Top Photo: U.S. National Archives
The Marshall Plan and its Austrian Legacy
By Wolfgang Petritsch
2015 marks the 70th anniversary of the end of the Second World War and also the 60th anniversary of the regaining of Austria’s sovereignty. Within the 10 years between 1945 and 1955, Austria recovered successfully from the outcome of the Second World War. Although occupied by four powers after the war, Austria managed to reconstruct its economy, society and polity after the war. One important factor in this vast effort of reconstruction, especially with regard to the economy, was American Marshall Plan aid.
With the Marshall Plan, the United States supported European reconstruction after the Second World War; it was the largest economic aid program ever. Within the framework of the Marshall Plan – officially known as the ‘European Recovery Program’ (ERP) – every American citizen contributed an average of 80 U.S. dollars towards European recovery, at the time about two weeks’ pay for a skilled worker. The Austrian Federal Republic and its population profited enormously from the ERP: On a per capita basis, Austria ranked in the top three nations receiving Marshall aid with approximately one billion U.S. dollars transferred to Austria. In total, more than 13 billion U.S. dollars were poured into postwar Western Europe by the United States between 1948 and 1952.
The Marshall Plan - Crisis in Europe
Not only West Germany and Austria, but also the winners of the Second World War, i.e. Great Britain and France, suffered from postwar economic dislocation in 1946 and 1947. The principal reasons for the crisis were a bad harvest in the fall of 1946, followed by a very severe and cold winter 1946/1947.
During the winter/spring 1947, the United States became aware of Europe’s economic misery and realized they needed to initiate an aid program to avoid a humanitarian catastrophe in Europe. In June 1947, Secretary of State George C. Marshall delivered his famous Harvard commencement address. In what would soon be known as a “historical speech,” Marshall first outlined the European Recovery Program on June 5, 1947:
“A very serious situation is rapidly developing which bodes no good for the world. (…) The truth of the matter is that Europe’s requirements for the next three or four years of foreign food and other essential products – principally from America – are so much greater than her present ability to pay that she must have substantial additional help or face economic, social, and political deterioration of a very grave character. (…) It is logical that the United States should do whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace. Our policy is directed not against any country or doctrine but against hunger, poverty, desperation, and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist.”
The cornerstone of what would soon be called the “Marshall Plan” was finalized during a conference in Paris some weeks after the Harvard speech. Austria was one of the participants of this conference. In principle, the Marshall Plan was open to all democratic European countries; in fact, Austria - besides Germany - was the only country with a Soviet occupation zone that was allowed to receive aid through the Marshall Plan.
The motto of the Marshall plan can be summarized as: “Helping those who help themselves.” The simple but ingenious idea behind the Marshall Plan was not only to provide help, but also to help create a capital market. The United States put the Marshall Plan resources at the disposal of the Austrian government, which, in turn, was expected to make a large part available as credits to the Austrian economy. The Austrian economy was thusly provided with the necessary investments funds to restart its economy and solve its monetary problems. Austria also obtained urgently needed raw materials and capital goods from the U.S.
The credits extended through the so-called Marshall Plan “counterpart funds” were repaid in Austrian currency. These counterpart funds, distributed through the Federal Chancellery, created an investment bank of sorts. In 1962, the U.S. government transferred the assets of the counterpart funds to the Austrian government, which created the “ERP Fund.”
Austria’s industrial recovery, its rail network and hydroelectric power plants, roads and bridges, agriculture and tourism, and a public housing program were financed in large part by ERP counterpart funds.
The Austrian Legacy
The most important legacy of the Marshall Plan is that the ERP Fund continues to make the capital assets from the Marshall Plan available for investment in the Austrian economy. The capital generated by the initial grants of the Marshall Plan thereby is still at work in the Austrian economy today, supporting investments in many economic sectors. The ERP Fund is now part and parcel of the Austria Wirtschaftsservice (Austrian Economic Service).
It provides approximately 600 million euro of investments annually to Austrian companies to fund innovation and modernization projects. The total assets of the ERP Fund amount to approximately 3 billion euro. Next to the ERP Fund, the Austrian Marshall Plan Foundation is another legacy of the Marshall Plan still at work in Austria.
The Austrian Marshall Plan Foundation
The Austrian Government and the ERP Fund created the Austrian Marshall Plan Foundation on the occasion of the fiftieth anniversary of the European Recovery Program in 1997/1998. Its activities extend across Austria and the United States. The aim of the Foundation is the transfer of knowledge between the U.S. and Austria; it seeks to enrich the mutual understanding between the United States and Europe including Austria.
The Foundation particularly supports the cooperation between Austrian and American universities and academics by providing approximately 1 million euro every year for cooperative endeavors. This support is carried out in the framework of endowed professorships, student fellowships and scholarships, public lectures and discussions, and publications. The Foundation is proud of its mission: To generate and disseminate distinguished scholarships through individual and collective efforts, not only by scholars and students in Austria, but also through interaction with their American counterparts.
The Marshall Plan is considered one of the most successful political initiatives in history. In contrast to the high reparations demanded of the defeated powers after the World War I, American Marshall aid was characterized by generosity and political wisdom. George C. Marshall has to be credited with establishing an economic aid program that still creates positive impacts today.
The Marshall Plan impacted Austria and all of Europe with the ERP Fund and the Austrian Marshall Plan Foundation. The Organization for Economic Cooperation and Development (OECD), for example, is a direct outcome of the institutional set-up of the Marshall Plan as well, resulting in efforts of economic cooperation in all of Western Europe. Moreover, almost every politician advocating creative solutions to one of the many economic crises in the post-Cold War world (e.g. Ukraine, Greece, Syria), usually calls for a “new Marshall Plan.” The Marshall Plan thus has become synonymous with large scale economic or political aid programs. In 1953, George C. Marshall received the Nobel Prize for Peace for his efforts to set up the European Recovery Program.
Dr. Wolfgang Petritsch is the President of the Austrian Marshall Plan Foundation. He previously served as EU Special Envoy for Kosovo (1998-1999), EU chief negotiator at the Kosovo peace talks in Rambouillet and Paris (1999), and High Representative for Bosnia and Herzegovina (1999-2002).
Furthermore, he served as Austrian ambassador to the UN in Geneva (2002-2008) and to the OECD in Paris (2008- 2013); he also was the editor-in-chief of Austrian Information during his time as Director of the Austrian Press and Information Service (1988-1992). Most recently, he was the Joseph A. Schumpeter Fellow at Harvard University (2013-2014).
The Austrian Marshallplan Foundation Today
- The University of New Orleans (Rotating, Social and Economic Sciences
- Johns Hopkins University (SAIS), Washington, D.C., International Relations
- Forthcoming: Technical University (TU) Vienna, Smart Manufacturing
Three Fellowship Programs (~ 110 Fellows per year)
- The Marshall Plan Scholarships in the field of technical sciences
- The UC Berkeley Program in the field of social- and economic sciences
- The Johns Hopkins Program in the field of International relations
Track Record (End of 2014)
- 415 Marshall Plan Scholarships in the field of technical sciences
- 71 Berkeley Program Fellows
- 16 Professorships in New Orleans
- 10 Johns Hopkins Fellows
For more information and application information, please visit www.marshallplan.at