Introduction
The Cold War was marked by political and economic opposition between blocs, varying in intensity from one period to the next. It also produced certain forms of international cooperation between the two blocs.Footnote 1 Regarding East–West economic cooperation, the transnational integration of key industries in Eastern European economies was set out during institutional reforms these states undertook in the 1970s and 1980s,Footnote 2 which met the interest of ‘recession-hit European businesses who then tried to gain a foothold in Central and Eastern European trade’.Footnote 3 Several authors agree that East–West economic cooperation underwent significant changes during the 1960s and 1970s,Footnote 4 whether through trade relationsFootnote 5 or loans from Eastern Bloc states to Western Bloc players.Footnote 6 In countries of the Eastern Bloc, during the long 1970s, socialist economic leaders adopted and adapted Western management ideas and practices.Footnote 7 These studies build on the idea of the permeability of the iron curtain by examining and describing these economic connections. This enables us to ask new questions concerning the private organisation of these East–West economic exchanges, that is, outside intergovernmental negotiations, and their role in these dynamics. Despite the existence of concrete economic links, little is known about the private actors who facilitated these exchanges and the evolution of their collaborative practices over time.
The aim of this article is to gain a better understanding of the private forms of international economic cooperation that emerged during the Cold War.Footnote 8 To this end, special attention will be given to elites and to a specific form of cooperation: the transnational elite club. These clubs establish a discussion forum protected from external pressures where discussions take place between selected members. They share several characteristics: they are private organisations, made up of individual members rather than national organisations or structures; and their members are co-opted on the basis of their presumed importance or membership of an elite. Transnational elite clubs – like the Trilateral Commission or the Bilderberg conferences – are often described as a ‘strategic element within globalised capitalism’.Footnote 9 Nevertheless, they have mostly been studied through a transatlantic lens,Footnote 10 and their role in promoting economic liberalism in non-capitalist countries has been less studied.Footnote 11 Furthermore, the transnational business community is often described as predominantly anti-communist.Footnote 12 Many Western economic elites believed that economic cooperation with the Eastern Bloc might strengthen the Soviet Union. In contrast, this article studies an East–West elite club dedicated to promoting East–West economic cooperation: the International Vienna Council (IVC). From 1974 to 1996, the IVC brought together economic actors from the East and West. It presented itself as an ‘East–West businessmen’s club’ officially dedicated to fostering direct personal contact between economic elites from the West and the East. The IVC brought together CEOs from large European and American firms and banks, such as Fiat, Pepsi and Crédit Lyonnais, as well as economic leaders from several Eastern Bloc countries, including the Soviet Union, East Germany, Hungary, Poland and Bulgaria. The aim of the IVC was to bring together leaders of multinational companies and those of the planned economy. This does not imply that Western participants were sympathetic to the socialist project; rather, they saw the establishment of relations with representatives of countries of the Eastern Bloc as an economic opportunity. The analytical value of the IVC lies in its ability to provide a new perspective on economic cooperation by focusing on private negotiations regarding economic openness as well as on the spread of liberal economic principles through discussions among elites.
The article seeks to prompt new analysis of East–West cooperation dynamics. In terms of existing literature, the IVC sheds light on an alternative model of private economic cooperation. Firstly, scholars often associated the activities of private actors with those of a single state. For instance, the Trilateral Commission has been portrayed as an extension of the US government,Footnote 13 while Western private banks that developed projects in some Eastern Bloc countries aligned their activities with the priorities of their respective European governments.Footnote 14 While these analyses are very useful for understanding the different layers of East–West economic cooperation and the various channels used by private groups,Footnote 15 they provide little information on how private cooperation was established and evolved, or on the specific kind of circulation it produced. Through the case of the IVC, this article examines the changing roles of an East–West elite club until the late 1990s. Secondly, the academic literature has emphasised the predominance of technical networks in East–West economic cooperation that were managed by technical experts who were not decision makers.Footnote 16 IVC members, by contrast, defined themselves as ‘decision makers’, distinguishing their approach from expert-driven, technical networks.
The way the IVC operates brings it closer to other transnational elite clubs. Its uniqueness lies in the fact that it brings together elites from distinct, even conflicting, political and economic spaces with the aim of fostering economic cooperation. Its members’ activities highlight the existence of forms of ‘alternative internationalism’.Footnote 17 Not only did its members emphasise the need for East–West cooperation, they also highlighted the similarities in the views of Western and Eastern managers. Inside the IVC, discourse traversed the iron curtain, stressing the necessity of a pan-European perspective.
This article studies one key dynamic: the gradual evolution of private cooperation in the 1980s. It analyses how private economic cooperation developed towards the end of the Cold War. Did the end of ‘détente’ impact the activities of these actors, or were they completely unaffected by international political tensions? Similarly, did the end of the Cold War spell the end for this East–West elite club, or did it represent a period of growth for their activities? Such questions encourage us to clarify the degree of autonomy of these private cooperations and to understand their evolution, moving away from the idea of the stability of their practices. This article identifies three moments of cooperation within the IVC. Between 1974 and 1980, the IVC institutionalised itself and was a club made up of business leaders, academics, governments and international organisation representatives. Its members developed activities in line with the Conference on Security and Cooperation in Europe’s (CSCE) general recommendations. From 1980 to 1989, the IVC became a club for members in economic decision-making positions, focusing on practical economic cooperation. Finally, from 1990 to 1996, there was a drive to Europeanise the former elite pan-European economic space. IVC members attempted to gain access to European Union (EU) institutions and establish more and more links with its political project. These attempts were far from linear or successful, but they partly reveal the changes and tensions that structured the pan-European economic space between the early 1970s and the late 1990s.
