The fall of America’s benevolent empire

Guest Post by Thomas Fazi

There will be no more Marshall Plans

Exactly 75 years ago, the foundation stone of the transatlantic relationship was laid. After the Marshall Plan was signed into law by President Harry S. Truman, the US would go on to send billions of dollars in economic assistance to help rebuild Western Europe after the Second World War, laying the groundwork for a mutually beneficial North Atlantic alliance that offered Europe several decades of economic prosperity and military security. America, the President claimed, would be “the first great nation to feed and support the conquered”.

Today, Truman’s world no longer exists. Indeed, the contrast between the Marshall Plan and America’s approach to Europe today couldn’t be more jarring. The Marshall Plan may still be regarded as one of the pillars of America’s post-war mythology, but under Biden, America is pursuing an isolationist economic policy and a ham-fisted foreign policy that both run counter to Europe’s vital interests. Moreover, the actual impact of the Marshall Plan is also worth reassessing.

In spite of the largesse and generosity usually associated with the European Recovery Program, as it was officially called, between 1948 and 1951 the funds actually only amounted to about 3% of the combined GDP of the recipient countries, accounting for a direct increase in GDP growth of less than 0.5%. Some authors have credited the Marshall Plan with having a much larger indirect effect on the recovery, through the promotion of a macroeconomic environment conducive to growth, but such analyses are largely speculative. Overall, its contribution to Europe’s recovery was relatively modest. Much of the money also flowed back to the US in the form of purchases of American goods and services, including oil, while many of the materials and equipment used to rebuild Europe were supplied by American companies, creating jobs and profits for American businesses.

Regardless of the actual economic impact of the Marshall Plan, there is no doubt that it was a resounding political success for America — to the extent that it secured US geopolitical influence and control over Western Europe. Part of the logic was that more prosperous societies would be less amenable to communist and Soviet influence — though, as we have seen, it’s questionable whether the programme had much of an impact on economic and social gains during the post-war boom.

An arguably more important channel through which the Marshall Plan consolidated US influence was through the funds it channelled to those European centre-right parties which stood to gain from being integrated into the nascent American empire. This included covert CIA funds to ensure their electoral success — especially in Italy and France — at the expense of communist rivals. As the historian Sallie Pisani shows in her book The CIA and the Marshall Plan, under the guise of the Marshall Plan, the US used “massive foreign aid and non-military covert operations to reshape war-torn Europe in the image of the US”.

Just as crucially, the Marshall Plan was also a key catalyst for the formation of Nato, through which the US exerted its military control over Western Europe — in addition to dozens of military bases, especially in the defeated nations, many of which still exist today. The Marshall Plan also played an important role in fostering European integration, by creating new intergovernmental institutions to administer and coordinate the programme.

These included the OEEC, the precursor to the OECD, and most importantly the Schuman Plan, which led to the European Coal and Steel Community, then the European Economic Community and ultimately the European Union. The Americans also played a crucial role in promoting, also financially, the cause of European federalism through the American Committee on United Europe (ACUE), founded in 1948, whose first chairman was the former head of the Office of Strategic Services (OSS) William Joseph Donovan. The vice-chairman was Allen Welsh Dulles, who would later become the head of the CIA.

Taken as a whole, then, the Marshall Plan appears to embody a form of “benevolent imperialism”, through which the US gained control over Western Europe and cemented its position as a global superpower, while also fostering, for much of the post-war period, economic prosperity and — at least until the end of the Soviet Union — military security on the continent. Europe clearly benefited from the spoils of empire, even if in a subordinate position.

Today, however, this no longer seems true. In economic terms, over the past six months, Europe has seen a massive fall in industrial output while governments have been forced to foot an €800 billion energy bill as a result of their decision to follow the US strategy in Ukraine. Riots have broken out in France and there is no reason to think they won’t spread. A European-wide poll taken in October last year showed that a majority of voters in Europe’s four largest countries expected social unrest and public protests in the coming months due to rising living costs. Meanwhile, senior EU officials have accused the US of profiting from the war — and from Europe’s hardship. Not only is it reaping the benefits of Europe’s switch to American natural gas, but it is also the main beneficiary of Europe’s rearmament.

Moreover, anger has also been mounting in Europe over America’s Inflation Reduction Act, a $369-billion package of subsidies and tax breaks enacted by the Biden Administration to boost American manufacturing (under the guise of the “green shift”). One may call it a Marshall Plan of sorts — but one that is directed at America, not Europe. Indeed, from a European perspective, the bill constitutes a protectionist measure that encourages companies to shift investments from Europe and incentivises customers to “Buy American”, dealing a serious blow to Europe’s already struggling industry. The president of Imperial College London recently said that the IRA represents an “existential threat” to European economies. Even Chancellor Jeremy Hunt, not known for being critical of American policies, last week criticised Biden’s “massively distortive” investment plan.

Such concerns might seem hyperbolic, but they highlight the cognitive dissonance of most members of the European establishment. On the one hand, they are constantly forced to repeat public platitudes about Western unity and resolve; on the other, they are slowly beginning to realise that America is playing its own game, and it doesn’t include Europe, which is no longer seen as a strategic ally anymore but as a competitor and a rival.

In security terms, things aren’t looking much better for Europe, which is looking more vulnerable today than it has been for decades. As the possibility of a direct Nato-Russia confrontation becomes more likely, what used to be a security umbrella today looks more like a big flashing target. From America’s perspective, however, the conflict has been an opportunity to reassert its waning hegemony over Europe, first and foremost by revamping and expanding Nato, which was going through an existential crisis prior to the conflict. Indeed, from America’s perspective, this was likely a desired outcome. Driving a wedge between Europe (and Germany in particular) and Russia, and preventing the rise of a Eurasian geopolitical reality, has always been an American geopolitical imperative. No wonder some thought the US was behind the bombing of the Nord Stream pipeline, which severed Russian-German relations.

In this context, why should Europe remain anchored to the US? Especially when we consider the radical geopolitical realignment that is underway. As I noted recently, the conflict in Ukraine has accelerated the rise of a new international order in which American dominance is losing its attraction. US actions in Ukraine have driven together its two greatest adversaries, Russia and China, whom along with India, Saudi Arabia, Turkey, Brazil, South Africa and dozens of other countries comprising most of the world’s population are giving rise to the world’s largest and most dynamic trading bloc — and the US is not part of it.

In only the past few days, two important events gave further impetus to this trend: Brazil and China reached a deal to trade using their own currencies rather than the US dollar, while China’s national oil company CNOOC and France’s TotalEnergies completed China’s first LNG trade settled in yuan. All of which points to the increasing isolation of the US from the rest of the world, and a dramatic reduction in its influence and ability to extract resources which it can then distribute to its protectorate states.

In other words, the America of the Marshall Plan is gone — and in its place, China hopes that its Belt and Road Initiative (BRI) will become the new economic engine of the post-Western bloc. Many in the West are suspicious of the BRI, but this has not stopped 147 countries — including 18 EU states — from signing up to its promise of connecting Asia with the rest of the world through infrastructure, investments and trade.

Should we be surprised? Our age of uncertainty is the perfect stage for a new Marshall Plan. And while Truman’s world may no longer exist, that doesn’t mean China can’t recreate it.

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