Significant in post-war reconstruction was the economic integration of Western Europe, which was promoted by the Marshall Plan and spurred on further by the formation of the International Authority of the Ruhr (IAR) in April 1949, where the Allied Powers set limits to the German coal and steel industries. By 1952, with West Germany firmly aligned with the Western democracies, the IAR was abolished and replaced by the European Coal and Steel Community (ECSC), which integrated the economies of France, West Germany, Italy, Belgium, the Netherlands, and Luxembourg. The ECSC was established on April 18, 1951, with its original intent as a means to prevent further war between France and Germany. By establishing a common market for coal and steel, competition among member nations over these resources would be neutralized. In 1957, the ECSC was succeeded by the European Economic Community (EEC), which later led to the European Union (EU) in 1993.
(Taken from The End of World War II in Europe – Wars of the 20th Century – World War II in Europe: Vol. 6)
Post-war reconstruction and start of the Cold War Europe was devastated after the war, many millions of people lost their lives, and many millions others lost their homes and livelihoods. Industries were destroyed, and farm lands laid waste, leading to massive food shortages, famines, and more fatalities. Whole national economies were bankrupt, expended largely toward supporting the war effort.
The United States, whose economy grew enormously during the war, poured into Europe large amounts of financial and humanitarian support (U.S. $13 billion; U.S. $165 billion in 2017 value) toward the continent’s reconstruction. American assistance was directed mainly toward its war-time Western Allies and formerly occupied nations. U.S. policy toward Germany in the immediate post-war period was one of hostility and indifference, implemented under JCS (Joint Chiefs of Staff) Directive 1067, which stipulated “to take no steps looking toward the economic rehabilitation of Germany”. At this time, Germany was divided into four Allied zones of occupation, and stripped of its heavy industries and scientific and technical intellectual properties, including patents, trademarks, and copyrights.
The Allies also severely restricted access to Germany for international humanitarian agencies (e.g. International Red Cross) sending food, leading to low nutritional levels and hunger among Germans, which caused high mortality and malnutrition rates among children and the elderly. The Allies deliberately limited Germany’s procurement of food to the barest minimum, to a level just enough to prevent civil unrest or revolts, which could compromise the safety of occupation troops. By 1946, the Allies began to gradually ease these restrictions, and many donor agencies opened in Germany to provide food and humanitarian programs.
By 1947, Europe’s economic recovery was moving forward only slowly, despite the massive infusion of American funds. Farm production was only 83% of pre-war levels, industrial output only 88%, and exports just 59%. High levels of unemployment and food shortages caused labor strikes and social unrest. Before the war, Europe’s economy had been linked to German industries through the exchange of raw materials and manufactured goods. In 1947, the United States decided that Germany’s participation in Europe’s economy was necessary, and the Western Allied plan to de-industrialize Germany was ended. In July 1947, the U.S. government scrapped JCS 1067, and replaced it with JCS Directive 1779, which stated that “an orderly and prosperous Europe requires the economic contribution of a stable and productive Germany”. Restrictions on German industry production were eased, and steel output was raised from 25% to 50% of pre-war capacity.
In April 1948, the United States implemented a massive assistance program, the European Recovery Plan, more commonly known as the Marshall Plan (named after U.S. Secretary of State George Marshall), where the U.S. government poured in $5 billion ($51 billion in 2017 value) in 1948 in financial aid toward European member-states of the Organisation for European Economic Co-operation (OEEC). In the Marshall Plan, which lasted until the end of 1951, the United States donated $13 billion ($134 billion in 2017 value) to 18 countries, with the largest amounts given to Britain (26%), France (18%), and West Germany (11%). Other beneficiaries were Austria, Belgium, Luxembourg, Denmark, Greece, Iceland, Ireland, Italy, Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, and Trieste. After the Marshall Plan ended in 1952, another program, the Mutual Security Plan, poured in $7 billion ($63 billion in 2017 value) annual recovery assistance to Europe until 1961. By the early 1950s, Western Europe’s productivity had surpassed pre-war levels, and the region would go on to enjoy prosperity in the next two decades.
