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The European Economy Essay Sample

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Introduction of TOPIC

How far do you agree that the Cold War broke out in Europe because the USA and the USSR disagreed fundamentally about how they should treat the shattered European economy?

Subsequent to the Second World War in 1945, the European economy was in tatters as much of the infrastructure had been laid to waste and industrial centres destroyed. As such, the two main victors of the war, the United States of America (USA) and the Union of Soviet Socialist Republics (USSR), declared their commitment to postwar unity and mutual cooperation in improving global conditions. 1 Yet, in less than two years, a fervent rivalry between the two nations led to a breaking up of accord, concerning mutual blaming, the division of Europe, as well as the difference in political ideologies. The Cold War broke out in Europe in 1947, signifying a sharp and unexpected deterioration in postwar relations between the USA and USSR. Yet all through this period, the rivalry between the two superpowers was played out in numerous areas: military coalitions; ideology, military, industrial, and technological developments. Europe was split in half, with Western Europe supporting the USA, and Eastern Europe being an ally of the USSR. So, was the disagreement on how to deal with the shattered European economy between the USA and USSR the sole reason for the Cold War? I would agree with this statement only to a small extent, due to the presence of other equal or more important factors which led to the Cold War.

First of all, one of the main reasons for conflict that led to the Cold War was the different ideas both superpowers had in place for post-war Europe. In response to a battered European economy, the United States hoped to shape the postwar world by opening up the world’s markets to capitalist trade. They believed in rebuilding a capitalist Europe that could again serve as a hub in world affairs, as this would serve US interest and suit the Wilsonian idealism of free trade and an open door economic system which they were strongly influenced by. Opening the Western European economies globally would provide markets for US products through trade, thus strengthening the US economy and also protecting themselves as well as Europe from the Soviet ideology.

“The serious crisis in Europe, particularly Germany, would threaten the successful implementation of George Kennan’s strategy of preserving important areas of economic strength for the capitalist, as opposed to the communist world. One way in which all these problems could be tackled was the provision of US economic aid on a large scale.”2 Referring to how the USA came up with the Marshall Plan to provide aid to European countries, it addressed economic needs in Western Europe as well as indirectly boosted its own economy by creating a captive market for American goods and also aided American businessmen in coping with the falling domestic demand of goods.

However, the USSR, which had for long had placed higher priority on its own security and internal development than on world revolution, focused more on developing a Soviet sphere of influence around its borders for security reasons after the war. Thus the USA, in providing aid to Europe, posed as a threat to the Soviet Union’s communism ideology. The Soviets viewed the Marshall Plan as an infringement on economic sovereignty, fearing it might lead to a spread of US influence into Eastern Europe, and hence compromising on the USSR’s security buffer. This led to the USSR perceiving the Marshall Plan as a capitalist plot, hence withdrew from it and “insisted that its East European allies do likewise, and subsequently embarked on a new foreign policy strategy: a strategy of isolation, and of the consolidation of Soviet and communist power in Eastern Europe as a counter to the emerging West European bloc signalled by the Marshall Plan”3. This effectively stopped cooperation and consultation between the USSR and the USA, as they realised the massive disparity between their political ideologies, which would be impossible to bridge.

Consequently, the USSR came up with the Molotov Plan, which was in essence the Soviet version of the Marshall Plan. It was created in order to provide aid to rebuild the countries in Eastern Europe that were politically and economically aligned to the Soviet Union, as they would be unable to receive aid from the USA under Soviet influence. The aid would allow European countries to stop relying on the USA, and hence rivalled the USA openly and directly. The Molotov Plan eventually led to the formation of the Council for Mutual Economic Assistance(COMECON). This proved of importance to the cause of the Cold War, as the USA felt that the USSR’s refusal to participate exhibited their hostility and accentuated mistrust among the two nations. It also signified a start of Soviet insurgence physically against the USA.

Also, Stalin consider

ed it essential to destroy Germany’s capacity for another war, which directly clashed with the

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US desire to rebuild Germany as the economic centre of a stable Europe. The USSR then uprooted and shipped the majority of the heavy industry in Germany. The West viewed these developments as violations of those nations’ basic rights and a clear disregard of the Yalta agreement, which clearly specified the splitting of Germany into four occupied zones, with only one under the USSR. The Soviets also perceived the American strengthening of West Germany and West Berlin as aggressive, provocative and threatening to its security because West Berlin was right in the middle of the Soviet Zone4. Stripping Germany of its economic power would create a tougher buffer state for the USSR, ensuring peace in the area. Additionally, the dispute over Germany escalated after Truman refused to give the USSR reparations from West Germany’s industrial plants because he believed it would hamper Germany’s economic recovery further. Stalin responded by splitting off the Soviet sector of Germany as a communist state. This proved that the two different points of views on how the shattered European economy, Germany in this case, led to a strong dispute of ideas and also setting the path for physical response and confrontation.

