Germany Proposes African Marshall Plan

A week ago the German Development Minister Gerd Müller has suggested that in order to stem the flow of refugees coming from Africa, as well as enhance the economic prospects of these countries, an economic assistance programme modeled on the Marshall Plan should be implemented. The German Development Ministry have even said that in next few weeks they shall publish a report outlining how such a plan could be enacted. At this early stage the proposal would include measures to improve education and training, strengthen the rule of law, and provide massive amounts of employment.

In order to appropriately understand what the German government is proposing, it is first vital to know what the Marshall Plan was. In the aftermath of WWII the United States provided a large amount of money to countries in Europe to rebuild their economies. The total amount of money given to European countries was $13 billion which in today’s money is approximately $150 billion. Don’t be mistaken in thinking that this was an act of pure altruism. The United States had become a manufacturing superpower, so as well as stabilizing post-war Europe, it also allowed the US to create countries willing to buy its goods.
Further in the larger context of the Cold War, the Marshall Plan created countries that were strongly allied with the US and as such wouldn’t adopt a communist system of government. It is this final reason that the Soviet Union and many Eastern European countries didn’t take part, and instead opted to join COMECON, which was the USSR-led version of the Marshall Plan.
The key thing about the Marshall Plan is that unlikely the attempts at reconstruction after WWI, the money provided was not solely in the form of loans. Much of the Marshall Plan was eventually repaid but some was purely a gift in order to kick start economic growth. The other important distinction between post-WWI and post-WWII reconstruction efforts is who was providing the money. After WWI large banks like JP Morgan were lending nation-states the money, but the problem was that once the Wall Street Crash of 1929 hit these large banks asked for their money back. The Marshall Plan, on the other hand, was money provided by the US government, and as such was insulated from market forces.
The Marshall Plan was instrumental in rebuilding Europe after WWII. (Edward Miller/Getty)
There are two things that would determine if this programme was going to be successful: participant countries; and geopolitical calculations. It is unclear at this point which countries would be the lenders under this scheme but presumably many would be in the G20. My reservation is that if countries like Russia, China, the US, Britain, France etc. don’t take part for whatever reason, the idea is essentially a non-starter. China may well get involved as for a number of years the Chinese government has been actively investing in African countries in exchange for raw materials to fuel their meteoric development, but it’s unclear if wealthy countries like Saudi Arabia would get involved especially given their tepid response to the Syrian Civil War.
Geopolitical calculations may well hamper the project as well. I believe there is a risk of these countries essentially dividing up Africa into places ‘friendly’ to them. For example the US could invest is West Africa, and China may in invest in the South West, and Russia may invest in Southern Africa and so on. It is imperative, in my view, that all the money put into this programme was put into a communal pot and orchestrated by a central organisation. If left up to individual nation-states geopolitical competition may dominate and undermine the original reason for this project, namely to prevent the continuation of massive flows of refugees.
At the end of the day this is a good idea and I look forward to reading the German Development Ministry’s specific proposals. For decades developed countries have ignored the plight of their fellow human beings but such a sizable investment would not only alleviate poverty on a scale never before seen. but it would serve the national interests of these countries. By placing conditions on the loans, countries could be required to venerate human rights and democracy, thus emancipating millions of people. Obviously if this was the case Russia and China may get slightly jumpy, but China has proven that it will invest in Africa irrespective of international aid efforts. An African Marshall Plan must immediately be put into place because millions of people are currently living in conditions that would make our stomachs turn.

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