To document these practices and their evolution, this article draws on IVC archives that have never been studied before. This archival material comprises forty large moving boxes of documents dating from 1973 to 1995. These were given to me in 2012 alongside other archives that had been removed from storage in Paris, France. The IVC archives include a wide range of documents, from official meeting minutes to personal correspondence. These documents belonged to Jean Deflassieux, vice-chairman of the IVC, and the French Committee of the IVC. In a previous research project, I worked on the archives of the European League for Economic Cooperation (ELEC). These archives were stored in an untidy office overflowing with boxes. Shortly afterwards, the ELEC members suggested that I retrieve the IVC archives, as Deflassieux had passed away a few years earlier. As these archives have not been classified by the organisation, they provide information on not only the actions taken but also the difficulties encountered. They give an insight into the difficulties of cooperation during the Cold War and afterwards. Still, as these archives were compiled by Deflassieux to support his work as vice-chairman, they do not represent the full scope of the IVC’s activities. They still provide us with all the minutes from the IVC Executive Committee meetings. Many documents shed light on the club’s day-to-day operation, enabling us to re-evaluate how business elite cooperation was politically constructed. Despite describing the activity of an East–West group, these archives contained considerably more information on the Western side, and more correspondence between Western leaders.
The article chronologically traces the development of cooperation between the members of the IVC. First, it documents the structuring of the IVC as an alternative diplomatic forum, uniting academics, business leaders and representatives of international organisations from 1973 to 1979. Then, in response to the East–West tensions that emerged in late 1979, the IVC evolved into a more narrowly focused group comprising Western business leaders, academics, representatives from international organisations and the planned economies of the Eastern Bloc. At that point, the group became an instrument for promoting the tools of the liberal economy to Eastern countries. Finally, after November 1989, the Cold War framework progressively lost its relevance. Consequently, the IVC – a club created during the Cold War to serve Cold War objectives – struggled to develop alternative forms of economic cooperation. Its members then attempted to narrow its focus to the European Union, but were unsuccessful.
Defining Private Cooperation as ‘Parallel Diplomacy’ (1974–9)
From the mid-1960s onwards, the easing of Cold War tensions – sometimes referred to as the era of détenteFootnote 18 – allowed multilateral consultations to be revived. One such meeting was the summit between Leonid Brezhnev, the General Secretary of the Communist Party of the Soviet Union, and US President Richard Nixon, which took place in Moscow from 22 to 30 May 1972. This meeting paved the way for the CSCE.Footnote 19 The CSCE has mostly been studied either from an intergovernmental perspective or with a focus on human rights.Footnote 20 Here, I present a complementary perspective on economic matters and private cooperation. The IVC was gradually structured in response to the economic goals of the CSCE. To promote East–West economic cooperation, the IVC members initially aimed to establish a forum for ‘parallel diplomacy’,Footnote 21 that is, a private group intended to make the orientations of intergovernmental organisations more concrete and efficient. In other words, the IVC was not initially designed as an exclusive organisation for economic leaders but rather as a means for them to meet with academics as well as with representatives of government and international organisations.
An Elite Private Club in Line with Intergovernmental Negotiations
To understand the origins of the IVC, it is important to consider it within the context of various international and transnational dynamics. Analysing the IVC alongside other transnational organisations clarifies how East–West cooperation was structured. More specifically, the IVC can be situated at the intersection of three types of transnational cooperation.
The first one, and arguably the most significant, concerns the CSCE, and more specifically the contents of the economic section (‘basket’) of the 1975 Helsinki Final. In November 1974, the International Council for New Initiatives in East–West Cooperation (IVC) held a conference in Vienna to promote the economic activities of the CSCE and encourage private actors to get involved. Referred to as ‘Vienna I’, this conference brought together fourteen individuals representing fourteen CSCE countries,Footnote 22 all of whom described themselves as ‘decisionmakers from business and industry’.Footnote 23 The creation of the IVC and its initial objectives were conceived as a response by private stakeholders to the CSCE’s intergovernmental negotiations, with the aim of encouraging private-sector involvement in the process.
Secondly, the IVC builds on the East–West structures that provided space for practical cooperation during the Cold War. It is linked to the activities of the International Institute for Applied Systems Analysis (IIASA), which was founded in 1972 by the Soviet Union and the United States with the aim at fostering scientific cooperation, building bridges across the Cold War divide and confronting growing global problems on an international scale. Dzhermen Gvishiani, from the GKNT (the central organ for research and technology policy, industry and transfer in the Soviet Union), led the negotiations for the Soviet Union. He was also a founding member and the first president of the IVC. Several IVC members, particularly in Eastern Europe, are also active within the IIASA. Although the IIASA and the IVC are two organisations working on different themes, they both share a desire to promote a new understanding of the world and of its governance that transcends the division of the Cold War.Footnote 24
Finally, the IVC is an elitist club. This type of organisation, which did not feature much in East–West cooperation, but it expanded rapidly in the 1970s.Footnote 25 The Trilateral Commission was established in 1974, the World Economic Forum in 1971 and the Club of Rome in 1968. Several members of the IVC are also members of other clubs, notably the Trilateral Commission, and the Club of Rome was particularly active in bringing the IVC into existence. Among IVC’s founders, only the Club of Rome is clearly referenced, reflecting members’ aspirations to participate in elite transnational networks.
