70th Anniversary of the Marshall Plan Speech

Reading some of the comments and prescriptions outlined by then U.S. Secretary of State George C. Marshall on June 5, 1947, I am struck by their contemporary relevance and applicability to other, non-European situations.

He spoke of the people of United States being “distant from the troubled areas of the earth and it is hard for them to comprehend the plight and consequent reactions of the long-suffering peoples.” The plight he described as the dislocation of the entire fabric of societies and economies caused by conflict. The remedy he proposed would lie in breaking the vicious circle caused by disruption and restoring confidence of people in the future of their own countries. The program of recovery should be drawn up and owned by the countries concerned themselves. Without return of normal economic health in the world “there can be no political stability and no assured peace.”

Although Secretary Marshall’s speech was aimed at motivating U.S. response to the postwar situation in Europe, the principles and assessments applied to other contexts as well. On January 20, 1949, President Truman, in his since famous “Four Points” spoke of U.S. support for the UN, the Marshall Plan, NATO, and the need to “embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas.” This fourth point envisaged a “program of development based on concepts of democratic fair dealing,” since “commerce with other countries expands as they progress industrially and economically.” But economics were not the sole focus. Democracy alone, Truman argued, was able to “supply the vitalizing force to stir the peoples of the world into triumphant action, not only against their human oppressor, but also against their ancient enemies — hunger, misery and despair.”

Although the reasoning behind these suggestions is logical, they have not commanded universal or consistent support in the United States. Truman’s Point Four program cleared the U.S. Senate in May 1950 by one vote. And ten years later, commitment to Truman’s program had waned so significantly that then Senator John F. Kennedy on May 4, 1959, argued that the United States “ought to return to the generous spirit in which the original Point Four program was conceived… we cannot be an island unto ourselves.”

Following the Bretton Woods conference, the World Bank and IMF were set up to support international liquidity and postwar recovery, but agreement could not be reached then on an International Trade Organization, which was meant to monitor trade but also provide technical assistance to developing countries to set up industries, and tariff preferences for developing country manufactures. Agreement could only be reached to set up the General Agreement on Tariffs and Trade (GATT), to initiate tariff reduction negotiations among participants, and as an element in postwar reconstruction of Europe. The WTO, GATT’s successor organization, closer to the ITO originally envisioned, was eventually established in 1995, but its latest round, the so-called development round which was meant to work toward Truman’s fourth-point goal of assisting developing countries’ industries has been stalled for years.

The spirit of international solidarity pushed by U.S. administrations, despite the obvious economic and political justifications, has waxed and waned over time depending on the overall global political context and compulsions. The postwar bloc rivalry, and the need to garner support from the newly independent and decolonized countries was one such compulsion. It found the necessary reflection in Truman’s Point Four. With the dissolution of the Soviet Union in 1991, this compulsion evaporated, and the “Washington Consensus” emerged advising the capital scarce countries to rely essentially on inflows of private capital. The Rio Conference on Environment and Sustainable Development in 1992 sought to revive international solidarity, based on common but differentiated responsibility, and in view of the inevitable impact on all from climate change. From the perspective of developing countries, however, this did not translate sufficiently into additional financial flows, or technology transfers. Nor was there a clear consensus for these policies in the United States. In 2001, President Bush rejected the Kyoto protocol agreed to by his predecessor.

There is some speculation now about countries that could step into this leadership vacuum. Chinese president at Davos in January this year and their prime minister during a visit to Germany at the end of May spoke of sustaining the present trade and environmental norms. Their Belt and Road Initiative, launched globally at a Forum in Beijing on May 14–15, aims at expanding Chinese economic and geopolitical presence in Asia, Africa, and Europe, and providing outlets for surplus Chinese capital and industrial capacity. But there is concern at the terms of such cooperation, their lack of transparency, and there have been negative reactions and consequences in several countries including Sri Lanka and in Africa, where this strategy has been applied so far. Europe could also attempt to take the lead, but faces constraints on account of its internal economic and political challenges and continued internal opposition to the nature of the European integration project.

The world is clearly facing today a crisis of globalization and solidarity. Groups in the United States that felt disadvantaged by the trends have struck back, and attempted to do so in Europe. President Trump’s decision to walk away from the Paris climate agreement and abdicate international responsibility for one of today’s great global challenges draws attention once again to the principles and approaches enunciated by Secretary Marshall some 70 years ago — and reminds of the great opportunities that could be missed.