The Marshall Plan

by Benn Steil

The Soviet government, Masaryk pleaded to Stalin, “should help us in our delicate situation. We do not have any great illusions, [but] perhaps the matter could be fixed in such a manner that one would go to the Conference on one day and leave it on the next?”

  No, Stalin said. Czech participation would be “a break in the front; a success for the Western Great Powers. Switzerland and Sweden are still wavering. Your acceptance would certainly also affect their decision.”

  Drtina tried a different tack. If the Czechs could not take American help, then surely, he put to Stalin, the Soviets could do more for them? Drtina pleaded with him to take “into account the fear which our population has, that namely the detachment from the West should not result in general impoverishment. That would not only have serious economic consequences, but also political ones.” Marshal Stalin should also consider the “downward turn” in Czech trade with the Soviet Union. He hoped the ongoing negotiations between the two governments would “improve this state of affairs.”

  “[I]n our present situation,” Masaryk summed up, “we need a kind of consolation prize, a gesture of the Soviet side.”

  “Your situation is better than that of France or England,” Stalin put back. But “the USSR is prepared to help you in your economic affairs.” It would buy more Czech industrial equipment—drilling pipes, electric motors, and the like. “Our harvest is good this year. . . . The agricultural plan has been fulfilled, indeed exceeded. We can help our friends: Bulgaria, Poland, and also you.”

  This offer—to barter food for machine parts—Stalin presented as self-evident generosity. He reiterated, however, that the Czech government needed first to reverse its decision on the conference.

  “You could announce to Paris,” Stalin suggested, that it had “become evident that the acceptance of the invitation could be interpreted as a stroke against the USSR, in particular since none of the Slav or other East European states accepted the invitation.” In closing he added, for good measure: “I believe that the sooner you do that, the better.”93

  With that, the Czechs were dismissed.

  MASARYK WAS HORRIFIED. THE SOVIETS, he concluded, sounding little different from Marshall after his Moscow meetings, “do not want Europe to recover economically; they are afraid of the success of the reconstruction of western Europe. . . . As I listened to Stalin I had more and more clearly the feeling that he is counting on war. Everything they do is done with one aim in view: war.”94

  Prior to Marshall’s speech, Stalin had wielded an iron fist at home but had been willing to tolerate, to varying degrees, a measure of political independence, including non-Communist participation, in the nations just beyond Soviet borders. This tolerance was finished. Governments were now with Stalin or against him. Poland, Hungary, Romania, and Bulgaria, as well as Czechoslovakia, would all be brought to heel.

  Gottwald cabled the government in Prague with an account of the meeting. A Czech informant for the American embassy quickly passed on a copy to the U.S. ambassador, Laurence Steinhardt, who forwarded it on to Marshall with instructions to the State Department to “take every precaution” to prevent it becoming known that the text had come from the embassy.95

  Returning to Prague, Gottwald convened the cabinet on July 10, two days before the Paris conference, for a final full day of contentious discussions. The Soviets, anxious for the Czechs to make the right decision, were spreading the message that the Marshall Plan was not about helping Europe but rebuilding Germany. Masaryk, Ripka, and the non-Communists were anguished, but aware that Stalin would extinguish the embers of Czech democracy if the government did not reverse itself.96 The real battle in the cabinet, therefore, was over the wording of the statement, which Communist vice premier Viliam Široký was sent out to read publicly at 9 p.m. It left little doubt as to the source of the reversal:

  An exceptional meeting of the government took place on July 10th that focused on the participation of Czechoslovakia at the Paris conference. It was found out that many countries rejected the invitation, especially all Slav states and other central and western European countries. Countries that Czechoslovakia remains in close economic and political relations with based on contractual obligations will not participate in the Paris conference. In this situation, the Czechoslovakian participation would be interpreted as an act against the Soviet Union and other allies. Hence, the government has decided not to participate in the conference.

  Clementis informed the British and French ambassadors a half hour later.97

  Economist Ladislav Feierabend, minister of finance in the London-based government-in-exile during the war, was appalled. “Why didn’t the democratic members of Gottwald’s government resign?” he asked incredulously. This would have produced a “government crisis” that would either have affirmed the original decision to go to Paris or resulted in new elections. “And if that had happened, and Gottwald had managed to establish a new government with a parliamentary majority, Czechoslovakia would have been in a different situation.”98

  Social Democrat food minister Václav Majer said later that the humiliating about-face had “smashed the illusion of Czechoslovak independence to smithereens.”99 Ripka reported that Prague residents were calling it “another Munich.”100

  “I went to Moscow as the foreign minister of an independent sovereign state,” a bitter Masaryk would tell a former British diplomat, and “I returned as a lackey of the Soviet Government.”101

  Masaryk and his fellow democrats, however, too often wanted to have it both ways. Steinhardt singled out Masaryk as an example of Czechs who “indulge in double-talk [and] place bets on both sides.”102 Upon signing the alliance agreement with Moscow in December 1943, Masaryk, as a representative of the government-in-exile, had declared that his country’s “relations with other neighbors will be from the angle of our Soviet agreement.” Beneš had told Molotov that “In questions of the organization of Central Europe, we will do nothing without your consent.”103 Fears of having no one to protect their country from Germany underlay this servility.

