Revisiting Soviet oil subsidies to East Europe: System maintenance in the Soviet hegemony, 1970--1984

Throughout the 1970s and 1980s the Soviet Union sold oil shipments to the member-states of the Council of Mutual Economic Assistance (CMEA) at a fraction of the world market price (wmp). Contrary to arguments made by previous scholars that it paid a subsidy, namely the difference between the wmp and the CMEA price, either as a reward for material contributions to Soviet foreign policy objectives or as a consequence of membership in a customs union, the Soviet Union provided subsidized oil shipments as a form of economic assistance in maintaining its hegemony.; Using non-parametric statistical analysis of previous scholars' data and comparative case studies based on interviews of Soviet decision-makers and on archival research, this study shows that the Soviet Union acted as a hegemon, which created a protectionist trade regime, used oil policy as means of hegemonic maintenance. The CMEA, the embodiment of values espoused in the Soviet trade regime identified as “embedded supranationalism”, stood as the institutional antithesis of a customs unions, which embodied the values of the Western liberal trade regime. Soviet leaders did not use oil subsidies or trade relations in general as means of calibrating CMEA member-states' domestic or foreign policy behavior. Soviet leaders used subsidized oil as a means of supporting East European national economic development with the ultimate goal of creating politically legitimate governments thereby ensuring political stability in its cordon sanitaire with the West.