The Marshall Plan

by Benn Steil

  MOLOTOV “COULD HAVE KILLED THE Marshall Plan by joining it,” Harriman later reflected, disbelievingly.54 “Bevin did a superb job of getting Molotov out of Paris—by careful maneuvering. . . . [H]e had the courage to invite Molotov and the bluntness to get rid of him.”55 But falling into the trap confirmed the Russian as “essentially a dull fellow.” 56

  Bidault agreed. “I could never figure out why Molotov had acted like that. . . . [I]f he had continued to side with us, he could not have lost anything . . . but he [chose] the only way to lose for sure.”57

  “Sometimes the communists do strange things,” Byrnes told Bidault. “If Molotov had stayed in Paris, he [could] have referred to the Potsdam accords in order to demand 50 percent of all available financial assets. This would have embarrassed the United States as much as France. Then Molotov would have demanded aid for Yugoslavia, Poland, etc. . . . It is difficult to believe that this would have been acceptable to Congress. In deciding to act otherwise, [Moscow] has greatly aided the United States.”58

  For Paul Hoffman, Republican founder of an influential business leaders forum who would soon play a vital role in taking the Marshall Plan from idea to program, “the Molotov walkout” was a watershed. It made it “transparently clear that Russia was not interested in European reconstruction, but in chaos.”59

  Of course, Molotov was not the decision maker; Stalin was. Kennan had applied keen insights into the systematic defects in the Soviet leader’s psychology, pulling off a maneuver worthy of Clausewitz. The Soviets and their satellites could have bled Marshall’s offer to death with demands and grievances over terms. Instead, Stalin allowed himself to be goaded into rejecting it, casting the Soviet Union as an enemy of recovery.

  “We were fortunate in our opponents,” concluded a relieved Acheson.60 “Uncle Joe helped us again,” Harriman added.61

  ALWAYS FINELY ATTIRED, AT HOME in high Society, dean acheson lived a lifestyle government service could not finance. A return to his law practice being the only alternative to austerity, he stepped down, as scheduled, on July 1, 1947.

  Fifty-one-year-old banker and former Stimson deputy Robert Lovett succeeded him. Lovett would oversee progress of the Marshall Plan through its most critical period. Thin, bald, with high, sharp cheekbones, Lovett operated on a constant, high-intensity nervous energy. Born to wealth, with an accent to match, he was nonetheless dubious of diplomats and Washington elites, preferring the company of artists, writers, even enlisted men. Reserved, cautious, humorous, profane, and practical, he was an implementer and not an innovator. He had little time for the egos around the administration, men like General Clay. As Marshall would spend much of the remainder of his tenure traveling abroad and recuperating from medical interventions, Lovett would drive deliberations on the substance of the Marshall Plan forward. Though a friend of Acheson’s from their days at Yale, he took a more skeptical view of an expansive role for the United States in global affairs. The United States should not, he felt, aim to fill Britain’s former role. The country had first to build up its resources, and to focus them on countering the immediate threat: Soviet aggression.62

  On July 3, Bidault and Bevin issued a joint communiqué from Paris announcing the invitation of twenty-two European countries to cooperate in devising a collective plan for European recovery.63 The assemblage, it said, would begin work on July 12 and complete it by September 1, after which it would submit the agreed blueprint and request for economic assistance to the United States. Bidault sent a copy of the formal invitation to the Soviet ambassador in Paris, assuring him that his country would still be welcome to participate were his government to change its decision.