  Now, National Socialist Party chairman Petr Zenkl, who had insisted that the government had “acted correctly when [it] accepted the invitation to the Paris conference,” was unapologetically pragmatic: “Our situation . . . changed at the moment when the delegation . . . was notified of the Soviet opinion toward the Marshall plan. The political perspective trumped the economic one. We remain a faithful ally, and accept both the advantages and disadvantages of this alliance.”104 Drtina had “secretly hoped the government in Prague could possibly express opposition to the overt political pressure that Stalin had put us under. . . . However, it is questionable whether it would have been wise to” accept the Paris invitation. “Czechoslovakia was in no danger in case of a break-up with the Americans; however I could not be sure of what would happen in the case of a break-up with the Soviets.”105 The country’s “most important guarantee of security [rested] in close cooperation with the U.S.S.R.” Minister of Posts František Hála insisted the government “had to adapt politically” to the Kremlin’s position “because we have no guarantee from any other state against attack.”106

  Given Czechoslovakia’s geographic position, its politicians were sensitive to the security dimensions of the Marshall aid invitation. But, as Washington would soon learn, they were not uniquely so. Even nations to the west would come to demand military protection, against Germany and Russia, as a condition for accepting American integration demands that would reduce their self-sufficiency and increase their economic vulnerability.

  From his base in Moscow, Ambassador Smith was concerned about the implications of the Czech volte-face for the Marshall Plan broadly. “The Czechoslovak reversal on the Paris Conference, on Soviet orders,” Smith cabled to Marshall on July 11, “is nothing less than a declaration of war by the Soviet Union on the immediate issue of the control of Europe.”

  “The lines are drawn,” he concluded. “Our response is awaited. I do not need to point out . . . the repercussions o
f a failure to meet the Soviet challenge, in terms not only of the control of Europe, but of the impact which such a failure would have in the Middle and Far East and throughout the colonial world.”107 The dominoes were arrayed, as Smith saw it, from western Europe to the ends of the earth. Washington now had to act to keep them upright.

  Kennan, for his part, was buoyed by developments. The “Russians [have been] smoked out in their relations with satellite countries,” he memoed Marshall. “Maximum strain [has been] placed on those relations.” Furthermore, western Communist parties were struggling to justify opposition to the plan. “Events of the past weeks,” therefore, had delivered “the greatest blow to European Communism since termination of hostilities.”108

  But the Marshall Plan had not yet united the West. It had, through very different means, only united the East.

  With British Foreign Minister Ernest Bevin presiding, delegates to the historic sixteen-nation Conference of European Economic Co-operation work at a plenary session to complete their Marshall Plan aid request, Paris, c. September 1947.

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  SIX

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  UNITY

  JULY 12, 1947: JUST BEFORE 11 a.m., foreign and trade Ministers of Sixteen nations—Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, and the United Kingdom—entered the Grande salle à manger at No. 37 Quai d’Orsay.1 Above each of the nine doors the sculptor Combettes had carved two ethereal children holding a medallion crowned with acanthus leaves and fleurons, traditional European symbols of great power. Above them, the cartouches in the great ceiling’s four corners bore France’s imperial symbol.2 Here, in this magnificent hall consecrated to the glories of the French empire, Europe’s top diplomats assembled to plea for aid from a former British colony.

  They unanimously elected the British foreign minister as conference chairman—the price he demanded for agreeing to French hosting.3 Brusque and unsentimental, Bevin told the gathered that the conference was only “a piece of ad hoc machinery to grapple with a special problem.” It was not a time for theater or dreaming. “Effective and quick action is required.”4 His cohost, Bidault, in grandiloquent contrast, intoned that “The hour [had] come to construct a Europe.” The two representatives of noncommunist Europe thereby highlighted the tensions inherent in American hopes for the gathering: it was to produce, on the one hand, a practical plan with immediate tangible results, and on the other a blueprint for far-reaching and unprecedented cooperation. This difference in emphasis between the two visions—Europe as practical necessity, and Europe as supranational aspiration—would continue to mark the British and French approaches.

  The conference set up a Committee of European Economic Co-operation (CEEC) to perform the actual work, to be chaired by Britain’s Sir Oliver Franks—an Oxford philosophy don and wartime permanent secretary in the Ministry of Supply.5 It also created a powerful executive committee, comprising the U.K., France, Italy, Norway, and the Benelux customs union (comprising Belgium, the Netherlands, and Luxembourg), as well as four technical committees (with further subcommittees) covering food and agriculture, fuel and power, iron and steel, and transport. There would be only six weeks for them to forge a plan for a new West European economy that, before Marshall’s speech the month prior, few of them had ever imagined.

  Notwithstanding the message of unity in the CEEC’s name, aimed to appeal to its American benefactor, its member states formed an unlikely cast of collaborators. Some were at the center of empires, some were Lilliputians; some were rich, some poor; some dirigiste, some laissez-faire. Two were long-standing neutrals, another was occupied by two of the others. Some were European in focus, others oriented outwardly. What bound them together was a need for dollars, and a determination to make as few concessions as possible to American aspirations that undermined their sovereignty.

