Economic Recovery and European Unity

1
Economic Recovery and European Unity

• 1945-2001
• Chapter 31-1

2
Post-War Economic Efforts

• 1944 Bretton Woods Conference Lay the
  foundations for the modern international monetary
  system
• GATT General Agreements of Tariff and Trade
  lowered tariffs and other trade restrictions to
  stimulate international trade

3
Economics 1945-2001

• Between 1958 and 1971 the value of national
  currencies was based on gold and the U.S. dollar
• International Monetary Fund (IMF)
• Was designed to provide short-term loans to
  struggling countries to prevent economic crisis
  and anarchy
• Became important in the post-war economic boom

4
Post-War Economics

• The World Bank
• Provided long-term loans to countries for
  economic growth

5
Post-War Political Efforts

• The United Nations (UN) 1945
• The framework of the UN was agreed upon by the
  allies at the Yalta Conference
• The Security Council Consisted of 12 nations
  (including 5 permanent members U.S., Britain,
  France, Nationalist China, USSR) that had the
  authority to maintain world peace

6
The UN continued

• The General Assembly
• Included every country in the world
• Had the power to advise but could not enforce
  recommendations

7
Post-War Economic and Political Recovery

• Great post-war economic hardship
• Scarcity of food, runaway inflation, black
  markets plagued the economy
• Many of Europes important cities were in ruins
• Many believed that Europe was a goner
• Recovery seemed impossible
• Suffering was the worst in Germany

8
Political Restructuring

• Christian Democrats emerged as a dominant
  political movement in several countries
• Saw a common Christian and European heritage
• Rejected authoritarianism and narrow nationalism
• Had faith in democracy and cooperation
• Catholic parties were progressive in nature

9
Political Restructuring

• Socialist and communist parties emerged with
  increasing power and prestige especially in
  France and Italy
• Pushed for social change and economic reform with
  some success
• SOsocial reform and political transformation
  created the foundation for a European Renaissance

10
Italy

• Christian Democrats gained control in 1946
• Were led by De Gasperi
• Much socialist influence average workers wages
  included social benefits

11
France

• General Charles de Gaulle (leader of the Free
  French movement) led the Fourth Republic from
  1946-1958
• The real power in the legislature
• President was mostly a ceremonial position
• The Catholic Party big in France
• Big socialist influence Industries were
  nationalized
• The 5th Republic gave the President more power

12
Britain

• Clement Atlee led the Labour Party.
• Defeated Churchill and the Conservatives in 1945
• Atlee moved to the establishment of a welfare
  state
• Many industries were nationalized
• All citizens had free medical.
• Middle and Upper Classes taxed heavily

13
The Federal Republic of Germany (West Germany)

• After 1949 led by Conrad Adenaur
• Christian Democrats became the major party for a
  generation

14
Economic Recovery

• Europe began a period of unprecedented economic
  growth that continued into the late 1960s
• By 1963 Western Europe produced more than 2.5
  times more than before the war
• In many countries workers were willing to work
  for low wages expansion of industry
• lower prices higher demand

15
Reasons for Economic Recovery

• The Marshall Plan The U.S. sent substantial aid
  to Europe beginning in 1947
• Economic growth became a basic objective of most
  European governments
• Governments accepted Keynesian economics to
  stimulate their economies
• Governments more willing to use deficit spending
  to make more resources available to the people

16
Reasons for Economic Growth continued

• The Economic Miracle was also due to the
  elimination of economic barriers (like tariffs)
• Result A large unified market emerged The
  Common Market

17
Economics West Germany

• Ludwig Erhard Finance minister
• Combined a free market economy and extensive
  social welfare (the latter inherited from the
  Nazi era)

18
Economics France

• Jean Monnet (architect of European Unity)
• France used Marshall Plan aid and nationalized
  banks to funnel into key industries
• Achieved the most rapid economic development in
  French history
• Used a mixed state and private economy

19
The Welfare State

• Western European countries worked to provide
  universal services to their citizens
• Employment
• Unemployment and disability insurance
• Social Security for the elderly
• Free or subsidized health care
• Paid for by wealthier citizens

20
The Welfare State

• Benefits were universal not just for the poor
• As long as economies continued to expand, the
  cost of the welfare state were easily met by the
  government

21
Britain (Atlee) the Labour Party

• Britain was the model for the Welfare State
• Nationalized The Bank of England, coal mines,
  electricity, gas, iron and steel industries
• Increased unemployment insurance, old age
  pensions, universal health care, workers
  compensation
• Increased a progressive income tax and
  inheritance taxes
• 80 of industry was still private

