Hoteles y Servicios Almendral Cía Ltda Notas a los estados financieros
17. IMPUESTO A LA RENTA CORRIENTE
Unit 2 MOLOTOV PLAN Unit 3 CONTAINMENT Unit 4 DETERRENCE Unit 5 DETENTE
UNIT 1 MARSHALL PLAN
CONTENTS
1.0 Introduction 2.0 Objectives 3.0 Main Body 3.1 Marshall Plan
3.2 The Goals of Marshall Plan 4.0 Conclusion
5.0 Summary
6.0 Tutor Marked Assignment 7.0 Reference/Further Readings
1.0 INTRODUCTION
The Marshall Plan was a massive pawn in a Cold War chess game played out in the character of ideology and geopolitics, pitching the Soviet Union Marxist – Leninist ideals against the free market capitalist ideology of the United States. This unit exposes the students to the various frameworks to explain why the United States should prevent the perceived Communist aggression of the Soviet Union through a containment strategy based primarily on economic policies. The Marshall Plan, otherwise known as European Recovery Programme, was the most important aspect of the strategy of containment that Kennan had outlined. The students will understand the frameworks of United States policy of containment and evaluate the plan through these three frameworks. The unit intends to discuss the goals and strategies to enhance our better understanding.
1.0
At the end of this unit students should be able to:
• Describe the United States Marshall Plan
• Understand the United States strategies of Europe Economic Recovery Programme
• Explain the goals the Marshall Plan.
2.0 MAIN BODY
3.1 MARSHALL PLAN
During World War Two (1939 – 1945), American was no t directly attacked therefore was not a victim of the barrage of bombing campaigns and ground battles that had ensued throughout Europe. This privileged situation placed the capitalist economy of the United States at a comparative advantage as it flourished through the huge exportation of its produce to its Allies in Europe. However, at the end of the War, the market demand situation change, its capitalist economy needed foreign markets to supply its surplus produce. ―American exports in 1947 were only five per cent of gross national product, compared to ten per cent in the pre-1929 period‖ (McCormick, 1995). It must be noted here that Europe was indeed a huge market but lack the finance to back up its demand that the United States had to supply because its industries had been destroyed by the war and the lack of dollars in the possession of European governments. It became necessary for America to reopen and build up the market in Europe to stimulate the United States economy. Thus, the European Recovery Programme (ERP) was to ensure that participating European countries would have the means to purchase American goods and in doing so they would be reopening their markets to American trade. President Harry Truman announced the Truman Doctrine to the American Congress on March 12, 1947. He proposed that the United States must adopt a policy to support free peoples who were resisting attempted subjugation by armed minorities or by outside pressures. According to him
"We must take immediate and resolute action." The Truman Doctrine was a proposal to send military and economic aid to Greece and Turkey, which the American Congress authorized in May 1947. The Marshall Plan was an extension of the principle underlying the Truman Doctrine. The Secretary of State Marshall initiated the European Recovery Programme, through his famous speech at Harvard on June 5, 1947.
The United States did not hide the fear that poverty, unemployment and dislocation power in Europe were germane to Soviet influence and popularity of communist parties to voters in Western Europe. In order to create stable conditions for the sustenance of democratic principles, George C. Marshall on 5 June, 1947 in a speech
OBJECTIVES
th
delivered at Harvard University proposed European self help recovery program to be funded and coordinated by the United States. Based on the recommendation of a unified plan for the economic reconstruction of Western Europe by a Committee representing 16 (sixteen) countries, the United States Congress approved and signed into law in 1948 the establishment of the European Recovery Programme (ERP). The aid plan was offered to all European countries including the Soviet Union and its satellites states under military occupation. The participating and receiving countries were: Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy,
Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, United Kingdom and West Germany.
The Soviet Union considered the economic integration with west as another imperialist ploy by the United States and capable of eroding Soviet control of Eastern bloc toward realigning Europe. The Soviet Union immediately moved to discourage and prevent Eastern bloc nations from participating and receiving the Marshall Plan aid. In June 1947, delegates from France, Great Britain, and the Soviet Union met in Paris to discuss Marshall's proposal. After several days, Soviet Foreign Minister Vyacheslav M. Molotov walked out, stating that the Soviet government "rejects this plan as totally unsatisfactory." Viewed by Western leaders as one more refusal to support postwar stabilization efforts, Molotov's action contributed to the growth of Cold War tensions. In it stead, the Soviet Union introduced its own economic assistance plan known as Molotov Plan and later as Comecon to provide subsidies and promote trade within eastern bloc. Some nations of Western Europe were excluded from the Marshall Plan, one of such nations was Spain, which did not openly take part in the World War II. Spain was an aggressive anti – Communist embraced as allies by the United States, but pursued a policy of self – s ufficiency, currency control and quotas. Other nations were Finland, Romania, Hungary and East Germany that were forced to pay for reparation supplies to the Soviet Union.
