By the second half of the 1980s, the USSR was on the br i nk of the most ambitious and far-reaching reform programme f or decades. This study concentrates on a policy area which is an integral element of the overall economic reform strategy - foreign economic relations with the developed capitalist countries. Gorbachev's policy of 'opening up' to the West is a continuation of a process which began during the 1960s but was interrupted as the USSR entered a phase of retreat f rom the world economy between 1976 and 1985. The Soviet policy line was not followed by all of its CMEA allies, most notably Hungary where the intention was declared to pursue further integration into the world economy. Concentrating on the USSR and Hungary in particular, this study examines the range of factors, internal as well a s external, which influenced CMEA countries' policies on economic relations with the OECD countries between 1976 and 1985. A number of important issues are covered, including the following. The reasons why the USSR and Hungary preferred different long term strategies. The role of nonleadership groups in each country's policy process. What the most important long term influences on CMEA countries' relations with the world economy are. Factors which affect East European leaderships' abilities to implement radical reform in the domestic economy and in foreign economic relations. The relationship between foreign trade poli cy and domestic economic and political reform. The case studies show how all the above issues a r e interrelated and highlight a range of phenomena applicable to all CMEA countries during a decade in which they faced acute dilemmas over their future development.