Ireland and the Marshall Plan: Reflections 70 years On
By Professor Bernadette Whelan, Associate Professor Emeritae, University of Limerick
History, both domestic and international, is littered with a plethora of plans and programmes. Many have become footnotes in scholarly works and are often only recalled by researchers. It is notable that the Marshall Plan (the European Recovery Programme) is still recalled seventy years on from its inception, despite the fact that it lasted only four years, ending in 1952. The immediate questions to be asked are what was the Marshall Plan and why was Ireland included in it?
On 5 June 1947, George C. Marshall, US Secretary of State, painting a grim picture of conditions prevailing in post-world war two Europe, offered financial and, technical assistance, and economic advice to European countries totalling $13 billion, the equivalent of approximately $130 billion in 2017. Governments that accepted the offer would have to produce a joint plan of their needs; in this way, Europe would co-operate and recover along democratic, capitalist lines. Ireland was one of the sixteen countries that accepted the invitation to participate in the European Recovery Programme (ERP) also known as the Marshall Plan. From the beginning of this plan, not all participant countries were treated equally.
Ireland’s inclusion in the ERP was surprising because its wartime policy of neutrality still rankled in the US State Department, the White House, and Congress. On the other hand, the US government could not afford to exclude Ireland, because of its strategic importance to US and British security and its role as an exporter of food to Britain. More importantly, omitting Ireland would have been contrary to the US aim of uniting Europe. Also while anti-communism had long been a feature of Irish life, George Garrett, US minister to Dublin, believed that Ireland was as vulnerable as any other European country to communist infiltration as a result of deteriorating economic and social conditions. However, the US government did illustrate its disapproval by awarding Ireland only $128.2 million in loan aid and $18 million in grant aid between 1948 and 1952, representing the second-smallest grant awarded to any of the ERP countries.
The response of the Éamon de Valera-led Fianna Fáil government was influenced by economic and political concerns. In June 1947, the Irish economy continued to display the effects of wartime dislocation: rationing, rising inflation, falling living standards and frequent strikes. Ireland also shared many of the prevailing European economic trends: increasing reliance on the dollar area for imports and a worsening balance of payments position. In order to obtain vital imports, London’s dollars had to be exchanged for Washington’s dollars. Against this economic and financial background, and with Irish political and diplomatic resources directed at rehabilitating an international reputation damaged by neutrality, Ireland had little choice but to participate in the ERP.
The work of using the dollars began in September 1948 when officials from the Economic Co-operation Administration (ECA), the US body that supervised the Marshall Plan, arrived in Ireland. From the beginning, Washington’s plans for Ireland emphasised agricultural development, and this was reflected in the backgrounds of the men appointed as ECA chiefs of mission to Ireland. Joseph Carrigan (1948–50), Paul Miller (1950–1) and Albert Dexter (1951–2) had all taught agricultural science either at university or high school level and had been involved with agricultural extension programmes. Their focus on agriculture coincided with those of Irish policy-makers at least until the 1949 devaluation crisis, when ECA attention shifted to the industrial sector – which could export to dollar markets – and the tourism sector, as a way of boosting dollar earnings.
Unlike most of the other ERP participant countries, ERP aid did not result in economic prosperity in Ireland. But ERP-funded imports totalled 17% of total imports in the period 1948–51. Between 1949 and 1952, 49.5% of the government’s capital expenditure programme was funded by the ERP. Substantial impetus was given towards supporting rural electrification, reforestation, land reclamation and the provision of houses and hospitals. After ERP ended, grant aid assisted schemes to improve land, to reduce bovine tuberculosis, to establish the Agricultural Institute (An Foras Talúntas), the Fulbright programme and the Institute for Industrial Research and Standards.
The Irish Countrywomen’s Association, Muintir na Tíre and Macra na Feirme also received aid. All the projects sought to improve the economy through increased productivity. Funding for some of them did not come through until the mid-to late 1950s, when, ironically, the political climate was more attuned to such messages than during the ERP years; part of the long-term impact of the ERP may, therefore, be dated from this time onwards. Under the ERP Technical Assistance Programme (TAP), by the end of 1952, 37 visits to the US had been undertaken by representatives from government departments, semi-state bodies, rural organisations, trade unions, employers and university students. Additionally, five projects involved visits to Ireland by US experts. The significance of the TAP cannot be appraised in terms of dollars spent or structures put in place (the first productivity body in Ireland was established in 1959), but rather in terms of the transfer of skills and knowledge, specifically messages that emphasised efficiency and productivity, market diversification, export promotion, tourist development, attracting foreign investment and trade liberalisation. The key concepts of growth, modernisation and prosperity characterised as the ‘American way’ were publicised through an ERP-funded propaganda programme.
