Although the government promoted the reform as a tool in combating the illegitimate acquisition of wealth, in fact it had the opposite effect. Corrupt officials and those operating in the shadow economy managed to convert their cash into luxury goods, which they resold at a profit after the devaluation. In Moscow’s Tushino District, for example, two store directors (both members of the Communist Party) embarked on a large-scale money-making scheme. Using their own money, they bought up suits, fabrics, hundreds of pairs of shoes, and other items. These goods were stashed away until after the reform, when they were gradually sold at
rynoks
through a network of sellers, as well as through the directors’ stores. The following figures give an idea of how typical such operations were: during the last two weeks of December 1947, approximately 3,000 people working in the retail sector were arrested, of whom 1,100 were store directors and approximately 900 were party members. Such arrests continued at the same rate through January and February.
57
And this was only the tip of the iceberg.
Another common practice spurred by the devaluation was the backdating of savings account deposits made after the terms of the reform were announced. Many large accounts were broken into smaller ones under the three-thousand-ruble limit. The true scale of such malfeasance is unknown, but records show that this subterfuge was practiced in all regions of the country by a significant proportion of officials. According to incomplete data for March 1948, in just twenty-six oblasts,
krais,
and republics, more than two thousand officials, including senior party and law enforcement officials, were prosecuted for violating the currency reform law.
58
Party secretaries and the heads of state security and internal affairs branches were found guilty of such operations. Cases were also uncovered where top regional officials tried to subvert justice. Central Committee records show multiple cases where “certain regional party bodies have dragged out investigations of cases associated with violating the currency law, and in some cases they have even taken under their protection ‘major’ party and government officials, shifting the full burden of guilt on secondary individuals.”
59
Another case file stated that “a significant proportion of senior party and government officials have essentially escaped punishment.”
60
Researchers have yet to find evidence of Stalin’s reaction to this malfeasance. The absence of major shake-ups in the wake of the monetary reforms suggests that he maintained a fairly condescending attitude toward this blatant corruption. This stance was nothing new. Stalin consistently demonstrated tolerance for the moral failings of his faithful underlings. He cared about political loyalty and administrative competence.
While the currency reform cast a spotlight on many of the Stalinist system’s flaws, it also had a positive impact on the country’s economic development. Ambitious reconstruction plans for 1948 were surpassed. Having taken so much money out of people’s pockets, the government could print more without risking inflation, a move that was a great help in making up budgetary shortfalls. The relative financial stability achieved in early 1949 enabled wholesale pricing reform in heavy industry, which in turn created the preconditions for industrial development. Economic indicators for 1948 suggested that the most damaging consequences of the war had been overcome and that the main objectives of postwar recovery had been met. The end of the devastating famine of 1946–1947 was especially important. In 1948 the gross grain yield came close to prewar levels, and the production of potatoes (a staple of the Soviet diet) broke all prewar records. In the words of Donald Filtzer, the Soviet Union had entered a period of “attenuated recovery.” Nevertheless, Stalin-style industrialization was able to meet only the most basic needs of the population.
61
CONSOLIDATING THE SOVIET SPACE
While this economic recovery was under way in the USSR, neighboring countries were still roiled by political instability. In early 1948 the liberal democratic government of Czechoslovakia was overthrown in a coup, making Czechoslovakia the last East European country to join the Communist bloc. Establishing Communist control of these countries was, however, just the first step. They had to adopt the Stalinist model of internal development, pledge to be loyal satellites of the USSR, and unquestioningly submit to Stalin as the supreme leader of the bloc. A number of obstacles stood in the way. Despite repression, the presence of the Red Army, the suppression of educated segments of society, and the expansion of state control of the economy, for some time the newly Communist countries retained a degree of socioeconomic, cultural, and political diversity. Furthermore, the majority of East Europeans opposed the Communists, and power struggles within the Communist parties prevented the emergence of the kinds of dictatorial leaders needed to implement Stalinist socialism. Worse, a number of East European leaders showed signs of unacceptable “liberalism,” preferring a more flexible model of socialism over the Soviet model.
