Globalization in the 1970s Essay Example for Free

Globalization in the 1970s Essay Globalization is not a new concept as there have been numerous cycles of globalization stretching as far back as the ancient civilizations. The wave of globalization prior to the oil embargo was after the Second World War. Although this period was marked with rapid economic growth, it came to an end in 1973 after the Arab oil embargo that resulted in a rise in oil prices. Financial globalization particularly can be termed as the integration of country’s local financial system with international financial institutions and markets. The main agents of financial globalization are the governments and hence they need to liberalize any restrictions on their domestic financial sector and capital account of the balance of payments if any form of integration is to take place (Schmulker, 2004:5). Dammasch (2010: 4) asserts that the economic environment in times of globalization changes rapidly with capital movements becoming larger and less controllable. Therefore there is usually a need to create a stabilizing system. The situation after the Second World War which was marked by falling credit institutions, mass unemployment, hyperinflation and bankruptcy of enterprises brought about such a necessity. The Bretton Wood system thereby came into creation. Bretton Woods’s agreement of 1944 was part of the decision by the industrialized countries to restructure themselves after the Second World War and the difficulties encountered especially after the First World War for the purpose of financial globalization. There was a great need for these nations to come up with workable rules and regulations which would direct them in the formulation of national policies that would facilitate the pursuit of common economic objectives (Kenen, 1994:11). The necessity and urgency of this legal structure was collectively agreed upon and accepted as it was viewed as a way of avoiding the negative effects that had marred the inter-war period (King, 2003:30). The Bretton woods years that spanned from 1946-1971 are seen in retrospect as a golden age of capitalism with exchange rate stability and rapid economic growth (King, 2003:30). This is because the system ensured that value of price increases was just and that the exchange rates remained fixed for unlimited periods in all key industrialized countries. Moreover, the national income in the G7 countries rose more rapidly than in any other comparable period. The system ensured long-run price stability for the whole world because the fixed price of gold provided an ostensible anchor to the world’s money supply. Therefore by pegging their currencies to gold, individual nations fixed their prices levels to that of the world (Bordor et al, 1993:1). King, 2003:30 emphasizes that the Bretton Woods system had two main characteristics which were: the existence of a set of rules that consisted of fixed rates of exchange, capital controls and independent policies of domestic macroeconomics on one hand and US domination on the other hand. Capital control as was stipulated in the Bretton Woods system was officially authorized and every government was highly encouraged and had the right and obligation to control its movement of capital. Capital control is the ability of the government to control the in and out flow of capital to and from their country. This meant that bank discount rates were not necessary when the central bank wanted to attract capital inflows or avoid flight of capital. As a consequence, the bank rate is maintained as low as possible (King, 2003:31). However, a country’s domestic economy can be adversely affected through inflation by in and out rapid flow of capital together with fixed rates of exchange. Capital controls essentially prevent rapid outflow of capital and can equip governments with the ‘tools’ to prevent economic crisis in the future. In this system capital control played a significant role whereby it effectively regulated the fixed exchange rate system that had been agreed upon by members during the Bretton Woods agreement. Whenever exchange rates required adjustments capital control was an integral component of the adjustment mechanism. These controls were fundamental to the reconstruction and growth of the international trading system that had been devastated by global depression, the two world wars and hyperinflation. This meant that capital flow was highly restricted with countries prohibiting convertibility. In capital control, currency non-convertibility was the most restrictive form of control. The government was the only one permitted to have the exclusive authority to hold foreign currency and to also to give it out to importers that had been approved by the government. Countries that fixed their exchange rates at levels that were unacceptable could therefore be monitored through this system (Eicher et al, 2009:470). Kitschel (1999, p. 38) further expounds that the capital controls were viewed as instruments of exchange rate stabilization and also as means of securing full employment and other national economic priorities. Additionally the system condoned the controls not only for short term management of balance-of –payment crises but also for the purpose of domestic economic management. The limited capital-account convertibility was the most common form of restriction. It enabled the system to place limits and know who had the right and accessibility to foreign exchange rates. Moreover, qualitative restrictions were also put in place which urged for the limitations on the external asset and liability position of domestic financial institutions. The controls were also placed on foreign banks domestic operations as well as on resident firms’ and on individuals’ direct savings, collection of foreign possessions and real estate property. Dual or multiple exchange rate system was another form of capital control that involved discrete rates for either commercial or financial transactions (Kitschel, 1999:39). Therefore the system allowed members to regulate international capital movements as long as they did not restrict payment for current external transactions. Although currencies would be freely convertible into one another after a transaction period, members were allowed to place capital controls on currency