Introduction

The Second World War (1939–1945) had profound and far-reaching economic consequences, reshaping the global economy, altering trade patterns, destroying infrastructure, and leading to the emergence of a bipolar economic order dominated by the United States and the Soviet Union. The war resulted in massive government spending, inflationary pressures, shifts in labor markets, and fundamental transformations in industrial and financial systems. The global economic landscape was dramatically altered as European colonial empires weakened, new economic institutions emerged, and economic reconstruction programs such as the Marshall Plan were implemented. The war also catalyzed the process of decolonization, significantly impacting the economies of former colonial powers and their dependencies.

Devastation of European Economies

The war left Europe in a state of economic devastation, with industries, infrastructure, and agricultural sectors severely damaged. Germany, France, Britain, and the Soviet Union suffered extensive destruction of industrial facilities, railways, and urban centers, resulting in a dramatic decline in production capacities. Germany, which had been the economic powerhouse of Central Europe before the war, experienced massive losses in capital stock, labor force depletion, and the destruction of transportation networks. The occupation and bombing campaigns destroyed approximately 20–40% of the industrial capacity in Western Europe.

The United Kingdom, which had mobilized its economy for total war, emerged financially exhausted. By 1945, Britain’s national debt had increased more than threefold, and its reliance on American loans and Lend-Lease aid had created a long-term financial burden. The country also suffered from a sharp decline in its global trade dominance, as many of its former trading partners turned to alternative sources for raw materials and goods. France, having been occupied for most of the war, experienced severe shortages in food and industrial goods, while the Netherlands and Belgium faced crippling destruction of their economic infrastructure.

The Soviet Union, despite its eventual victory, suffered the most extensive economic damage of any major power. The Nazis’ scorched-earth policy and the immense human losses led to a significant decline in the Soviet labor force, agricultural output, and industrial production. The war had obliterated thousands of factories, mines, and power plants, forcing the Soviet state to undertake a massive postwar reconstruction effort, largely through centralized planning and forced labor.

The Emergence of the United States as an Economic Superpower

While most of Europe and Asia faced economic devastation, the United States emerged as the dominant global economic power. The war had spurred an unprecedented level of industrial production, technological innovation, and economic expansion, leading to what became known as the American economic hegemony. By 1945, the U.S. economy accounted for approximately 50% of global industrial output, with its gross national product (GNP) doubling during the war years.

The Bretton Woods Conference (1944) established a new global economic framework, with the U.S. dollar becoming the dominant reserve currency and the creation of institutions such as the International Monetary Fund (IMF) and the World Bank. These institutions were designed to stabilize international finance, prevent economic crises, and facilitate postwar reconstruction. The United States also emerged as the primary lender to war-torn nations, securing its position as the global economic leader in the postwar world.

Furthermore, the war had led to the consolidation of large American corporations, as industries such as steel, oil, automobiles, and aerospace expanded massively. The military-industrial complex, which had grown during the war, remained a significant driver of economic activity in the postwar period, shaping American economic policy and global strategy for decades to come.

The Decline of European Colonial Economies

One of the most significant economic consequences of the Second World War was the accelerated decline of European colonial empires. The war had drained the financial and military resources of Britain, France, and the Netherlands, making it increasingly difficult to maintain control over their colonies. Many colonies, having contributed soldiers and resources to the war effort, demanded economic and political independence, leading to a wave of decolonization between 1945 and the 1960s.

The British Empire, which had relied heavily on colonial trade and raw materials, faced severe economic constraints after the war. The loss of India in 1947 was particularly significant, as India had been one of Britain’s most valuable economic assets. Similarly, France faced major economic challenges in Indochina and North Africa, with rising costs of maintaining its empire leading to economic instability and political crises.

The economic impact of decolonization was twofold: former colonial powers lost access to cheap raw materials and labor, while newly independent nations struggled with underdeveloped economies, lack of infrastructure, and dependence on foreign aid and investment. Many of these economies remained tied to the global capitalist system through neocolonial economic structures, where former colonial powers continued to exert influence through trade agreements and financial institutions.

