The Marshall Plan

by Benn Steil

  With the upset Labour general election victory in July 1945, incoming prime minister Clement Attlee, to the approval of outgoing foreign secretary Anthony Eden and King George, added to the surprise by bypassing Hugh Dalton to name Bevin foreign secretary. The former union leader quickly put his stamp on the job, inspiring loyalty in the Foreign Office both for his integrity and his firm hold on diplomatic power.

  Still, many supporters and detractors alike viewed him as “long-winded, vain, vindictive, profoundly suspicious, and prejudiced.” He had issues with “Jews, Germans, Roman Catholics, and intellectuals of all kinds, groups that, when taken together, comprised a large proportion of those with whom he had to deal.” Truman considered Bevin a “boor.” Soviet diplomat Andrei Gromyko concurred.28 Acheson, however, who knew him far better, saw him in a much more affectionate light. “Ernie [was] solid, squared away to the world,” Acheson said. He had “curious flashes of temper and anger.” But “if after testing you a little bit he decided he was your friend, he was, and that stood through thick and thin.”29

  John Maynard Keynes, Britain’s storied economist, had in 1944 warned of an impending “Financial Dunkirk.”30 After the cessation of American war aid, Britain would be unable to sustain its imperial commitments or meet its welfare state ambitions at home. Bevin would be obliged to preside over the former, though much of his diplomacy would be geared toward persuading his own countrymen that he was not. “[I] do not accept the view . . . that we have ceased to be a Great Power,” he intoned before the House of Commons on May 16, 1947. Yet ten days prior he had told colleagues that he would have to “bluff his way through in foreign policy, given the financial weakness of this country.” And he warned British miners, his political base, that his ability to carry out an independent foreign policy was dependent on their willingness to provide him with more coal.31

  Bevin resented American dollar diplomacy, in particular the linking of desperately needed financial assistance to London’s submission on political matters central to British sovereignty. The American loan agreement, signed in December 1945 after nearly four months of difficult and often humiliating negotiations in Washington, required Britain to accept American air and naval bases on British and Commonwealth territory. Bevin’s decision to support the manufacture of British nuclear weapons was driven not by a German or Soviet threat, but by his belief that the country “could not afford to acquiesce in an American monopoly of the new development.”32 Britain, as Bevin saw his country, was “the last bastion of social democracy,” standing against both “the red tooth and claw of American capitalism and the Communist dictatorship of Soviet Russia.”

  It was the Soviets, however, whom Bevin knew to be the greater threat to British interests. No one, he told a group of left-wing critics in June 1946, had done more to defend the Russian Revolution than he. Yet what he got in return was Russian “Communists [trying] to break up the [trade] Union that I built.” The Soviets were not to be trusted. Their stranglehold over eastern Europe, “clos[ing] the door and prevent[ing] entry or any contact with those peoples for trade or anything else,” could not be abided. Their territorial ambitions cut “across . . . the throat of the British Commonwealth.”33 With Bevin at the helm, British foreign policy was certainly more overtly hostile to Moscow than it would have been had the more accommodationist Attlee been able to run it himself.34

  Still, Bevin was no Kennan. He had no theory on the sources of Soviet conduct, and was willing, at times seemingly eager, to suspend disbelief, to probe for hidden good intentions. Bevin at times ascribed the unbending, even brutal, nature of Russian negotiating behavior to inexperience and isolation. In November–December 1946 he had been part of the New York meeting of the Council of Foreign Ministers that forged agreement on peace treaties with Italy, Finland, Hungary, Bulgaria, and Romania, drawing optimistic inferences from the experience. “I think we are learning how to cooperate,” Molotov had said on the boat back to Europe, and Bevin liked to cite this remark in evidence. Even after the March–April 1947 foreign ministers meeting in Moscow, from which Marshall had returned to Washington wearing a shroud of gloom, Bevin was optimistic that slow progress was being made.35

