Why There Was No ‘Marshall Plan’ for Eastern Europe and Why This Still Matters

Abstract

Starting with an overview of the design and impact of the original Marshall Plan, this article explores the question of why the EC/EU failed to set in motion a similar project for Eastern Europe—purposefully targeted massive foreign aid conditioned upon cooperation among the recipient countries that could have encouraged productive investment and regional integration. Three elements of the Marshall Plan played a crucial role in the making of post-war economic miracle in Western Europe—regional integration that laid the basis for self-sustaining growth, a developmental state, and a balance between free market policies and social cohesion. It was the absence of these three elements from the Western strategy for Eastern Europe that made the latter relapse to its peripheral status. Indeed, precisely the opposite pattern was transplanted onto this region—economic fragmentation, the progressive withdrawal of the state from various redistributive and social functions thus effectively limiting its role to that of a guardian of the free market, and an organization of social forces that favoured economic liberalism at the expense of social cohesion. Salient features of the contemporary Eastern European capitalism are high share of foreign ownership of industrial and financial assets, large and growing dependence on capital imports, and trade dependence.