The American economic recovery act, also known as Marshall Plan, helped in the recovery of European states aftermath of WW2, but it is also blamed for dividing Europe into east and west block. Discuss.

The European economy was totally devastated by the time world war 2 ended. However, differences arose between US and USSR during the Yalta Conference, also known as the Crimea Conference, which was the meeting of the heads of government of the United States, the United Kingdom, and the Soviet Union to discuss the postwar reorganization of Germany and Europe. Countries were being divided into free market economies under the US and socialist-communist economies under USSR.

The Marshall plan launched in the 1940s had two objectives:

  • Improve the economy of western powers by promoting free market and industrialization.
  • Prevent the spread of communism, by backing the economies of these countries.

On the other hand, USSR also launched its plan to tackle US objectives to spread capitalism.

  • East European countries under USSR had communist governments.
  • Strict government control over the economy remained in force.
  • Most of these countries were devastated by war, like Czechoslovakia, Romania, Bulgaria, etc.
  • The USSR government also provided help under the Molotov plan, but monetary assistance was far less.
  • State control led to problems in the economy of the USSR and satellite countries.

Thus by the 1960s, Europe was divided between developed and industrialized market economies of the west and backward, state-controlled economies of the east.

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