The Economic Division of Germany and the Origins of the Cold War Economy

Germany became a focal point of postwar economic restructuring and geopolitical division, leading to the formation of two distinct economic models: the capitalist West and the socialist East. The Marshall Plan (1948–1952) played a crucial role in rebuilding West Germany’s economy, providing massive financial aid to restore industrial production, modernize infrastructure, and integrate West Germany into the Western capitalist system.

In contrast, East Germany (the German Democratic Republic) was integrated into the Soviet-led economic system, characterized by centralized planning, collectivization, and state control of industries. This division solidified the economic split between Western and Eastern Europe, marking the beginning of the Cold War economic rivalry.

The Role of War Debt and Inflation

The economic cost of the war was unprecedented, leading to massive national debts and inflationary pressures across multiple nations. The United Kingdom, France, Italy, and Japan accumulated huge war debts, leading to economic austerity measures and postwar financial instability. Inflation surged in many countries, as wartime economies had been geared towards military production, leading to shortages of consumer goods and price increases.

The United States emerged as the primary creditor nation, while European countries struggled to repay debts, leading to currency devaluations and dependence on American financial assistance. The establishment of the IMF and the World Bank was intended to stabilize exchange rates and provide financial support to struggling economies, but postwar economic recovery remained uneven, particularly in Southern and Eastern Europe.

The Transformation of Global Trade and Economic Systems

The war also reshaped global trade patterns, leading to the creation of new economic alliances and institutions. The General Agreement on Tariffs and Trade (GATT) was established in 1947, promoting free trade and the reduction of tariffs, laying the groundwork for the modern World Trade Organization (WTO). The war had also led to the increased role of multinational corporations, as American businesses expanded overseas, dominating industries such as automobiles, oil, finance, and consumer goods.

In the Soviet bloc, the Council for Mutual Economic Assistance (COMECON) was established in 1949, creating a centralized trading system for socialist economies. The division between capitalist and socialist economic models shaped global trade patterns, leading to economic competition between the United States and the Soviet Union.

Conclusion

The economic consequences of the Second World War were profound and far-reaching, leading to the destruction and rebuilding of economies, shifts in global financial power, the decline of colonial empires, and the division of the world into competing economic systems. The emergence of the United States as an economic superpower, the institutionalization of global financial structures, and the economic division of Europe shaped the postwar world order. The war fundamentally transformed economic policies, industrial production, labor markets, and global trade, setting the stage for the geopolitical and economic conflicts that would define the second half of the 20th century.

• The basic cause of conflict between the communist and capitalist states lay in their fundamental differences of principle.
• The communist system was based on the ideas of Karl Marx, who believed that a country’s wealth should be collectively owned and shared, with a centrally planned economy and state policies safeguarding the working class.
• The capitalist system operates on private ownership of wealth, driven by private enterprise and the pursuit of profits, with the preservation of power by the wealthy classes.
• Since the establishment of the first communist government in Russia (USSR) in 1917, most capitalist states viewed it with mistrust and feared the spread of communism.
• The spread of communism would threaten private ownership and the political power of the wealthy.
• In 1918, when a civil war broke out in Russia, several capitalist states (USA, Britain, France, Japan) sent troops to support the anti-communist forces.
• The communists won the war, but Joseph Stalin, who became Russian leader in 1929, was convinced that the capitalist powers would attempt to destroy communism again.
• The German invasion of Russia in 1941 confirmed Stalin’s fears.
• The need for self-preservation against Germany and Japan led the USSR, USA, and Britain to cooperate temporarily.
• Once the defeat of Germany seemed imminent, both sides, particularly Stalin, began planning for the post-war period.

• Stalin’s aim was to take advantage of the military situation to strengthen Russian influence in Europe.
• As the Nazi armies collapsed, Stalin tried to occupy German territory and acquire as much land as possible from countries such as Finland, Poland, and Romania.
• Stalin was highly successful in this effort.
• The West was alarmed, perceiving this as Soviet aggression.
• The West believed Stalin was committed to spreading communism over as much of the globe as possible.