Thus, the IVC’s involvement in East–West cooperation is particularly useful for analysing the evolution of these forms of East–West cooperation as it is located at the intersection of intergovernmental and private cooperation, via the CSCE, as well as between a classical form of East–West technical cooperation, the IIAS, and a less common form: an elite transnational club. Based on these various forms of cooperation, IVC members defined a form of East–West economic cooperation that differed from previous forms in two main ways: it was part of a multilateral framework and it brought together only national elites.
The genesis of the IVC shows both the role of the CSCE and the success of an economic conference that was never intended to be permanent. The 1974 Vienna Conference was initially presented as a one-off event. Five main themes were discussed in 1974: natural resources and energy, economic cooperation, science and technology, transportation and communication, and man and the environment.Footnote 26 These themes were selected in line with the CSCE’s economic proposals. ‘Vienna I’ embraced a broad conception of the economy, extending beyond the mere increase of exchange and investment. The 1974 Vienna Conference was widely regarded as a success, with numerous participants from over twenty countries and information links established among attendees.Footnote 27 This perceived success led to a desire for this East–West forum to meet regularly in the long term. A steering committee was created to address this question. The committee was mostly made up of diplomats or top civil servants, including George Ball (United States Ambassador to the UN), Gvishiani (Soviet Union Deputy Chairman of the State Committee for Science and Technology (GKNT) – and son-in-law of Soviet premier Alexei Kosygin) and Carl Henrik von Platen (Swedish ambassador to the UN).Footnote 28 While this conference is presented as a meeting of private individuals interested in East–West economic cooperation, it is important to note that the members of the Steering Committee are mainly senior civil servants.
The steering committee decided to organise a second conference, ‘Vienna II’, for March 1979, and to hold planning meetings several times per year. The two Vienna conferences had the same participants and managed to establish clear continuity in their deliberations. One of the challenges of Vienna II was also to reach an agreement with the participants on creating a structured organisation to facilitate ongoing discussions within a more regular forum. Several internal documents describing the genesis of the IVC establish a direct link between ‘the Helsinki Final Act’ and the need to create a new organisation, initially named ‘the International Council for New Initiatives in East–West Cooperation’.Footnote 29 The creation of this permanent structure, subsequently referred to as the International Vienna Council (IVC), was legitimised by not only the relationships formed among participants but also the CSCE. Although it was a non-governmental conference, the IVC assigned a pivotal role to the national committees. The statute of the club even stated that each country was entitled to three representatives on the board.Footnote 30
In line with the functioning of the CSCE, the IVC described itself as a ‘multilateral organisation’, in which each country could be represented. Unlike the IIASA where members of the Eastern Bloc countries were selected by the Soviet Union,Footnote 31 participation in the IVC was based on requests from members wishing to establish a national section. The main limitation on membership is the desire of IVC members to have an equal number of national sections in the Eastern and Western blocs. During the meetings, establishing new sections in Eastern Bloc countries was frequently mentioned, in order to accommodate new sections from Western Europe. A key principle of the IVC’s activity is maintaining an East–West balance. The first steering committee demonstrated this equality, with seven representatives from each bloc. This became a core principle: the idea that East–West cooperation could not be achieved without perfect equality of representation. The official creation of the IVC as a club in 1979 enables us to study its individual members more closely. Four main types of member can be identified, each reflecting the influences that led to the IVC’s creation: 1. political representatives or officials, such as ministers, members of parliament or ambassadors; 2. CEOs of private companies, such as Fiat and the United States-based Cargill Incorporated, which operated 140 subsidiaries in thirty-six countries in 1978, and a German multinational steel company; 3. academics and think tanks members such as the Friedrich-Ebert-Stiftung (close to the German SPD) and the Hungarian Federation of Technical and Scientific Societies; 4. representatives of international organisations, primarily CSEC and UNECE members, including its executive secretary, Janez Stanovnik.Footnote 32 During its early years, the IVC acted as a bridge between private business interests and public institutions. It was therefore much more akin to the Trilateral Commission or the Club of Rome, liberal elite clubs comprising academics, members of government, top civil servants and business representatives. The main difference is that the Trilateral Commission and the Bilderberg Group only had members from the Western Bloc.
IVC’s origins illuminate its place in broader international dynamics, especially its alignment with the CSCE and the Helsinki Accords. Rather than promoting their own pan-European economic space, the IVC’s members pursued their activities within the one established by the CSCE.
Promoting Cooperation between Elites
During its formative years, members of the IVC described their club as a forum for ‘parallel diplomacy’. One of the first challenges is to define the nature of this parallel diplomacy and the role of private actors within it. What specific role did the club play in the wider East–West cooperation ecosystem?
