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Laskavo Prosymo, Mr Marshall!

by Jessica Gienow-Hecht

№ 58/2022 from Jun 02, 2022

Over the past 75 years, the Marshall Plan has been cited as a blueprint for recovery across the Global South, the Middle East, and, most recently, Ukraine. But to what extent can the Marshall Plan serve as an instruction for a successful economic and sociopolitical recovery of Ukraine's war-torn economy? Ahead of the SCRIPTS panel discussion “Another Marshall Plan? Myths and Truths 75 years later”, Jessica Gienow-Hecht takes a look at the original parameters of the plan, the reasons for its visionary power, and the feasibility of its central tenets. The historian concludes that a revitalized Marshall Plan for Ukraine needs five fundamentals: clear objectives, communication, institutions, economic integration and security guarantees.

A poster promotes the Marshall Plan 1953 in West Germany.

A poster promotes the Marshall Plan 1953 in West Germany.
Image Credit: Image Credit: Bundesarchiv Bild 183-20671-014, Recklinghausen 1953, Creative Commons (image edited)

In Luis Garcia Berlanga’s 1953 film comedy, ¡Bienvenido, Mister Marshall!, the inhabitants of a rural Castilian village are excited to welcome a group of U.S. diplomats. [2] The diplomats, so the villagers hope, will help the town qualify for the benefits of the Marshall Plan. To impress the traveling delegation, local leaders disguise their otherwise unspectacular community as a picturesque Andalusian village, complete with white chalked house facades, lavish flower pots, colorful costumes, and a fiery flamenco show. The night before the planned visit, village people have vivid dreams about what the plan could do for them individually, including robust career jumps, trips to New York and the Wild West, cancan dances, and an altogether new and better life. Yet when the U.S. delegation finally appears, its cars merely race across the central square without ever stopping by.

¡Bienvenido, Mr Marshall! echoes the enormous expectations triggered by the Marshall Plan but also, on a sideline, the disappointment of those excluded from it. Over the past 75 years, the plan has been cited as a blueprint for recovery across the Global South, the Middle East, and, most recently, Ukraine. The Ukrainian president Volodymyr Zelensky, the U.S. ambassador to Berlin, Amy Gutmann, and the German minister of finance, Christian Lindner, have all advocated a “new Marshall Plan” for the reconstruction of postwar Ukraine. [3] EC president Ursula von der Leyen’s initiative to rebuild Ukraine, tied to the country’s EU admission, likewise echoes a vision of the Marshall Plan. At the same time, reservations abound, not only among individual states ambivalent about Ukraine’s membership (such as Georgia or Moldova) but, also, parts of the European Commission.

So, is this a good idea? To what extent can the Marshall Plan serve as an instruction for a successful economic and sociopolitical recovery of a war-torn economy? Let’s take a look at the original parameters of the plan and the feasibility of its central tenets.

The Situation in 1947

The post-World War II situation in Europe can be summarized with a simple word: disastrous. Cities and industrial plants lay in shambles, millions of people had died, displaced persons roamed the streets, and two years after the end of the war, the economy was still struggling. The winter of 1946-47 proved to be one of the harshest and coldest ever since weather data had been collected.

That scenario was not entirely new. World War I, too, had wrought utter destruction to the continent, with an ensuing inflation wiping out the savings of the middle classes. One did not need to be a historian to understand the recurrent risk: Hungry people who were cold and lacked both hope, and property, tended to be violent, endanger social and international peace, and convert with flying colors to radical organizations.

Radicalization, many U.S. observers felt, required radical answers for at least two reasons: One was to save Europeans from their economic misery and prevent them from starting another. Equally important, hopeless hungry people needed to be sidetracked from the lure of Soviet communism, a specter increasingly realistic as allied relations tensed.

This is where the Marshall Plan came in: The plan was both generous and pragmatic, both humanitarian and egocentric. Its purpose was to inspire the European economy, bring integration, peace and security to Western Europe while at the same time push the exchange of transatlantic trade and, also, profoundly Americanize European societies. At the commencement of the class of 1947, on the grounds of Harvard University, U.S. Secretary of State George Marshall, told his audience that war-ravaged European economies were unable to help themselves get back on their feet. Help, he said, could only arrive from the U.S. And assist the U.S. had to because without assistance there was never going to be a peaceful, prosperous European (read: global) economy, no political stability, and no peace.

The plan – controversial as it was – passed by Congress in March 1948 and became known as the European Recovery Program (ERP). It stipulated that the U.S. would deliver around $13 billion (about $115 billion today) to, eventually, a total of sixteen countries on the continent, until 1952.

The Marshall Plan undoubtedly has been the most successful political project in transatlantic history. Its success went way beyond the expectations of its original planners. Yes, it provided money, food, fuel, machinery and many others to Western European states when their economies were low. It allowed those countries to ease austerity policies including food rationing and, thereby, contributed to regional morale, satisfaction, hope, and political stability. Communist influence was reduced and communist parties west of the Iron Curtain lost their popularity in the years following 1947. It fostered transatlantic trade relations that would give rise to the North Atlantic economic and military alliance, including NATO. Rejected by East European leaders following Stalin’s instructions, it also solidified the division of the continent.