• During the war, the USA under President Roosevelt sent war materials to Russia through a system called ‘Lend-Lease’and trusted Stalin.
• After Roosevelt’s death in April 1945, his successor Harry S. Truman was more suspicious and toughened his stance towards the communists.
• Some historians argue that Truman’s decision to drop atomic bombs on Japan was not only to defeat Japan, but also to show Stalin the potential consequences of Soviet aggression.
• Stalin suspected that the USA and Britain still sought to destroy communism; he believed their delay in launching the Second Front was a tactic to exhaust the Russians.
• The USA and Britain did not inform Stalin about the atomic bomb until shortly before its use, and rejected his request to share in the occupation of Japan.
• The West had the atomic bomb, and the USSR did not.
• Historians in the 1950s, like George Kennan, blamed Stalin for the Cold War, seeing his motives as sinister to spread communism and destroy capitalism.
• Kennan advocated a policy of ‘containment’ of the USSR by political, economic, and diplomatic means, leading to the formation of NATO and American involvement in the Korean War.
• In the 1960s and early 1970s, Soviet historians and some American historians argued that the Cold War was not Stalin’s fault.
• They believed that Stalin’s actions were defensive, motivated by Russia’s enormous losses during the war and the need for friendly neighboring states.
• Some Americans argued that the USA should have been more understanding and not challenged the Soviet ‘sphere of influence’ in eastern Europe.
• The revisionist view of the Cold War, advocated by William Appleman Williams, suggested that the USA’s obsession with hostility towards communism and its desire for world hegemony caused the Cold War.
• This view emerged during the late 1960s as many in the USA became critical of American foreign policy, especially regarding the Vietnam War.
• In the 1980s, the post-revisionist interpretation gained popularity, suggesting that both sides were responsible for the Cold War.
• New evidence from archives led to the view that the situation at the end of the war was more complicated than previously understood.
• The post-revisionists argued that American economic policies, such as Marshall Aid, were designed to increase US political influence in Europe.
• While Stalin had no long-term plans to spread communism, he was an opportunist, taking advantage of Western weaknesses to expand Soviet influence.
• The Soviet methods of imposing communist governments in eastern Europe gave the appearance of expansionistaims.
• The entrenched positions and deep suspicions of both sides created an environment where every act could be interpreted as self-defence or aggression.
• Open war was avoided because the USA was reluctant to use the atomic bomb again unless directly attacked, and the USSR dared not risk such an attack.

• A new organization, the United Nations, was to replace the failed League of Nations.
• Germany was to be divided into zones: Russian, American, and British (with a French zone added later).
• Berlin, located in the middle of the Russian zone, would also be split into corresponding zones.
• Similar arrangements were to be made for Austria.
• Free elections were to be allowed in the states of eastern Europe.
• Stalin promised to join the war against Japan on the condition that Russia received Sakhalin Island and some territory in Manchuria.
• Trouble arose over Poland: as the Russian armies pushed through Poland and set up a communist government in Lublin, there was already a Polish government-in-exile in London.
• At Yalta, it was agreed that some members of the London-based government (non-communist) should join the Lublin government.
• In return, Russia would be allowed to keep a strip of eastern Poland annexed in 1939.
• Roosevelt and Churchill were not happy with Stalin’s demands for Poland to be given all German territory east of the Oder and Neisse rivers.
• No agreement was reached on this point.

• The atmosphere at the conference was distinctly cooler.
• The three leaders at the beginning of the conference were Stalin, Truman (replacing Roosevelt, who had died in April), and Churchill. Churchill was replaced by Clement Attlee, the new British Labour prime minister, after Labour’s election victory.
• Free elections were to be allowed in the states of eastern Europe.
• Stalin promised to join the war against Japan on condition that Russia received the whole of Sakhalin Island and some territory in Manchuria.
• The war with Germany was over, but no agreement was reached about her long-term future.
• The big questions were whether, or when, the four zones would join together to form a united Germany.
• Germany was to be disarmed, the Nazi party disbanded, and its leaders tried as war criminals.
• It was agreed that the Germans should pay reparations to repair the damage they caused during the war. Most reparations were to go to the USSR, which would take non-food goods from their zone and other zones in exchange for sending food supplies to the western zones of Germany.
• The main disagreement occurred over Poland.
• Truman and Churchill were annoyed because Germany east of the Oder-Neisse Line had been occupied by Russian troops and was being run by the pro-communist Polish government, which expelled around five million Germans. This had not been agreed at Yalta.
• Truman did not inform Stalin about the exact nature of the atomic bomb, though Churchill was told.
• A few days after the conference, the atomic bombs were dropped on Japan, and the war ended quickly on 10 Augustwithout the need for Russian help (though the Russians declared war on Japan on 8 August and invaded Manchuria).
• The Russians annexed south Sakhalin as agreed at Yalta, but were allowed no part in the occupation of Japan.

