Joint Ventures and East European Shipping: Contribution to Development and Change

by Professor Michael S. Roe, BA, MSc, PhD, MCIT

The recent changes in East Europe have created a new situation of a scale never before experienced. Prior to the political changes of 1987, the economy of East Europe was effectively controlled by the Council for Mutual Economic Assistance (CMEA), a bureaucracy dominated by the Soviet Union whose tasks were to coordinate trade between member states and the outside world; to exchange information on trade; and to provide an exchange mechanism for goods within the CMEA without involving hard currency, largely based on the transferable Rouble.

With the accession of Gorbachev, decreasing Soviet intervention in other East European states, declining East European economies, lack of hard currency, and pressure from EC, US, IMF and the World Bank, the CMEA eventually collapsed. The Organisation for International and Economic Coordination (OIEC) was proposed as a replacement, but East Europe was characterised by disunity and CMEA’s only successor was a liquidation committee. Gorbachev first spoke of perestroika in 1984; the crux of this reform programme was the revitalisation of the Soviet economy, but its impact was considerably wider, influencing political and economic structures throughout East Europe. Its impact on the Soviet shipping industry can be said to date from January 1987, when self financing and cost accounting were introduced, and on the wider East European shipping industry thereafter.

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