As policymakers and commentators grapple with understanding the direction of Russia’s invasion of Ukraine, they turn to the past for guidance. Are we at the beginning of a more general war –1914 or 1939? Or is the experience of how major wars end a guide? The Marshall Plan of 1948-1951 is all over the news as discussions get under way about the hoped-for recovery of Ukraine. “The war in Ukraine has caused the world, particularly the west, to look to the past for answers…. Marshall Plan history is no longer a niche,” says the Financial Times’s Gillian Tett. EU Commissioner Johannes Hahn, Prime Minister Boris Johnson, magazines like New Statesman, and think tanks like the Center for Economic and Policy Research (CEPR) have all flagged it up.
Yet, we need to remember how the ‘model’ of the Marshall Plan is not a perfect model for postwar planning.
What was the Marshall Plan?
Between 1948 and 1951, American grants, amounting to $12.5bn ($130bn today) were distributed to 16 countries in Europe. These payments were a ‘plan’ with strings attached. It was ambitious, contentious, and a great experiment with the unknown. 1948 was just three years after the total surrender of Germany, which ended World War II in Europe. Defeated Nazi Germany had been divided by the Wartime Allies into four military zones – American, British, French and Soviet, and was now to be offered funding. The Soviet Union and eastern European countries were initially invited to join in, but on tough terms. When the Soviet Union withdrew in July 1947, participation by eastern European states and the Soviet’s German zone (later East Germany) was forbidden by Moscow.
The Marshall Plan narrative was that the US was ‘saving Europe’; then ‘saving Western Europe’ as a bedrock for economic integration and peace. The Americans now needed to bang quarrelsome West European heads together after two world wars to free up trade and international payments. Complex arrangements between donors and spenders were managed by the Organisation for European Economic Cooperation (OEEC) but overseen by the US. To receive funds, all states had to participate in cooperative bargaining and decision-making. Yet there was also another glint in American eyes. A peaceful ‘federated’ Europe would be a more prosperous partner for future US-European trade and financial relations.
After the North Atlantic Treaty Organization’s (NATO) creation in 1949, Cold War European supranational integration essentially became contingent on US military and financial support and backing. The Marshall Plan for West European economic growth, and the Truman Doctrine and NATO to contain communism were later seen by US President Truman as ‘two halves of the same walnut’. The European community’s enlargements to larger states were conventionally preceded by accession to NATO, and the neutral countries were discouraged from joining. 5% of the Marshall Plan’s counterpart funds went to the CIA for political aims. Over time the Marshall Plan became a cold war ‘golden halo’ shorthand for American goodwill. The open season of the cold war was underway.
A workable model for today?
Seventy-five years later, the differences are enormous. In summer 2022, is it possible to talk about an American-led or even multilaterally led postwar reconstruction plan of this sort? The war is not over. Linking funds to possible Ukrainian membership of the EU is now a quite different policy. The NATO question and Ukrainian EU membership is linked, but highly sensitive. This is not about European reconstruction. 2022 presents a new and different challenge.
When we consider Ukraine as the beneficiary of any new Marshall Plan, we must ask what Ukraine has achieved with the vast funding it has received since 1991, and especially from 2014. It appears that nearly $45 billion has already been granted in loans and grants to Ukraine since its independence. Yet Ukraine’s general performance as a recipient has been widely criticised. The original Marshall Plan was largely untainted by accusations of corruption by participating states. In all, it will be a challenge for funders today to see the same transformative effects achieved after World War II.
Globally, a new Marshall Plan may also resonate poorly. Ukraine is not a matter of urgent global political debate, beyond access to food supplies. A new Plan may be seen instead as American/Western neo-imperialism, or an attempt to reinvent the old Europe-first transatlantic relations of the early cold war. Post-imperial issues are now very sensitive globally. Further, accelerating Ukraine’s EU’s application in the context of a new Marshall Plan may also seem to be queue-jumping – and this has happened to Turkey once before, after 1989. Such funding may also become a domestic issue for the American right, for American domestic discontent was a feature of the original Marshall Plan.
Then there is Russia. In 1947, the Soviet Union, a Wartime Ally, but now excluded, saw the Marshall Plan as an American springboard for capitalism to undermine it and its satellite states. Might not a new Marshall Plan that excludes a defeated or disgruntled Russia be interpreted as a message to Moscow in the same way that the Soviet Union was excluded in 1947? A new Marshall Plan that excludes Russia could nudge it closer to China. A ‘second cold war’ with Russia could certainly be brought into closer view.
Or to take another, longer view: the extraordinary irony of the post-World War II years was this. The potential of a defeated but geo-strategically pivotal Germany was publicly and boldly co-opted into a new Western balance of power against the Soviet Union. It may be improbable, and not currently on the cards, but there has been some discussion about the possible consequences of a future Russian government collapse or change of heart following a retreat from Ukraine. A new form of ‘Marshall Plan’ (with a different name of course), which could draw Russia in, and perhaps stall an emerging Russia-China axis is not then unimaginable. Indeed, this attitude to Russia’s potential geo-strategic shift to the West lay behind some of the West-Russia diplomacies of the 1990s. For Russia, like a defeated Germany was in 1945, is also a geo-political pivot state.
Much to play for?
Perhaps the historian should ignore any historical misrepresentations and applaud giving more aid to Ukraine – if it survives and whatever its future borders may be – as signals of generosity, and indeed of an evolving relationship with the EU. Yet, the more we look, the more we can see that the original Marshall Plan model will not do now. It is a misleading catchphrase. The management of reconstruction and recovery aid to Ukraine will require very different terminologies, tools, management, and, above all, different strategies to achieve a win-win solution. Airing these facts around the Marshall Plan myth at least allows us to sharpen our thinking about the region’s future and the subsequent global balance of power.