• In the months following Potsdam, the Russians systematically interfered in the countries of eastern Europe to set up pro-communist governments.
• This interference occurred in Poland, Hungary, Bulgaria, Albania, and Romania.
• In some cases, opponents were imprisoned or murdered; for example, in Hungary, although free elections were allowed, the communists won less than 20% of the votes but ensured that a majority of the cabinet were communists.
• Stalin frightened the West further with a widely reported speech in February 1946, claiming that communism and capitalism could never coexist peacefully and that future wars were inevitable until communism triumphed.
• However, Russian historians claimed that the speech was misleadingly reported, particularly by George Kennan, the US charge d’affaires in Moscow.
• In March 1946, Churchill responded with a speech at Fulton, Missouri, stating that “From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the continent.”
• Churchill claimed that the Russians were focused on the “indefinite expansion of their power and doctrines” and called for a Western alliance to stand firm against the communist threat.
• The speech provoked a sharp response from Stalin, who expressed fears about Germany and the need to strengthen Soviet security.
• The rift between East and West grew steadily wider, and Stalin denounced Churchill as a “warmonger”.
• However, not everyone in the West agreed with Churchill; over a hundred British Labour MPs signed a motion criticizing his attitude.

• By the end of 1947, every state in eastern Europe, except Czechoslovakia, had a fully communist government.
• Elections were rigged, non-communist members of coalition governments were expelled, many were arrested and executed, and eventually, all other political parties were dissolved.
• This took place under the watchful eyes of secret police and Russian troops.
• Stalin treated the Russian zone of Germany as if it were Russian territory, allowing only the Communist Party and draining it of vital resources.
• Yugoslavia was the exception, where the communist government of Marshal Tito had been legally elected in 1945.
• Tito’s forces, not the Russians, had liberated Yugoslavia from German occupation, and Tito resented Stalin’s attempts to interfere.
• The West was irritated by Russia’s treatment of eastern Europe, which disregarded Stalin’s promise of free electionsmade at Yalta.
• Despite this, the West should not have been surprised, as Churchill had agreed with Stalin in 1944 that much of eastern Europe should be a Russian sphere of influence.
• Stalin argued that friendly governments in neighboring states were necessary for self-defense, that these states had never had democratic governments, and that communism would bring progress to backward countries.
• It was Stalin’s methods of gaining control that upset the West, leading to major developments in the Cold War.

• Truman Doctrine sprang from events in Greece, where communists were trying to overthrow the monarchy.
• British troops had helped liberate Greece from the Germans in 1944, but they were strained in supporting the monarchy against communists receiving help from Albania, Bulgaria, and Yugoslavia.
• Ernest Bevin, the British Foreign Minister, appealed to the USA, and Truman announced (March 1947) that the USA would support free peoples resisting subjugation by armed minorities or outside pressures.
• Greece received massive amounts of arms and supplies, and by 1949, the communists were defeated.
• Turkey also received aid worth about $60 million.
• The Truman Doctrine made it clear that the USA had no intention of returning to isolation; it was committed to a policy of containing communism worldwide, including in Korea and Vietnam.
• Marshall Plan (June 1947) was an economic extension of the Truman Doctrine.
• George Marshall, the American Secretary of State, produced the European Recovery Programme (ERP), offering economic and financial help.
• Marshall stated that the policy was not against any country or doctrine but against hunger, poverty, desperation, and chaos.
• Western Europe was suffering from these issues, exacerbated by the coldest winter in almost 70 years (1947-48).
• The ERP aimed to promote the economic recovery of Europe and provide lucrative markets for American exports.
• The main aim was likely political: to prevent communism from gaining control in a prosperous western Europe.
• 16 nations (Britain, France, Italy, Belgium, Luxembourg, Netherlands, Portugal, Austria, Greece, Turkey, Iceland, Norway, Sweden, Denmark, Switzerland, and western Germany) joined the plan for using American aid.
• Over $13 billion of Marshall Aid flowed into western Europe over four years, fostering recovery of agriculture and industry.
• Communist parties in western Europe suffered electoral defeat, especially in France and Italy.
• Many American historians claim Europe’s recovery was due entirely to the Marshall Plan.
• Greg Behrman and Nicolaus Mills see it as a perfect example of humanitarian intervention, but Mills acknowledges the role of European leaders.
• European historians reject the idea that Europe was saved solely by the Marshall Plan; they point out that conditions for recovery were already in place.
• Marshall Aid was only about 2.5% of the total national income of the 16 countries involved.
• Historians question whether without Marshall Aid, western Europe would have turned communist or suffered Soviet invasion.
• Communists’ popularity was already in decline before American aid arrived.
• Most historians agree that Stalin was more concerned with protecting Soviet security than launching invasions of western Europe.
• The USSR denounced Marshall Aid as “dollar imperialism” and rejected the offer.
• Soviet Union and its satellite states, including Czechoslovakia, were not allowed to take advantage of it.
• The iron curtain seemed a reality, further strengthening tensions.