62
One “bad example” for any wavering Communists was Yugoslavia’s Josip Broz Tito. In the spring of 1948 he became embroiled in a conflict with the Soviet Union that quickly escalated. Stalin was confronted with a worthy adversary. Tito was a born dictator who, unlike some other Communist leaders, had not simply been placed in power by Moscow but had earned it fighting the Nazis. His hand was further strengthened by the absence of Soviet troops in Yugoslavia. Tito pretended to political independence and aspired to be a leader of the Communist bloc, and he translated these pretensions into actions. In short, he ignored one of the key principles of Stalinization: total submission to Moscow.
Stalin’s hope that severe public accusations would drive a wedge through the Yugoslav leadership and spark mutiny against Tito was disappointed. Tito made quick work of the Kremlin’s Yugoslav clients and emerged from the showdown stronger. This defeat was a painful blow for Stalin. For the first time since the struggle with Trotsky, he was being opposed by a major leader within the Communist movement. And unlike Trotsky, Tito had real power and forces capable of protecting him from the ice picks of Stalin’s professional killers. Tito’s insubordination was not simply a blow to Stalin’s self-respect, but also a dangerous precedent and a crack in the monolithic Soviet bloc. Others might follow Tito’s lead.
The dangers of Titoism intensified confrontations with the West. The first serious standoff in Germany between the USSR and its former allies also came in 1948. The Soviet blockade of the Western sectors of Berlin was met with determined resistance. The system used to supply the Western zone by air—the Berlin Airlift—not only demonstrated the effectiveness of the Western bloc, but also promoted its consolidation. In April 1949 the agreement that established NATO was signed. The following month Stalin was forced to lift the blockade, and that autumn, Germany was formally divided into two separate states.
These foreign policy setbacks ignited Stalin’s suspicions and insecurity and strengthened his resolve to force Stalinization in the East European Communist bloc. Moscow intensified its interference in the internal affairs of its satellites, and demands for accelerated sovietization became more implacable and impatient. Using his familiar methods of purges and fabricated political charges, Stalin initiated and oversaw a campaign against “enemies” within the leaderships of the socialist countries. In late 1948 he succeeded in getting rid of Poland’s unyielding leader, Wladyslaw Gomulka. In Hungary, advisers from Moscow helped orchestrate a case alleging a far-reaching espionage organization, supposedly led by the country’s former minister for internal affairs, Laszlo Rajk. In September 1949 Rajk was convicted and given the death sentence. In December, after a lengthy process of fabricated charges (again with the help of Soviet security advisers), the former secretary of the Bulgarian central committee, Traicho Kostov, was put to death. Stalin kept a close watch over all these cases and sanctioned both the falsification of evidence and the death sentences. Rajk’s and Kostov’s trials prompted arrests in other Communist countries.
63
These tactics brought about a concentration of power in the hands of dictators entirely dependent on Stalin and ready to implement any policy he liked.
While overseeing the Stalinization of the Communist bloc, the Soviet dictator still found time to consolidate his power at home—or rather to preempt any possibility that it could be undermined. Setting an example for his satellites, Stalin launched yet another wave of domestic purges. The themes and victims depended to some extent on random developments. One such development was the death of Stalin’s close comrade Andrei Zhdanov in August 1948. Zhdanov’s duties as Stalin’s deputy for party affairs and as head of the Central Committee apparat were taken over by Georgy Malenkov, a shift that upset the balance of power within Stalin’s inner circle. Having lost their patron, the Leningrad group, most prominently represented by Gosplan chairman Voznesensky and Central Committee secretary Kuznetsov, found itself weakened, and the group’s rivals, Beria and Malenkov, were now stronger. Such shifts prompted a new bout of behind-the-scenes struggle. The combination of these intrigues, international tensions, and Stalin’s political calculations spawned the Leningrad Affair, the last purge to roil the upper echelons of power in the USSR. Before it was over blood had been spilled.