transactions if such capital flows threatened to overwhelm the nation’s balance on payment or exchange rate stability (McNamara, 2003:75). Forces challenging the system Although the Bretton Woods system was important to the economic prosperity after the Second World War, it nevertheless failed to support the equally rapid growth in the advanced countries over the next 25 years. One of the reasons according to Kenen (1994, p. 7) is the fact that the permanence and malleability of the system was slowly being destabilized by the postwar system. There were two vital roles of the Bretton Woods system. The first goal was geared towards producing exchange rates that were stable through the use of capital control and the second goal was meant to shield member nations from the shifting demands brought about by the flow of gold. Nonetheless, these goals highly contradicted each other because the system could not guarantee that global prices would remain stable as it lacked an effective technique. Additionally, the founders of the Bretton Woods system explicitly designed the system in an effort to disentangle international monetary relations from power politics. Nonetheless postwar monetary relations were highly politicized and required constant political interventions to keep the system functioning smoothly. Another flaw of the Bretton Woods design was that it lacked an effective, automatic mechanism to adjust and settle payment imbalances that inevitably arose between surplus and deficit countries. Under this system, a country that had a payment deficit most probably lost its gold which decreased the domestic monetary base and resulted in a decline in the currency’s purchasing power. Inevitably, the country’s imports would fall, exports would rise and the payment would eventually balance. However, the loss of gold and the decrease in money supply also meant that there would be a fall in the cumulative domestic demand, which meant deflation or even the possibility of depression. These structural problems assured that chronic balance of payments would mushroom into full-scale political problems, both domestically and between nations (Gavin,:6). Originally, the Bretton Woods system was designed to produce stable exchange rates while at the same time shielding national economies from demand shifts produced by the flow of gold (Gavin,:6). The founders wanted to set monetary arrangements that could combine the advantage of classic gold standard i. e. the exchange rate stability with the advantage of floating rates i. e. the independence to pursue national full employment policies. They mainly sought to avoid the defects of floating rates (destabilizing speculation and competitive beggar-than-thou-neighour policies). The disadvantage of fixed rates is that individual nations were exposed to both monetary and real shocks transmitted from the rest of the world via the balance of payment and other channels of transmission. The common world price level under the gold standard exhibited secular periods of deflation and inflation which reflected shocks to the demand for and supply of gold (Bordo et al, 1993:1). Countries like Germany and Japan were reluctant to import foreign inflation and this could have attributed to the eventual collapse of the system. In the long run this broke the credibility of the fixed exchange rate commitment among countries and the willingness of the central bank of several countries to cooperate in order to maintain the fixed parities. In other words the system failed because the commitment by the US of fixed equality was not reliable due to the inflation that was accelerating (King, 2003:33). The collapse of the Bretton Woods system is also related to the increasing speculative capital flows. With time as the dollar continued to decline, the US economy was unable to assure other countries that the dollar could be converted to gold at the fixed parity. In this view, the collapse of the system was related to the escalating in and out movements of capital and the lack of capacity of the dominant country, the US to control them (King, 2003:32). In conclusion the end of the Bretton Woods period can be said to have come when President Richard Nixon finally suspended the official conversion of the dollar into gold at $35 an ounce, shut down the gold window and cut the exchange rate system loose. Importance of the Euromarkets The growth of the Euromarkets has been directly linked to the expansion of the US multinational firms, and the consequent expansion of US banking abroad. This growth of the market and its development coincided with the increasing pressure of the US economy and the recoveries witnessed in the capitalist economy. The Eurodollar market therefore took over aspects of a developed domestic credit system since it was operating globally and independently from the central banks. Therefore, Britain which was a low-productivity and low-wage country became the center of global finance due to the contribution of the Eurodollar market. London developed as a center of global circulation of capital and hence became the world’s leading Eurodollar market. The regulation of the currency which allowed the partial and finally the full convertibility of the pound for those who were neither residents of the dollar or the sterling are some of the factors that brought about the growth and development of the Eurodollar market (Patel, 2007:1). This market was deemed important as it helped in redistributing surplus liquidity, in facilitating adjustments of internal liquidity in countries whose monetary systems rely on the import and export of short term funds through banks as a major monetary regulator. The Eurodollar market also helped to maintain world business activity at a high level by the availability of short term working funds. The Nixon Shock The Nixon Shock is termed as a series of economic measures that were taken by the then US president Richard Nixon in 1971. This decision was reached upon by various events which included: the Vietnam War that had become too costly and had drained the gold reserves of US, the increased domestic spending that accelerated inflation, the balance of payment deficit by US and trade deficit (Engdahl, 2003:1). Additionally, the US dollar foreign arbitrage had also caused the governments gold coverage of the paper