Historians are hence divided over the actual financial significance of the plan, notably the question whether it did trigger economies otherwise unable to reconstruct. Some, such as historian Werner Abelshauser, have argued that it merely provided the “crucial margin” inspiring reconstruction in a region that was already well on its way up. [4] Critics have held that the plan held more promise for the U.S. corporate economy than anyone else. All this depends, in effect, on where we look. We know today that while France and Great Britain received more aid than West Germany, the latter was able to reconstruct quicker than all other states. But it is also safe to say that the plan did not alter regional development paths; its reconstructive leverage was more successful in regions with developed industrial economies such as France or Northern Italy, rather than in rural areas such as Southern Italy and Ireland.

But the Marshall Plan also did something else, and far more dramatic. Often overlooked, the Marshall Plan was not a mere humanitarian aid program. Subventions were tied to specific conditions such as the implementation or solidification of the principles of a market economy, structural labor reforms, and economic decentralization. That’s precisely why East European states were politically unable to join the plan. To push the message of liberal capitalism, a massive propaganda machine fanned the ERP. Marshall planners devised an astute, educational mass operation complete with posters, broadcasting, teach-ins and more than 280 films, viewed by some 50 million Europeans. [5] They hailed economic reconstructing, left no doubt where the money was coming from, and hammered home the same message, over and over again: IF you follow the instructions on this package, you, too, can be like us: productivity, efficiency, and a continental-scale market. That is the reason why the Marshall Plan developed a visionary power, a brand, that, as we have seen above, continues to inspire political leaders to this day.

Do Lindner, Gutmann and Zelensky get it right?

There is no doubt that Ukraine needs massive help once the war is over. But, does the Marshall Plan qualify for reprojection to Ukraine? Right now, the situation is a far cry from 1947 for at least two reasons. For one thing, the plan was designed for a group of target countries, at least three of which counted among former enemies that the U.S. had just fought, for a total of three and half years. Questions to clarify up front, then, would be: what is the purpose of aid and who, exactly, qualifies as beneficiary? For another, notwithstanding all the internal squabbles, in 1947, there was broad, bipartisan political consensus for both the plan and the vision of liberal internationalism -- a situation very different from today’s uncertainties in Brussels, Washington, and the European capitals. Visions of a liberal script in Europe, as we have documented here many times, are currently highly contested. In the U.S., it may take just one Congressional election (scheduled for 2022) and/or another presidential election (scheduled for 2024) to stop all support for Ukraine dead in its tracks.

But let’s presume these challenges could be solved, what would we need to implement a new Marshall Plan for Ukraine?

First, goals: Next to political unanimity, there is a clear need to identify midterm and long-term goals for and in Ukraine. Donor states would need to define conditions under which loans and aid would be distributed. At the top of any such list would likely be a reform of the entire national economic and financial system. In 2012, accounting conglomerate Ernst & Young named Ukraine as one of the three most corrupt nations among 43 (together with Colombia and Brazil). In 2015, Ukraine earned the title “most corrupt nation in Europe,” from the British newspaper The Guardian. That’s no good reputation for the marketing of major loan and aid programs, to European and U.S. taxpayers.

Second, messages: Like the Marshall planners, donor states need to engage massive educational and cultural diplomacy programs to convince recipients of the advantages of a transparent liberal order. Ukrainian policymakers, administrators, entrepreneurs, and common people, in turn, need to learn how to trust each other when it comes to the transfer of goods and services. Educational programs and perhaps good old-fashioned town hall meetings may serve to provide exactly the sort of transparency needed.

Third, institutions: As Barry Eichgreen pointed out recently in The Guardian, any aid program along the lines of the ERP would require an independent organization working unbureaucratically and in tandem with international organizations such as, for example, the IMF. Such agency would need to be able to quickly review and assess applications and direct (and control) the distribution of funds on the local level to make sure that those do not disappear in private bank accounts. In Greece alone, ERP officials sent hundreds of agents to local administrative offices to make sure that the money channelled to the country would be spent as planned. No easy feat, by the way: Such intense micro-monitoring might conceivably meet with great resistance among politicians and entrepreneurs in a country known for its pride. Here, planners would need to work closely with local leaders to ensure a smooth implementation of aid measures and sociopolitical reforms

Fourth, economics: The Marshall Plan explicitly encouraged industrial renewal and an integrated market economy. Ukraine is one of the poorest countries in Europe. It is neither predominantly industrial nor tied into major trade networks. Here, admission to the EU would be a crucial condition for reform and modernization as might be a plan for the implementation of novel technologies such as renewable energy and eco-friendly production lines. Admission to the EU, however, takes time, perhaps too much so. Here, planners are called upon to be realistic and consider carefully if (think Ireland and Southern Italy), the plan really has a chance in Ukraine – and what would need to be amended to make it viable. Integration can only envision a green, digital, transparent, democratic, pro-European Ukraine.

