Rebuilding Europe

One of the first tasks assigned to these new institutions was to provide the capital to help put the war-ravaged European economies back on their feet. Not only did they lack the resources for such a massive undertaking but European finance ministries balked at the harsh 'conditionalities' that accompanied support from the IMF as too great an infringement of their sovereign right to shape their domestic economies. So the much looser Marshall Plan was set up to provide US finance to rebuild Europe largely through grants rather than loans. Southern countries now emerging into independence did not fare so well - from the very beginning any loan was accompanied by pressure to keep their economies completely 'open' to foreign goods and capital. In the late 1 950s the World Bank was pressured into setting up the International Development Association (IDA) this would provide 'soft loans' and so head off attempts by the new countries of the Third World to set up an independent funding agency under UN auspices.