• The Communist Information Bureau (Cominform) was the Soviet response to the Marshall Plan, set up by Stalinin September 1947.
• Its purpose was to bring together various European communist parties.
• All satellite states were members, and the French and Italian communist parties were represented.
• Stalin aimed to tighten his grip on the satellites, enforcing Russian-style communism.
• Eastern Europe was to be industrialized, collectivized, and centralized.
• States were expected to trade primarily with Cominform members, and contacts with non-communist countries were discouraged.
• Yugoslavia objected and was expelled from Cominform in 1948, although it remained communist.
• In 1947, the Molotov Plan was introduced, offering Russian aid to the satellites.
• Comecon (Council of Mutual Economic Assistance) was established to coordinate the economic policies of the satellite states.

• The Czech coup came as a blow to the Western bloc, as Czechoslovakia was the only remaining democratic state in eastern Europe.
• A coalition government of communists and other left-wing parties had been freely elected in 1946.
• The communists won 38% of the votes and 114 seats in a 300-seat parliament and held a third of the cabinet posts.
• The prime minister, Klement Gottwald, was a communist; President Benes and foreign minister Jan Masarykwere not, hoping to keep Czechoslovakia as a bridge between East and West.
• A crisis arose in 1948 when the communists were expected to lose ground in the upcoming elections due to the rejection of Marshall Aid, exacerbating food shortages.
• The communists acted before the elections, seizing power in an armed coup.
• Non-communist ministers, except for Benes and Masaryk, resigned.
• A few days later, Masaryk’s body was found under his office windows, officially described as suicide, but later proven to be murder after the collapse of communism in 1989.
• The May elections were held with only a single list of communist candidates; Benes resigned, and Gottwald became president.
• The Western powers and the UN protested but could not act as they could not prove Russian involvement, as it was seen as an internal affair.
• Evidence suggests that Stalin had influenced the coup due to Czech connections with the West and interest in Marshall Aid.
• Several Russian divisions occupying Austria were moved to the Czech frontier.
• The bridge between East and West was gone, and the iron curtain was complete.

• The Cold War crisis arose from disagreements over the treatment of Germany.
• As agreed at Yalta and Potsdam, Germany and Berlin were divided into four zones.
• The three western powers focused on economic and political recovery in their zones, while Stalin drained the resources from the Russian zone to Russia.
• In early 1948, the three western zones were merged into a single economic unit, benefiting from Marshall Aid, contrasting sharply with the poverty in the Russian zone.
• The West wanted Germany reunification and self-government, but Stalin kept the Russian zone separate with its own communist government for Russian security.
• The idea of the three western zones reunifying was alarming to Stalin, as it would bring the region into the Western bloc.
• In June 1948, the West introduced a new currency and ended price controls in their zone and West Berlin.
• The Russian response was to close all road, rail, and canal links between West Berlin and West Germany, aiming to force the West to withdraw by starving the city.
• The Western powers, fearing this would lead to a Russian attack on West Germany, decided to fly in supplies to West Berlin.
• B-29 bombers were positioned on British airfields for support, and 2 million tons of supplies were airlifted to West Berlin over the next ten months.
• The airlift kept the 2.5 million West Berliners fed and warm through the winter.
• In May 1949, the Russians lifted the blockade, admitting failure.
• The outcome boosted the Western powers’ morale and worsened relations with Russia.
• The blockade led to the formation of NATO to co-ordinate Western defenses.
• The crisis marked the permanent division of Germany, with no compromise possible for its reunification.

