How Sheikh Ahmed Zaki Yamani Won the Cold War

Did Reagan win the Cold War? Or, more broadly, did US policies in the 1980s

result in the collapse of the Soviet Union? A wonderful

analysis by Yegor Gaidar, who was there when it happened,

suggests that the answer is no.

Gaidar compellingly describes how a weak Soviet agricultural system, combined

with the mid-80s collapse in oil prices, was the key factor leading to the Soviet

Union’s collapse. The country, faced with an unsustainable financial situation,

stuck its head in the sand and started borrowing to the point at which no foreigners

would lend any more. And at that point, Moscow was essentially at the mercy

of any foreign countries who might conceivably lend it money.

Government-to-government loans were bound to come with a number of rigid

conditions. For instance, if the Soviet military crushed Solidarity Party

demonstrations in Warsaw, the Soviet Union would not have received the desperately

needed $100 billion from the West. The Socialist bloc was stable when the

Soviet Union had the prerogative to use as much force as necessary to reestablish

control, as previously demonstrated in Germany, Hungary, and Czechoslovakia.

But in 1989 the Polish elites understood that Soviet tanks would not be used

to defend the communist government.

The only option left for the Soviet elites was to begin immediate negotiations

about the conditions of surrender. Gorbachev did not have to inform President

George H. W. Bush at the Malta Summit in 1989 that the threat of force to

support the communist regimes in Eastern Europe would not be employed. This

was already evident at the time. Six weeks after the talks, no communist regime

in Eastern Europe remained.

So who do we thank for the collapse of the Soviet Union? If it’s one person,

that individual is not Ronald Reagan but rather Sheikh Ahmed Zaki Yamani,

the minister of oil of Saudi Arabia in 1985, who ramped up oil production in

that country and send the price of oil tumbling. Without its main source of

hard currency, the Soviet Union was doomed.

(Via Cowen)

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