History of Postwar Germany: 1945-1947.

                Great Britain, the Soviet Union and the United States discussed how a defeated Germany was to be treated, and determined the “negative” aims of demilitarisation, disarmament and denazification, and the prosecution of war criminals. The representatives of these Big Three powers agreed at the Yalta Conference in February 1945 that the country was to be divided into four occupation zones administered by American, British, Soviet and French military governments, and Berlin into four sectors, and administered jointly by a four-power authority. The supreme military commanders of the four Allied contingents and France were to administer their respective zones of occupation in accordance with instructions from their governments, and were to deal jointly with all matters relating to the country as a whole. An Allied Control Council was established as a governing body for this purpose with an administrative infrastructure to look after different matters to replace the functions of a national German government. Disagreement between the western powers and the Soviet Union were apparent over the questions of reparations and redrawing the boundaries of postwar Poland, which diverted from the Atlantic Charter as a joint declaration released by U.S. President Franklin D. Roosevelt and British Prime Minister Winston Churchill on 14 August 1941 that provided a broad statement of U.S. and British war aims, whereby they would not demand heavy reparations and seizing territory from Germany. This agreement could not be maintained in view of maintaining postwar cooperation with the Soviet Union and in recognition of its war efforts. These matters concerning the postwar division and occupation were further addressed, albeit not altogether resolved, at the subsequent Potsdam Conference of July-August 1945, while specific policy proposals that could be implemented uniformly in postwar Germany as a whole remained lacking.
Unlike during the First World War, Germany in the last years of the Second World War became a war scenario that followed with total defeat, widespread destruction constituting complete collapse, while the dismembered country and its capital was divided into four separate military occupation zones. By the end of the war, Germany had lost six percent of the prewar population, totaling nearly seven million killed among an estimated 3,250,000 military and 3,640,000 civilian casualties, with 2,000,000 wounded. Over one quarter of all houses were destroyed, and over half of them in most cities. The Sudetenland Germans, along with those who had lived in Poland in prewar Pomerania and Silesia, Hungary, Romania, Yugoslavia and former East Prussia that represented the origin of German militarism as Nazi Germany’s first military district, often at the hands of revengeful violence against vulnerable non-combatant populations were unable to leave out of their own volition who were forbidden from evacuating from threatened areas by Nazi authorities, or organised evacuations when they were threatened by allied advances.
Approximately one-third of northern East Prussia, which Stalin had demanded as early as the Teheran Conference become part of the Soviet Union, was annexed by the Soviet Union, including the city of Königsberg, becoming renamed Kaliningrad, to fulfill the demand for a year around ice free port on the Baltic Sea as a strategic exclave. The southern part of East Prussia, as well as all German areas east of the Oder and western Neisse rivers, along a line approximately 50 miles east of Berlin, became Polish on 17 October 1946 when the borders between the USSR and Poland were finalised. Millions of Germans had become refugees as a result of the expulsion of ethnic Germans from eastern Europe in the largest population transfer in European history, beginning with evacuations and disorganized fleeing westward that had taken place during the war in the face of the Soviet military advances. These flows of refugees were followed by organised brutal postwar expulsions from different eastern European states that considered German ethnic minorities of inhabitants who had been descendants of German eastward emigration for centuries, or became residents of these countries following the dissolution of the Hapsburg empire, composing a total of approximately 14 million people, as a suspected collective potential threat to the stability of their postwar governments, including in Poland in the newly-acquired territories east of the Oder and western Neisse Rivers, Czechoslovakia, particularly in the former Sudetenland. Hungary, Yugoslavia and Rumania, which further burdened the physical resources of what remained of available food and shelter in the remaining two-thirds of postwar occupied Germany. Most of the remaining German residents in northern East Prussia were forced to leave for the Soviet occupation zone during 1947, while lacking any means of income or financial support, apart from specialists who were engaged in the postwar reconstruction until the early 1950s, while this territory was repopulated with relocated Soviet citizens to contribute to rebuilding its devastated economic life.