• NATO was formed in April 1949 following the Berlin blockade, which highlighted the West’s military unreadiness.
• In March 1948, Britain, France, Holland, Belgium, and Luxembourg signed the Brussels Defence Treaty, promising military collaboration in case of war.
• The USA, Canada, Portugal, Denmark, Iceland, Italy, and Norway joined the treaty and signed the North Atlantic Treaty.
• The treaty stipulated that an attack on any one country would be considered an attack on all, and the countries placed their defence forces under a joint NATO command.
• This was a significant shift as the Americans abandoned their traditional policy of ‘no entangling alliances’ and pledged to military action in advance.
• Stalin saw NATO as a challenge, keeping tensions high between the East and West.

• The Western powers set up the German Federal Republic (West Germany) in August 1949 after realizing no prospect of a united Germany.
• Elections were held, and Konrad Adenauer became the first Chancellor of West Germany.
• In October 1949, the Russians established the German Democratic Republic (East Germany) in response.
• Germany remained divided until the collapse of communism in East Germany (November-December 1989), which led to the re-unification of the two states into a single Germany in early 1990.

• In September 1949, the USSR successfully exploded an atomic bomb, triggering an arms race.
• Truman authorized the USA to produce a hydrogen bomb, which was much more powerful than the atomic bomb.
• The US defense advisers created NSC-68 (April 1950), stating that the Russians were fanatics intent on spreading communism globally.
• The document recommended tripling the expenditure on armaments to counter communism.
• In October 1949, a communist government was proclaimed in China under Mao Zedong after defeating Chiang Kai-shek, the US-backed nationalist leader who fled to Taiwan.
• In February 1950, the USSR and communist China signed a treaty of alliance, heightening American fears of the spread of communism.
• Amidst growing anxiety, the Cold War spotlight shifted to Korea where, in June 1950, communist North Koreainvaded non-communist South Korea.

• 1953 saw some improvement in East-West relations, but the thaw was not consistent.
• The death of Stalin was a key turning point, leading to new Russian leaders like Malenkov, Bulganin, and Khrushchev, who sought to improve relations with the USA.
• The balance of power between the US and USSR was now critical, as both had developed a hydrogen bomb by August 1953, making relaxation of tensions necessary to avoid nuclear war.
• In February 1956, Khrushchev gave a speech criticizing Stalin and advocating for “peaceful coexistence” with the West, stating that it was essential to avoid the most destructive war in history.
• Khrushchev’s vision was not about defeating the West but about demonstrating the superiority of the Soviet economic system, and eventually achieving communism through economic aid to neutral states.
• Anti-communist sentiments in the US began to moderate when Joseph McCarthy was discredited in 1954.
• McCarthy’s attacks on leading generals and President Eisenhower led to a large Senate condemnation and his loss of influence.
• Eisenhower expressed that the American people wanted to be friendly with the Soviet people.

• The signing of the peace agreement at Panmunjom ended the Korean War in July 1953.
• The war in Indo-China ended in the following year (1954).
• The Russians made important concessions in 1955:
  • Agreed to give up their military bases in Finland.
  • Lifted their veto on the admission of 16 new member states to the UN.
  • The quarrel with Yugoslavia was healed when Khrushchev visited Tito.
  • The Cominform was abandoned, suggesting more freedom for the satellite states.
• The signing of the Austrian State Treaty (May 1955) was the most important development in the thaw.
  • After World War II (1945), Austria was divided into four zones of occupation, with the capital, Vienna, in the Russian zone.
  • Unlike Germany, Austria was allowed its own government because it was viewed as a liberated state rather than a defeated enemy.
  • The Austrian government had only limited powers, and the Russians insisted on squeezing reparations, mainly in the form of food supplies.
  • The Russians were persuaded, mainly by the Austrian government, to be more cooperative in 1955.
  • Russians were also afraid of a merger between West Germany and western Austria.
• As a result of the agreement, all occupying troops were withdrawn, and Austria became independent with its 1937 frontiers.
  • Austria was not to unite with Germany, its armed forces were strictly limited, and it was to remain neutral in any dispute between East and West.
  • This meant that Austria could not join either NATO or the European Economic Community.
  • Austria was unhappy about the loss of the German-speaking area of the South Tyrol, which Italy was allowed to keep.

