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) on April 4, 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.
(Taken from Wars of the 20th Century – World War II in Europe – Volume 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.