Saving the West: A Marshall Plan for Minerals

By 1947, the European continent lay in tatters.

It was two years after the most brutal and damaging war in human history. But much of the damage and economic carnage remained. 

A swathe of the European continent sat in rubble: ruined factories, broken transport, food and fuel shortages, and a severe lack of dollars to pay for imports.

Washington feared that hunger and unemployment would feed the explosion of communism, especially in France and Italy. But just as importantly, it needed Europe back on its feet as a major trading partner.

Then, on June 5, 1947, Secretary of State George Marshall gave a speech at Harvard, outlining a plan for rebuilding Europe. And so the seed was sown.  A few months later, President Harry Truman signed Europe’s recovery into law…

The Marshall Plan was born

This was a pledge to rebuild Europe and an attempt to keep America’s allies on the right side of history.

America was set to commit about US$13 billion, roughly 5% of the country’s entire GDP at the time. 90% of the money was in the form of grants, with the rest in loans.

In all, sixteen countries received aid. The largest recipients were Britain, France, West Germany and Italy.

But the Marshall Plan didn’t receive universal appeal; Joseph Stalin, the leader of the Soviet Union, rejected it and pressured Eastern Bloc countries, including Czechoslovakia, to decline the American offer.

US Congress was also mixed and sceptical about committing such a large sum to fixing Europe’s mess. After all, the US military had just saved Europe from imploding on itself.

But this was more than a goodwill mission.

It was America’s fight to keep democracy alive and ensure its most important trading partners remained aligned.

Much of the initial money was spent on food, fuel, and basic necessities. Later, America’s Marshall Plan helped to restore power plants, railways, ports, steel and coal capacity.

Historians still debate how much the Marshall Plan ultimately led to Europe’s recovery. But it did restore confidence. But perhaps more important, it rebuilt the link between the American and European supply chain.

80 Years On, We Have Another Version

Today, Western governments are pledging similar amounts to something just as important: breaking China’s grip on critical minerals.

According to some sources, Western governments have already pledged around $135 billion to mining, processing, and manufacturing critical minerals outside China.

But those numbers are dwarfed by the West’s even more ambitious task: restoring manufacturing.

A report by the McKinsey Global Institute found that of the approximately $3 trillion in manufactured goods the United States imports annually, about 25% are vulnerable due to national security concerns, supply concentration, and geography.

Building enough domestic capacity to replace imports of these critical, trade-exposed products and their upstream inputs was estimated to cost about $2 trillion, according to the report.

A mammoth task. But there is no alternative.

The parallels from 80 years ago are uncanny, and the failure to achieve the objectives is just as consequential.

If the West doesn’t build, it permanently cedes control of global supply chains to China. And that will erode the dominant role it’s played across global finance, geopolitics, and wealth accumulation.

If The Great Build doesn’t happen, the West decays, perhaps permanently, into the history books. Failure is not an option!

I’ve put together a short presentation on what this means and who could stand in the way of all this cash.

You can check that out here.

Until next time.