• Khrushchev’s policy was a curious mixture, difficult for Western leaders to understand.
• While making conciliatory moves, Khrushchev was quick to respond to any threat to the East and had no intention of relaxing Russia’s grip on the satellite states.
• In 1956, the Hungarians discovered this when a rising in Budapest against the communist government was crushed by Russian tanks.
• Khrushchev sometimes seemed to push the Americans to see how far he could go before they responded.
• The Warsaw Pact (1955) was signed between Russia and her satellite states shortly after West Germany joined NATO.
  • The Pact was a mutual defence agreement, interpreted by the West as a gesture against West Germany’s membership in NATO.
• The Russians continued to build up their nuclear armaments.
• Berlin caused more tension between East and West.
• Khrushchev’s most provocative action was installing Soviet missiles in Cuba in 1962, less than a hundred miles from the American coast.
• The western powers refused to officially recognize the German Democratic Republic (East Germany), which the Russians set up in response to the creation of West Germany in 1949.
• In 1958, Khrushchev announced that the USSR no longer recognized the rights of the Western powers in West Berlin.
  • When the Americans made it clear they would resist any attempt to push them out, Khrushchev did not press the point.
• In 1960, an American U-2 spy plane was shot down over Russia. President Eisenhower declined to apologize, defending America’s right to conduct reconnaissance flights.
• Khrushchev stormed out of a summit conference in Paris, and it seemed the thaw might be over.
• In 1961, Khrushchev suggested to President John F. Kennedy that the West should withdraw from Berlin.
• Communists were embarrassed by the large numbers of refugees escaping from East Germany into West Berlin—averaging about 200,000 a year, totaling over 3 million since 1945.
• When Kennedy refused, the Berlin Wall was erected in August 1961.
  • The wall was a 28-mile-long structure across the city, effectively blocking the escape route.

• Cuba became involved in the Cold War in 1959 when Fidel Castro seized power from the corrupt, American-backed dictator Batista.
• Castro outraged the USA by nationalizing American-owned estates and factories.
• As relations with the USA worsened, Cuba’s relations with the USSR improved; in January 1961, the USA broke off diplomatic relations with Cuba, and the Russians increased their economic aid.
• John F. Kennedy, the new US president, approved a plan by Batista supporters to invade Cuba from American bases in Guatemala.
• The CIA was deeply involved in the invasion plan.
• The invasion of Cuba at the Bay of Pigs in April 1961 failed due to poor planning, and Castro’s forces crushed the invasion with ease.
• Later in 1961, Castro declared Cuba a Marxist and socialist country.
• Kennedy continued his campaign to destroy Castro, using tactics like sinking Cuban merchant ships, sabotaging installations, and conducting invasion exercises.
• Castro appealed to the USSR for military help.
• Khrushchev decided to set up nuclear missile launchers in Cuba aimed at the USA, whose nearest point was less than a hundred miles from Cuba.
• Khrushchev intended to install missiles with a range of up to 2000 miles, threatening major US cities like New York, Washington, Chicago, and Boston.
• The Russians had lost the lead in ICBMs, and this move was an attempt to regain the initiative from the USA.
• In 1959, the USA had signed an agreement with Turkey allowing them to deploy Jupiter nuclear missiles from bases in Turkey.
• Khrushchev’s decision was a response to the US surrounding the USSR with military bases and was also a gesture of solidarity with Castro.
• The missiles were meant to deter further US operations against Cuba, such as Operation Mongoose.
• The missiles might also serve as a bargaining chip with the West over issues like the removal of American missiles from Europe and a possible withdrawal from Berlin.
• Kennedy’s advisers urged military action, including airstrikes or a full-scale invasion of Cuba, but Kennedy opted for caution: he alerted American troops, initiated a blockade of Cuba, and demanded the dismantling of the missile sites.
• The situation led to a tense standoff, and the world seemed on the brink of nuclear war.
• The UN Secretary-General, U Thant, called for restraint from both sides.
• Khrushchev made the first move, ordering Russian ships to turn back, leading to a compromise.
• Khrushchev promised to remove the missiles and dismantle the sites in exchange for Kennedy’s promise not to invade Cuba and to disarm the Jupiter missiles in Turkey (though this would not be announced publicly).
• Castro was furious with Khrushchev for “deserting” him, leading to cool Cuban-Soviet relations for several years.
• The Cuban Missile Crisis lasted only a few days but was extremely tense and had important results:
  • Both sides gained something, but most importantly, they realized how easily a nuclear war could have started.
  • The crisis led to a relaxation of tensions, including the introduction of a hotline between Moscow and Washington for swift communication.
  • In July 1963, the USSR, USA, and Britain signed the Nuclear Test Ban Treaty, agreeing to conduct nuclear tests only underground.
• Kennedy’s handling of the crisis was praised, with many commentators believing he defused the crisis and achieved a peaceful settlement.
• Some historians criticized Kennedy for causing the crisis by placing nuclear missiles in Turkey and trying to destabilize Castro’s regime.
• Some also argued that Kennedy missed the chance to solve the Cuban issue permanently by overthrowing Castro.
• Since Soviet long-range missiles could already reach the USA, the missiles in Cuba were not an entirely new threat.