When Marshall Aid to Ireland was suspended in May 1951, Irish economic policy remained concerned with maintaining the privileged position for agricultural exports within the British market and protecting indigenous industry. Furthermore, a change of government in 1951, combined with a recurrence of balance of payments problems, forced the government to adopt restrictive fiscal measures that led to economic depression.
In political terms, though the Organisation for European Economic Co-operation (OEEC) provided Ireland with a valuable opportunity to break out of its isolationist position, it remained on the periphery of the key American objective – European integration – until the early 1960s. It also refused to join the North Atlantic Treaty Organisation (NATO), and by raising partition at various European forums it annoyed Washington policy-makers. Their hostility was more than obvious when Ireland refused to agree to the ERP successor legislation, the Mutual Security Act, because of the implications for Irish neutrality.
The Marshall planners revealed major weaknesses in the Irish economy and while ERP’s economic lessons could be ignored in the short term, they could not be ignored in the long term. Thus, examining the legacy of the ERP for Ireland reveals that from the early 1960s onwards the Marshall plan messages of foreign investment, increased productivity and efficiency, and long term planning facilitated economic growth. In political terms, the continued, albeit minimum, engagement of Irish officials in the OEEC during the 1950s ensured some level of engagement with the evolving European integration project and contributed to the first Irish application to join the European Economic Community in 1961.
In subsequent decades, the Marshall plan was the subject of new empirical research and revisionist critiques when mainly European scholars such as Alan Milward, argued that western Europe except for France and the Netherlands, would have recovered economically and financially on its own without US resources. However, American historians particularly Michael J. Hogan, emphasised the generosity, vision and breadth of the Marshall Plan, its central concept of public/private partnership and its external aid model; an interpretation that still resonates with politicians facing international crises and domestic problems. On 8 July 2017, German Chancellor Angela Merkel told the G20 leaders in Hamburg that ‘we in Germany have a fundamental interest of good economic development in Africa and that’s why we are discussing a Marshall Plan for Africa’. Marshall plans have also been mooted for the Soviet Union, eastern Europe, the European Union, Asia, Africa, the Middle East, Central America, Latin America, the Balkans, Haiti, Greece among other places.
The Marshall Plan concept is raised also as a solution for large-scale problems such as poverty in US cities, the under-developed EU regions, to deal with global problems relating to the environment, immigration, development, disasters, and George Soros has been described as a ‘one-man Marshall Plan’. More ridiculous analogies include the actor Nicole Kidman following a ‘Marshall Plan’ to win her first Oscar award in 2002 while Marina Hyde in The Guardian on 19 August 2017 suggested that the ‘Big Ben debate makes the “bring back the royal yacht” idea look like the Marshall plan’.
In Ireland the plan remained alive in people’s memories to offer political, economic and educational solutions for Northern Ireland. Bob Geldof called for a European Marshall plan to reconstruct destitute African countries. European Central Bank (ECB) loans to Ireland to buy ‘toxic loans’ at a 1.5 per cent interest rate were described by Senator John Hanafin in 2009 as a ‘Marshall Plan for Ireland from Europe.’ Minister for Justice Alan Shatter described his approach in the Personal Insolvency Bill 2012 to get ‘those in genuine difficulty back on their feet to give them hope for the future’ similar to the idea underpinning the Marshall plan. Other politicians called for a bold initiative like the Marshall plan to deal with child poverty and urban privation in Ireland.
The term ‘Marshall plan’ gathers over 20 million hits in a Google search thus confirming that the programme plan was not just a model for external economic aid to achieve a common goal between 1947 and 1952. It became a metaphor for large-scale co-operation, vision, altruism and generosity and it became a myth as the world it helped create has utterly altered, the Atlantic alliance is weakening and few contemporary proposers explain how it can be replicated. Instead it might be argued that the Marshall Plan focus on public-private partnership, trade liberalization, freeing up intra-European payments and trade, market organisation and financial stability were its most enduring legacy reinforcing to-day’s dominant neo-liberal economic ideology.
Bernadette Whelan’s book, Ireland and the Marshall Plan, 1947-57 (Four Courts Press 2000) is the standard work on this topic.