Thursday, November 20, 2014

Marshalling the Facts

Most people in the US and in Europe (and perhaps to a somewhat lesser extent) have favorable views of the Marshall Plan which was implemented after World War II to speed European economic recovery. A little background for those who slept through history class. The Marshall Plan:

The Marshall Plan (officially the European Recovery Program, ERP) was the American initiative to aid Europe, in which the United States gave $17 billion (approximately $160 billion in current dollar value) in economic support to help rebuild European economies after the end of World War II. The plan was in operation for four years beginning in April 1948. The goals of the United States were to rebuild war-devastated regions, remove trade barriers, modernize industry, and make Europe prosperous again. The phrase "equivalent of the Marshall Plan" is often used to describe a proposed large-scale rescue program.

The key words there are “gave,” “helped rebuild,” “prosperous,” and “rescue.” It’s not a surprise that the Marshall Plan enjoys a positive legacy in the West.

However, that perspective is not shared everywhere. Not a new Marshall Plan:

China has declared it is establishing a special fund for the Silk Road Economic Belt and the 21st Century Maritime Silk Road, two initiatives proposed by China to promote regional integration, cooperation and trade. It is making action plans to start cooperation with the relevant countries to translate the blueprints into tangible achievements. Meanwhile, the founding of the Asian Infrastructure Investment Bank is also picking up speed.

However, some in the West have misinterpreted, either willfully or shortsightedly, the two proposals and describe them as being China's equivalent to the Marshall Plan, which was the economic assistance provided by the United States to its allies in Western Europe to help them reconstruct their countries after World War II. This is easily sensationalized.

Yet comparing China's two Silk Road projects to the Marshall Plan only exposes the diehard Cold War mentality that still casts shadows in the West.

In fact, the two Silk Road plans, which will greatly improve the connectivity of the Eurasian continent and the coastal countries of the Pacific and Indian oceans, are completely different from the Marshall Plan.

First, the Silk Road projects and the Marshall Plan embody different purposes. The US was seeking to contain the rise of the Soviet Union. The Marshall Plan was an economic tool that started the Cold War, split the European market, and aggravated poverty and hunger worldwide for more than four decades.

Other than that, how was the play Mrs. Marshall? So the Marshall Plan was responsible for forty-plus of the Cold War, the division of Europe, and global poverty and hunger? An interesting view of the Marshall Plan to say the least.

Again, not one that’s necessarily widely shared. Back to Wikipedia:

The years 1948 to 1952 saw the fastest period of growth in European history. Industrial production increased by 35%. Agricultural production substantially surpassed pre-war levels. The poverty and starvation of the immediate postwar years disappeared, and Western Europe embarked upon an unprecedented two decades of growth that saw standards of living increase dramatically. There is some debate among historians over how much this should be credited to the Marshall Plan. Most reject the idea that it alone miraculously revived Europe, as evidence shows that a general recovery was already underway. Most believe that the Marshall Plan sped this recovery, but did not initiate it. Many argue that the structural adjustments that it forced were of great importance. Economic historians J. Bradford DeLong and Barry Eichengreen call it "history's most successful structural adjustment program." One effect of the plan was that it subtly "Americanized" countries, especially Austria, who embraced United States' assistance, through popular culture, such as Hollywood movies and rock n' roll.

The political effects of the Marshall Plan may have been just as important as the economic ones. Marshall Plan aid allowed the nations of Western Europe to relax austerity measures and rationing, reducing discontent and bringing political stability. The communist influence on Western Europe was greatly reduced, and throughout the region communist parties faded in popularity in the years after the Marshall Plan. The trade relations fostered by the Marshall Plan helped forge the North Atlantic alliance that would persist throughout the Cold War. At the same time, the nonparticipation of the states of Eastern Europe was one of the first clear signs that the continent was now divided.

The Marshall Plan also played an important role in European integration. Both the Americans and many of the European leaders felt that European integration was necessary to secure the peace and prosperity of Europe, and thus used Marshall Plan guidelines to foster integration. In some ways this effort failed, as the OEEC never grew to be more than an agent of economic cooperation. Rather it was the separate European Coal and Steel Community, which notably excluded Britain, that would eventually grow into the European Union. However, the OEEC served as both a testing and training ground for the structures that would later be used by the European Economic Community. The Marshall Plan, linked into the Bretton Woods system, also mandated free trade throughout the region.

China can only hope that its two Silk Road initiatives have half the positive impact that the Marshall Plan did.