ABSTRACT
The chapter assesses Soviet economic policy options for dealing with Eastern Europe and their implications for the East European economies. The Soviet Union's economic relationship with Eastern Europe is more complex than with any other region of the world. The potential for using economic policies to pursue political or ideological goals is correspondingly greater. The Soviet Union also incurs large opportunity costs when granting ruble loans. They include: specialization agreements, target programs, cooperation in planning, joint ventures, and agreements on sharing the results of scientific research and technological development. The Council for Mutual Economic Assistance (CMEA) also encourages transfers of technology between countries. The policy options available to the East European leaderships for accelerating economic growth in the face of Soviet reductions in subsidies, three stand out: diverting trade from the West to the Soviet Union and the rest of the CMEA, reforming the economic systems, and embarking on another investment boom.