  Here in Paris, now, Bevin’s response to Molotov was unfailingly gracious. He ensured the Russian that he, Bevin, “should not wish to be a party” to any project that would “interfere with the sovereignty of participating Governments.” Yet still it was necessary, he insisted, “that we should undertake work in collaboration . . . and that our demands should be co-ordinated.” For Molotov, sovereignty and coordination were incompatible conditions from which to approach American aid. Yet Bevin maintained, however implausibly, that “Mr. Molotov’s remarks provide the basis on which we can approach the problem from similar points of view.”36

  Following a second meeting with Bidault and Bevin on June 29, Molotov sent a coded cable to Moscow highlighting his effort to impress upon Bidault the gulf that existed between the Soviet and French visions for shaping Marshall’s still hazy initiative. “The difference,” Molotov reported having told Bidault, is “that the Soviet project limits the tasks . . . to the discussion of the issues which are directly related to the American economic assistance to Europe, whereas the French project envisages also the design of economic programs which encompass both the domestic economies of European countries and . . . economic relations between them.”37 This had been Molotov’s oblique way of telling Bidault that Moscow would be happy to submit an assistance request, as part of a package of such national requests, but that it had no intention of subjecting its resources or requirements to external evaluation, or to participate in any form of coordination underwritten by Washington. Neither would it allow its satellites to do so.

  MOLOTOV’S SUSPICIONS OF HIS COUNTERPARTS’ intentions were soon confirmed. The Kremlin was receiving a constant flow of intelligence from highly placed British sources—among whom Guy Burgess at the Foreign Office in London and Donald Maclean at the British embassy in Washington. Maclean, who had access to all of the embassy’s classified cable traffic, was reporting—according to Pavel Sudoplatov, the spymaster who had overseen Trotsky’s assassination—that “the goal of the Marshall Plan was to ensure American economic domination of Europe.”38

  On the night of June 29, a brown-jacketed Feldjäger special messenger raced through the streets of Moscow. Arriving at the Kremlin gates, he handed the guard an envelope marked “Very Urgent.” A few minutes later, Stalin, sitting in his dimly lit office, opened it and removed the intelligence report, growing increasingly “indignant” as he read. He quickly wrote out text, and directed his secretary, Alexander Poskrebyshev, to call Politburo members and request their approval. Once the last “yes” vote was secured in the early hours of June 30, Poskrebyshev told Vyshinsky to encipher the cable and send it to Paris.

  The message directed Molotov to obstruct Marshall’s plan from being implemented in eastern Europe. Clayton and Bevin, the cable explained, had agreed that the Marshall Plan was not to be focused on providing assistance of the sort that had been carried out by UNRRA, but rather exclusively on the long-term economic reconstruction of Europe. It was to be implemented outside the United Nations framework, for the reason that German industrial revival was considered essential to rehabilitation of the continent—and Germany was not a member of the U.N. Most importantly, the cable stated, “Britain and America will oppose payment of reparations to the Soviet Union from current production.”

  At the time, reparations were the Soviet Union’s only source of foreign capital—capital that was vital to modernizing its chemical and machine tool industries. At Yalta and Potsdam, Stalin believed he had secured Roosevelt’s and Churchill’s consent to a five-year flow of German industrial machinery and goods. Yet the Kremlin’s British moles now indicated that the United States and Great Britain would end this arrangement in favor of an American-controlled reconstruction scheme, partially financed by Germany.

