SIER Working Paper Series

The first phase policy of the Allied Occupation of West Germany (1945-55) and of Japan (1945-52) was focused on demilitarization and democratic reform. From 1947 the policy aim was shifted to economic recovery and the establishment of self-sustaining economies, and then further transformed to ‘cooperative developments’ between these defeated countries and the U.S.-led world economy. After the onset of the Cold War, the occupation policy promoted the reconstruction of West German and Japanese economies in order to make them help contain the expansion of the communist regimes in Europe and Asia. However, there lies an utmost necessity to solve the dollar gap then prevailing throughout the world, and to construct a collaborative world economy under the American leadership. To obtain this goal it was important to develop West Germany and Japan into the European and Asian workshop each, and give them the central role of the regional economic integration respectively. Thus, the collective security and the trade networks are supposed to settle in parallel manner.. In Europe the occupation sewed the seeds of European integration by providing the Marshall aid and by creating the EPU. In Japan, in addition to the EROA fund, the U.S. has put a tremendous amount of military procurement order, and encouraged Japan to expand to Southeast Asia. After all it looks equivalent that the U.S. occupation reopened the way Germany and Japan so wanted to take but failed, to the Grosswirtschaftsraum and the Greater East Asian Co-prosperity Sphere. West Germany and Japan soon became workshops of their own region, and the centers of Europe and Asia respectively. Dollar shortage was soon solved. It overshot to the Triffin dilemma.

Keywords: Regional Integration, Collective Security, Trade Networks, Dollar gap, Allied occupation of Germany and Japan