Access the short term impact (down to the late 1950s) of the European Recovery Programme (or Marshall Aid) on the economy of the 26 counties of Ireland
Uploaded by Kerrytom on Aug 10, 2013
The Marshall Plan was created to help stimulate European economies after the destruction of the second world war. America viewed the recovery of Europe as vital because healthy European economies, which were allies of the US, would also help the US economically, as well as politically in the ever increasing tension surrounding the Cold War. “The Marshall plan rested squarely on the American conviction that European economic recovery was essential to the long term interests of the United States.” Ireland was granted American aid despite the vast amount of American ill-will towards the country because of Ireland’s neutrality during the war. The reason for this was that the US saw Ireland as being an essential part of the economic growth of Britain. “American policy-makers regarded Ireland as a potential supplier of much-needed food exports to Britain and other countries in Western Europe, reducing their reliance on imports from the United States.” Over the period of time from 1947-1952, Ireland received loans amounting to $128m, grants amounting to $18, and technical assistance (TAP) of around half a million dollars. The short term impact of this aid is most easily comprehended by firstly examining the loan and grant payments and then examining and the TAP impact on the Irish economy.
The first aspect of Marshall aid to be examined is the loans and grants received. It is important to firstly differentiate between the loans and grants. Loans would have to be paid back to America, while grants would not. This is important because by giving most of the aid in loans rather than grants, the US seriously degraded the amount of influence they actually had on how the money was to be spent. This meant that the Irish government could use this money without US approval. “If loaned, then the recipient country’s government determined how the counterpart funds should be spent. If granted, the expenditure of counterpart funds had to be agreed between the recipient government and the US authorities.” The loan funds were used by the inter-party government primarily to fund five projects. These were “the land reclamation project, expenditure under the 1949 Local Authorities Act, grants for harbour improvements, advances for mineral development schemes and investment in the stock of ACC.” Despite the Department of Finance’s preference of directing the funds towards debt retirement, the government decided that investment in the country’s infrastructure and natural...