  Bidault’s deputies, however, privately offered a different statement of his views. “The Soviets,” they told Ambassador Caffery, “have forced Europe to band together to save itself.” The Kremlin is hoping to exploit the “chaos [that] will follow” economic collapse and “take over the Western European countries with their well-organized Communist Parties.” Yet its “desire to sabotage European reconstruction will be as clearly revealed as is our determination to . . . save ourselves and to profit from the splendid initiative taken by Secretary Marshall.”64

  On July 4, American Independence Day, French prime minister Paul Ramadier called for, and won, a vote of confidence over the government’s support for the Marshall Plan.65 Meanwhile, matters between Washington and Moscow were rapidly deteriorating. With Stalin now convinced the United States was using the Marshall Plan to keep its military in Europe, the breakdown in relations reverberated around the globe. Negotiations between the USSR and the United States over the formation of an interim Korean government collapsed.66

  That same day, the Communist Party of the Soviet Union (CPSU) cabled seven East European Communist Party leaders telling them that whereas the Soviet Union had rejected the Marshall Plan “it would be better” for their governments “not to refuse to participate in [the upcoming Paris] meeting, and instead to send their delegations to show the unacceptability of the Anglo-French plan and to prevent its unanimous adoption.” Their delegations should “then leave the meeting, potentially with more delegates from other countries.”67 Molotov reinforced the message in telegrams to his embassies on July 5 and 6.68 On the 7th, the Central Committee cabled Tito praising his “firmness on the issue of the American enslaving loans,” but telling him “it would be better . . . to take part” before walking out.69

  This position, however, was not to be Moscow’s last word. As eager expressions of interest came forward from Czechoslovakia and Poland, the Kremlin did an about-face.70

  “At first we decided . . . to propose to all the socialist countries to participate,” Molotov explained years later, “but we quickly realized that was wrong.” The problem was that “we still could not count on them,” singling out the Czechs for particular suspicion.71

  Satellite participation in the Marshall Plan was a possibility Moscow could not abide. It would restore East-West trade links that had been superseded by bilateral ones imposed by Moscow after the war. It was only a matter of time before American political influence set in among them. From this point on, then, the Soviet Union would rely on unilateral action to protect its interests.72

  For Marshall, the epiphany that U.S.-Soviet cooperation had outlived its usefulness came on April 15, 1947, during his meeting in Moscow with Stalin. For Stalin, it would not come for another three months, with the imminent threat of the Marshall Plan incorporating Germany and the East. If one wants to set a firm birthdate for the Cold War, therefore, a strong case can be made for July 7, 1947—the day that Molotov ordered further cables to be dispatched to the satellites, rescinding his previous day’s instructions for them to send delegations to Paris. It was only at this point that both sides, the United States and the Soviet Union, became irrevocably committed to securing their respective spheres of influence—politically, economically, and militarily—without mutual consultation. Europe, which had previously been divided into allies, former enemies, and neutrals, was now divided between Marshall states and the Soviet bloc (see Maps 3 and 4).73

  Problems, Molotov told the eastern states, had emerged. Britain and France “do not [now] intend to carry out changes in their plan for economic recovery in Europe without [adverse] considerations for the sovereignty and economic independence of small countries.” European recovery, moreover, was being used as a pretext for creating an anti-Soviet “Western bloc,” which was to “include Germany.” The governments were now, therefore, advised not to participate, although each could “present its own grounds for refusal.”74

  Most of the eastern states understood the nonnegotiability of the new instructions, and rejected or backed out of the Paris initiative immediately. The Romanian government explained that the Franco-British proposal would lead “inescapably [to] a breach of independence [and] a meddling in the domestic affairs” of European countries. Moreover, “any plan for economic stabilization of Europe may reach its goals only [by] cooper
ation with the USSR.”75 Yugoslavia, which had been prepared to follow earlier instructions to “send [a] delegation . . . and give a good fight to America and its satellites” before walking out,76 now denounced it. Foreign minister Stanoje Simić said the Franco-British outline “would allow certain powers to interfere with the economic and political sovereignty of other countries” and free Germany from obligations to compensate its victims.77 In an interview, Tito accused the United States of “disingenuous intents” and trying to “isolate” his country through “some kind of economic blockade.”78

  The Poles, who had been planning to send cabinet ministers to highlight their seriousness, “wavered initially”—in Stalin’s words. So the Kremlin made matters clearer. On July 8, Radio Moscow announced, to the great surprise of Poland’s Communist president, Bołeslaw Bierut, that Poland and Romania would refuse to take part.79 A “very agitated” Bierut summoned the Soviet ambassador at 6 p.m., “calling the attention of the Soviet government to the fact that the Polish government [had] not taken any decision in this matter,” and that “such communications [put] the leadership of the Polish Workers Party in a very difficult situation in respect of their partners in the democratic [i.e., eastern] bloc.”80 It was to no avail.