Academic literature often emphasised the predominance of expertise networks in East–West cooperation, which are managed by technical experts who are not decision makers.Footnote 33 IVC members, on the other hand, claimed to be ‘decision makers’, and they distanced themselves from expert groups or ‘epistemic communities’Footnote 34 that shared knowledge or methods.Footnote 35 By so doing, they developed a different approach of practicing East–West cooperation. In 1979, the United States representative stated:
I think the secret of the success of 1974 was that we were able to attract top-level decision makers from all the participating countries. I am afraid that the more technical we get the more we are driving top people away from the IVC.Footnote 36
This view was supported by several representatives, including those from the United Kingdom and Bulgaria. The IVC demonstrates the desire to develop a form of East–West cooperation whose legitimacy was based not on expertise but rather on the social and professional status of its members. The IVC’s legitimacy derived from its ability to bring together national decision makers. This choice was not consensual. Several participants were disappointed by these aims, particularly those accustomed to more traditional (that is to say technical) East–West cooperation. For example, at the 1979 meeting, a representative of the International Chamber of Commerce wrote that he was surprised, because he had been ‘expecting a technical discussion’,Footnote 37 which did not materialise. Their assumption that the discussions would be technical demonstrates the approach taken by the IVC members and their desire to adapt the elite club model to the context of the Cold War.
Representatives of international organisations played a key role in emphasising the need for strengthening the complementarity between private actors and governments. In 1977, UNECE Executive Secretary Janez Stanovnik stated: ‘Today what is needed is a very pragmatic approach to the actual promotion of East–West economic cooperation’,Footnote 38 adding:
I believe that what is missing is an effective link between government channels and those who do things, which means business people, scientists and ordinary people involved in East–West co-operation.Footnote 39
The purpose of this parallel diplomacy was to facilitate the realisation of international projects.
This aim was accompanied by a redefinition of the themes addressed by the club, based on a new position with regard to the official work of states and their lobbying activities. The agenda defined by the members shows that the subjects tackled gradually became more specialised according to the members’ ability to contribute. For example, during a 1977 meeting on setting up a permanent organisation, the IVC Secretary General, Ernst Stock, summarised the members’ discussions by saying:
all of us were a little unhappy about the question of transport and communication. (…) It is a question which should be dealt with by governments. We will therefore not go into the matter, since we can only have theoretical discussions without implementing anything.Footnote 40
This did not mean that IVC representatives could not address these issues, but rather that it would be challenging to implement specific actions without state support. Therefore, matters on which business representatives could have no clear, direct impact were therefore removed from the club’s agenda. Consequently, the IVC’s activities then became more focused on direct economic cooperation involving private firms or banks. Members showed a willingness to define the IVC as a forum in which direct economic action was defined and taken, rather than as a lobby group. Initially, the IVC’s aim was not to have a voice or take public stances, but rather to connect elites operating in distinct political and economic spheres, to encourage practical cooperation.
From its foundation to 1980, IVC members pushed for the development of an elitist pan-European economic space for political and economic elites to meet and promote practical economic cooperation, in line with the CSCE’s orientation. In other words, although it is presented as a private club, the IVC was more of a liaison organisation for business leaders, national civil servants and representatives of international organisations involved in East–West economic cooperation. The IVC’s uniqueness lay in its elitist nature and its decision to prioritise practical cooperation led by decision makers over technical cooperation.
Asserting Private and Unofficial Cooperation between Western and Eastern Businesspeople (1979–989)
The IVC’s position as a ‘parallel diplomatic arena’ was undermined by the gradual withdrawal of representatives from international organisations and academia. The evolution could be explained by several factors. The Soviet invasion of Afghanistan in December 1979 led the Carter administration to impose economic sanctions, including a grain exports embargo on the Soviet Union in January 1980, restrictions on high-tech exports (January 1980) and the severing of high-level diplomatic relations with the Soviet Union (1980). The difficulties of economic cooperation within the CSCE must also be taken into account to explain this evolution. Nevertheless, the IVC remained active, and its members took pride in being one of the only East–West clubs to succeed in operating normally during the 1980s. Nevertheless, the rising East–West tensions had consequences for its membership and activities.
Defining a Pan-European Business Community
Unlike many other groups involved in East–West cooperation, the IVC remained active amid the surge in conflict following the Soviet Union’s invasion of Afghanistan. The IVC claimed that it was the only private group to remain continuously active throughout the 1980s.Footnote 41 This self-promotion, though useful for legitimacy, tends to overlook more nuanced aspects of the club’s actual history. Indeed, although the IVC has remained active, the East–West tensions of the early 1980s changed its membership composition. All the academics as well as the representatives of Western governments and international organisations left the IVC. These departures must also be understood as distancing themselves from the activities of the CSCE, particularly by the SG of the UNECE, who deemed the IVC to no longer be a priority. More broadly, the CSCE ‘proved an unwieldy instrument in maintaining the momentum achieved in East–West economic relations before 1975’.Footnote 42 Thus, IVC activities should not be interpreted as strictly following the main milestones of Cold War politics. Rather, the issue is to consider different explanations, such as the existence of tensions limiting the ability to engage in parallel diplomacy, and the distancing from the CSCE’s economic ambitions.
By the beginning of the 1980s, IVC members were describing themselves as ‘businessmen from the West and East’.Footnote 43 This claim emphasised the change in the group’s membership and raised questions about using the term ‘businessmen’ to describe Eastern Bloc members. A brief overview of the IVC Executive Committee in the 1980s reveals two distinct profiles.
Firstly, there were CEOs of multinational firms or banks. This profile was over-represented in the six Western national sections (Austria, France, West Germany, Italy, the United States and the United Kingdom). Between 1982 and 1989, five of the twelve members of the IVC Executive Board were business leaders, all representing national sections in Western Europe and the United States. Umberto Agnelli, the Italian chairman of the IVC from 1988 onwards, was a member of the Fiat Board of Directors. He was also the chairman of Ifil, the Agnelli family’s holding company for industrial assets. Fiat had built a car assembly plant in the Soviet Union as early as 1967, and in 1988 discussions were underway about constructing a second site.Footnote 44 Fiat was the most well established of the Western and Asian carmakers operating in the Soviet Union.Footnote 45 Frenchman Deflassieux was president of Crédit Lyonnais from 1982 to 1986, and was then president of Banque des échanges internationaux (BDEI) from 1987 to 1996. In 1979, Crédit Lyonnais held the second-largest portfolio of non-guaranteed credits in Poland of any French bank.Footnote 46 Another Executive Board member, American Donald Kendall, was CEO of the Pepsi-Cola Company from 1971 to 1986. Under his leadership, Pepsi-Cola became the first American consumer product to be officially approved in the Soviet Union in 1972, and it went on to become the sole supplier of cola-flavoured soft drinks to the Soviet Union.Footnote 47 Until 1986, Otto Wolff von Amerongen, a West German businessman, was chairman of Otto Wolff AG, one of the largest commercial groups in West Germany, which he had inherited from his father. He also held representative positions in the West German employers’ confederation. All these individuals shared two characteristics: they occupied a leading position in a multinational firm and had a direct economic interest in the Eastern Bloc.
Between 1982 and 1989, the second group of IVC members was made up of government representatives including ministers, senior civil servants and central bank governors. This professional profile mainly applied to the representatives of the Eastern national sections. One such representative was the Soviet national Gvishiani, who was the first president of the IVC (and then honorary president from 1988). He was vice-chairman of the State Planning Committee of the Soviet Union, and later president of the Academy of Sciences of the Soviet Union. In 1988 he was succeeded at the IVC by Vladislav L. Malkevitch, who was then president of the Chamber of Commerce and Industry of the Soviet Union, a national public entity that handled relations with foreign companies. The Polish section was also represented by the president of the Chamber of Foreign Trade, Tadeusz Zylkowski. The Hungarian section was represented by Ferenc Bartha. Initially a deputy minister responsible for the secretariat for international economic relations in 1986, he became governor of the Hungarian National Bank in 1988. Finally, the Bulgarian and East German sections were both represented by the Deputy Minister for Foreign Relations: Georgi Pirinski for the former and Klaus Stubenrauch for the latter. Despite their different titles and positions, almost all of these individuals were, or had been, involved in foreign trade. This can be linked to the pivotal role assigned to foreign trade in the construction and modernisation of socialist economies.Footnote 48
Following these changes, the IVC evolved from an economic discussion club bringing together players comprising academics and representatives of international organisations, to a club assembling economic decision makers, that is, individuals with the power to make concrete decisions regarding matters such as opening a plant, creating a joint venture or amending legislation. In this sense, the IVC is a perfect example of Pula’s observation that: ‘Western corporations (…) were the preferred counterparts for East European foreign trade and industrial ministries and enterprises’.Footnote 49 The IVC partly institutionalised this relationship, contributing to the development of a more global and multilateral forum for this cooperation. The ‘businessmen’ label was used because it enabled the club to emphasise its private nature and its autonomy from governments. This was a way of demonstrating its economic focus and the unofficial role of the IVC, even though some members were also government officials.
Promoting Practical Economic and Financial Cooperation
Despite limitations on intergovernmental cooperation and the strengthening of certain economic sanctions, the economies of several Eastern Bloc countries were relatively open to foreign investment in the 1980s. Although industrial agreements between Eastern and Western companies remained rare, they began to increase from the mid-1970s (around 2,000 agreements in 1977), having been rare in the 1960s. It is worth remembering that case studies demonstrate the existence of different realities in the various of the Eastern Bloc countries.Footnote 50 Even within the IVC, some members push for their national agenda,Footnote 51 as economic priorities remained nationally defined. Still, one of the IVC’s interests is to produce a multilateral forum that aims to discuss global issues and to promote economic openness to Eastern Europe. IVC members achieve this by putting emphasis on direct East–West discussion of tangible and practical cooperation.
One example of this is the attention paid to joint ventures. When the Soviet Union began permitting joint ventures with Western companies in January 1987, the decree left several issues unresolved, including how prices would be set, salaries determined and profits repatriated. This complicated the implementation of these joint ventures. In April 1987, the IVC organised a colloquium in Venice to clarify how economic cooperation and joint ventures with the Soviet Union would operate. Speakers included representatives of Western European firms, political leaders mostly from the Soviet Union and representatives of the EEC and COMECON.Footnote 52 The vice-president of the State Bank of the Soviet Union gave a presentation on current joint-venture projects and how they operated. The CMEA general secretary gave a speech showing his full support for the development of joint ventures:
Broad prospects for the all-European co-operation are opened by joint enterprise with setting up joint ventures. I must say that in our opinion differences in the nature of our economic systems cannot be an obstacle on this path. (…) Enterprises and associations in the CMEA member countries have been vested with extensive rights to establish cooperation relations with their partners abroad (including the capitalist countries) and to set up ventures and firms jointly with them.Footnote 53
At the time of the colloquium, in April 1987, it is difficult to provide an accurate overview of joint ventures between Comecon member countries and Western firms. While some authors estimate that the Comecon countries hosted 171 joint ventures in 1987,Footnote 54 others suggest a figure closer to 290.Footnote 55 By the late 1980s, joint ventures were authorised and regulated in six Eastern Bloc countries.Footnote 56 Despite these limited numbers, there are many projects underway. Around sixty joint ventures were under consideration between French companies and Soviet organisations. This modest figure confirms the prospective nature of the IVC’s activity. The potential short-term profits for the companies involved remained limited. The main objective was to demonstrate economic openness in practice.
Another example is the desire to strengthen the financialisation of several Eastern Bloc countries’ economies. In 1984, a ‘Finance Seminar’ was organised in Paris. The group’s activities continued thereafter in order to build shared practices between East and West bankers.Footnote 57 Plus, one of the IVC’s working groups was entitled Economic Cooperation, Subgroup A: Financing East–West Trade and Cooperation. At the IVC’s 1983 Vienna conference, which was entitled New Horizons in East–West Trade Cooperation, this working group produced one main recommendation:
Increased appeal to the international financial markets. It seems that an increased appeal to the international financial markets is possible and desirable. (…) The diversification of sources of credit and of new financial instruments make it possible today to obtain highly competitive rates on the international markets.Footnote 58
This recommendation was addressed directly to the governments of Eastern Bloc countries. It encouraged them to finance their development through credit and strongly criticised the old ways of financing, such as ‘barter, counter-trade, compensation’ as mentioned in the report.Footnote 59 Furthermore, this recommendation was made by a group comprised of Western bankers, including Sir Michael Wilford, Director, Lloyds Merchant Bank; Pr. Stephan Koren, President, Austrian National Bank; and Jean Deflassieux, President of Crédit Lyonnais in France.Footnote 60 While competition between Western lenders to provide loans to several Eastern Bloc countries, notably Poland,Footnote 61 is well documented, it is also important to consider their joint efforts to further strengthen East–West financial cooperation. There were few members on the Eastern side. Janos Fekete, first vice-president of the Hungarian national bank, seems to have been the most active.
Thus, the members of the IVC were involved in spreading liberal economic ideas. However, this activity was not aimed at producing a vision of a new hybrid economy, or an amended version of economic liberalism that was better suited to the constraints of a state-run economy, as economists did, according to a study.Footnote 62 The IVC illustrates a gradual spread of liberal economic references and an increase in the East’s economic dependence. At several meetings, particularly at the 1987 Venice meeting, the Eastern Bloc was referred to as the ‘new frontier’, signalling the importance of these markets for the development of Western European and US companies.Footnote 63 The use of the term ‘frontier’ shows the asymmetrical relationship between the different club’s members. However, it is important not to oversimplify by asserting too quickly that the export of Western capitalist models to the socialist countries was successful. Each member country had a specific agenda and used the IVC to pursue its own goals.Footnote 64
Between the early 1980s and 1990, IVC members sought to build a transnational business community rooted in shared values and personal relationships. This was done to take advantage of the relative opening up of the economic markets of the Eastern Bloc countries. During this period, the IVC operated independently of intergovernmental organisations, defining an autonomous elitist, pan-European economic space. Yet, this business space was highly unequal: the main concern was facilitating Western entry into newly accessible Eastern Bloc markets.
Transforming an Elitist East–West Club into a European One (1989–96)
Since 1974, the IVC has gradually evolved into a group whose purpose is to connect economic elites from different blocs. Following the fall of the Berlin Wall in November 1989 and the subsequent dissolution of the Eastern Bloc, the usefulness of the IVC as an intermediary was called into question. However, the club remained active until 1996. Recognising this continuity allows us to better understand the uneven evolution of a pan-European business elite network.
The Difficult Transition from an Elite East–West Club to an Elite Club
The members of the IVC structured their activities around the Cold War. They structured the club’s operations around East–West divisions. The IVC guaranteed perfect equality between members of the blocs: the Executive Committee comprised six members from each side, and every symposium reflected this by having an equal number of chairs and panel members from each bloc. In this case, cooperation was achieved by acknowledging the divisions of the Cold War rather than denying them. In other words, the IVC was not a club that sought to transcend the Cold War; rather, it was a gathering of individuals who were trying to make the most of the situation. In this sense, the fall of the Berlin Wall in November 1989 marked a defining moment for the club in terms of its operations and objectives. However, the IVC’s members initially tried to act as if nothing had happened. On 27 November 1989, a meeting of the IVC Executive Committee took place in Paris. The ten-page minutes barely addressed the political context. The only mention of the fall of the Berlin Wall was the following clarification by President Agnelli:
Mr. Agnelli pointed out that in view of the rapid developments currently underway in Eastern Europe, the Executive Committee might want to identify furthers areas of cooperation. Particular satisfaction was expressed that despite changing developments, the membership of the International Vienna Council has not changed, and some members have been assigned even greater responsibilities.Footnote 65
The satisfaction expressed about the stability of representation by former Eastern Bloc countries confirms that the IVC was structured as a club that developed within the Cold War, rather than in opposition to it. The aim was not to challenge the Cold War divisions but rather to make the most of them. Given the importance of interpersonal links in the operation of the IVC, the most important task in late 1989 was to ensure their continuity.
