This is an AI translated version of this Chinese article
The Marshall Plan is a term I encountered in junior high history class, remembered as the American aid plan to counter the Soviet Union. In recent years, it has been repeatedly mentioned as an international hotspot with the “Belt and Road” initiative.
However, what exactly is the Marshall Plan? How did the Soviet Union react? What were its objectives? What were its effects? What is its relationship with the European Community, NATO, and the OECD? I had no understanding of these questions. Benn Steil, the author of “The Battle of Bretton Woods,” provides a detailed and fascinating account of this topic in his work, “The Marshall Plan.”
Summary of the main content
This book closely follows the ending of “The Battle of Bretton Woods,” discussing the backdrop of post-World War II turmoil in Western Europe and the leftward shift in Eastern Europe. It recounts a series of events, including the introduction of the Truman Doctrine, the proposal of the Marshall Plan, the initiation of European integration, the establishment of West Germany, the formation of NATO, as well as the Prague Coup and the Berlin Blockade. It is a worthwhile read.
The economic background of the Marshall Plan is the severe production capacity shortage in post-war Western European countries, which heavily relied on imports from the United States for essential goods. There was a significant shortage of dollars and gold reserves, leading to a major crisis in people’s livelihoods. Politically, domestic communist parties in countries like France, Italy, and Greece gained power due to public concerns over living conditions, while the Soviet Union established significant influence and military presence in Eastern Europe, leading to severe distrust among Western European countries.
American diplomatic elites believed that if the Western European economy continued to stagnate, the resulting livelihood crisis would give rise to communist regimes in Western Europe, expanding Soviet influence across the continent. This would force the United States to engage in another world war, akin to its experience with Hitler’s occupation of Europe during World War II.
Diplomats like Kennan, Acheson, and Marshall believed that under these circumstances, the Yalta-Potsdam system established during the Roosevelt era was no longer effective. This system essentially catered to America’s isolationist tradition, promoting cooperation with the Soviet Union and delegating international affairs to joint management by the United Nations (effectively a US-Soviet co-management), resulting in the withdrawal of American troops from Europe.
Economically, this system was centered around the International Bank for Reconstruction and Development and the International Monetary Fund, which strictly limited trade deficits for European countries with the US and restricted their access to reconstruction loans, while hoping to fund the rebuilding of Western Europe and the Soviet Union through German war reparations.
American diplomats believed that this approach was an appeasement of the Soviet Union and communism, not in line with American interests. At the same time, immediately engaging in a new European war with the Soviet Union was also not in America’s interest. Therefore, Kennan and others hoped to prevent the establishment of pro-Soviet regimes in Western Europe by providing economic aid to restore production capacity and stabilize the economies of these countries, thereby containing the Soviet Union.
To gain domestic support for this plan, President Truman and House Majority Leader Vandenberg campaigned under the banners of anti-communism and anti-dictatorship, using public fear and sympathy for Western Europe to garner social support. They successfully passed the aid plan, providing $13.2 billion in grants from 1947 to 1952, which accounted for 1.1% of America’s GDP during that period.
Economically, the goal was to enhance the production capacity of Western European countries, encouraging the import of capital goods from the US while not promoting the import of consumer goods beyond essential living supplies. The US set production targets for coal, food, steel, etc., and aid would be suspended if these targets were not met.
From a trade perspective, the US believed that the various European countries acting independently would not achieve economic recovery. Instead, countries needed to operate similarly to US states, leveraging their comparative advantages rather than existing as independent economic entities. To this end, significant reductions in internal trade barriers were necessary, leading to the establishment of a payments union and advancing European economic integration.
Regarding Germany, the US believed that without the recovery of German industrial production, there would be no recovery for the European economy (Germany’s industrial capacity at the time of surrender was even greater than pre-war levels, with most not being damaged). Allowing Germany to restore production to import raw materials from other Western European countries and export industrial products was central to relieving the US of its aid responsibilities toward Europe. Consequently, actions such as continuing German war reparations and dismantling machinery had to cease. With the Soviet Union uncooperative, the US took the lead in establishing West Germany and integrating it into the Western military, political, and economic systems.
At the same time, the Marshall Plan required recipient countries to implement market economy policies domestically to ensure financial stability.