  On Wednesday, July 9, Polish foreign minister Zygmunt Modzelewski informed the American ambassador in Warsaw, Stanton Griffis, in a manner “extremely apologetic and at least apparently regretful,” that Poland would not send a delegation to Paris, reversing the indications he had given two days prior. Relaying what were presumably talking points from Moscow, he said that Poland would have “little or nothing to say” at the conference, as the “plan was already substantially [fixed] in form,” and that rehabilitation of “the aggressor nation,” Germany, was wrongly being given priority over assistance to its victims. The idea of European integration as a Trojan horse for German hegemony would become a staple of Communist diplomatic doctrine.81

  Griffis surmised that between Monday and Wednesday, Modzelewski, “if not the entire Polish Cabinet, had . . . been overruled by higher authority.”82 This development came as a grave disappointment to Ramadier, who considered Poland “indispensable” to European economic unity, particularly given the importance of its coal production. “To wish to have Europe stop this side of [the] Vistula,” he told Caffery, “would be equivalent to having [the] United States stop at [the] Mississippi.”83 In a sign that brewing Cold War politics were now infusing the Bretton Woods institutions, the World Bank halted consideration of a loan to Poland after its decision not to go to Paris. The Bank’s American president, John J. McCloy, said Poland’s action raised the question of its independence from Russia and its ability to guarantee repayment of a loan.84

  The only holdout at this point was, as Molotov had feared, the Czechs.

  IN SOME REGARDS, CZECHOSLOVAKIA MIGHT have been expected to require the least encouragement to follow orders. Unlike Poland, there were no Soviet troops in the country, yet the coalition National Front government had been largely obedient to Moscow, to which it was bound by preferential trading agreements. Communists had won 38 percent of the vote in the last elections, in May 1946, making them the largest party in the government.85 The country had been abandoned by the West to Hitler at Munich, in 1938; in 1945, the Americans ceded the liberation of Prague to the Soviet army. Stalin’s portrait was ubiquitous on the city’s billboards. He was, whatever his imperfections, the closest thing the country had to a guarantee against another German invasion.

  Yet Czechoslovakia had also received over $200 million ($2.3 billion in today’s money) in much needed American financial assistance since the war’s end. Now, presented with the manna of Marshall aid, Masaryk was once again overcome by an excess of enthusiasm. “The Czech government,” he told Soviet, British, and French officials on July 1, “has authorized me to let you know that Czechoslovakia with one voice welcomes the opportunity that the offer outlines.”86

  To be sure, Masaryk had not yet gone rogue. He had, in fact, on July 2—the day Molotov stormed out of the Paris meetings with Bevin and Bidault, and two days before the invitations to the coming meetings had gone out—asked for and received permission from the Soviet chargé in Prague, Mikhail Bodrov, before advising the cabinet to accept the anticipated invitation.87 Yet this was clearly not the tone of a man whom the Kremlin could count on to storm out of a capitalist aid conference.

  The Czech cabinet held a heated and inconclusive debate over whether to retract the government’s acceptance. Communist prime minister Klement Gottwald informed Bodrov of the stalemate: “the government will not support us” in pulling out of the conference. “The British and French have [already] been informed of their decision,” Communist Ministry of Foreign Affairs state secretary Vladimír Clementis added by way of explanation. “[I]t has been carried by the press. [Ambassador Jindřich] Nosek in Paris has received instructions to the effect that he is entrusted with the task of attending the conference.”88

  In Moscow, Stalin did not take the news well. A Czech delegation was scheduled to arrive for trade treaty talks in a few days. The Marshall Plan would now be the main agenda.89

