I am indebted to Ellen Comisso, Stephen Krasner, and an anonymous referee for helpful comments on an earlier draft of this article and to the National Council for Soviet and East European Research for financial support.

1. For details of the price-setting procedure, see Ed Hewett, A., Foreign Trade Prices in the Council for Mutual Economic Assistance (Cambridge: Cambridge University Press, 1974)Google Scholar.

2. Marrese, Michael and Vanous, Jan, Soviet Subsidization of Trade with Eastern Europe: A Soviet Perspective (Berkeley: University of California Institute of International Studies, 1983)Google Scholarand Marrese, Michael and Vanous, Jan, “The Content and Controversy of Soviet Trade Relations with Eastern Europe, 1970–84,” in Brada, Josef C., Ed Hewett, A., and Wolf, Thomas A., eds., Economic Adjustment and Reform in Eastern Europe and the Soviet Union (Durham, N. C.: Duke University Press, forthcoming)Google Scholar.

3. Walker, Peter, “The Common Agricultural Policy: Its Advantages and Disadvantages,” Barclays Bank Review (11 1981)Google Scholar.

4. For example, Marrese and Vanous, Soviet Subsidization, estimate that Soviet implicit subsidies for 1974–78 ranged from $5,325. 5 million to $6,264. 9 million, and average annual per capita implicit subsidy receipt ranged from $57. 6 in Bulgaria to $-0. 4 in Romania for the same period. The total intra-EC implicit subsidies in Table 1 sum to $3,185. 7 million and per capita implicit subsidy receipts range from $249 in Denmark to $7. 93 in Belgium.

5. Marrese, Michael, “CMEA: Cumbersome but Effective Political Economy,” International Organization 40 (Spring 1986), pp. 111–51CrossRefGoogle Scholar.

6. Comisso, Ellen, Soviel-East European Relations: Unconventional Gains from Trade or a Sum-Positive Power Game? University of California at San Diego, mimeo, 1984Google Scholar.

7. On the role of solidarity and internationalism in Soviet-Eastern European relations, see Jowitt, Ken, “Moscow ‘Centre’,” Eastern European Politics and Societies 1 (Fall 1987), pp. 296–348CrossRefGoogle Scholarand Gitelman, Zvi, “Toward a Comparative Foreign Policy of Eastern Europe,” in Potichny, Peter J. and Shapiro, Jane P., eds., From the Cold War to Detente (New York: Praeger, 1976)Google Scholar

8. Koves, Andras, “Implicit Subsidies and Some Issues of Economic Relations within CMEA,” Ada Oeconomica 31 (1983), pp. 125–36Google Scholar, and Marer, Paul, “The Political Economy of Soviet Relations with Eastern Europe,” in Terry, Sarah Meiklejohn, ed., Soviet Policy in Eastern Europe (New Haven: Yale University Press, 1984)Google Scholar.

9. On this point it is worth citing at length the Hungarian economist, Nyiri, Karoly, “Changes in the Production Pattern of the Small East European Countries and Cooperation within the CMEA,” in Dobozi, Istvan, Keller, Clare, and Matejka, Harriet, eds., Small Countries and International Structural Adjustment (Geneva: Institut universitaire de hautes tudes internationales, 1982)Google Scholar, who discusses the dependence of Hungarian telephone exchange production on the Soviet market:

“This steady demand for large quantities from the Soviet Union has made it ‘impossible’ for Hungary to stop manufacturing the so-called ‘kolhoz exchanges’ even though the Hungarian factory is already manufacturing electronic exchanges as well. Many Hungarian economists have … strongly criticized the Soviet market which provides too secure an outlet and freezes the product assortment, putting the blame primarily on the buyer. In the author's opinion, this kind of ‘taking it easy’ is never the buyer's fault. To come back to our example: for decades Hungarian telephone exchange manufacturers have complained about not being able to modernize their production, to manufacture goods marketable on alternative markets, because the greater part of their capacity must be used [for the Soviet market]. However, if the price of a traditional product with a secure outlet is good, it can easily carry the overhead expenses, and finance the expansion of capacity and modernization.” (pp. 129–30).

10. Brada, Josef C., King, Arthur E., and Schlagenhauf, Don E., “The Optimality of Socialist Development Strategies: An Empirical Inquiry,” Journal of Economic Dynamics and Control 3 (January 1981), pp. 1–27CrossRefGoogle Scholar, argue, on the basis of optimization experiments with an econometric model of Czechoslovakia, that speeding industrialization, even industrialization that stressed heavy industry, was a desirable policy for promoting growth and that the main limitation on the implementation of such a policy was the volume of raw material imports that could be obtained from the Soviet Union. It is also noteworthy that East European efforts at industrialization in the early postwar period did not differ much in sectoral emphasis from West European strategies such as, for example, the French economic recoery plan.

11. Comisso, Ellen, “State Structures and Political Processes Outside the CMEA: A Comparison,” International Organization 40 (Spring 1986), pp. 401–22Google Scholar.

