It Takes More Than Money to Make a Marshall Plan

Benn Steil and Benjamin Della Rocca

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The Marshall Plan, the historic U.S. aid initiative to speed western Europe’s recovery after World War II, is rightly legendary for its vision and accomplishments. The $13.2 billion the United States dedicated to the Plan from 1948 to 1952 would be worth a substantial $135 billion in today’s money. Although it is widely understood that the United States spent enormous sums fighting the recent wars in Afghanistan and Iraq, it is much less well known how much was spent on reconstruction. Through 2017, the total was $208 billion, in today’s dollars. This is over 50% more than the totality of Marshall aid, in today’s dollars. Yet the United States has tragically little to show for it.

There are many differences in the circumstances then and now, but two bear particular notice. The first is the presence of a capable, largely apolitical bureaucratic infrastructure, willing and able to carry out coherent reconstruction and reform programs, in the Marshall countries. The second, more important, is the presence of far greater internal and external security in the Marshall countries. Critical external security guarantees came from the United States, in the form of NATO, in 1949. In fact, NATO became known in the State Department as a “military ERP,” or European Recovery Program—the official name of the Marshall Plan.

In contrast, the Afghan and Iraqi governments have faced vastly less favorable circumstances than those of the Marshall countries. They never achieved full control of their territory. Instead, they have been under constant siege from armed domestic and foreign opponents, such as the Taliban and ISIS. Their governments were not, unlike Marshall governments, natural allies of the United States, which has in turn been at odds with alternative neighboring benefactors such as Iran.

In short, the foundation that enabled American economic statecraft to be so successful in postwar Europe is lacking in the cases of Iraq and Afghanistan. Given the insatiable desire to create new Marshall Plans around the globe, it is important to recognize that physical security is prerequisite for economic security.