ABSTRACT
Figure 26.1 The influence of the world market on the CMEA 415
IBRD and IMF fail to come up to the mark
That the Bretton Woods institutions IBRD and IMF were unable to finance the recovery of the European economies was the economic background to the aid provided for the reconstruction of Europe, as announced in 1947 by US Secretary of State George Marshall. In effect both institutions hindered the transition to postwar recovery. ‘Keynes had been right. The IMF and IBRD were too small to do what they were supposed to do, namely provide the huge sums needed to finance the European recovery.’ At the beginning of 1947 the European economic recovery was stagnating and ‘the Fund and Bank were proving inadequate to do much about it’ (Moffit 1983, 26). The problem was that the US had the largest production capacity and fewer import needs than the rest of the world and also exported large quantities of goods, but a lack of dollars and gold meant that the European states were unable to pay for their imports. If the US was to avoid European bankruptcy it had to tackle this problem on a grand scale, without involving the IBRD and IMF. The solution was the Marshall Plan, that lent and donated more than 12 billion dollars to Western Europe and Japan between 1948 and 1952. During the same period the expenditure of the IBRD and IMF did not even reach three billion dollars.
