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So, during the late 70s and 80s, the Soviet Union allowed its satellite states to take loans from Westerners. Eventually the Soviet Union itself would join in, building up a significant debt to various entities West of the Iron Curtain. Difficulties servicing this debt during the late 80s and early 90s would play a role in the collapse of Communism in Eastern Europe and the USSR.

I've always found this extraordinarily strange. The Westerners were very much being strategic in their loans - if you google around you can find scanned copies of trade publications discussing how loaning and investing money to the Eastern bloc could weaken the Communist menace - why the usually paranoid Soviet Union opened itself and its puppets to this sort of subversion is not something I understand. Then, to compound it, all of the Soviet countries I have researched so far were willing to wreck their own economies and undermine the security of their regimes to service these debts. And this for debts that were relatively small - most Latin American and Western European countries had larger debts in the 70s and 80s - and some of them defaulted on those debts either wholly or partially. So why did the Soviet bloc countries not default when their debt problem grew too great?

And what happens if the Soviets and their satellites DO default on the debts? (Let's say this happens in either 1988 or 1989, when the Soviet attempts to reform their economy were most frantic.)

fasquardon
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