The Cold War Part 2

A New Europe & A New Order

Europe Remade

European Recovery Program

Political Consequences

Division of Germany

Creating The New Order

Bretton Woods

The United Nations

NATO

As the United States attempted to contain the spread of Soviet power, they faced the possibility of losing all of Western Europe to communism. This encouraged the U.S. To massively finance the rebuilding and economic recovery of Europe. Likewise, these tensions saw the occupation of Germany coalesce into an eventual division of that country by the two power blocs.

With the economies of Western Europe seemingly unable to recover from the Second World War and Stalin predicting the collapse of their capitalist system, the U.S. government attempted to find a solution.

Ultimately, their proposal to solve the postwar European economic crisis came to be known as the 'Marshal Plan', after wartime army chief of staff and then current secretary of state George C. Marshall.

George C. Marshall

The plan entailed providing the various European nations with a badly needed infusion of capital: it was mostly a lack of funds that had kept the Europeans from being able to rebuild after the war's devastation.

While the plan had not excluded the communist states from receiving recovery funds, the USSR declined this aid package with its allies falling in step.

Distribution of American Aid

After wrangling in congress, the plan was approved, in part because of the argument that European states would use the money to buy American products and resources, while likewise increasing Europe's future purchasing power, further benefiting the American economy.

The plan went into effect in April 1948, and kick-started a period of remarkable growth in Western Europe that would last for over two decades.

Just as the non-communist parties were being marginalized and eliminated in Eastern Europe, in Western Europe the communist parties which had recently been growing in popularity were targeted.

While the indigenous communist parties of Western Europe were willing to work through legitimate channels to achieve power, Stalin insisted they wage a relentless campaign against the Marshall Plan, which he believed was an instrument to secure American hegemony.

As such, the Soviets established the 'Communist Information Bureau' (Cominform), ostensibly help coordinate the actions of the various European communist parties (and functionally to oppose the implementation of the Marshall plan).

Meanwhile, the newly formed Central Intelligence Agency (CIA) of the United States helped finance a variety of anticommunist measures and organizations, assisting in the electoral defeat of the French and Italian communist parties.

So, while the Soviets had eliminated non-communist parties in their satellite empire between 1945-1948 through intimidation and the threat of force, the U.S. and its allies had likewise eliminated the threat of communist electoral success in Western Europe through equally successful covert action and economic incentives.

With the end of the Second World War, Germany had been divided into four occupations zones (American, British, and French in the west, Soviet in the east) while the capital city of Berlin (though located inside the Soviet zone) was itself divided into four occupation zones.

While the allies had originally intended to treat the defeated nation as a single entity, attempts to solve the economic problems of Germany undermined this resolve.

While the allies had agreed that Germany would have to pay reparations to the victims of its aggression (principally the Soviet Union) the Anglo-Americans grew frustrated as they were required to support the destitute population of Germany with food and funds while the Soviets stripped their occupation zone bare of every conceivable resource (thus, the western nations were indirectly financing the Soviet Union's postwar reconstruction).

When the squabbling over the economic future of Germany proved insoluble, the Western powers decided to simply unite their three occupation zones into a single national entity.

Stalin attempted to forestall this, as a rebuilt and American allied West German state would draw away the population of East Germany, while acting as the potential spearhead of an anti-Soviet capitalist coalition.

A manufactured crisis saw the Soviets enforce a total land blockade of Berlin, thus putting pressure on the allies to back down from their unilateral plans to create a new German state from their territories.

However, a massive American airlift sustained the city's 2.5 million inhabitants during the 11 months of the Berlin Blockade, and Stalin eventually called it off when additional negotiations were agreed to.

Ultimately however these proved fruitless, and on May 23rd, 1949 the new German Federal Republic was formed under Chancellor Konrad Adenauer.

The new West German state, with the aid of American funds and under the brilliant direction of its minister of economics Ludwig Erhard, embarked on a recovery so successful it was referred to as the 'Wirtschaftswunder' (economic miracle).

The Soviet zone was then converted into the communist German Democratic Republic, a loyal subject-ally to the USSR.

In this way Germany, much like Europe as a whole, was divided into a democratic capitalist west and an authoritarian communist east, and would remain so until the end of the Cold War.