12. Once communist regimes were installed in Eastern Europe, they demonstrated an enthusiasm for overindustrialization that exceeded that of their Soviet tutors. For example, Romania's conflict with CMEA stemmed from Soviet efforts to restrain the Romanians’ breakneck efforts to expand their steel industry.

13. The view of the CMEA as a customs union was first developed by Holzman, Frankiyn D.,“Soviet Foreign Trade Pricing and the Question of Discrimination,” Review of Economics and Statistics 44 (05 1962), pp. 134–47CrossRefGoogle Scholar and “More on Soviet Bloc Discrimination,” Soviet Studies 17 (07 1965), pp. 44–65Google Scholar. The customs union approach to interpreting the Marrese-Vanous subsidies includes Desai, Padma, “Is the Soviet Union Subsidizing Eastern Europe?” European Economic Review 30 (January 1986), pp. 107–16CrossRefGoogle Scholar; Holzman, Frankiyn D., “The Significance of Soviet Subsidies to Eastern Europe,” Comparative Economic Studies 28 (Spring 1986), pp. 54–65Google Scholar, and “Further Thoughts on the Significance of Soviet Subsidies to Eastern Europe,” Comparative Economic Studies 27 (Fall 1986), pp. 59–64Google Scholar. The approach employed here draws on Brada, Josef C., “Soviet Subsidization of Eastern Europe: The Primacy of Economics Over Politics?” Journal of Comparative Economics 9 (03 1985), pp. 80–92CrossRefGoogle Scholar.

14. Crane, Keith, The Soviet Economic Dilemma of East Europe (Santa Monica: Rand Corporation, 1986)Google Scholar.

15. The application of the theory of clubs to the study of international regimes has a long literature, including Olson, Mancur Jr, The Logic of Collective Action: Political Goods and the Theory of Groups (Cambridge: Harvard University Press, 1965)Google Scholar; Olson, Mancur Jr, and Zeckhauser, Richard, “An Economic Theory of Alliances,” Review of Economics and Statistics 48 (August 1966), pp. 266–79CrossRefGoogle Scholar; Sandier, Todd and Cauley, Jon, “The Design of Supranational Structures: An Economic Perspective,” International Studies Quarterly 21 (June 1977), pp. 251–76CrossRefGoogle Scholar, Keohane, Robert O., “The Demand for International Regimes,” International Organization 36 (Spring 1982), pp. 141–71CrossRefGoogle Scholar.

16. Typical examples of public goods are defense and law enforcement. An example of a club in the sense used here is a group of families pooling resources to build a swimming pool that they can all use but from which outsiders are excluded.

17. The weakness of intra-CMEA financial arrangements makes it difficult to finance surpluses and deficits among members. Given the taut nature of members’ economic plans, and the consequent inability to change trade flows in response to price changes, fixed prices mean that if physical trade plans are met then unanticipated surpluses and deficits will not arise.

18. Ruggie, John Gerard, “International Regimes, Transactions and Change: Embedded Liberalism in the Post War Economic Order,” International Organization 36 (Spring 1982), pp. 195–232CrossRefGoogle Scholar.

19. The decrease in Soviet participation in CMEA is not a unique event in the history of CMEA. Romania in the 1960s was dissatisfied with the pattern of trade imposed on it by its resource endowment and with CMEA prices that undervalued its agricultural and raw material exports and overpriced its machinery imports. Therefore Romania became a “shirker,” and redirected its trade towards the West in order to take advantage of the more favorable terms of trade available on world markets. In this way Romania was able to enjoy the collective benefits provided by CMEA while reducing costs of membership that its leadership may have viewed as excessive. These two examples are also important for demonstrating that although members of CMEA are unlikely to be able to drop their membership in the CMEA club de jure, they can do so de facto. The Soviets no doubt would have acted to prevent Romania from leaving CMEA; they themselves could not have left the organization without grave repercussions. However, by reducing the share of trade directed towards CMEA members, both countries were able to reduce their participation in the operation of CMEA.

20. In comments on a previous draft a referee argued that I “overstate the extent to which the interests of the Soviet… and … East European leadership coincide” and that I “overlook the extent to which the Soviets pressurize the East European leaderships to do things at home, within the block …, and internationally that are perceived to be at odds with national interests.” I would argue that the major element of coercion was the installation of communist regimes after the war. Once these regimes were in power the degree of coercion could be sharply reduced. This is not to say that everything done by East European regimes is in their national interest, narrowly defined. However, like Comisso, Ellen, “Introduction: State Structures, Political Processes, and Collective Choice in CMEA States,” International Organization 40 (Spring 1986), pp. 19–62Google Scholar, I believe that East European interests have to be interpreted more broadly. A failure to do so means that we would have to understand all Soviet-East European relations in a narrow hegemon-client framework that is based largely if not entirely on coercion and bribery. My view is that cooperation among Communist parties ought not be eliminated a priori as a potential source of motivation in Soviet-East European relations.