1989 and the Soviet Collapse

The Soviet Union did not get invaded or defeated in war. It ran out of money and willpower. By the 1980s, oil exports (its main source of hard currency) were earning less as prices fell, while matching American military spending in the arms race drained the budget further. Meanwhile ordinary Soviet citizens stood in line for bread and shoes while watching the system fail to deliver basic goods. Mikhail Gorbachev, who became leader in 1985, tried to fix this with glasnost, open political discussion, and perestroika, restructuring the economy. Instead of saving the system, these reforms let long-buried frustrations surface and loosened Moscow's grip on its satellite states.

Once Gorbachev signaled he would not send tanks to crush dissent, Warsaw Pact governments fell like dominoes through 1989. Poland held partly free elections in June and Solidarity swept them. Hungary opened its border with Austria in the summer. East Germany's government collapsed as the Berlin Wall came down in November. Czechoslovakia's Velvet Revolution and Romania's violent overthrow of Ceausescu followed within weeks. By 1991, nationalist movements inside the Soviet Union itself, from the Baltic states to Ukraine to the Central Asian republics, pushed for independence. A failed hardline coup against Gorbachev in August 1991 destroyed his remaining authority, and by December the USSR formally dissolved into fifteen separate countries.

This collapse removed the last major alternative to the global capitalist economy. Former Soviet republics and Eastern European states abandoned central planning and opened themselves to foreign trade and investment, feeding directly into the accelerated globalization of the 1990s.