Also significant was the economic integration of Western Europe, which was promoted by the Marshall Plan and spurred on further by the formation of the International Authority of the Ruhr (IAR) in April 1949, where the Allied Powers set limits to the German coal and steel industries. By 1952, with West Germany firmly aligned with the Western democracies, the IAR was abolished and replaced by the European Coal and Steel Community (ECSC), which integrated the economies of France, West Germany, Italy, Belgium, the Netherlands, and Luxembourg. In 1957, the ECSC was succeeded by the European Economic Community (EEC), which later led to the European Union (EU) in 1993.
The Marshall Plan had been offered to the Soviet Union, but which Stalin rejected. The Soviet leader also strong-armed Eastern and Central European countries under Soviet occupation not to participate, including Poland and Czechoslovakia, which had shown interest. Stalin was determined to achieve a political stranglehold on the emerging communist governments of Hungary, Poland, Romania, Bulgaria, Czechoslovakia, Yugoslavia, and Albania. Participation of these countries in the Marshall Plan would have allowed American involvement in their economies, which Stalin opposed.
Relations between the Soviet Union and the Western Powers, the United States and Britain, deteriorated during the Yalta Conference (February 1945) when victory in the war became clear, because of disagreement regarding the post-war future of Poland in particular, and Eastern and Central Europe in general. In April 1945, new U.S. President Truman announced that his government would take a firmer stance against the Soviet Union more than his predecessor, President Roosevelt. Following the end of the war, the United States, Britain, and France were wary of the continued Red Army occupation of Eastern and Central Europe, and feared that the Soviets would use them as a staging ground for the conquest of the rest of Europe and the spread of communism. In war-time Allied conferences, Stalin had demanded a sphere of political influence in Eastern and Central Europe to serve as a buffer against another potential invasion from the West. In turn, Stalin saw the presence of U.S. forces in Europe as a plot by the United States to gain control of and impose American political, economic, and social ideologies on the continent. In February 1946, Stalin announced that war was inevitable between the opposing ideologies of capitalism and communism.
George Kennan, an envoy in the U.S. diplomatic office in Moscow, then sent to the U.S. State Department the so-called “Long Telegram”, which warned that the Soviets were unwilling to have “permanent peaceful coexistence” with the West, was bent on expansionism, and was prepared for a “deadly struggle for total destruction of rival powers”. The telegram proposed that the United States should confront the Soviet threat by implementing firm political and economic foreign policies. Kennan’s proposed hard-line stance against the Soviet Union was eventually adopted by the Truman government. In September 1946, in response to the “Long Telegram”, the Soviets accused the United States of “striving for world supremacy”.
In March 1946, civil war broke out in Greece between the local communist and monarchist forces. Also that month, Churchill delivered his “Iron Curtain” speech, where he stated that an “iron curtain” had descended across Eastern Europe, and warned of further Soviet expansionism into Europe. In reply, Stalin accused Churchill of “war mongering”.
American foreign policy in the post-war era finally took shape in March 1947 with the Truman Doctrine, which arose from a speech by President Truman before the U.S. Congress, where he stated that his administration would “support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures”. President Truman gave reference to supporting friendly forces in the on-going Greek Civil War after the British had announced the end of their involvement in the conflict. Truman also requested U.S. Congress support for Greece’s neighbor, Turkey, which was being pressured by Stalin to grant Soviet base and transit rights through the Turkish Straits. Russian troops also continued to occupy northern Iran despite the Soviet government’s war-time promise to leave when the war ended. To the Truman administration, a communist victory in Greece, and the absorption of Turkey and Iran into the Soviet sphere of influence would lead to Soviet expansion into the oil-rich Middle East.
The Truman Doctrine of “containing” Soviet expansionism is generally cited as the trigger for the Cold War, the ideological rivalry between the United States and Soviet Union in particular, and the forces of democracy and communism in general. By the late 1940s, with the apparent threat of imminent war looming, the Western European democracies: Britain, France, Italy, Belgium, Netherlands, Luxembourg, Portugal, Norway, Denmark, and Iceland, and the United States and Canada, formed a military alliance called the North Atlantic Treaty Organization (NATO) in April 1949. Then in May 1955, with the entry of West Germany into NATO and the formation of the West German Armed Forces, the alarmed Soviet Union established a rival military alliance called the Warsaw Pact (officially: Treaty of Friendship, Co-operation, and Mutual Assistance) with its socialist satellite states: East Germany, Poland, Hungary, Czechoslovakia, Romania, Bulgaria, and Albania. The stage thus was set for the ideological and military division of Europe that lasted throughout the Cold War.