Tuesday, July 11, 2006

Behind the Iron Curtain

Movie: Commanding Heights

NARRATOR: Much of the world once modeled itself on the Soviet Union. Here, Lenin's revolution industrialized a backward country within a single generation. The Soviet system, ruthless and centrally planned, gave birth to vast industrial complexes like Norilsk.
DANIEL YERGIN: Norilsk symbolized every stage of Soviet economic history, from the original prison camp and the beginnings of Soviet industrialization right up to the collapse of the economy in the 1990s. So much of its history had been tied up with the fact that it was a prison camp. Even in the early 1950s, 100,000 political prisoners were working in its mines and factories.
NARRATOR: Millions rode the slow train to the prison camps. Vassily Romashkin's crime against the state was to check out the wrong book from the public library.
VASSILY ROMASHKIN, Former Political Prisoner: They sent me over to Norilsk after the trial. The trial lasted about 10 minutes. My wife and I said our good-byes.
NARRATOR: The prisoners' slave labor became a crucial component of the Soviet economy.
VASSILY ROMASHKIN: When they took us to work, they'd say, "Attention, you enemies of the people. A step to the left or to the right, and we will shoot you without warning." A chill went up my spine, and I thought, "You are the enemies of the people."
NARRATOR: Minefields, barbed wire, searchlights, and lookout towers sealed the Soviet bloc off from the outside world. In the 1980s British intelligence recruited a Russian double agent to penetrate this wall of secrecy. But Soviet intelligence, the KGB, became suspicious and put him under house arrest. News reached London that its top spy was in mortal danger. Charles Powell was foreign policy advisor to Prime Minister Margaret Thatcher.
CHARLES POWELL: The news of the intention to spring him came to me in Downing Street. I couldn't tell anyone else because no one else knew about it.
NARRATOR: It was so sensitive that Powell needed the prime minister's personal approval to activate an escape plan.
CHARLES POWELL: Oleg Gordievsky was perhaps the most valuable agent, because he understood the Soviet system from inside.
NARRATOR: In Moscow, the net was closing in on Oleg Gordievsky.
OLEG GORDIEVSKY, KGB Defector: At that time I decided to use my secret longstanding plan of escape. I sent a signal to the British intelligence.
NARRATOR: Gordievsky evaded his KGB watchers and made his way to a forest near the Finnish border.
OLEG GORDIEVSKY: In the morning, I started to move toward the site in the woods, and there I waited. I waited for the arrival of car, driven by two British people who picked me up, put me in the boat, and drove to the border. It was a very small car, a very small boat. On the border, we started to stop. One stop. Second stop. Third stop.
NARRATOR: They were approaching the moment of maximum danger.
OLEG GORDIEVSKY: The KGB and Soviet customs checks of the cars. I heard the voices. I heard even the KGB dogs barking. And to my great luck, it went without any accident. NARRATOR: But one of the British agents, a woman, threw the guard dogs off the scent by feeding them potato chips. Three days later, Gordievsky was in London and the debriefings began.
OLEG GORDIEVSKY: When I was a British agent inside the KGB, the British intelligence service didn't have time to ask me about economy, because they were interested about strategic problems. The arms-control questions were so overwhelming, the West neglected the important foundation of the argument: the economy.
NARRATOR: Gordievsky told his British spymasters that the Soviet Union was under great pressure, devoting more than a third of its entire economy to military spending.
OLEG GORDIEVSKY: And the analyst said no, I can't put such a huge figure down because nobody would believe it. Later, economists realized that the Soviet Union had been spending at least 50 percent on the military.
CHARLES POWELL: Gordievsky's information was shared with President Reagan and the Americans, and he was able to play, behind the scenes, a role of extraordinary influence. NARRATOR: Thanks to Gordievsky's intelligence, Western leaders realized that Soviet military might rested on a crumbling economy.
OLEG GORDIEVSKY: The Communist administration reported that the economy was growing. It was not the case. The economy started to go down all the time, and the deficit was covered only with the help of the oil prices. And the extra money made it possible to claim that they were successful. And they were deceiving the world.
NARRATOR: Soviet satellites circled the world, and nuclear submarines prowled the oceans. But after seven decades of communism, the real story of the Soviet economy was one of empty shelves and a standard of living that was a fraction of Western Europe's.
GRIGORY YAVLINSKY, Economic Reformer: Soviet economy was neither nor. It was not a Stalinist economy anymore, but it was not a market economy, so it was no water, no fire. It was a mess.
NARRATOR: An independent-minded young economist, Grigory Yavlinsky, wrote a report on why workers in state mines were so unproductive.
GRIGORY YAVLINSKY: The people don't want to work. The people have no incentives. The economy inside which the people have no incentives have no future. So you can do two things: Take a gun and put this gun to his head like it was at the Stalin's time, or you have to give him incentives, because he wants to improve the life of his family, and he can't.
NARRATOR: Factory managers at Norilsk could see the economy was not working, because the workers were not working.
VALERY KOVALCHUK, Former Norilsk Factory Manager: You can't work properly under socialism. There is no incentive. And sadly, that's the only thing that gets us going. People come to work and just go through the motions. They doze off, read papers, do the crosswords. The state goes on paying them, the state gets poorer, the people get corrupted, then bankruptcy. And that's what happened -- the collapse of a great empire. ht, and we will shoot you without warning." A chill went up my spine, and I thought, "You are the enemies of the people." NARRATOR: The Soviet system of central planning meant that the Kremlin controlled every aspect of the economy. The aim was to make the Soviet Union strong and self-sufficient. The Soviet Union became an industrial giant, a military superpower, and a threat to the West. GEORGE SHULTZ, U.S. Secretary of State, 1982-1989: Russia looked very formidable. The essence of Soviet power was its ballistic missiles. They could wipe out any country in the world in 30 minutes' time. So that's a lot of power.
MARGARET THATCHER, British Prime Minister, 1979-1990: Communism was gaining the world over, gaining by its main methods, military threat from military might.
CHARLES POWELL, British Foreign Affairs Advisor, 1983-1991: We all thought the Soviet Union was still a vast powerful economy, a huge military power, a threat to world peace, determined to extend its influence around the world.
NARRATOR: Soviet influence was everywhere in Eastern Europe, in Africa, and Latin America. Socialism, planning, state control, government ownership -- these became the gospel. In Asia, the apparent success of communist China seemed to show the way. But the truth about the Soviet economy lay concealed behind the "Iron Curtain."