Although the US consistently touted the Marshall Plan as a self-rescue plan proposed by European countries rather than an American-imposed policy, in reality, it was a “dollar diplomacy” plan executed according to American will in exchange for aid.
To implement this plan, the US established the Economic Cooperation Administration (ECA) and set up offices in Paris to oversee the distribution of funds. European countries jointly formed the Organization for European Economic Cooperation (the precursor to the OECD) to self-regulate the use of these funds.
Overall, the Marshall Plan promoted European economic integration. By December 1949, import restrictions among Western European countries were reduced by 50%, and by 1955, they were reduced by 90%. With the establishment of the European Payments Union (EPU), internal trade among EPU countries increased from $10 billion in 1950 to $29 billion in 1959, far exceeding trade growth with North American countries. The European Coal and Steel Community (the precursor to the European Community) was also established during this period.
However, the author believes the effects of the Marshall Plan in promoting economic growth and changing domestic economic policies in European countries were ambiguous. The former is attributed to the fact that European economies were already showing signs of recovery before the Marshall Plan began, while the latter saw countries employing various means to circumvent American intervention, continuing to implement nationalization and welfare policies. The US also maintained the principle of not scrutinizing details as long as countries were anti-communist and anti-Soviet.
Simultaneously, citing the Soviet Union’s influence in Western Europe through democratic elections that brought pro-Soviet forces to power, the US began secretly intervening in elections in Western European countries. Although the original intention of the Marshall Plan was to avoid further military entanglement in European affairs through economic aid, the opposite occurred. On one hand, Western European countries feared the Soviet military presence in Eastern Europe; on the other hand, Britain and France were concerned about the potential threat of a resurgent German economy. Therefore, the US ultimately established NATO with Western Europe, breaking its precedent of not signing collective security treaties in peacetime.
To avoid being blamed for dividing Europe, the initial design of the Marshall Plan included a provision for the Soviet Union and Eastern European countries to join, hoping the Soviets would voluntarily withdraw or even coerce Eastern European countries not to participate.
As the US wished, Stalin and Soviet diplomats scoffed at the Marshall Plan. On one hand, the Soviet Union could not accept the restoration of German industrial capacity and the cessation of German reparations, believing it would again expose the Soviet Union to threats from Central Europe and violate the Yalta-Potsdam system. On the other hand, the Soviet Union viewed economic aid as a precursor to military alliances (as they had anticipated), believing the US would inevitably maintain a long-term military presence in Europe following the Marshall Plan.
In strong response, the Soviet Union withdrew from the Marshall Plan negotiations after several initial discussions and demanded that all Eastern European countries withdraw as well; they strengthened their control over Eastern Europe, established the Communist Information Bureau, supported the Prague Coup, and vehemently opposed the establishment of a West German government, leading to the blockade of the Berlin control zones by Britain, France, and the US, forcing them to rely on airlift for supplies. The Soviet Union also increased its control over communist parties in France and Italy, shifting from expecting them to gain power through democratic elections to demanding violent protests against the Marshall Plan. They established the Warsaw Pact and the Council for Mutual Economic Assistance, initiating a comprehensive confrontation with the West.
My reflections
First, ideology cannot substitute food to sustain lives. Communism, democracy, and freedom ultimately cannot compete with some basic pursuits, namely wealth, prosperity, independence, and security. The Cold War seems to be an ideological struggle, or rather, liberal scholars describe it as such, but in reality, it is a geopolitical struggle, a contest of national power. Only those who can enable their people to live well, be happy, develop their own industrial capacity, and protect themselves can win the competition.
Second, the division of spheres of influence driven by great power chauvinism is unpopular and will inevitably face strong resistance from nationalism in the long run. Those who seek to control other countries as imperialists and demand that other nations act against their fundamental interests will ultimately fail. In other words, defense is often easier to succeed than aggression.
Third, the success of economic diplomacy policies hinges on mutual benefit and win-win outcomes; policies aimed at nurturing the endogenous economic and industrial capacities of other countries can be successful. Those who are upright need not fear criticism; the wise will naturally seek cooperation.
Forth, in the face of high walls, self-isolation cannot bring security; only by opening one’s arms, steadfastly embracing openness, and venturing into broader horizons can one ignite the sparks of hope and open up new territories.