Last and most importantly, security: The Marshall Plan was based on a geopolitical vision entailing European security leading straight into NATO. While the plan originally sought to extract three million soldiers from the continent, it was clear to all (British and French policymakers included) that it would not do well without solid security guarantees – hence the soldiers stayed on. In other words, a Marshall Plan without security guarantees (as currently envisioned by some) adheres, perhaps, to sweet visions of neutrality but will do not any service to Ukraine’s future, if that future is supposed to be framed by the liberal script.

Defense and the Future of the Atlantic Alliance

On that last note, there can be no doubt that in the past thirty years, the Atlantic alliance has never been more important than today. For all the political division, distancing, and recent indignation, without U.S. American support, the European order would look very different today, likely not more liberal, not more peaceful and not more prosperous. Since the 1990s, we seem to have forgotten that liberalism and democracy cannot be taken for granted. The challenge in the face of rising contestations of the liberal script, is to rediscover the liberal consensus, and to remember that freedom and democracy are values that are neither automatic nor simple. Instead, they need to be constantly checked, discussed, negotiated, and defended, both internally as well as externally. I do not see that consensus right now, neither in Europe nor the U.S. Nor do I see much of an appreciation of transatlanticism for Europe’s security. We may think about Joe Biden what we want but he does belong to that faction of liberal internationalists formed during the Cold War that is shrinking, in both parties and among voters across the nation.

It is, thus, highly conceivable that support for NATO will lose ground in the U.S. in the near future (see my SCRIPTS blog, 9 February 2022). Yet, the war in Ukraine is not a European-only affair, nor is postwar reconstruction. Without the power and the impetus of the U.S., the war will be longer, reconstruction will be harder, and the European continent’s future less secure.

Spain, we know, never received the benefits of the Marshall Plan. [6] And we do not know whether that “crucial margin” would have made much of a difference in a predominantly rural, economically backward country. But one thing is clear: Without the pressure of conditional aid, Spanish leaders saw little incentive for political change, leaving el caudillo and an authoritarian regime in power for another thirty years. Laskavo Prosymo -- Welcome, Mr. Marshall!

[1] I am indebted to Tanja Börzel, David Ellwood and Thomas Kleine-Brockhoff for their candid comments and thoughts.

[2] Full movie in Spanish: https://www.youtube.com/watch?v=saSrofZ9YYE; trailer: https://www.youtube.com/watch?v=pFcaobDW42g.

[3] E.g., “Ukraine Needs a ‘Marshall Plan,’ German Finance Minister Says, Reuters, 22 March 2022 https://www.reuters.com/world/europe/ukraine-needs-marshall-plan-german-finance-minister-2022-03-22/

[4] Werner Abelshauser, Wirtschaft in Westdeutschland 1945–1948. Rekonstruktion und Wachstumsbedingungen in der amerikanischen und britischen Zone, Diss., Universität Bochum, Abteilung für Geschichtswissenschaft; also: DVA, Stuttgart 1975; Michael Hogan, The Marshall Plan: America, Britain and the Reconstruction of Western Europe, 1947-1952 (Cambridge: Cambridge University Press, 1987); Hadley Arkes, Bureaucracy, the Marshall Plan, and the National Interest (Princeton, NJ: Princeton University Press, 2015); Michael Holm, The Marshall Plan: A New Deal for Europe (New York: Routledge, 2016); Günther Bischof, Der Marshallplan: Die Rettun Europas & der Wiederaufbau Österrichs: Das europäische Wiederaufbauprogramm, der ERP-Fonds, die Marshallplan-Jubiläumsstiftung (Wien: Christian Brandstätter Verlag, 2017).

[5] Maria Fritsche, The American Marshall Plan Film Campaign and the Europeans: A Captive Audience? (London: Bloomsbury Academic, 2018).

[6] Spain did, however, receive economic assistance in return for U.S. military bases stationed on the Iberian Peninsula, and, also, joined a series of international organizations (such as the OEEC) incurring economic liberalization and the “Spanish economic miracle,” in the 1960s.

Prof. Dr. Jessica Gienow-Hecht is a Principal Investigator at SCRIPTS and chair of the department of history at the John F. Kennedy Institute for North American Studies at the Freie Universität Berlin.

This is the first part of two blog posts on the Marshall Plan. Prof. Dr. Jessica Gienow-Hecht has been part of the panel at the public discussion “Another Marshall Plan? Myths and Truths 75 years later” on 10 June 2022 at the Humboldt Lab in Berlin in cooperation with the U.S. Embassy Berlin, the John F. Kennedy Institute at Freie Universität Berlin, and the Humboldt Lab of the Humboldt-Universität zu Berlin.