural basis for resistance to Stalinist regimes.

[218] The following table displays a set of estimated growth rates of GDP from 1951 onward, for the countries of the Eastern Bloc as well as those of Western Europe as reported by The Conference Board as part of its Total Economy Database.

The United Nations Statistics Division also calculates growth rates, using a different methodology, but only reports the figures starting in 1971 (for Slovakia and the constituent republics of the USSR data availability begins later).

[186] While official statistics painted a relatively rosy picture, the East German economy had eroded because of increased central planning, economic autarky, the use of coal over oil, investment concentration in a few selected technology-intensive areas and labor market regulation.

[1] In 1975, the communist victory in former French Indochina following the end of the Vietnam War gave the Eastern Bloc renewed confidence after it had been frayed by Soviet leader Leonid Brezhnev's 1968 invasion of Czechoslovakia to suppress the Prague Spring.

In response, China moved towards the United States following the Sino-Soviet border conflict and later reformed and liberalized its economy while the Eastern Bloc saw the Era of Stagnation in comparison with the capitalist First World.

The start of the disintegration of the Eastern Bloc can be attributed to June 1989 Polish parliamentary election, to the opening of a border gate between Austria and Hungary at the Pan-European Picnic on 19 August 1989, and to the fact that the Hungarian Government gave 108 GDR citizens the allowance to cross the Iron Curtain.

After the picnic, which was based on an idea by Otto von Habsburg to test the reaction of the USSR and Mikhail Gorbachev to an opening of the border, tens of thousands of media-informed East Germans set off for Hungary.

[286] In Czechoslovakia, following protests of an estimated half-million Czechs and Slovaks demanding freedoms and a general strike, the authorities, which had allowed travel to the West, abolished provisions guaranteeing the ruling Communist Party its leading role.

Writing in 2016, German historian Philipp Ther asserted that neoliberal policies of liberalization, deregulation, and privatization "had catastrophic effects on former Soviet Bloc countries", and that the imposition of Washington Consensus-inspired "shock therapy" had little to do with future economic growth.

[292][293] The scholars Kristen Ghodsee and Mitchell A. Orenstein have referred to this as the "mortality belt of the European former Soviet Union" and assert that it could have been avoided with the implementation of "an aggressive health policy intervention" which could have "prevented tens of thousands of excess deaths.

[292] In Russia, Boris Yeltsin's IMF-backed rapid privatization and austerity policies resulted in unemployment rising to double digits and half the Russian population falling into destitution by the early to mid 1990s.

[311] A 2009 Pew Research Center poll showed that 72% of Hungarians, 62% of both Ukrainians and Bulgarians, 48% of both Lithuanians and Slovaks, 45% of Russians, 39% of Czechs, and 35% of Poles felt that their lives were worse off after 1989, when free markets were made dominant.

[313] Writing in 2018, the scholars Kristen R. Ghodsee and Scott Sehon assert that "subsequent polls and qualitative research across Russia and eastern Europe confirm the persistence of these sentiments as popular discontent with the failed promises of free-market prosperity has grown, especially among older people".