Marshall Plan

Programme of US economic aid to Europe, set up at the end of World War II, totalling $13.3 billion throughout the life of the programme from 1948 to 1952 (equivalent to more than $88 billion late 1990s dollars). Post-war Europe was in a state of economic collapse and physical ruin and the USA, as the world's richest nation, intended to resurrect the European economy and combat the perceived danger of a communist takeover in Europe. Officially known as the European Recovery Program, it was announced by Secretary of State George C Marshall in a speech at Harvard in June 1947, but it was in fact the work of a State Department group led by Dean Acheson.

Sixteen countries - Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, The Netherlands, Norway, Portugal, Sweden, Turkey, the UK, and West Germany - were recipients of Marshall Plan assistance. The USSR and countries under its influence declined participation; although Poland and Czechoslovakia initially gave positive responses, their participation was vetoed by Moscow. The Economic Cooperation Administration distributed the money, and the Organization for European Economic Cooperation (OEEC; from 1961 the Organization for Economic Cooperation and Development, OECD) disbursed it.

US economic interests The generosity of the USA was not fuelled solely by a desire to resurrect the damaged economies of its wartime allies; the strength of the US economy relied in part on exports to Europe. If Europe could not afford to buy US goods, US industry would suffer. The granting of Marshall Aid to Europe was, therefore, in the interests of the USA. Furthermore, the USA had lent vast sums to Europe during the 20th century, and to recoup these loans the Europeans had to be able to repay their debts.

Cold War politics The Marshall Plan was also part of the emerging Cold War. The USA feared the spread of communism into Western Europe, and believed that the collapse of economies and the subsequent threat of high unemployment and potential social collapse would act as the perfect breeding ground for communist ideology. Communist parties were already strong in Italy and France, two of the largest countries in Western Europe, and were looking to the USSR for support. To counter this threat, the USA introduced Marshall Aid to bolster the economies and governments of Western Europe - with economic recovery the USA hoped to make the attractiveness of communism diminish.

The European Recovery Program embodied the spirit of the Truman Doctrine of 1947, in which US president Harry Truman stated that the USA would ‘support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures’. It can, therefore, be seen as a method of allowing the USA to support capitalism and democracy against the spread of Soviet communism. Initially, the US Congress was unconvinced by the programme's aims, and turned down the president's request for funds. Following the communist takeover of Czechoslovakia in February 1948, the US Congress changed its mind and voted the funds as requested.

Soviet retaliation Soviet leader Joseph Stalin's response to the Marshall Plan was to ban the Soviet satellite states of Eastern Europe from receiving US aid. When the Czech government showed interest in the Marshall Plan, Stalin ordered them to refuse the offer. Stalin feared that US businesses would be able to take over industries in Eastern Europe, threatening Soviet control. Stalin and the Soviet foreign minister Vyacheslav Mikhailovich Molotov were heavily critical of the Marshall Plan, and saw it as a threat to the USSR. To show that the USSR could help its satellite states in the absence of Marshall Aid, Comecon was set up in 1949.

The Marshall Plan marked another stage in the development of the Cold War. In 1945, at the Yalta Conference and Potsdam Conference, the USA and USSR had agreed to the concept of spheres of influence. However, neither side felt that the other had adhered to its promises. The Soviets regarded the Marshall Plan as evidence of US intention to dominate the whole of Europe; the USA saw Soviet insistence that the nations of Eastern Europe refuse US aid as proof of Stalin's dictatorial hand. After 1945 the two former wartime allies moved ever further apart, and the Marshall Plan became an element of this separation.

Aside from the immediate benefits of the Marshall Plan for those involved, there were also important longer-term effects - the plan's architects consciously promoted European integration. The Program stimulated new forms of European cooperation through the OEEC, intra-European trade, and the European Payments Union, forerunner of the European Monetary System. These measures helped foster moves towards integration that led to the creation of the European Community, later called the European Union. The growth of cooperation between European countries, coupled with US engagement, also facilitated the establishment of the North Atlantic Treaty Organization (NATO) in 1949.