  Eight eastern states had, under Moscow’s instructions, declined to attend the conference: Albania, Bulgaria, Czechoslovakia, Finland, Hungary, Poland, Romania, and Yugoslavia.6 Spain was also conspicuous in its absence, having been excluded from the invitation owing to bitter opposition to the Franco dictatorship among Europe’s political left. Whether Spain’s inclusion might have ended the country’s isolation from western Europe much sooner would become a matter of debate for years. Europe’s most important economy was, of course, also unrepresented, having not yet been permitted by the occupying powers to create a government to represent it. Western Germany would, however, be an object of intense discussion over the coming weeks.

  The day the conference opened, Clay cabled Washington from Berlin, saying that an important agreement had been reached with Britain to boost industrial output in the German bizone.7 When Bidault was told, he was adamant that the news be kept quiet. Its announcement at the conference, he warned Caffery, would doom it. “There would,” he said, then “be no Europe.”8

  Whether “the German problem” was one of its neighbors’ security, which was the French position, or their prosperity, the Benelux position, seemed unresolvable. France was determined to keep German industrial output down in the service of buttressing national defense, the Benelux to rev it up in the service of boosting trade. In this clash, the Benelux seemed to have the powerful support of the United States.

  With the Soviets out of the picture, though, the main political hurdle was France. The State Department needed, therefore, in Kennan’s words, to “place squarely before the French the choice between a rise in German production or no European recovery financed by the U.S.”9 Caffery, in mocking reference to the Morgenthau Plan, cabled Marshall on July 20 that France had still “not abandoned outwardly” its “ ‘pastoral’ ” approach to the “German problem,” and was insisting on “ ‘pulling [out Germany’s] heavy industrial teeth.’ ”10

  Within the administration, however, the battles over the role of Germany in the recovery plan were no less heated than those between France and the State Department. With the War Department demanding more German output, and France refusing to countenance any plan premised on it, the State Department had to mediate between two vital competing American objectives: creating a Germany that could stand on its feet economically, and securing French cooperation in the creation of an integrated western Europe.

  The result was an acrimonious three-way transatlantic standoff among two cabinet departments and France. Clay insisted that the United States could not “place Germany in a vacuum while we solve world problems as if it did not exist.”11 (Clay’s tendency, in Marshall’s eyes, was to do the reverse.) “Two years have convinced me that we cannot have a common German policy with the French,” he said bitterly.12 Bidault vowed that he would accept no plan that gave “priority to the reconstruction of Germany over the reconstruction of France.”13 Both Clay and Bidault threatened to resign: Clay if the French were allowed to influence German production, and Bidault if the State Department refused to renounce plans to boost it.

  Clay was telling Marshall he needed to break with the French agenda to save Germany and Europe: “we must proceed vigorously with revival of the German economy . . . if we are to save Germany from chaos and communism, and . . . a communistic Germany is almost certain to result in a communistic Europe.” Bidault was telling him he needed to break with the German agenda to save France and Europe. The “French government will continue to insist that this will result,” Clay said disparagingly, “and no one can prove otherwise except by the test.”14

  Will Clayton argued that France’s interests should be divided into “legitimate” and “illegitimate,” with the latter being “ignored completely.” He defined legitimate interests as “military security” and “decreas[ing] the economic dependency of France on Germany.”15 But such logical quarantining was useless: any French objection to American action in Germany could be shoehorned into one or both of these formulations. French obstruction therefore constrained the Marshall strategy for reviving German
y.

  THE CENTRAL PLANK OF FRANCE’S postwar reconstruction policy was the Monnet Plan, a five-year economic modernization program premised on a massive increase in steel production that would turn the country into an industrial and export powerhouse—at Germany’s expense. This program doubled as a security policy, since a Germany that could not produce steel could not field an army threatening to France. “With the aim of military security,” explained a French foreign office official to his American counterpart in 1946, “we prefer to increase French steel production and output to the detriment of the Ruhr.”16 Yet to put the plan into action would require huge imports of German coal and coke, and thus dependence on unlikely German collaboration in its own deindustrialization. The Monnet Plan therefore relied on French control of the German Ruhr area, Rhineland, and Saarland, or at least a measure of such control through schemes aimed at “internationalizing” them.

  Here, French interests clashed with those of the Benelux, which saw a robust German recovery as essential for generating the industrial and consumer demand for its exports. The three nations therefore demanded immediate action to boost Germany’s coal and industrial output and an end to misguided Allied meddling in German internal economic policy. Italy, equally export-dependent and lacking France’s security concerns, backed them. Norway did as well, albeit with protections for its fish and ships.

  Caffery was unperturbed by the French position. In spite of relentless Communist propaganda against the Marshall Plan, eight times as many French believed their government was right to participate in the American aid discussions (64 percent) as believed it was wrong (8 percent).17 Caffery told Marshall that the French would remain publicly wedded to “a modified version of the Morgenthau Plan,” but would compromise in the end. Bidault, he said, had hinted as much on several occasions. He merely warned Caffery “not [to] force [France] to do so at the point of a gun.”18 It would only boost the Communists.