This document summarizes the key events and organizations that emerged in post-WWII Europe and globally in response to tensions with the Soviet Union. It discusses the Marshall Plan to rebuild Western Europe's economies; the division of Germany and Europe along capitalist/communist lines; the Bretton Woods agreement establishing the IMF, World Bank and international monetary system; the founding of the UN; and the creation of NATO as a military alliance to deter Soviet aggression in Europe. These developments laid the foundations for the post-war global political and economic order.

1. The Cold War Part 2
A New Europe & A New Order

2.  Europe Remade
 European Recovery Program
 Political Consequences
 Division of Germany
 Creating The New Order
 Bretton Woods
 The United Nations
 NATO

3. As the United States attempted to contain the
spread of Soviet power, they faced the
possibility of losing all of Western Europe to
communism. This encouraged the U.S. To
massively finance the rebuilding and economic
recovery of Europe. Likewise, these tensions
saw the occupation of Germany coalesce into
an eventual division of that country by the two
power blocs.

4. With the economies of
Western Europe
seemingly unable to
recover from the Second
World War and Stalin
predicting the collapse of
their capitalist system,
the U.S. government
attempted to find a
solution.

5. Ultimately, their
proposal to solve the
postwar European
economic crisis came
to be known as the
'Marshal Plan', after
wartime army chief of
staff and then current
secretary of state
George C. Marshall.
George C. Marshall

6. The plan entailed
providing the various
European nations
with a badly needed
infusion of capital: it
was mostly a lack of
funds that had kept
the Europeans from
being able to rebuild
after the war's
devastation.

7. While the plan had not
excluded the communist
states from receiving
recovery funds, the USSR
declined this aid package
with its allies falling in
step.
Distribution of American Aid

8. After wrangling in congress,
the plan was approved, in
part because of the
argument that European
states would use the money
to buy American products
and resources, while
likewise increasing Europe's
future purchasing power,
further benefiting the
American economy.

9. The plan went into
effect in April 1948,
and kick-started a
period of remarkable
growth in Western
Europe that would
last for over two
decades.

10. Just as the non-communist parties were being
marginalized and eliminated in Eastern Europe, in
Western Europe the communist parties which had
recently been growing in popularity were targeted.

11. While the indigenous communist parties of
Western Europe were willing to work through
legitimate channels to achieve power, Stalin
insisted they wage a relentless campaign
against the Marshall Plan, which he believed
was an instrument to secure American
hegemony.

12. As such, the Soviets established the 'Communist
Information Bureau' (Cominform), ostensibly help
coordinate the actions of the various European communist
parties (and functionally to oppose the implementation of
the Marshall plan).

13. Meanwhile, the newly formed Central Intelligence Agency
(CIA) of the United States helped finance a variety of
anticommunist measures and organizations, assisting in the
electoral defeat of the French and Italian communist parties.

14. So, while the Soviets
had eliminated non-
communist parties in
their satellite empire
between 1945-1948
through intimidation
and the threat of force,
the U.S. and its allies
had likewise eliminated
the threat of
communist electoral
success in Western
Europe through
equally successful
covert action and
economic incentives.

15. With the end of the
Second World War,
Germany had been
divided into four
occupations zones
(American, British, and
French in the west,
Soviet in the east) while
the capital city of Berlin
(though located inside
the Soviet zone) was
itself divided into four
occupation zones.

16. While the allies had originally intended to treat the
defeated nation as a single entity, attempts to solve the
economic problems of Germany undermined this
resolve.

17. While the allies had agreed that
Germany would have to pay
reparations to the victims of its
aggression (principally the
Soviet Union) the Anglo-
Americans grew frustrated as
they were required to support
the destitute population of
Germany with food and funds
while the Soviets stripped their
occupation zone bare of every
conceivable resource (thus, the
western nations were indirectly
financing the Soviet Union's
postwar reconstruction).

18. When the squabbling
over the economic
future of Germany
proved insoluble, the
Western powers
decided to simply unite
their three occupation
zones into a single
national entity.

19. Stalin attempted to forestall this, as a rebuilt and
American allied West German state would draw away
the population of East Germany, while acting as the
potential spearhead of an anti-Soviet capitalist coalition.

20. A manufactured crisis
saw the Soviets
enforce a total land
blockade of Berlin,
thus putting pressure
on the allies to back
down from their
unilateral plans to
create a new German
state from their
territories.

21. However, a massive
American airlift
sustained the city's 2.5
million inhabitants
during the 11 months
of the Berlin
Blockade, and Stalin
eventually called it off
when additional
negotiations were
agreed to.

22. Ultimately however these proved fruitless, and on May
23rd, 1949 the new German Federal Republic was
formed under Chancellor Konrad Adenauer.

23. The new West German state, with the aid of American
funds and under the brilliant direction of its minister of
economics Ludwig Erhard, embarked on a recovery so
successful it was referred to as the 'Wirtschaftswunder'
(economic miracle).