Having suffered the privations of the Great Depression and the horrors of the Second World War, the Allied Powers were determined to build a better future for humanity. This determination laid the foundations of the major organizations dealing with economics, diplomacy, and defence in the modern era. These decisions, made in the mid to late 1940's, helped to create the world of today.

The depression of the 1930's had devastated world trade, as countries erected protectionist barriers and devalued their currencies in a vain attempt to prevent economic decline.

In order to reinvigorate international trade a new monetary system was negotiated in the summer of 1944 at the Bretton Woods conference.

In essence, the U.S. dollar could be freely exchanged for a set value of gold (initially $35 an ounce), and individual national currencies would be pegged to the U.S. dollar.

As such, the Bretton Woods System reduced the risk of investing and trading abroad, as money converted into a foreign currency wouldn't lose its value due to erratic monetary policies as had been the case in the depression.

Another element of Bretton Woods was the creation of two new financial institutions: the first of these was the International Monetary Fund (IMF), for providing short term loans to countries.

The second was the International Bank for Reconstruction and Development (commonly known as the World Bank) which provided long term loans for economic development.

To address the issue of trade barriers that had been erected during the depression, the General Agreement on Tariffs and Trade (GATT) was established, which sought to foster negotiations to reduce these complicated trading restrictions. Thanks to this, world trade expanded dramatically and continued to do so until the early 1970's.

While the failure of the League of Nations to prevent the Second World War was egregious, Allied leaders were determined to establish some sort of postwar system for collective world security, as exemplified by the Atlantic Charter.

The new organization adopted the name 'United Nations', which had been the official name for the Allied Powers of the Second World War, and would consist of three main institutions:

•Security Council •General Assembly •Secretary-General

The Security Council would deal with matters of peace and security, and would give the 5 permanent members (U.S., Britain, China, USSR, and France) a veto on any decisions made there.

The General Assembly would consist of every member state with equal voting power, and would be limited to debate, discussion, and recommendations.

Finally, a Secretariat would carry out day to day business and implement the policies of the Security Council, and would be headed by the U.N. Secretary-General.

After negotiations beginning in April with Nazi Germany in its death throes, on 26th June 1945 as the war continued to rage in the Pacific, the U.N. Charter was signed by 51 countries in San Francisco and came into effect in October that year.

While hopes were initially high for the new organization, a breakdown of cooperation by the wartime allies led to it becoming hopelessly deadlocked, and with the exception of a few early successes.

One of these notable early successes included the resolution of the Kashmir dispute between India and Pakistan.

Another U.N. success was the partition of the British Mandate of Palestine.

Unfortunately beyond a number of early successes, the UN proved incapable of preventing conflict in the world. Indeed, despite agreement at the UN both the conflicts in Kashmir and the British Mandate of Palestine continued in varying forms.

It would fall once again to regional military alliances to provide defence and security for the world's nations, just the kind of thing the U.N. and its predecessor the League of Nations had hoped to make unnecessary.

The non-communist states of Western Europe feared that the increasingly powerful Soviet bloc might eventually prove a serious threat to their own security.

In March of 1947 the U.K. and France signed a security treaty, and a year later an agreement known as the Brussels Treaty included Belgium, the Netherlands, and Luxembourg in this defence pact.

It was evident however that this alliance was not nearly powerful enough to defend itself in a potential war with the Soviet Union and its satellite allies. As such, secret negotiations began with the United States (to which Canada was also invited) to examine its possible entry into this organization.

While the U.S. congress was controlled by the traditionally isolationist Republican party, support for the new internationalist foreign policy won out.

However, the American preference for a massive and swift postwar demobilization meant that there was a lack of U.S. military forces to actually contribute to this proposed alliance.

This was altered by the Soviet Union's aggressive actions in Eastern Europe, and as a result conscription was re-established, providing the U.S. with the large army it required.

After additional negotiations, on April 4 1949 the U.S., Canada, the Brussels Treaty powers, and 5 other nations (Italy, Norway, Denmark, Iceland, and Portugal) signed the North Atlantic Treaty, pledging them all to mutual defence.

This new military alliance, Known as the North Atlantic Treaty Organization (NATO), signalled an end to American isolationism, as well as their traditional disdain for European affairs.

From this point on the liberal democracies of Western Civilization would stand united against potential aggressors, the most obvious of which was the Soviet Union and its communist bloc.