  The Marshall Plan was, therefore,
according to Sudoplatov, “totally unacceptable because it would obstruct our consolidation of control in Eastern Europe. It meant that Communist parties already established in Romania, Bulgaria, Poland, Czechoslovakia, and Hungary would be deprived of economic levers of power.” Constructing a network of puppet regimes across eastern Europe depended on Moscow’s ability to strip Germany bare, funneling its resources through local Communist parties into building a new command economy throughout the vast territories it occupied. It is no wonder that Molotov was cautioned to “object to any discussion . . . of the utilization of German economic resources to meet the requirements of European countries [or] of economic assistance to Germany from the USA.”39 Anything to do with Germany needed to be handled “through the [Allied] Control Council, where we have the right to ‘veto.’ ”40

  AT THE JUNE 30 MEETING, Molotov had been raising “relatively minor questions [and] objections” when an assistant handed him Vyshinsky’s decoded cable. “It seems,” Acheson recalled from accounts of the meeting, “that Molotov has a bump on his forehead which swells when he is under emotional strain.” As Molotov read the telegram, “he turned pale and the bump on his forehead swelled. After that, his attitude suddenly changed and he became much more harsh.”41

  Molotov told Bidault and Bevin that “the German issue” and “the drafting of an all-around program for the European countries” were not proper subjects for their present conference.42 Reading from the telegram, he retreaded his arguments of the prior three days.

  “In effect,” Bevin said, smiling disbelievingly, “what you are asking the United States Government to do is to give us a blank check. If I were to go to Moscow with a blank check and ask you to sign it I wonder how far I would get with your end.” Bidault nodded in agreement. The inevitable split between Moscow and the London-Paris axis had arrived.

  Shortly after adjourning, the Soviet delegation, in a departure from their previous insistence on keeping the discussions secret, bared its objections to the French proposal in a public statement distributed to the TASS news agency.43 That evening, Molotov cabled back to Stalin that “Britain and France [were] now in dire straits [and that] their only hope was the United States, which demands that [they] set up some kind of European body to facilitate interference in the economic and political affairs” of Europe. “Britain and—and to some extent—France count on using this body to promote their own interests.”44

  Bidault’s frustrations boiled over on July 1. He began by calling it “grave” that “on the eve of a decision” the three delegations might “not reach an understanding.” He drew attention to the “fundamental differences” between the Soviet and French positions. First, the Soviets proposed “to establish only a list of needs in American credits” that would be received by a European Committee for transmission to the United States. France believed this was entirely insufficient. “[Mr. Marshall’s] text is perfectly clear,” Bidault stressed; “if there is no European mutual aid, there is no American aid.” Second, “Mr. Molotov fears that [such] a general economic plan may result in an interference in the internal affairs of European States, and be an infringement of their sovereignty.” This was, however, something that “the French Delegation has never foreseen, or considered, or admitted.” Sovereignty was to remain sacrosanct.45

  Bidault and Molotov were by this time talking past each other. “Sovereignty” in the context of the Marshall Plan was, for Bidault, European governments making autonomous decisions regarding what adjustments in their economic structures they were willing to make in order to satisfy, with as little wastage of scarce resources as possible, the combined needs of their people. And such adjustments were essential to securing American aid, which was itself essential to ensuring that Europe had adequate provisions to allow them to be implemented without further hardship. For Molotov the requirement for mutual adjustment was an imposition from without, and therefore a fundamental interference with sovereignty. And if the Americans were determined to usurp sovereign powers as the price for their assistance, then Europeans simply had to reject it.

  Molotov reported home that no “joint decisions on the substance of the issue in question” were likely, as the Soviet “stand differs in its essence from the Anglo-French position.”46 At this point, however, he was still willing to engage with his French and British counterparts, believing that their differences with the United States would doom Marshall’s scheme.

  But “I changed my mind,” Molotov later recalled. Western tensions, he decided, would be greater with Moscow out of the picture. So “I sent a second memorandum,” this time saying he wanted to reject the Plan.47 Tito deputy Djilas remembers things differently. In Paris for a congress of the French Communist Party, he was invited to lunch at the Soviet embassy. With jazz playing in the background—best for thwarting listening devices, the Russians explained—Molotov said he had been ordered to oppose the Plan by the Politburo.48 In any case, it was to be a fateful decision.

