Irrespective of the larger structure that might encompass central and eastern Europe, in the form of an enlarged Community, or, less probably, a German oriented
The collapse of the Soviet regime left the Czechoslovaks unable to rely, as the Poles could, upon a self-confident leadership to pick up the reins of government, though the country was still far from the total confusion prevailing at the same time in the GDR. Their leaders believed — rightly or wrongly time alone will show — that a split into two more homogeneous parts would help to solve the many problems that freedom brought with it. So Czechia and Slovakia set themselves up as two separate states. In the eighteen months which have elapsed they have not been able to do much more than hold constituent assemblies and draft terms for new elections in each. Industrial production, down to near zero in the autumn of 1985, has picked up somewhat, but the disastrous central European harvest of that same year has left the Czechs and Slovaks no less dependent on food supplies from the Americas and Australasia than the people of other former European clients of Soviet Russia.
The year 1986 was one of unprecedented flourishing for the Hungarian economy. This country, whilst still under Soviet hegemony, had managed to move away from socialism, to reduce the intervention of its bureaucrats in the economy, and to renounce state subsidies in industry and in agriculture. The Hungarian economy developed swiftly, following the laws of competition rather than state planning and regulations. As soon as the war ended, Hungary made rapid progress in improving the wellbeing of its population. The Government introduced the lowest taxes in Europe and abolished all state intervention in economic problems. This caused an economic boom and an unprecedented influx of capital. The temptation to exploit success was too great and in the summer Hungarian forces attempted a rapid movement into Romania, with the classic objective of protecting the Hungarian minority in Transylvania who had been transferred to Romanian sovereignty in 1919. Only partial success was achieved, in spite of Romania's simultaneous trouble on another front.
In the remains of the dismembered Soviet Union itself, the approaching winter of 1985 looked like being a savage one. In many parts order had completely broken down. Marauding bands dominated huge tracts of country searching for food. Ethnic groups, driven by necessity, were banding together for their own survival. Soldiers returning to their homes, often with weapons and sometimes in organized units and formations, if they did not turn to banditry were forming local defence forces. Centres of order slowly began to emerge.
For the Western allies the occupation and administration of all that huge hinterland was quite out of the question. It was essential, however, to establish secure areas both as refuges and as nuclei of civil government. These were set up initially in Petrograd (no time was lost in shedding the hated patronym of the source of so much evil), Moscow, Archangel, Odessa, Smolensk, and in the vicinity of Gorki and Kuybyshev on the Volga. Each secure area was the responsibility of one Allied division, operating with an organization strong in infantry and specialist troops (particularly in engineers, communications, logistics and transportation) but not in heavy weapons. A Control Headquarters at the level of an army group was established in Petrograd, which swiftly became the capital of the North Russian Republic, soon also incorporating Novgorod and adopting in its entirety Novgorod's ancient code of laws. The Control HQ, set up in the first instance by NATO in late September 1985, passed under the control of the United Nations, where it still rests.