Nevertheless, the group’s operations were made more difficult by the gradual dissolution of the Eastern Bloc. As Agnelli stated in December 1990, ‘in some of the Central and Eastern countries, we have yet to identify the right counterparts from business and economics’.Footnote 66 These changes also affected Western European countries and the United States.Footnote 67 It may seem surprising that it was difficult to recruit new Western members, given the potential benefits of leveraging contacts with the former Eastern Bloc. Despite numerous changes, some key figures remained, including Ferenc Bartha, the Hungarian representative. When he joined the IVC, he was a deputy head of a department within the Ministry of Foreign Trade. In 1980, he was appointed head of the Secretariat for International Economic Relations of the Council of Ministers. In 1987, he became Secretary of State at the Ministry of Trade. From 1988 to 1990, he worked as governor of the Hungarian National Bank. Throughout this period, he remained an active member of the IVC, even after the regime change in Hungary. In 1990, he became Chief Executive of Indosuez Financial Services, and subsequently worked as president of Banque Indosuez Hungary until mid-1993. In 1993, Bartha was appointed Chairman of the Board of the National Property Agency (ÁVÜ), also becoming Government Commissioner of Privatization. The fact that a key member of the IVC went on to become responsible for the privatisation of Hungary’s economy shows that the IVC could have continued to function as a platform for promoting economic investment in Central and Eastern Europe.
The IVC’s problems did not automatically result from the breakup of the Eastern Bloc; rather, they were a consequence of disagreement among its members about the club’s new goals and new type of transnational cooperation. A key factor was the departure of the US members and the dissolution of their national section. The minutes of the Executive Committee meeting held in Brussels in April 1991 state: ‘It was reported that the US Committee had been dissolved’.Footnote 68 Although several other members were also questioning the usefulness of the IVC, none went as far to disband their national section. Prior to the dissolution, US representative Don Kendall (one of IVC’s founding members) attended his final Executive Committee meeting in March 1990. At that meeting, he was still president of the US section and vice-president of the IVC, and he expressed certain concerns about the operation of the IVC:
The Vienna Council has reached the point where it is no longer needed as it is currently structured, due to the opening up of communications between East and West.Footnote 69
This sheds light on the differing opinions regarding what the IVC should become. According to Kendall, the end of the Cold War rendered alternative channels of communication unnecessary. Since contacts could be made directly, and US companies could benefit from more direct support from their governments, the IVC no longer seemed necessary. Even during the Cold War, Don Kendall made it clear that he believed the IVC should remain a business platform and avoid deeper cooperation. For instance, in the 1980s, he repeatedly wrote to his Western counterparts to condemn Soviet attempts to take control of the IVC. US representatives played a smaller role in establishing a transnational and pan-East–West economic elite. They were preoccupied with their own business interests and never lost sight of the Cold War and its balance of power. The other members were not as keen to re-enact Cold War antagonisms. For many Western Europeans, the IVC served as a vehicle for fostering contacts to move beyond Cold War constraints, and the post-1989 period opened possibilities to support European reunification. This did not mean end of the IVC. In other words, the departure of the US delegation also sheds light on the different ways in which various national actors used the IVC and illustrates how the US representatives became isolated when the club continued its activities despite their wishes.
Another reason for the departure of the US members were their connections to their government. In a letter to Umberto Agnelli, Don Kendall wrote:
The US no longer needed to go through a European group to achieve its contacts (with elite of countries of the former Eastern Bloc).Footnote 70
The end of the Cold War made it easier to establish direct links, by-passing the need for a third-party organisation. These comments also shed light on the nature of the IVC, which the United States perceived as a European group even though it defined itself as a club based in New York, Vienna and Moscow. The United States’ departure reinforced the IVC’s European dimension. The IVC president said: ‘The absence of the American Committee would not diminish the work of the Council as the main task was within Europe’.Footnote 71 In other words, while the IVC was already seen as a European group, it became one in reality following the United States’ departure, particularly since the remaining members, who were all European, made the promotion of a greater Europe their new joint project. The IVC was therefore becoming an increasingly European club operating within a pan-European economic space. This is all the more interesting when you consider that the US delegation was one of the largest at the time of the IVC’s foundation. The United States’ departure was not simply a membership adjustment. This shift fundamentally redefined the club’s geographical scope and reinforced its European character.
Getting Closer to the European Union
The IVC’s reflections on its role in relation to the breakup of the Eastern Bloc also included a discussion of its actions. Agnelli proposed two main changes of the IVC’s activities, marking a clear departure from its recent past.
