Eastern Europe

The state had huge control over every aspect of our lives but most of that control was beneficial – free health, fair rationing, control of worn-out, broken-down industries – and citizens had voted for it through free and fair elections. People were suffering but they were cheerful and optimistic that their fate would improve over time. The citizenry were still bound by the common bonds of sacrifice forged in the heat of war. In adversity there was optimism but it would take to the 1960s for conditions to dramatically improve.

In Europe the Second World War ended in 1945 with the defeat of Nazi Germany and its allies by an alliance of the USA, the USSR, Great Britain and the Free French. The alliance had agreed in 1944 that upon the defeat of Nazi Germany, Germany and the occupied territories would be split and shared by the victors. The split was intended to recognise the likely outcome of the battles to be fought and won by the conquering and liberating armies. As a result the Soviet Union liberated and retained Eastern Europe and occupied East Germany. It had been agreed that Berlin would be split into four Zones, one for each member of the alliance even though Berlin was in East Germany, part of the Soviet occupied territories. Europe was basically split into two, Western Europe and Eastern Europe.

The policies of the two occupying groups were totally different. The Western Allies, particularly the USA, wanted to rebuild and restore sovereign democratic governments and rebuild devastated economies on free enterprise principles.
The USA was prepared to fund and support these activities. The Western Allies wanted a strong, independent Europe. The Soviets on the other hand wanted to control their occupied lands, make the nations subservient to Moscow and use whatever assets they could identify for the greater good of the USSR. The USSR wanted a communist empire.

In a short time the ideologies confronted each other. As Winston Churchill described it ‘an Iron Curtain has descended over Europe.’ Soon the Soviets would blockade Berlin and attempt to force their one-time allies to withdraw to West Germany. It is hard to over-emphasise the bitter mutual distrust between East and West. This was the Cold War 1947-1989. Before long through extensive espionage the Soviets acquired the capability to make nuclear weapons and the rockets to deliver them. The Western Allies had formed NATO and stood ready to fight the Soviets who in turn had formed the Warsaw Pact of Soviet satellites to fight the NATO forces. Relations between the two sides were very bad and came to a head in 1962 when the Soviets tried to install nuclear missiles in Cuba. The world came very close to nuclear annihilation.

After 1945 in Eastern Europe, the Soviets had installed communist political systems mirrored on the Russian model. Each national Communist Party controlled everything in that country and each national Communist Party was controlled by Moscow. There were minor variations in the Communism practiced in each country but overall the system was monolithic. The Communist Party model was a one-party state running a totally planned economy where the state controlled all means of production, distribution, finance, property, assets, ownership, health care, welfare and all politics of any kind. The Party’s policies were policed by a state bureaucracy and a state terror system. It was totalitarian dictatorship. The Party was a strange animal. It had a political ideology that was a mixture of Marxism and Leninism but it wasn’t Marxist ‘dictatorship by the proletariat.’ Rather it was ‘dictatorship over the proletariat.’ The Party was run by a clique, a kind of ‘cosa nostra’ who used a brutal secret police and other organs of government to ensure compliance with their instructions. It has been called not unreasonably a ‘state terror apparatus’. The only people who actually believed in the political ideology were reputedly some people in East Germany. Everyone else knew it for what it was –gangster dictatorship.

The Cuban Missile Crisis of 1962 scared the world. An idea emerged that perhaps East and West ought to try to thaw some of the ice in their relationship if only to avoid another confrontation that might not end peacefully. Much diplomacy was involved particularly by third parties. Eventually the West embarked on a thawing process that became known as ‘détente.’ In the East it was called ‘razryadka’ or ‘relaxation.’ Neither side relaxed their military preparations but they did start talking to each other. The West recognised that there was an alarming gap in living standards between East and West and that the East would need access to western technology to close the gap. The West was not eager to give the East technology that would assist the military and therefore tight controls would remain on western exports. On the other hand, recognising that the East had no hard currency to buy technology, the West made trade credits available for approved purchases. The Helsinki Accords of 1975 were the highpoints of détente. In the meantime the Cold War raged on with much espionage, heated rhetoric, provocations and dirty tricks, everything short of actually shooting at each other. The Soviet Bloc was a very frightening place for anyone from the West.

When I joined Redifon Computers on January 1st 1977 I knew little about Eastern Europe. I had travelled extensively in the USA, Western Europe and the Middle East but apart from a brief trip to talk at a conference in Dubrovnik in Yugoslavia I had not been to Eastern Europe and I felt no loss. I knew a little about communism from my history degree. I certainly didn’t know Redifon had dealings in Poland.

In 1974, a predecessor company to Redifon Computers had granted a manufacturing licence to a Polish organization to manufacture a version of Redifon’s minicomputer products in Warsaw and to sell those products in Eastern Europe. It had taken a long while to do the deal and get the relevant approvals particularly the export licences. Setting up the funding was difficult and time-consuming but the licence was in place and work was starting. No one had any idea as to whether the deal would work, or how long it would last or how much it might be worth. These things were totally unknowable at the time.

At the same time apparently it became known in the Soviet Bloc that the Poles had the license and that they were going to sell Redifon’s products in Eastern Europe for hard currency. This news did not meet with universal approval and very soon Redifon was approached by the Czecho-Slovakian government and asked whether Redifon could supply direct for hard currency. Redifon was in an interesting situation of licensing in one Soviet Bloc country and selling direct in another Soviet Bloc country both by invitation of relevant government bodies. In planned uncompetitive economies we had been chosen as a supplier. To this day no-one really knows why this happened. In Poland, years later we were told that it had been a mistake. The Poles intended to ask someone else but there had been a mix-up. The Czecho-Slovaks said years later they were not paying hard currency for Polish copies. The Hungarians bought direct because they did not want to deal with either the Poles or the Czecho-Slovaks. The Russians felt the same way. So much for planned economies and the united Soviet Bloc! Welcome to Eastern Europe in 1977.

I made my first visit later in 1977. It was not a trip fuelled by any enthusiasm. More it was a trip dominated by damage limitation. In particular it was about terms of trade – making sure we were paid in full in hard currency [GB pounds} FOB London i.e. the plane carrying the goods did not leave until we were paid in full in hard currency, making it clear that we would not entertain thinking about, talking about or even mentioning counter-trade or barter as it is usually called .We only did cash on the nail. We came up with some creative ways of providing a warranty service. Our terms of trade were sustainable and unchanged for 13 years.

I was shocked by what I found in both Poland and Czecho-Slovakia. The general drabness, empty shops, few private cars and obvious poor living standard reminded me of post-war London but whereas the Londoners were cheerful and optimistic, here they were gloomy and pessimistic. Many people wanted to leave and go to the West but emigration was prohibited. They could not leave the Soviet Bloc. It was really a huge prison.

There were few connections with the world outside the Soviet Bloc. There was no uncensored news of any kind. Radio and TV were state-run. There were no foreign newspapers, no foreign media and no independent news sources. Most foreign mail was intercepted and read. There was no freedom of speech or freedom of assembly. There was no job progression without Party membership. The citizen was owned by the state .For foreign visitors, visas were hard to get and there were strict controls on where we could stay and who we could meet. The secret police were nearly everywhere and informers were everywhere else. I remember trying hard to rationalise why anyone would want to visit.

Most things manufactured in Eastern Europe in 1977 were of poor quality mainly because quality control at every level was rudimentary. The only obvious exceptions were vodka, Bohemian crystal glass, Pilsner beer and military equipment. The military/industrial complex was completely separate from the general economy and was strictly off-limits to foreigners. Technology was generally 20 years behind the West. Management was driven by five year plans created by bureaucrats. Management progression and preferment were by political decision. Even technocrats had to be party members if they hoped for promotion. There was no such thing as job appraisal. Job descriptions rarely existed. The concept of work was interesting. Work was a place you went to not what you did there. Punctuality was what happened after you were diverted on your way to work. If you came across a line or queue of people you automatically joined it because something useful was being sold and someone among your colleagues would want it. All common given names had a ‘name day’ which allowed you and your colleagues to party all day. Drinking was a huge past-time.

Being a Party member brought special and often secret benefits – special shops that had goods in them, special restaurants that had food, special hotels, special holiday facilities and sometimes even special travel to the West on business. Because of all these things, work productivity was poor and everything was inefficient. It was hardly surprising that it took years for the Polish manufacturing licence to produce any systems. This wasn’t in any way unusual. The communist approach was completely bankrupt.

From 1977 to 1989 there was a slow, continuous and noticeable erosion of the communist system. It was as if tiny cracks were beginning to appear in the mighty dam wall. This erosion had probably begun with the death of Stalin in 1953 and could be seen initially in cultural influences from the West such as pop music and fashion. The special party shops often had ‘forbidden’ Western goods such as Scotch Whisky. There were times when the communist authorities kicked-back against pressure for change with violence as in Hungary [1956], Czecho-Slovakia [1968] and Poland [1981] but there was a sense of inevitability that changes had to come. The gap in living standards between East and West was too noticeable for even the most die-hard propagandist to deny.

In 1989 the Soviet Bloc imploded with the demolition of the Berlin Wall and in the 1990s the Soviet Union disappeared. Détente had been abandoned by President Reagan in 1980 after the Soviets had invaded Afghanistan in 1979. Reagan decided to use financial muscle power to bring the Soviets to their knees. He set out to destroy the ‘evil empire’ and he succeeded, helped by the fact that it was already collapsing under the weight of its own incompetence and hubris. We continued to work in Eastern Europe until 2000 but we eventually withdrew for a number of reasons. We could not maintain our terms of trade. Many of our people had moved on and rightfully enjoyed great success in their new ventures. The new democratic countries needed investment that we did not wish to provide and we were not willing effectively to start anew.

Our original rationale for staying in Eastern Europe was to take advantage of being the chosen ones. We had been given a huge advantage in closed markets. We had planned our operations carefully and we had avoided the bear-traps awaiting the unwary. We had made good profits and carefully contained all our risks. And we had had a good experience. After we got past the ideology and penetrated the personal presentation levels we made good friends and learned how people cope in adversity. It was often a humbling experience. We also shared their joy when liberation came and we helped them cope with the new challenges. They were interesting times.

Case studies were never written for Eastern European projects because the last thing the authorities wanted was publicity. This section of the Archive therefore relies on material from the ROCC archives and essays by the author. In due course it is hoped that other additional contributions will become available.