Vast amounts of properties were damaged or uninhabitable, governmental administrations were non-existent, food supplies were broken down, unexploded ordinance was common everywhere, schools were closed, and medical care was virtually non-existent. Hunger and diseases were rampant during very poor living conditions. Millions of German soldiers remained in foreign prisoner of war camps, and the last survivors from Stalingrad only returned in 1955. There was also very severe material damage as every major city was in ruins. Over one quarter of all houses were destroyed, and in most cities, over half of them. In the case of Düsseldorf, ninety-three percent of the houses were left uninhabitable. Meanwhile, the basic economic infrastructure of Europe had ceased to exist, as the financial system had been destroyed and international trade was completely disrupted, and industrial production was down to one fifth of the prewar level. The administration of justice was brought to a complete standstill. Various reconstruction tasks were thus to be implemented by civil affairs divisions military personnel following the allied fighting forces, including restoring food supplies, infrastructure and communications, and thereby enlist Germans to contribute to the postwar reconstruction of the remaining seventy-five percent of prewar Germany outside the postwar territorial annexations.
        Apart from the negative immediate effects of the defeat that took place before and after the signing of the unconditional surrender that was characterised by widespread instances of physical and sexual assaults and looting by Soviet troops, constructive measures were to take place in the form of various forms of reconstruction. Colonel-General Nikolai Berzarin took immediate control of Berlin following the unconditional surrender by dissolving any political representation and confiscating any weapons in the city, while securing the immediate food supply to the city’s population, providing immediate medical care, provide shelters for refugees and civilians and clear war damage, and then institute repairs and restore infrastructure. Long term plans for Berlin and Germany as a whole were to be implemented during the temporary military occupation were determined at the Potsdam Conference in July-August 1945. The Potsdam Declaration on Germany stated that the victors intended to provide the Germans with “the opportunity to prepare for the eventual reconstruction of their life on a democratic and peaceful basis.” The four zones of occupation and the establishment of an Allied Control Council, already approved at the Yalta Conference, were once again recognised, and the aims of Allied occupation policy were specified as (1) disarmament and demilitarization; (2) denazification and the trial of war criminals; (3) democratization of Germany’s political, educational, and judicial systems; (4) decentralisation of her political structure and emphasis on local self-government; and (5) deindustrialisation of war and heavy industries and placement of primary emphasis on agriculture and peaceful domestic industries. Most of these aims had already been agreed on in principle at Yalta and were here merely restated.
       There were two other subjects that had already caused indecision at Yalta and that continued to cause matters of concern at the Potsdam Conference. These were Germany’s eastern frontier and the payment of reparations in kind, rather than cash that proved to be disastrous for reconstruction following the end of the First World War. Without notifying the allies, Russia had entrusted Poland with the administration of German territory east of the Oder and the western, rather than eastern, Neisse rivers three months earlier, and had taken over the northern part of East Prussia and extended the border of Ukraine westward. Faced with this fait accompli, the western powers were forced to recognise “in principle . . . the ultimate transfer to the Soviet Union of the city of Königsberg and the area adjacent to it.” However, that the final delimitation of the German-Polish frontier was to be postponed until a definite peace settlement was reached. This resolution did not preclude Poland from subsequently expelling most of the Germans from the region east of the Oder-Neisse line and from claiming that the term “delimitation” merely applied to details of the frontier. Poland thus acquired almost one-fifth of Germany’s pre-1938 territory.
          The exodus of Germans who had lived along the Baltic Sea would be initially housed in internment camps in Denmark, where some remained until 1949, following seaborne wartime evacuations or fled westward overland on their own volition, with an estimated five hundred thousand, or twenty percent of the population of East Prussia having evacuated prior to the Soviet offensives. Others during the postwar period would be forced to trek on foot or rail from other countries, including Poland, Czechoslovakia, Hungary, Romania and Yugoslavia, along with an estimated over twenty-thousand ethnic Germans who had been living in the Netherlands, in what would become one of the extensive ethnic cleansing programmes in history in the interest of establishing postwar nationalism, and considering ethnic Germans within the postwar boundaries as a potential threat who could undermine their countries from within, and therefore their mass expulsion was considered to be necessary for civil stability by preventing ethnic based violence, in addition to retribution for crimes that had been committed during the Nazi occupations of these countries. Those who were forcibly deported, as was sanctioned at the Potsdam Conference, among whom up to an estimated two to three million perished as a result of facing inhumane conditions and physical assaults out of an estimated fourteen million displaced people, were initially housed in refugee camps for indefinite periods of time until housing could be made available. In addition to an estimated nine hundred thousand ethnic Germans who had lived in the Volga region in the Soviet Union who were dispersed into different regions, other Germans were deported into remote parts of the Soviet Union to work as forced labour to engage in reconstruction as a form of reparations.
          Not any final decision was reached at Potsdam on the total amount of German reparations, although Russia continued insisting on its share of ten billion dollars as the amount that had been set only tentatively at Yalta, which was to be collected through removal of industrial equipment from the Russian zones of occupation and from German external assets. Each occupation power was empowered with extracted reparations were to be extracted separately from their respective occupation zones. The Russians were to receive an additional 25 percent of the industrial equipment in the western occupation zones that was not needed for Germany’s own postwar economy, in exchange for foodstuffs from the largely agricultural Soviet zone, extending from the new western Polish frontiers to the Elbe, Werra and Fulda rivers. Only ten percent of this twenty-five percent from western zone equipment was to be for reparations, however. The other fifteen percent was to be paid for by the Soviet Union in food and raw materials. The powers also agreed that Germany should retain “enough resources to enable the German people to subsist without external assistance,” that “the amount and character of the industrial equipment unnecessary for the German peace economy and therefore available for reparations shall be made by the Control Council under policies fixed by the Allied Commission on Reparations,” and that during the period of occupation Germany should be treated “as a single economic unit.”
       The country was divided into four occupation zones according to the 1937 borders. A British zone in the northwest, an American zone in the south, a British one in the north, and an American one in the west and south, a French one in the southwest that was created out of the original delineations for the British and American zones, and contiguous to the French-German border. The Russians received the remaining states of eastern Germany. Berlin and Vienna were divided into four zones as well; the Soviets granted the western powers passage rights to Berlin, which they temporarily revoked during the Blockade in 1948-49. Austria was divided as well, but the occupation was terminated in 1955 in exchange for a guarantee of permanent Austrian neutrality.
          All victor powers agreed, however, that foreign occupation of Germany should be temporary. They also did not initially intend to divide the country and tried to administer what was left of Germany together. They formed the Allied Control Council in June 1945 as the supreme political authority for all of Germany, apart from the areas of that were already annexed. However, this Council did not make much progress toward reaching uniform resolutions, since every member had the veto right, of which the French and Russians made frequent use, and inevitably stalled negotiations to reach common agreements on postwar reconstruction of a state that had temporarily ceased to exist, while the Allied Control Council functioned as a provisional governing body to fill the vacuum of national authority.
         The leaders of the victor powers could not agree on final boundaries for Germany during the Potsdam Conference, and decided that a peace treaty sometime in the future would have to resolve this issue. The victors decided to demilitarize Germany, to introduce democratic self-government, to decentralise the country to punish former Nazis, and to dissolve the big industrial cartels, which became known as the five Ds: demilitarization, democratization, decentralization, denazification, and decartelization. They also agreed that the Germans’ living standard should remain lower than that of their neighbours. The victors further granted each other the right to take reparations in form of machines and industrial equipment, which the Russians took more seriously than the western powers. While the west – after an initial phase of demontage – tried to help their part of Germany, the Russians seized almost all of the remaining industrial equipment and rolling stock left in the Soviet occupation zone. Certain enterprises were administered under Soviet ownership as Soviet joint stock companies (SAGs).
         The planned peace conference of the victors never took place, since Germany became an occupied country following the unconditional surrender on 8 May 1945, and a unified national government was not restored for Germany as a whole. In practice, only the talks of the two German governments with the four victor powers in 1989-90 finally led to a definitive border agreement. Tensions ran high immediately after Potsdam Conference. The Russians soon restricted mobility between the two parts of Berlin and between East and West Germany, although fleeing remained possible to flee until 1961, and ensured that communists got elected to the local self-administration offices. The most radical changes that consolidated divergences between the Soviet and the western zones took place in local political life, largely to legitimise the functions of the German Communist Party (KPD). German communists under the leadership of Walther Ulbricht were transported from Moscow to Berlin in late April 1945, and rapidly sought to establish control over local political affairs under the auspices of the Soviet Military Administration (SMAD).
       Denazification at the highest level was instituted at the famous trial of war criminals and for crimes against peace and humanity in Nürnberg in 1946 on the basis of Allied Control Law No. 10. Out of the twenty-four defendants in these legal proceedings, twelve surviving Nazi leaders received death sentences, whereas others received long prison sentences (See Yale Avalon Project: International Military Tribunal). Hess was sentenced to life imprisonment for his role as Hitler’s proxy, and Speer, who assumed responsibility but not guilt for his contributions to upholding the Nazi regime received a twenty-year prison sentence for his criminal use of slave labour. (For documents relating to the trials, see Yale, Avalon Project: International Military Tribunal.) The prosecution of other former Nazis in many cases were ambiguous. Many opportunists made the transition from one dictatorial regime to the next in the Soviet occupation zone, where the Soviet military government ensured that 520,000 former NSDAP members were dismissed, 150,000 Nazi sympathisers or anti-Communists were held in ten repurposed Nazi concentration camps and Gestapo prisons, and countless others were deported to labour camps in the Soviet Union. Meanwhile, the difficulty of finding competent personnel with requisite occupational knowledge and skills undermined the practicality of precluding them from being restored to positions of responsibility while faced with the problems relating to rebuilding the country, and were therefore eventually reintegrated into their former professions due to severe personnel shortages. The initially stringent standards in the American occupation zone were lowered, especially in the face of rising tensions with the Soviet Union.
       The occupying powers initially often determined the policies in their own occupation zones independently with military government legislation in their respective areas of jurisdiction. France wanted Germany weakened as much as possible and hoped to separate the Ruhr and Saar districts from Germany. The French, as in 1919, received extra powers in the Saar district with its precious coal mines, but more expansive aims failed, partly because France, as a country liberated by the Western allies and not a “full” victor, had a weaker position now than in 1918. Progress on preparing for a German settlement during the military occupation was at a virtual standstill while deliberations by the foreign ministers during several conferences were unsuccessful. The position taken by the American representatives at the Potsdam Conference in the summer of 1945, and the one substantially agreed to by the Russians during the course of those deliberations, called for the reunification of Germany on terms which, while ensuring its freedom and independence, would provide maximum assurance that a united German state would never again stage aggression against any of its neighbours. Moreover, the conference protocol explicitly provided that, as long as the occupation lasted, Germany would be treated as a single economic unit. It would not be very long, however, before this view was abandoned by both sides, the four occupation zones of Germany in the process of becoming sealed off from one another, with there first being increased economic cooperation between the British and the Americans, while centralization was opposed by both the French and the Russians.
       The main opposition to treating Germany as an economic unit came initially from the French, not the Russians. At Yalta, the Big Three had agreed to give France an occupation zone and a seat on the Allied Control Council. This placed the French government in a position to veto implementation of whatever parts of the Potsdam protocol it opposed. The French during the summer and fall of 1945 proceeded to adopt in their zone of occupation obstructionist policies toward the efforts of the Big Three to reach a final solution of the German question. In particular, in order to enforce their demands for a form of indemnity or territorial concession from Germany, the French proceeded to veto in the Allied Control Council almost every action that might have led to the treatment of Germany as a political or economic whole and thus lead to the reestablishment of a German state. These tactics, among other things, contributed to the subsequent deterioration of the four-power coalition, emboldening the Russians to alter their original policy of merely insisting on carrying out the Potsdam contract to one of seeking to extract every advantage they could within their own zone. The Russians took reparations more seriously than the western powers, seizing almost all of the industry and railroads left in Soviet-occupied Germany.
Apart from dividing Germany into zones of interest, the U.S., the U.S.S.R., and Great Britain did not have long-term plans for Germany. The western allies soon felt threatened by the Soviet Union, which repressed all democratic movements and established loyal communist governments in all countries occupied by its troops. For Poland, whose eastern territories the Soviet Union annexed, and giving Poland large German territories in exchange, Soviet repression often followed right after German repression had ended. Given the aggressive Soviet moves, the western powers gradually reconciled themselves to building up a capitalist German state out of the three western zones, which included the Ruhr district as the centre of German industrial power.
         The positions of the Western Allies and the Soviet Union became fragmented over the issue of postwar Germany. While the British and the Americans sought to reunify postwar Germany among the four occupation zones in the interest of economic recovery, they faced continual opposition for a permanent settlement from the Soviet Union. The result was the progressive breakdown of four power cooperation over the control of Germany, while the evolution of the American attitude toward the German question during the coming months reflected the changing orientation. The immediate issue was reparations, agreed on in principle at Yalta and Potsdam but never in specific amounts. The Soviet view prevailed that as much as possible should be removed from their occupation zone, with the result that the Americans and British, who were de facto underwriting most of the German economy, found themselves subsidizing reparations to Soviet Russia. Convinced that Germany was now the key to confronting the Russians, London and Washington took steps by mid-1946 to halt the drain of reparations from the western zones and prepare for the creation of a viable German economy, from which Alsace and Lorraine and the territories east of the Oder and Neisse rivers were severed, which weakened its economic potential. Economic life in immediate postwar Germany as a whole had required massive amounts of reconstruction due to the damage that had been inflicted by wartime conditions that reduced it to a primitive condition. Industrial production output was at two-thirds of its normal capacity. Agricultural output in 1947 was fifty-one percent lower than in 1938. Twenty percent of housing was destroyed in comparison to prewar levels. Bridges, railroads, electricity and water distribution had all been severely damaged. Industrial facilities had been removed for reparations in kind, which further undermined production infrastructure, including enabling producing fertilizer for agricultural production.
       Alarmed by the French obstructionist attitude toward Germany and Stalin’s stonewalling tactics, Washington authorities became convinced that the Russians were using the delay in implementing the Potsdam Agreement to consolidate their position in eastern Germany. French opposition to German economic unity also threatened not only to make the division of that country permanent, but to place upon Washington the burden of supporting the food deficient Western zones. As a result, a series of diplomatic initiatives were launched in the spring of 1946 designed to find out Russian intentions in Germany. The most important of these overtures was a proposal on April 29 by Secretary James F. Byrnes to the Council of Foreign Ministers calling for a four-power treaty guaranteeing the disarmament of Germany for the next twenty-five years. Four days after Byrnes made his proposal, the American military commander in Germany, General Lucius Clay, announced the suspension of further reparations shipments from the American zone until the four occupying powers agreed to treat Germany as an economic unit. This, said Undersecretary of State Dean Acheson, would “put Soviet protestations of loyalty to Potsdam to [the] final test and fix blame for [the] breach of Potsdam on [the] Soviets in case they fail to meet this test.” Both the Russians and the French rejected it within two months.
       It became quite apparent during the course of that year that President Truman and his key advisors were moving toward the view that if the Russians refused to cooperate on the German question, a united Germany could and should be created and incorporated into an anti-communist Western bloc of states. Secretary of State Byrnes’s Stuttgart speech on 6 September 1946 marked the initial public indication of an American policy shift toward maintain their presence in Germany, and would not abide by the Soviet Union’s demands to limit German industrial production solely for domestic use, and called for the unification of the German occupation zones, regardless of Soviet and French objections. Secretary Byrnes set the tone for much of the subsequent American approach to Soviet Russia and Europe when he said at Stuttgart that “The time has come when the zonal boundaries should be regarded as defining only the areas to be occupied for security purposes by the armed forces of the occupying powers and not as self-contained economic or political units.” If Germany could not be treated as a single economic unit, he implied that the Western states should merge their own zones, further declaring that steps should be taken to form a provisional German government. On 2 December, the American and British governments signed an agreement to merge the economies of their occupation zones.
         Reaching a postwar settlement with Germany had yet to be resolved while it remained under four power occupation as the western and eastern occupation zones consolidated separate political and economic systems. The Council of Foreign Ministers meetings in Paris and New York in November and December 1946 were unsuccessful during ongoing “diplomatic trench warfare” with the diplomatic representatives refusing to make compromises. Ironically, the event that actually triggered America’s psychological mobilization was one that Stalin did not initiate. Fighting broke out once again in Greece in the summer of 1946 between the royalist government, restored to power by British influence, and a communist-dominated anti-government insurrection. The Greek communists were aided and abetted by Josep Broz Tito in Yugoslavia who, flush with his victory over the fascists, now sought to develop a Balkan federation dominated by Belgrade. Britain, unable to provide the kind of help necessary to shore up the government with military support as a result of its severely weakened postwar economic position, gave up and pleaded with Washington to step into the breach.
The pivotal event in this regard occurred on 21 February 1947, when the British embassy in Washington delivered to the State Department a pair of notes concerning the role of Great Britain in Greece and Turkey. These notes essentially, indicated that Britain would have to cut off military and economic aid to Greece in its ongoing struggle with the guerrilla forces, while at the same time terminate granting economic assistance to Turkey by 31 March. Reports from the region indicated that the Greek government could last only a few weeks without continuing British support. It was argued that the instability Greece would eventually lead to Turkey and Iran facing Russian intimidation, and would perhaps collapse. Control of the eastern Mediterranean was also at stake as well as the long-term prospects for the stability of Italy and France. As those two countries had large, popular communist parties, the question was now whether they could survive if the Russians made significant inroads in southern Europe. Hence, a decision was made to step in and bail out the British. The result was the so-called Truman Doctrine – the name given to the program of economic and military assistance proclaimed on 12 June 1947, offering American economic and military assistance to all peoples in their struggle against communist encroachments, beginning with providing financial aid to Greece and Turkey any country that was threatened by communist expansion. The Truman Doctrine thus officially expressed the tension between the Soviets and the Americans, and also provided the justification for considerable injections of American money into European economic recovery to counteract the development of social and economic unrest.
         After the failure of the Paris and New York Foreign Ministers sessions, it was decided to meet in Moscow in March and April 1947. This next meeting would prove to be decisive by failing to make progress with reaching agreements on reparations and administering Germany as a single economic unit. The Moscow Conference opened on 10 March 1947 with negotiations on the major problems confronting the US and the USSR. Unfortunately, each side came to that meeting with a different emphasis. The solution of the German question in the western zones had become a matter of considerable economic significance. As Germany was felt to be the main engine of western Europe’s economy, the recovery of the national economies of the other states of western Europe would be hindered for as long as Germany remained divided. Increasingly violent strikes came to mark Europe’s labor relations as their economies began to hemorrhage, and Europe as a whole appeared to be on the verge of economic collapse in the face of acute food and raw material shortages, while being unable to restore former production levels and markets. Only increased economic aid from Washington or the reintegration of German resources into the European economy, it was felt, offered the possibility of stemming the bleeding. The Soviet Union considered the question of determining Germany’s postwar future also having economic importance, within the framework of extracting reparations. The Soviet authorities demanded these reparations to be delivered partly in the form of payments from current German production in order to better facilitate their own reconstruction. In terms of their political considerations, the Russians desired demilitarization, neutralization in order to prevent a resurgence of German power. The creation of a political system in which the German communists would play an important role.
         While the western allies prepared to implement their occupation objectives, Stalin and his advisers pursued their own purposes they sought to achieve when they assumed control of the occupation zone allocated to the Soviet Union. The Russians were the first of the four occupation powers to begin restoring political life in their occupation zone, beginning with transporting their German political representatives led by Walther Ulbricht to Berlin on 30 April 1945, and allowing for the formation of four political parties in the summer of 1945. The German Communist Party (KPD) was established on 9 June 1945, which did not acquire any majority support. It was later forcibly merged with the SPD, which had greater popular support, on 21/22 April 1946 to form the Socialist Unity Party (SED), with the underlying hope that it would represent the interests of a parliamentary democracy. The SED henceforth permanently became the majority political party by 1948 that effectively controlled the other parties in a United Front of Anti-Fascist Democratic Parties, which precluded re-establishing democracy while being directed as a puppet governing body by the Soviet occupation authorities. It was eventually purged of any recalcitrant anti-Stalinists, with ten out of the original fourteen founding members of the leadership were removed by 1949.
         Soviet foreign policy at the international level to determine the future of a postwar German state was thoroughly unambiguous. The Soviet representatives expressed the position at the Moscow Council of Foreign Ministers during March and April 1947 that Stalin refused to move toward a definitive settlement in Europe, which could have partly been in reaction to the pronouncement of the Truman Doctrine two days after the conference began, in addition to what the Soviets pursuing their postwar interests that were incompatible with those of the western allies. This set the stage for the Marshall Plan, which was conceived as a “counter-offensive” to Moscow’s moves in Eastern Europe and as a reaction to Stalin’s decision, registered at the Moscow Conference, to rebuff all gestures of compromise looking toward settlement of the problems dividing Europe. The conference proved unable to bridge the gap between Western and Russian interests. The Western powers refused to grant Moscow the reparations they wanted, and without a deal on reparations, the Russians proved unwilling to compromise on the question of Germany’s political structure. Nor would they agree to western proposals on the formation of an interim unified economic policy for all the occupation zones.
The American Secretary of State General Marshall, called on European nations in June 1947 in a conference in Paris to formulate a coordinated plan for American economic assistance to European countries that matched their own funds, in addition to assisting the economic recovery of Germany and Austria, and reconstruct the European economy as a whole, which was drafted on 5 June. Without the revival of German production there could be not be any restoration of Europe’s economy, while American authorities were anxious to prevent the spread of communism while also preserving valuable European markets for American exports in this European Recovery Program, which later became known as the Marshall Plan. Contributing large amounts of money, a total of seventeen billion dollars, to help reconstruct postwar Europe would also assuage French fears against being threatened by renewed German economic power. Sixteen European nations accepted this offer of American economic aid, with Britain receiving 3.1 billion and France receiving 2.7 billion, as the largest beneficiaries, to jointly plan for their economic recovery, and also achieve a non-military and unaggressive form of containment of the USSR through sending seventeen billion dollars in financial aid to sixteen European countries, which included preconditions for liberalizing trade and setting standards for currency exchanges.
       The Russians ultimately concluded that this policy entailed an ambitious strategy designed to bring as many states as possible under American control, and thereby draw these countries away from the Russian sphere of influence. The USSR therefore declined to take part in this program, and it would not allow its satellite states to receive those economic benefits. The Marshall Plan thus constituted a major development toward disassociating western Germany from the Soviet occupation zone, and incorporating it into western Europe as a whole by establishing economic ties with underlying political connections, which necessarily widened the chasm between East and West. It became apparent to the Soviets that the United States had adopted a policy of containment to keep communism within the existing boundaries of the Soviet Union and Eastern Europe, and rejected this offer for itself and its satellite states. The Soviet Union reacted to the promulgation of Marshall Plan aid by hastily establishing a series of bilateral trade agreements in July 1947 to link Soviet Russia with its erstwhile new allies in Eastern Europe. The Truman Doctrine and the Marshall Plan also precipitated a major shift in Soviet foreign policy. A conference involving all of the communist parties of eastern Europe was convened in Belgrade, Yugoslavia, in September 1947 to seek a common response to the events of the previous spring and summer. One outcome was the establishment of the Cominform on 22 and 23 September 1947 in response to the fusion of the British and American occupation zones, and the promulgation of the Truman Doctrine and the Marshall Plan that were perceived as threats from the US adhering to a policy of containment. This organization would be aimed at the coordination of policies among the Communist parties in Europe in order to challenge the West. Its “two camps” vision of a world divided between “progressive” and “imperialist” forces mirrored the growing bipolar view of conflicting spheres of influence.