EUROPEAN UNION WORLD

The Marshall Plan

The mistrust and apprehension between the East and the West reduced contact between the two blocs, which basically was taking place only within the United Nations (UN), and in particular its regional organisation, the Economic Commission for Europe, created in Geneva in 1947, with the aim of fostering contacts among all European countries that would help with the economic reconstruction of the region.

The Cold War increased the gap between the two blocs, and their respective countries tried to find their own wayintheir political, military and economic recovery and development.  Poverty and hardship of a large part of the population tend to instigate social upheavals, and such a situation led to the build-up of the left-wing parties in the post-war period in France, Italy and Greece. Harsh winter conditions (1946–1947) and the following dry summer led to a shortage of food.

The aggregate production in Western Europe was small. Domestic consumption absorbed almost everything that was produced. There was little export surplus that might have covered the growing demand for imports. The leader of the Western world, the US, realised that there should be a consolidation of the social system in Western Europe by means of a recovery programme. Such a programme would inject on a one-off basis a large amount of aid into the West European economies. The expectation was that it would help Western Europe recover and grow as a significant market for American goods, services and interests.

In May 1947, three young economists who were working for the US Department of State, Harold van Cleveland, Ben Moore and Charles Kindleberger, wrote to George Kennan, Director of Policy Planning Staff, calling for a “Coordinated European Recovery Programme”directed toward a strong and economically integrated Europe. Among the “top secret” documents from that time, there was also a “Report of the Special Ad Hoc Committee of the State–War–Navy Coordinating Committee”, in April 1947, which sought a ‘reintegration of these countries into healthy regional and world trading and production systems’ (Machlup, 1979, p. 10). It was in America’s strategic interest to have reliable partners in Europe, rather than unpredictable adversaries.

In June 1947, US Secretary of State George Marshall gave a speech at Harvard University announcing the European Recovery Programme (known as the Marshall Plan). The plan basically revealed American readiness to help the reconstruction of all European countries subject to two conditions:

- US aid was not offered on a bilateral, but rather on a continental basis.

• - European countries had to prepare jointly a reconstruction programme;
• - European countries needed to agree about the amount of the financial-aid package, as well as each country’s share in it.

The message of the plan to the Europeans was that they had to integrate in some way if they wanted to get aid from America. Such a stance by the US was based on the top-secret documents that argued in favour of European integration (Machlup, 1979, pp. 10, 186), as the Americans did not have confidence in some 20 atomised states in Western Europe.

In July 1947, the foreign ministers of France and Britain invited their counterparts from all European countries, with the exception of Spain, to a conference in Paris to discuss the drafting of a joint reconstruction programme.

Poland and Czechoslovakia were the only countries from the East that initially accepted the invitation. However, they both subsequently declined because of the Soviet fear that the Marshall aid programme was an American Trojan horse, which would destabilize the Soviet zone of inffuence.

The Paris conference consequently took place with the participation of 16 West European countries. (4)

These countries established a Committee of European Economic Cooperation (CEEC) which was supposed to prepare the principles of the reconstruction programme and suggest the necessary means to implement it. The programme was prepared and submitted to the US government in September 1947.

In April 1948, the US government approved the European Recovery Programme (the Marshall Plan). During the tenure of the programme (1948–1952), the US spent about $15 billion. The biggest single users of the programme funds were Great Britain (about 23 per cent), France (about 20 per cent) and the western zones of occupied Germany (about 10 per cent).

The Marshall funds had an enormous stimulating effect on the recovery of West European countries from their post-war economic disarray. Marshall aid was not conditional in any way, but in fact the recipients in the US spent almost all the funds because that was the only country able to provide the goods required.(5)

The member countries of the CEEC discussed the possibility of estab-lishing a permanent organisation with the aim of fostering economic cooperation among the member countries. Subsequently, they established the Organisation for European Economic Cooperation (OEEC) in April 1948.

During the negotiations there were, basically, two schools of thought:

• - The British thought that the OEEC ought to be an organisation with minimum authority, just enough to satisfy the American demands.
• - The French argued that the OEEC needed to have a wider authority.

- The British approach prevailed in the final agreement as the balance of the European leadership tipped over to the British side. It should be remembered that Great Britain was still an important partner in the victory over the Nazis and one of the three parties that had divided up the world in Yalta (1945), as well as a large colonial power. There are ancient rivalries between France and Britain, but one may find here the first overt contemporary bone of contention between Britain (and, perhaps, the Scandinavian states), on the one hand, and France and the other continental European states (which would subsequently create the European Community) on the other.