A Committee known as the Economic Cooperation Administration (ECA) under Paul G. Hoffman was constituted to administer the aid plan for the four years (1948 – 1952). Within this period, an estimated sum of $13 billion worth of economic and military aid were disbursed to assist industrial and agricultural production, create financial stability and expand trade. The United Kingdom and France organized the 16 participating countries to establish a master financial-aid-coordinating agency, the Committee of European Economic Cooperation which was later became Organisation for Economic Cooperation and Development (OECD) including West Germany, which was headed by Robert Marjolin of France.
The Marshall Plan of economic and technical assistance brought about an increase in gross domestic product of several western European nations of about 15 and 25 with a
rapid growth of the chemical engineering and steel industry. The years of the Marshall Plan was a period of economic revival and prosperity for Europe with an increase of about 35% in industrial production. The United States Cold War time President Harry S. Truman applauded the success of the concept and under the 1949 Point Four Programme extended it beyond Western Europe, even to less developed nations throughout the world. In 1951, the Marshall Plan was replaced by Mutual Security Plan as a futuristic plan for the United States search for market for its produce and
survival. The plan was originally schedule to end in 1953, but ended in 1951, because of the enormous cost of the Korean War and rearmament and other political factors such as the increase of congressional opposition.
IMPLEMENTATION
The United States response to Britain‘s announcement that it could no longer support Greece in the battle against communist expansion in Greece and Turkey and the request for United States intervention, to continue in aid under the Truman Doctrine was the beginning of a four year aid plan. The monies for the Marshall Plan to benefiting countries were transferred to the governments of the European nations to be jointly managed by Economic Cooperation Administration (ECA) and the home government. The ECA had an envoy at each participating nation‘s capital, usually a prominent American businessman whose responsibilities include but not limited to the following, to: (1) give a boost to the European economy: (2) promote European production, (3) bolster European currency, (4) facilitate international trade, especially with the United States; and (5) contain the growing Soviet influence in Europe, a silent unofficial goal of ECA (and of the Marshall Plan) in relation to the spreading and growing strength of communist parties in Czechoslovakia, France, and Italy.
There was a joint allocation meeting by panels of government, business, and labor leaders to examine and conduct the needs assessment.
The funds allocated for the economy recovery of Europe in accordance with the provisions of the Marshall Plan aid were used to procure goods from the United States. Prior to the aid, Europe was experiencing significant dearth of foreign reserve as a result of funding the war, the only available means of securing importation of foreign good was through the Marshall Plan aid. At inception, the importation were restricted to daily needs of food and fuel, but later included the reconstruction needs as was originally conceived. Subsequently, when the Korean War broke out and the pressure from the United States Congress there was a shift in expenditure with a huge amount of the aid spent on rebuilding the militaries of Western Europe. A breakdown of disbursement of allocation of $13 billion as at mid 1951 was as follows:
importation of raw materials and semi-manufactured products $3.4 billion; food, feed,
and fertilizer $3.2 billion; machines, vehicles, and equipment $1.9 billion on; and fuel
$1.6 billion (Hogan, 1987)
Other sources of funding were counterpart funding introduced to provide funds in the local currency. The aim was to serve as loan revolving scheme for industry according to the 60% ECA rules. For instance, in Germany where it was most noticeable government-administered funds provided the opportunity for private enterprises to secure easy loan for rebuilding programmes. These funds were pivotal for the reindustrialization of Germany because about 40% of investment in coal industry (energy sector) was provided from these funds (Crafts and Toniolo, 1996). This loan revolving system made it possible for the government to provide financial assistance to others as the companies comply with the provision of the loans. And it became the cornerstone of the state owned KFW bank and over time the fund had grown over 300% of the initial capital. The counterpart fund was also absorbed into government budget as revenue and used as measure to reduce budget deficit as was in the case of France and other countries.
The Economic Cooperative Administration initiated and funded the Technical Assistance Program to facilitate training of European industrialist and engineers through a study tour of United States mines, factories and smelters. Also, American technical experts were involved as technical advisors in the industrialization programme in Europe.
EXPENDITURE
The distribution of Marshall Plan aid was divided on a roughly per capita basis amongst the participating nations. There was an assumed consensus to give preference to the major industrial powers because their resuscitation was essential for general European revival irrespective ideological leaning. The table below shows Marshall Plan aid by country and year (in millions of dollars) from Schain Martin, ed (2004) The Marshall Plan Fifty Years Later. There is no clear consensus on exact amounts, as different scholars differ on exactly what elements of American aid during this period were parts of the Marshall Plan.
Country 1948/49($mil) 1949/50($mil) 1950/51($mil) Cumulative ($ millions) Austria 232 166 70 468
Belgium/luxembourg
Denmark 103 87 195 385 France 1085 691 520 2296 Germany 510 438 500 1448 Greece 175 156 45 376 Iceland 6 22 15 43
195 222 360 777