22
Britain

• 1951-1964 Conservatives took power and
  privatized more industries but kept the welfare
  state

23
Economic Downturn and High inflation in the 1970s

• Caused larger deficits, increased national debts
  and pressure from conservatives to lower taxes
• Conservatives argued that the welfare state had
  become too large and the taxes were excessive
• High taxes were stunting economic growth
• So all over Europe, the welfare state was
  modified and more privatization

24
Immigration of Guest Workers

• Western Europes dramatic economic revival and
  low birth rate led to a shortage of workers
• The need was filled by immigrants from Turkey,
  Greece, the Balkans, and North Africaalso from
  Spain, Portugal, Italy
• Many did not return home

25
Immigrants

• Great Britain had many immigrants from India,
  Pakistan, Africa and the Caribbean
• France had large numbers from Algeria
• The Netherlands had many from Indonesia
• Eventually, nationalists became concerned over
  the impact of immigrants on national cultures and
  put pressure on their governments to restrict
  immigration

26
European Unity

• Attempts to unify Europe in 3 areas
• Political The Council of Europe did
  represent nearly every European nation but had
  little influence
• Military Never really happened
• Economic Most successful with the EU and
  its precursors ECSC, EEC, EC

27
The Council of Europe

• European federalists hoped that the Council would
  evolve into a true European Parliament with
  sovereignty
• But Britain was opposed to giving the Council any
  real power due to its special relationship with
  the United States

28
1950 The Schuman Plan

• Organized by French (Monnet) and German (Schuman)
• Created the ECSC the European Coal and Steel
  Community
• Was an international organization to control and
  integrate European coal and steel production
• Members West Germany, Italy, Belgium, the
  Netherlands and Luxembourg

29
The ECSC continued

• The Goal a single competitive market without
  national tariffs or quotas
• The Six (by 1958)
• Long-term Goal To bind the members so closely
  economically that war between them would be
  unthinkable

30
The EEC

• The Treaty of Rome 1957 created the European
  Economic Communitysigned by The Six
• Goal to create a single market by gradually
  reducing tariffs among The Six
• Treaty also created Euratom The European Atomic
  Energy Agency to develop and regulate nuclear
  energy

31
COMECOM

• Above was the Soviet version of Euratom

32
Other goals of the EEC

• Free movement of capital and labor across borders
• Common economic policies and institutions
• Reduced tariffs
• All above encouraged hopes of political and
  economic union

33
The Rise of Nationalism

• The Rise of Nationalism in the 1960s frustrated
  the hopes for European unity
• Charles de Gaulle returned to power with the
  Fifth Republic and withdrew France from NATO
• He believed that the U.S. had too much influence
  in NATO

34
De Gaulle

• De Gaulle also twice vetoed the entrance of Great
  Britain into the European Union
• He believed Britain too pro-American
• Britain entered the EU in 1973

35
1992 The EU

• German Chancellor Kohl and French President
  Mitterand wanted to extend the EU to include a
  single European currency and a common defense and
  foreign policy
• British PM Margaret Thatcher had been opposed to
  joining the EU but was replaced in 1990 by John
  Major

36
The Maastricht Treaty 1991

• The Eurodollar was introduced
• Became the single currency of the EU in 2002
• Integrated the currency of 12 European nations
• Was organized by the EMU (European Monetary
  Union)
• Britain refused to join the EMU

37
The EU

• By 1995 had 15 members (Britain WAS a member but
  refused to use the euro)
• By 2005 10 more members
• In 2007 2 more members
• ( Actually its formal name was the EC until 1996
  when its name changed to the EU)

38
The Economic Crisis of the 1970s

• 1971 The U.S. (under Nixon) went off of the gold
  standard
• This ended the Bretton Woods system of
  international currency stabilization
• Fixed rates of exchange were abandoned
• Led to a great uncertainty

39
The Energy Crisis

• The post-war economic boom was partially due to
  availability of cheap oil
• 1973 OPEC (Organization of Petroleum Exporting
  Countries) dramatically increased the price of
  oil in the U.S. and in Europe due to their
  support of Israel in the Yom Kippur War of that
  same year

40
OPEC

• Raised the price of oil again in 1979 during the
  Iranian Revolution
• The increase in the price of oil, coupled with
  the upheaval in the international monetary system
  plunged the world into the worst economic decline
  since the 1930s

41
Stagflation in the mid 1970s

• increasing unemployment during increased
  inflationary periodunusual
• USUALLY unemployment and inflation have the
  opposite relationship
• 1970s and 1980s debts and deficits increased
  dramatically