Though the above stated points clearly proved the huge margin separating the USA and USSR in their views on the shattered European economy, and how it progressed the rift between the two superpowers, there are also various other factors in different fields that fundamentally contributed to the development of the Cold War.

The main underlying political motive of the USA all the while, behind the economic concerns, was to prevent impoverished Western Europe from falling under Soviet communist control. Economic motives were secondary, coming under the one main factor of preventing the spread of communism. The real function of the Marshall Plan, though seemingly altruistic and purely economy-wise, was the containment of communism from the USSR, as with all the other policies of the USA. An economically strengthened Western Europe would be politically strong against communism and the spread of ideology from the USSR, due to the strong support it receives from the USA, as well as the absence of an incentive for sharing of economical gains, as with in a communist state.

The creation of Russia, the world’s first socialist republic, brought about a new set of ideology and system, which was alien to the capitalist world. The USA has always believed in individual freedom, whereas the Soviet socialism bestows limited freedom. A one party communist state, as well as a classless society where government has ownership of all industries and businesses, are characteristics of socialism. This is completely contrary to the features of Wilsonian democracy. Hence, the huge difference in political ideologies of the USA and USSR made it impossible for an acknowledged agreement upon a single interest. Liberal capitalism would without fail straightforwardly clash with Soviet communism politically, economically and culturally. As the clashes of national interests between the USA and the USSR increased, the mistrust and perception of security-ideological threats from each other also increased, and tension rose steadily, which slowly gave way to the Cold War.

Also, the presence of strenuous factors after World War II contributed to the causes of the Cold War. Firstly, the USA perceived the dominance of the USSR Red Army in Eastern Europe as an aggressive move, as they felt all these were not done openly while Roosevelt was ill. However, it was also defence on the part of the USSR, and helped liberate European countries from Germany.

Yet, the mutual misunderstandings between the USA and USSR once again deepened the rivalry and was a significant factor in causing the Cold War.

Another major contributing factor of the Cold War was the nuclear arms race between the USA and USSR. The USA’s use of the atomic bomb in the bombing of Nagasaki and Hiroshima led the USSR to feel that it was to overwhelm them with an atomic monopoly. The USA’s refusal to share its nuclear technology, with the purpose of not wanting to proliferate the technology globally, intimidated the USSR into placing security as its top priority. The USSR believed that the USA planned to develop nuclear weapons against them. Also, the rejection of the Baruch Plan, in which the development and use of all nuclear weapons are prohibited, by the USSR, further escalated suspicions between the two nations.

Also, the USSR’s interest in Iran and Turkey for oil, security and trade through the Black Sea Straits only led to a US naval fleet being sent down the Mediterranean, showing the US opposition to any change anticipated from the USSR. This demonstrated a direct resistance of the USA towards the USSR.

Many other small events also threatened the relationship between the USA and USSR. Stalin spoke in his election address to the Supreme Soviet in February 1946 about a future capitalist war. The USA regarded this as a war threat, and it intensified the American view on the USSR. Also, the birth of Communist China signified a rise of a communism monolith, which the US felt needed to be curbed in order to prevent the spread of communism across Europe or even across the other parts of the world. The growing number of events that worsened the relationship between the USA and USSR slowly led to the breaking out of the Cold War.

Therefore, in conclusion, I would agree that the Cold War broke out in Europe because the USA and the USSR disagreed fundamentally about how they should treat the shattered European economy, but only to a small extent. The USA and USSR had disputes over certain issues regarding the European economy, with the Marshall Plan and occupation of Germany being the main focus. I would attribute the USA’s drive for world economic hegemony5, with the USSR being a main obstacle in the face of a global market as one of the more important factors of the Cold War. However, there were also many other factors that led to the Cold War. The division of Germany and Europe, the nuclear arms race and birth of communist China also served to accelerate the breaking out of the Cold War. Yet, the most important factor which proved the alliance of the USA and USSR to be impossible would be the totally unlike political ideologies which both nations had in place. Capitalism would never be able to be put in effect with communism, and as such, a conflict would be sure to arise in fighting for a similar interest. Weighing the multiple factors that played a part in causing the Cold War, I regard the difference in ideology as the single most influential factor. It was in fact due to the different wants of the USA and USSR that many misunderstandings and problems arose, and the disagreement regarding the treatment of the shattered European economy was brought about by this factor.


1 Geoffrey Roberts, “Starting the Cold War”, in History Today Issue 38, London: 2000, pp.9-14.

2 John W. Young and John Tent, International Relations (Since 1945). p.70

3 Geoffrey Roberts, “Moscow and the Marshall Plan: Politics, Ideology and the Onset of the Cold War, 1947”, in Europe-Asia Studies Vol. 46. Taylor & Francis Ltd, 1994, pp.1371-1386

4 Geoffrey Roberts, “Starting the Cold War”, in History Today Issue 38, London: 2000, p.11.

5 Klaus Larres and Ann Lane, The Cold War. Malden: Blackwell, 2001.

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