Economic Reforms in Hungary and Bulgaria and the Reaction to them in the USSR (Late 1950s — First Half of the 1970s)

This article analyses economic reforms in Hungary and Bulgaria between the late 1950s and early 1970s, as well as the reaction of official Moscow to the changes in these countries. The main sources for this article were documents of the Soviet embassies in the HPR and the PRB, briefing notes of Soviet economists, reports of special services and materials of meetings and negotiations at the highest party and state level. The authors conclude that a significant role in the launch and curtailment of reforms belonged to the political leaders of Hungary and Bulgaria — Ya. Kadar, the first secretary of the Central Committee of the HSWP, and T. Zhivkov, the General Secretary of the Central Committee of the BCP, Chairman of the Council of Ministers of the PRB. Therefore, at the level of decision-making, these reforms differed from similar ones in other countries of the socialist camp. The authors demonstrate that the transition to self-supporting relations in the HPR and PRB did not solve a number of economic problems, but, on the contrary, provoked a departure from socialist principles and the strengthening of market elements. This circumstance led to an increase in the volume of external debt of Hungary and Bulgaria, mainly to capitalist countries, which caused concern on the part of the Soviet leadership. Therefore, the Kremlin, which had previously pursued a policy of detached observation, forced Zhivkov and Kadar to curtail economic reforms. At the same time, Moscow offered individual solutions in each case. In Bulgaria, for example, the economic independence of enterprises ended after the USSR repaid the country’s internal debt, and in Hungary after Brezhnev’s conversation with Kadar. The authors believe that the direct initiator of the curtailment of reforms in the HPR and the PRB was a rather narrow circle of Soviet leaders who realised the futility of introducing market mechanisms into the socialist economy and launched a large-scale revision of the concept of the development of the world system of socialism in the early 1970s.