• In public, the Russians claimed victory in the missile crisis, but privately they admitted their main aim, to establish missile bases near the USA, had failed.
• The removal of American Thors and Jupiters from Turkey meant little because the USA now had another threat—ballistic missiles (Polaris, later Poseidon) that could be launched from submarines (SLBMs) in the eastern Mediterranean.
• The Russians decided to focus on catching up with the American stockpile of ICBMs and SLBMs.
• Their motive was not just increasing security but also hoping that by achieving equality with the USA, they could persuade the Americans to limit and reduce the arms build-up.
• As the USA became more involved in the Vietnam War (1961-75), they had less to spend on nuclear weapons, which allowed the Russians to catch up.
• By the early 1970s, the Russians had overtaken the USA and its allies in the number of ICBMs and SLBMs.
• The Russians developed a new weapon, the anti-ballistic missile (ABM), which could destroy incoming enemy missiles before they reached their targets.
• However, the Americans were ahead in some areas:
  • They developed a more terrifying weapon, the multiple independently targetable re-entry vehicle (MIRV), a missile that could carry up to 14 separate warheads, each programmed to hit a different target.
• The Russians soon developed their own version of the MIRV, the SS-20 (1977), targeted on Western Europe, but with fewer warheads (only three) and less sophistication than the American version.
• In response, at the end of the 1970s, the Americans developed Cruise missiles based in Europe, which flew at low altitudes to avoid detection by Russian radar.
• Both sides accumulated enough weaponry to destroy the world many times over.
• The main danger was that one side might attempt to win a nuclear war by striking first and destroying the other side’s weapons before they could retaliate.

• Many people were worried about the growing stockpiles of nuclear weapons and the lack of progress towards controlling them.
• Movements were formed to persuade governments to abolish nuclear weapons.
• In Britain, the Campaign for Nuclear Disarmament (CND), started in 1958, pressured the government to take the lead and be the first nation to abandon nuclear weapons (unilateral disarmament).
• The hope was that the USA and the USSR would follow Britain’s example and scrap their weapons too.
• Mass demonstrations and rallies were held, including an Easter protest march from London to Aldermaston, where an atomic weapons research base was located.
• The British government was reluctant to adopt unilateral disarmament, fearing it would make Britain vulnerable to a nuclear attack from the USSR.
• Multilateral disarmament (disarmament by all major powers) was the only option the government would consider.
• In the 1980s, there were protests in many European countries (including West Germany and Holland) and in the USA.
• In Britain, women protested by camping around the American base at Greenham Common (Berkshire), where Cruise missiles were stationed.
• The fear was that if the USA ever fired these missiles, Britain could be destroyed by Russian nuclear retaliation.
• Ultimately, the scale of protests and the growing concern about nuclear weapons played a role in bringing both sides to the negotiating table.
• This marked the transition to the next phase of the Cold War – detente.