In 1985 Mikhail Gorbachev became Soviet leader. He realised that the USSR could no longer compete with the USA in the arms race, if the Soviet economy was to survive.
Gorbachev wanted to modernise the USSR. He needed to stop so much money being spent on the arms race, so needed to improve relations with the USA.
Living standards in the USSR were falling while in the West they were rising rapidly.
The USSR was struggling to keep fighting Afghanistan, as well as keeping troops in Eastern Europe and supporting communist regimes in countries such as Cuba.
Many Eastern European countries wanted to be free from the USSR.
Gorbachev introduced policies of glasnost and perestroika in an attempt to make communism work in the USSR.
This was an attempt to be more ‘open’ in dealing with the West. Gorbachev encouraged more freedom of speech - he wanted communist politicians to stamp out corruption.
This was an attempt to modernise and ‘rebuild’ the Soviet state. Gorbachev realized that military spending had to be reduced. In February 1989 the USSR withdrew its troops from Afghanistan ending nine years of occupation.
Government reports had also informed Gorbachev that if the economy was to survive, an increase in small, private businesses was needed.