64
Through the efforts of Malenkov and Beria, who probably did not expect their actions to be as damaging as they proved to be, Stalin received compromising materials against the Leningraders. The infractions these materials exposed were relatively minor. In one instance a decision was made to hold a major trade fair in Leningrad without consulting all of the proper authorities. In another, Voznesensky’s agency, Gosplan, made certain errors in putting together plans and misplaced some documents—common occurrences in the highly bureaucratic Soviet system. There were also several instances when regional leaders, mostly Leningraders, attempted to use Voznesensky and Kuznetsov for patronage, but such attempts too were nothing out of the ordinary. They were all the sort of typical rule-bending that Stalin could simply ignore or use as ammunition. He chose to do the latter.
During a Politburo meeting presided over by Stalin in February 1949, Kuznetsov, Voznesensky, and other functionaries close to them were charged with attempting to turn the Leningrad party organization into their own fiefdom. Particularly ominous was a resolution comparing their actions to those of Zinoviev in the 1920s, “when he attempted to turn the Leningrad organization into a power base for his anti-Leninist faction.”
65
In the months that followed, charges against the beleaguered Leningraders snowballed. They were accused of enemy activity and even espionage. In September 1950, after months of interrogations and torture, Voznesensky, Kuznetsov, and a number of other leaders were sentenced to death in a closed Leningrad courtroom. Several hundred others were given death sentences, imprisoned, or exiled. The purge also affected other regions of the country, where natives of Leningrad held senior posts or had sought support from highly placed Leningraders in Moscow.
The way the Leningrad Affair unfolded suggests that Stalin was using it to pursue multiple goals. It may have been part of his ongoing pattern of intimidation to consolidate power. The accusations of patronage and the large-scale dismantling of networks of officials who made their careers in Leningrad were typical of the preemptive strikes Stalin liked to launch against informal networks within the nomenklatura.
66
He may also have viewed the Leningrad Affair as part of a larger shake-up at the upper echelons. In any event, the fabrication of evidence against the Leningraders at first unfolded in synchrony with Stalin’s attacks against his old comrades Molotov and Mikoyan. These assaults seem all the more likely to be connected as Molotov had maintained close professional ties with Voznesensky and was on friendly terms with him. Furthermore, while the Leningrad Affair was in full swing, Mikoyan’s son was preparing to marry Kuznetsov’s daughter and, rather surprisingly, proceeded with this plan.
Whatever the reasons for Stalin’s displeasure, Molotov and Mikoyan were its most natural targets. They were his oldest and most distinguished comrades, symbols of the collective leadership that might have been, and the presumptive heirs of the aging
vozhd
. The task of bolstering his personal power—Stalin’s prime obsession—required him, he felt, to periodically discredit his most influential associates in order to weaken their influence.
For several years the actions Stalin took against Molotov in late 1945 were known only within the narrow circle of the Politburo. Molotov continued to perform key governmental functions: he chaired a number of Council of Ministers commissions, headed the Ministry of Foreign Affairs, and had a voice on a wide array of questions. This status began to change in 1948. On various pretexts, Stalin used reprimands and limitations on his authority to diminish Molotov’s standing. The main means of pressure was the fabrication of evidence against Molotov’s ethnically Jewish wife, Polina Zhemchuzhina, showing her to be involved with “anti-Soviet” Jewish organizations. Stalin demanded that Molotov divorce her. “Stalin,” Molotov later recalled, “came up to me at the Central Committee: ‘You have to divorce your wife!’ And she said to me, ‘If it’s necessary for the party, then we’ll get divorced.’ In late 1948 we divorced.”
67
On 29 December 1948, “evidence” compiled by state security in the Zhemchuzhina case was brought before the Politburo. She was expelled from the party, a move that meant that arrest was imminent. Molotov abstained from voting, an action that put him in direct conflict with Stalin.
68
On 20 January 1949 Molotov sent the
vozhd
a formulaic expression of remorse: