Trump should learn from Marshall Plan – like Xi

Donald Trump is not the first president to institute an “America First” foreign policy in the post-World War Two period, Harry Truman did it with his Marshall Plan (MP). The difference is style: Truman promoting US interests through aids/grants and liberalized trade and investment versus Trump resorting to protectionism and threats.

Chinese President Xi Jinping, in his effort to build the “Chinese Dream,” seems to have taken a page out of the Truman playbook, “making China great” by investing in and promoting trade with  countries participating in his signature Belt and Road Initiative (BRI).

Both the MP and BRI were widely praised. The MP is credited with the  remarkable recovery or development of Europe and East Asia in the post-World War Two era. The BRI is seen as the champion of globalization by leaders of the participating nations and international organizations.

One major difference between the MP and BRI is the former imposed an ideological condition, requiring recipients to be “like America.” The latter is more business-oriented, offering participating nations a “slice of the pie.” Predictably, anti-Chinese crowds indicate otherwise, accusing China of practicing “predatory investmen,t” setting up “debt traps,” resorting to “neocolonialism” and a host of others. But those criticisms were dismissed as “sour grapes” by countries receiving Chinese investment.

Xi Jinping’s Belt and Road Initiative

Xi announced the establishment of the BRI in 2013, perhaps as a way to decrease its dependence on exporting to the West and Japan. Since then, the BRI has benefited many nations, which is why influential figures such as IMF chief Christine Legarde and World Bank President Jim Kim see it as the future of the global economy.

According to China’s State Council (cabinet) Information Bureau two-way trade between China and the over 60 participating countries exceeded $5 trillion from its conception in 2013 to 2017. It also revealed that China had invested over $70 billion in the same five-year period and is planning to invest $500 billion by 2029.

Some, particularly leaders in Africa and Latin America, went as far as to suggest the BRI is proof that Xi Jinping is making good on his “shared future” posture. According to a September 2 China Global Television Network (CGTN) report, China financed the Nairobi-Mombasa railway, which cut the travel time between the Kenyan cities by half and created 46,000 jobs, boosting economic growth from 2015 to 2018.

Indeed, the Hong Kong-based South China Morning Post reported on September 2 that China has provided $120 billion in aids/grants/loans to Africa since 2015. Loans are mostly concessional, low interest and in some cases are forgiven.

The Marshall Plan

The MP could be construed as an “America First” policy because of the conditions it imposed on recipient countries, requiring them to adopt US liberal capitalism and using the funds to buy American goods. But the way in which the MP was implemented and managed – encouragement of unfettered foreign investment and trade – boosted recipient countries’ economic prospects, albeit raised those of the US more.

At the end of World War II, Europe was in ruins from the bombing and the Soviet Union was thought to be spreading its ideology and influence into Western Europe. To rebuild Europe and contain Soviet Communist expansion, Truman signed the European Recovery Program, ERP, popularly known as the Marshall Plan (named after then Secretary of State George Marshall, who orchestrated it) in April 1948, giving between $12 billion and $15 billion to rebuild European cities, industries and infrastructures.

There is little doubt that the MP played an important  role in European economic recovery, but the full extent of its impact is debated among scholars on both sides of the Atlantic

There is little doubt that the MP played an important  role in European economic recovery, but the full extent of its impact is debated among scholars on both sides of the Atlantic.

Barry Eichengreen, author of The European Economy since 1945: Coordinated Capitalism and Beyond, argued that it was the most successful aid program ever, raising the economies of Germany and other recipient countries by 6% and 45%, respectively.

However, Boston University scholar, Jacob Magid, argued in his 2012 online Advances in Historical Studies, Vol. 1, No. 1, 1-7 paper that political initiatives (i.e. European integration) and government-business partnership vehicles were rsponsible for Europe’s unsurpassed economic growth.

Former US Federal Reserve Chairman Alan Greenspan echoed the majority voice that the Marshall Plan was not the biggest booster of post-war European economic recovery. In his memoir, The Age of Turbulence, Greenspan argued that it was German Chancellor Ludwig Erhard’s deregulation policies that were largely responsible not only for German economic recovery but also those of other European countries. He opined that reductions in regulations culminated in higher levels of investment thanks to high savings rates and low taxes.

The MP was extended to Asia in 1953 at the end of the Korean War (1950 -53), providing it with aid and grants totaling $5.9 billion, according to the US Bureau of the Census’s Statistical Abstract of the United States: 1954. The biggest recipients were Japan ($2.44 billion), Taiwan ($1.05 billion)  and South Korea ($894 million).

According to Aaron Forsberg, author of The Japanese Miracle:the Cold War Context of Japan’s Post War Economic Revival, 1950-1960, huge US investment in Japan during the Korean War was probably a major reason for its fast development and growth, averaging over 7% annually for over two decades until the 1990s. US investment helped Japan to revive and rebuild its industry base.

In an August 26, 2013, Singapore Strait Times article, Singapore the Top Destination for US Investment in Asia, Ravi Velloor suggested that American investment was probably responsible for the city state’s high per capita income of over $57,000.

The Marshall Plan’s ‘imperialist’ side

However, scholars on both sides of the Atlantic alluded that under the veneer of economic development,  the MP might be an “imperialist” posture. Revisionist school (reinterpretation of historical records) scholars such as Cornell University history professor Walter Lafeber complained the MP of funding CIA covert operations to manipulate “unfriendly” states’ domestic political affairs. According to Lafeber, the CIA received almost $900 million for such misdeeds.

The Soviet Union accused the US of using the MP to contain its rise. It in fact filed a complaint against the US at the United Nations, arguing that the MP is nothing more than America using financial and military muscles to control Western Europe if not the world.

US global influence

For all its flaws and contradictions, the MP could be construed as the the “foundation” from which America projects its global dominance. Up until the George W Bush presidency, American influence on the world stage was unchallenged and even welcomed. And with the help of Hollywood movies, many in the world wanted to emulate everything  American, from culture to ideology.

The neoconservatives, a group of academics, journalists, think-tank analysts, politicians and minor government officials, changed the direction of US foreign policy. They believed that under no circumstances should any nation be allowed to challenge US supremacy.

Under the George W Bush presidency, neocons like John Bolton and Paul Wolfowitz literally took charge of US foreign policy, invaded Iraq for no reason other than the “fake news” that Saddam Hussein possessed weapons of mass destruction.

Fast forward, neocons seem to be alive and well in the Trump administration. John Bolton and Peter Navarro became Trump’s national security adviser and trade czar, respectively. They appear to have gained the upper hand: Instituting trade wars, bullying “friends” into submission, and labeling Russia and China as “imminent threats.” In doing so, the US is isolating itself and harming the interests of nations the Trump administration targeted as well as itself.

Trump unnecessarily mounted the world’s biggest trade war in history, potentially risking global economic growth, including that in China and the US. Labeling Russia and China as “enemies” has incubated a military alliance between the two countries, giving the US and NATO partners a big security headache.

Falsely accusing trade partners of being “unfair” to America has driven away “allies/friends.” India and Japan show signs of rapprochement with China.

Truman is likely rolling over in his grave.