Firstly, he suggested that the IVC should become an advisory group for governments and adopt lobbying activities. Although the IVC had distanced itself from governments in terms of direct relations while developing its activities, the end of the Cold War opened the door to new perspectives. In March 1990, Agnelli described this new role:
to offer government institutions an opportunity to benefit from our experience, an experience that for most of us is deeply rooted in the past and that constitutes a priceless, irreplaceable aid to the examination and the launching of any other new initiative.Footnote 72
This was a landmark development for a group whose members had consistently defined their actions as geared not towards influencing or advising since 1974; but rather towards achieving concrete economic cooperation. The emphasis on lobbying – understood as seeking direct support from political representatives for ideas or projects – was common among interest groups in the 1990s. When it emerged as a new form of action in the mid-1990s, this was not a new invention. Rather, the reaffirmation of lobbying should be seen as an affirmation of an advisory role for public institutions linked to the rise of expertise and the connection between the private sector and public action.Footnote 73 A similar identity dynamic can be found at the European level, where in the mid-1980s, the employers’ representative organisation UNICE decided to redefine and strengthen its lobbying activities.Footnote 74 Thus, the increased use of the term ‘lobbying’ within the IVC is due as much to a change in its own practices as to a more general development that established lobbying as an important modern action tool. However, this new agenda was rejected by some members of the Executive Committee, who wanted the IVC to continue focusing on an elite inner circle. This view was expressed in a letter by Deflassieux, former vice-president of the IVC and the chairman of the French section.Footnote 75
In a second reorientation of the IVC, Agnelli recommended closer links between its activities and those of the EU and its institutions. IVC members saw the development of EU activities in Central Europe as making the EU an obvious partner. Affirming the European dimension was not only a response to the dissolution of the American committee but also a way for IVC members to seek financial support from the EU, to develop missions in Central European countries and to get their role recognised. It was a means of establishing a presence in the competitive arena of groups promoting economic cooperation. For example, the IVC applied for European funds to help create a training institute for Central European managers, called the Management Institute for Training in Europe (MITIE),Footnote 76 but was unsuccessful.Footnote 77 More generally, between 1990 and 1992, there were many discussions about the IVC’s new role, but no consensus was reached on a new, more policy-focused orientation.
The new direction of the IVC’s activities was reflected in the choice of Agnelli’s successor. Agnelli had been expressing his intention to step down since 1991. Carlos Ferrer was appointed president in November 1993. As the president of UNICE, the European Union’s employers’ confederation, Carlos Ferrer embodied the dual nature of business and the EU. He encouraged the IVC to shift its focus away from East–West cooperation to the EU. At the Executive Council meeting in March 1995, he raised three main issues that would be at the heart of the IVC’s activities in the following years: the relationship between the EU and Central and Eastern Europe; the kind of Europe desired; and European policies, particularly the Common Agricultural policy and the Structural Funds.Footnote 78 However, the IVC failed to differentiate itself from other European employers’ groups that had a longer presence in Brussels, and more structured links with EC institutions.Footnote 79 From 1990 to 1995, questions were raised about how the club would survive, but no answer was found. In 1996, the IVC ceased all activities.
Conclusion
This article examined various forms of private cooperation that emerged during the Cold War, as illustrated by the IVC, and their contribution to the establishment of an elitist, pan-European economic space. Here I will emphasise two elements that shed light on the emergence and development of a form of East–West cooperation between businesspeople.
Firstly, the article analysed how forms of private cooperation evolved during the Cold War and up to 1996. It highlighted the progressive autonomisation of business cooperation and identified the multiple layers of East–West cooperation. Three phases of cooperation can be identified. The first was the promotion of parallel diplomacy in conjunction with international organisations and governments. In that case, private cooperation was a continuation of the CSCE, an intergovernmental initiative. While this approach was successful, it was unable to overcome the escalating political tensions between East and West in the 1980s. The second phase saw the IVC transform into a club where CEOs from Western firms met with top Eastern civil servants in charge of the economy. During this period, the focus was on economic cooperation spreading liberal economic ideas and practices. Finally, the dissolution of the Eastern Bloc called into question the very existence of the IVC, given that it had emerged from the East–West divide. Its members attempted to reinvent the club and redefine its objectives, but without success.
Secondly, it is important to consider the conditions under which East–West circulation could exist. In the case of the IVC, East–West cooperation was achieved by replicating the logic of the Cold War. This was not achieved by denying divisions, but rather by acknowledging them and making them a key part of how the club operated (for example the IVC ensured that there was an equal number of members from each bloc). Although elite clubs are often described as adaptable forums with few restrictions, the IVC’s role in the Cold War was subject to constraints written into its statutes. This cooperation was therefore based on fluctuating labels, the term ‘businessman’ being the most obvious example, demonstrating the difficulty of labelling cooperation that was both private and public, and both official and unofficial. Although the IVC was founded as a club dedicated to practical cooperation, it failed to develop into a lobbying group.
These elements help us to understand both the role of private economic elites in the formation of a pan-European economic space during the Cold War and its (dis)continuity with the one of the European Union.
Acknowledgements
The author would like to thank Sandrine Kott, Angela Romano, Thomas David and Pierre Eichenberger for organising the conference Pan-European Economic Spaces in the Cold War, as well as for their precious comments on this article. The author would also like to thank Thomas Raineau for his help and the three anonymous reviewers for their valuable comments on this article. This article has been supported by the European centre for humanities and social sciences (MESHS-Lille, France).
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