24. The Soviet zone was then converted into the communist
German Democratic Republic, a loyal subject-ally to the
USSR.

25. In this way Germany, much like Europe as a whole, was
divided into a democratic capitalist west and an
authoritarian communist east, and would remain so until the
end of the Cold War.

26. Having suffered the privations of the Great
Depression and the horrors of the Second
World War, the Allied Powers were
determined to build a better future for
humanity. This determination laid the
foundations of the major organizations dealing
with economics, diplomacy, and defence in the
modern era. These decisions, made in the mid
to late 1940's, helped to create the world of
today.

27. The depression of the 1930's had devastated world trade,
as countries erected protectionist barriers and devalued
their currencies in a vain attempt to prevent economic
decline.

28. In order to reinvigorate international trade a new
monetary system was negotiated in the summer of 1944
at the Bretton Woods conference.

29. In essence, the U.S. dollar could be freely exchanged for a set
value of gold (initially $35 an ounce), and individual
national currencies would be pegged to the U.S. dollar.

30. As such, the Bretton
Woods System
reduced the risk of
investing and trading
abroad, as money
converted into a
foreign currency
wouldn't lose its value
due to erratic monetary
policies as had been
the case in the
depression.

31. Another element of Bretton Woods was the creation of
two new financial institutions: the first of these was the
International Monetary Fund (IMF), for providing
short term loans to countries.

32. The second was the International Bank for
Reconstruction and Development (commonly known
as the World Bank) which provided long term loans for
economic development.

33. To address the issue of trade barriers that had been
erected during the depression, the General Agreement
on Tariffs and Trade (GATT) was established, which
sought to foster negotiations to reduce these complicated
trading restrictions. Thanks to this, world trade
expanded dramatically and continued to do so until the
early 1970's.

34. While the failure of the
League of Nations to
prevent the Second
World War was
egregious, Allied leaders
were determined to
establish some sort of
postwar system for
collective world security,
as exemplified by the
Atlantic Charter.

35. The new organization adopted the name 'United Nations',
which had been the official name for the Allied Powers of the
Second World War, and would consist of three main
institutions:
•Security Council
•General Assembly
•Secretary-General

36. The Security Council would deal with matters of peace
and security, and would give the 5 permanent members
(U.S., Britain, China, USSR, and France) a veto on any
decisions made there.

37. The General Assembly would consist of every member
state with equal voting power, and would be limited to
debate, discussion, and recommendations.

38. Finally, a Secretariat would carry out day to day
business and implement the policies of the Security
Council, and would be headed by the U.N. Secretary-
General.

39. After negotiations beginning in April with Nazi
Germany in its death throes, on 26th June 1945 as the
war continued to rage in the Pacific, the U.N. Charter
was signed by 51 countries in San Francisco and came
into effect in October that year.

40. While hopes were initially
high for the new
organization, a breakdown
of cooperation by the
wartime allies led to it
becoming hopelessly
deadlocked, and with the
exception of a few early
successes.

41. One of these notable early
successes included the
resolution of the Kashmir
dispute between India and
Pakistan.

42. Another U.N. success
was the partition of
the British Mandate of
Palestine.

43. Unfortunately beyond a number of early successes, the UN
proved incapable of preventing conflict in the world. Indeed,
despite agreement at the UN both the conflicts in Kashmir
and the British Mandate of Palestine continued in varying
forms.

44. It would fall once again to regional military alliances to
provide defence and security for the world's nations,
just the kind of thing the U.N. and its predecessor the
League of Nations had hoped to make unnecessary.

45. The non-communist states of Western Europe feared
that the increasingly powerful Soviet bloc might
eventually prove a serious threat to their own security.

46. In March of 1947 the
U.K. and France signed
a security treaty, and a
year later an agreement
known as the Brussels
Treaty included
Belgium, the
Netherlands, and
Luxembourg in this
defence pact.

47. It was evident however that this alliance was not nearly
powerful enough to defend itself in a potential war with
the Soviet Union and its satellite allies. As such, secret
negotiations began with the United States (to which
Canada was also invited) to examine its possible entry
into this organization.

48. While the U.S. congress was controlled by the
traditionally isolationist Republican party, support for
the new internationalist foreign policy won out.

49. However, the American
preference for a massive
and swift postwar
demobilization meant
that there was a lack of
U.S. military forces to
actually contribute to
this proposed alliance.

50. This was altered by the Soviet Union's aggressive actions
in Eastern Europe, and as a result conscription was re-
established, providing the U.S. with the large army it
required.

51. After additional negotiations, on April 4 1949 the U.S.,
Canada, the Brussels Treaty powers, and 5 other nations
(Italy, Norway, Denmark, Iceland, and Portugal) signed the
North Atlantic Treaty, pledging them all to mutual defence.

52. This new military alliance, Known as the North Atlantic
Treaty Organization (NATO), signalled an end to
American isolationism, as well as their traditional
disdain for European affairs.

53. From this point on the liberal democracies of Western
Civilization would stand united against potential
aggressors, the most obvious of which was the Soviet
Union and its communist bloc.