  On July 2, at the fifth and final meeting, “Molotov adopted a completely uncompromising attitude,” Bevin recorded. The Russian laced into the latest French proposal for an “all-embracing European programme” to be elaborated by “a new organization, standing above the European countries,” demanding their “obedient behaviour,” and “intervening in [their] internal affairs.” One day Poland will be told: “produce more coal!” The next, Czechoslovakia will be told to buy machines abroad and grow more crops. They were to “lose their former economic and national independence, to the advantage of certain strong powers,” as a mere “pretext” for securing some undetermined American aid.

  “The Soviet government,” Molotov pronounced, “cannot, of course, take this course.”

  Bevin turned to Bob Dixon, his private secretary, whispering: “This really is the birth of the Western bloc.”49

  Molotov plowed on. As for Germany, it was unacceptable that its “resources should be used for any purpose rather than reparations.” Germany could not be the beneficiary of an Allied reconstruction scheme. Yet in the next breath he blasted the western powers for harming the country through “federalization.” Molotov insisted that only “the genuine restoration of Germany as a united democratic State” could ensure that “the needs of the German people” were met.

  “The Franco-British proposal,” he concluded, would “lead to nothing good.” It would “split Europe into two groups of States and will create new difficulties in the mutual relations between them. In this event American credits will serve not the economic restoration of Europe” but rather the exploitation of weaker countries by “certain strong Powers striving for domination.”

  “The Soviet Government,” he ended ominously, “considers it necessary to warn the Governments of Britain and France of the consequences of such action.”50

  Bidault was furious. “[Mr. Molotov] concludes by warning my country, [but] I, for my part, would like to warn the Soviet delegation against any action which might lead to the separation of Europe into two groups.” The sovereignty and independence of all European nations, he insisted, would be fully respected. What was being asked of them was nothing more than “national statistics,” freely and independently provided, that would “be brought together and compared so as to determine resources and needs”—to create a European “balance sheet.”

  Mr. Molotov had noted “that American aid is uncertain,” he said. But it would “be even more so if the data of the problem are not respected, and if, of course, Europe does not speak up and say . . . what she can do for herself, and what we all lack.”

  Regarding Mr. Molotov’s protestations that Poland could be ordered to produce more coal, or Czechoslovakia less machinery, this claim was, Bidault insisted, nonsense. “[I]t is in independence and for independence that their collaboration is sought.”

  As for the objection that France was proposing “a decisive place” for the United States in the “restoration of the economic life of the European countries,” Bidault explained that “decis
ive” did not mean “principal.” At Waterloo, he noted, “the decisive role,” as opposed to the principal role, “was played by a few thousand men who arrived at the last moment.” Likewise, with the Marshall Plan it was each European nation, “and all of us together,” that would play the principal role. Yet in the coming months the American role would indeed be decisive, in that “they are the few thousand men who will decide the battle and the victory over misery.”51

  For Molotov, such clarification was sterile pedantry. The Soviet Union was not about to collaborate in a new European “battle” in which the American role was to be decisive. If the United States wished to provide assistance for the recovery of the European nations—which was, after all, of vital and pressing interest to the survival of American capitalism—such a proposal would receive Soviet consideration. Yet there could be no American meddling in the sovereign internal affairs of these nations, as the French and British advocated.

  Bevin joined in, condemning Molotov’s statement as “a travesty of the facts.” British policy, he insisted, “was to cooperate with all and dominate none.” And “with regard to the division of Europe, nobody had striven more than I,” he added, “for the unity of Europe” and that of Germany. As for the “grave consequences” with which Molotov threatened Britain, “such threats had [never] and would not cause us to hesitate to pursue what we considered to be our duty.” He pledged, like Bidault, to take Marshall’s proposal forward.52

  Molotov stood, announcing that the Soviet Union was withdrawing from discussions. The Marshall Plan, he said, was “nothing but a vicious American scheme for using dollars to buy its way” into European affairs.53 His delegation followed him out of the hall.