  THE CZECHS ARRIVED AT THE Kremlin on July 9. that evening, Gottwald was summoned to meet privately with Stalin, Communist to Communist. His fellow delegation members waited nervously in a drawing room for hours, not knowing where he was. When he emerged, he tried to reassure them: “Everything is alright,” he said. He had “come to an agreement with Stalin. We’re to see him [all together later] this evening.”90

  Meeting privately with Masaryk and Prokop Drtina, the National Socialist justice minister, however, Gottwald’s tone turned severe:

  Now we’re in a pretty pickle because of your policy towards the West! Never before have I seen [Stalin] so beside himself. He reproached me bitterly for having accepted the invitation to participate in the Paris Conference. He doesn’t understand how we could have done it. He insists that we acted exactly as if we were preparing to turn our backs on the Soviets. I thought we were wrong in approving that decision without first referring it to Moscow, but you people were in such a terrible hurry! Now we’re in a fine mess! Stalin is furious, and I think he has a right to be. You’ll see for yourselves tonight. Stalin wants us to go and see him at 11 p.m.

  At eleven, the Generalissimo ushered them in. Masaryk was taken aback: contrary to Gottwald’s warning, he found Stalin’s tone one of “benevolence” and “calm.”

  It was Gottwald, and not Stalin, who steered the discussion onto the business of Paris. He offered that his government “had decided from the beginning to recall its representatives in case of need.” No definitive position had ever been taken, he explained:

  We now find ourselves confronted with a new situation, since we are the only Slavic State and only State of eastern Europe which has accepted the invitation to go to Paris. Is it not natural, therefore, that the Czechoslovak Government should wish to know the point of view of the U.S.S.R.?

  Masaryk now understood why Stalin was being so “friendly, almost jovial.” They had been set up. “The game was clear: [Stalin] had come to an understanding with Gottwald; the interview with us was nothing but a formality.”

  Stalin explained that he had been obliged to change his stance on Czech participation in Paris. The Soviet government had, after some investigation, determined that “the Great Powers [were] attempting to form a Western bloc and isolate the Soviet Union.” France, “which has no program for a revival of her [own] economy,” and Britain, which “is also in dire financial straits,” could not be the ones “trying to put together a program for the economic revival of Europe.” The instigator and “main creditor” behind it was, of course, “the USA, because neither France nor England has a kopeck.” Participation in such an American scheme would obviously “endanger [Czech] political and economic sovereignty.” Even going to Paris would “show that you want to cooperate in an action aimed at isolating the Soviet Union.”

  Masaryk still hoped t
he Soviet leader could see reason. Sixty to 80 percent of Czechoslovakia’s raw materials came from the West, he explained to Stalin. It was impossible for his government to ignore this fact. Drtina added that the importance of western trade to his country was much greater than that of other Slavic states.

  Stalin waved them off. Czechoslovakia’s trade balance with the West was an adverse one, he said. Since its exports were not substantial enough to pay for its imports, it had to pay the difference in foreign exchange. This was a bad deal.

  But this was “a crushing argument in favour of our adherence to the Plan,” observed an ill and exasperated Ripka after reading the transcript in Prague. It was the very reason why Czechoslovakia needed the American credits.

  Stalin continued: “[B]y your participation in Paris . . . you let yourselves be used as a tool against the USSR. Neither the Soviet Union nor its government would tolerate it.”

  “Everyone knows what that kind of warning means in Stalin’s mouth,” Ripka commented, “especially when it is addressed to a small neighouring country.”91

  Back in 1945, Stalin had told Czechoslovakia’s Socialist president Edvard Beneš that “the Soviet Union will not interfere in the internal affairs of its allies.” But he had prefaced this by saying that he “wants nothing more than to have allies who are always prepared to resist the German danger.”92 And an ally who accepted Marshall aid was assisting the German danger. It was therefore not an ally.

  Masaryk now got the message, or at least part of it. There would be no Marshall aid for his country. Yet he still hoped to present to the world the image of an independent Czechoslovakia.