dollar to decline by 33 points from 55% to 22%. Therefore in 1971, President Nixon imposed tariffs on all imports of 10 per cent to help reduce the trade deficit though it was removed in December the same year. At the same time, a freeze was put on wages and prices for a period of 90 days in a bid to lower inflation with the Federal Reserve Swap ending its support for other central banks. The convertibility of the dollar into gold was also ended and a limitation on gold transactions was put implying a decrease in the value of the dollar. This announced detached the US from the Bretton Woods system which collapsed from operation. After the gold convertibility of the dollar was suspended and flexible exchange rates emerged (James, 2010:1). After the Nixon shock, the US realized that it could exert more global influence through US treasury debt than from trade surpluses. In the 1970s oil was the only key commodity traded in dollars. This was due to the fact that the dollar was the only currency with the highest purchasing power and the only one that was backed by gold (Dammasch, 2010:6). As a result the US realized that the other nations would continue to demand for dollars for them to buy oil which was by now inflated in price. Thereafter, US trade partners had so many dollars in their reserves that they feared to create a dollar crisis. Instead they inflated and eventually weakened their own economies to support the dollar system as they feared a global collapse. Therefore when the price of oil increased in 1973 the dollar surprisingly continued to gain despite countries like Japan, Germany and the rest of the world suffering from severe economic destruction (Engdahl, 2003:1). Nonetheless, these measures did not help to restore or even quicken the economic growth rates of US or even correct the surplus reserves of dollars in Japan and Germany. From there henceforth, all the currencies of the Western nations began to ‘float’. There were no longer set exchange rates in the international market since the common link that was there before i. e. the Bretton Woods System, no longer existed. Ultimately, by the end of 1974, the price of gold had risen to $195 from $35 per troy ounce. As a result, due to unrestrained inflation there was a155% increase in the price of gold in a period of three years (James, 2010:1). Yom Kippur War The Yom Kippur War named after the Jewish holiest holiday, Yom Kippur began on October 1973 when Syrian and Egyptian forces backed by Soviet Forces launched attacks on Israel forces in the Golan Heights and Sinai in an attempt to recapture the land occupied by Israelites. However, despite the surprise attack on Israel, they emerged victorious due to the immense backing from US who provided them with weapons and intelligence. Therefore in a bid to punish the Western world for their aid to Israel, the Arab nations placed the oil embargo. This was initially political tactic meant to pressure the US into requesting Israel to withdraw from the Arab territories. However, with time the Arabs used it as an economic tactic when they realized the amount of power they had over the world through oil. The prices of oil thereafter quadrupled and continued to be a threat not only to America’s economy but also to the whole world. After the Yom Kippur war the OPEC member states struck back against the West for their support of Israel by imposing an oil embargo which increased oil prices by 70%. Lending by Private Banks to Developing Nations The origin of the debt crisis in the Third World countries has been attributed to the expansion of banking society in the US at an international level together with the rapid economic growth in the world. Before the oil price crisis of 1973-74 began, the real domestic product growth rate of developing countries averaged 6% annually. However, though the rate of growth had slowed down for the reminder of the 1970s it averaged 4-5%. This growth nonetheless generated new interests by the US corporate investment and similarly by other international banks. This multinationalism in providing financial services contributed to the emergence of the Eurodollar market which gave the US banks access to funds that they could undertake Third World Loans on a large scale. Additionally, the sharp rise in crude oil accelerated the expansion in lending (LCD debt crisis, 2010:192). The oil-exporting countries in the Arab world deposited their profits made during the oil crisis in banks in the European and US banks. This further fueled the lending boom. Since the banks had now been provided with more funds they became eager to make profits and hence invested it in developing nations by financing new development projects. The abrupt increase in oil prices brought about instant inflation into the prices of all other commodities. Moreover, the developing countries which had been crippled by these high oil prices saw this as an opportunity to borrow cheap money from the international banks so that they could offset the huge deficits ((LCD debt crisis, 2010:192; Schmulker, 2004:2). These funds that were known as petrodollars and had been recycled back to developing nations therefore generated inflationary pressures around the industrial world and created the debt crisis in developing nations (Cypher and Dietz, 2008:204). US High Interest Rates The developing nations during the 1970s were given loans at very low interest rates. However, this situation changed when the US in the early 1980s pushed up the interest rates of loans in an endeavor to stop inflation. This meant that the loans that had been lent out to Third World nations by US or other lending banks in Europe had to paid back with huge interests rates. Hence, by the 1980s the economy of Third World nations had began to stagnate and many nations were on the verge of bankruptcy due to the combination of mounting debts and low economic growth rates. The total debt had amounted to $567 billion and the high interest rates forced them to take out new loans which increased the burden (Jauch, 2009:1). This dismal situation was further compounded by the oil shock of 1973 and 1979. This decision by OPEC crippled the economies of many Third World nations with the cost of imported energy rising. Therefore, the culminative result of this crisis saw many developing nations especially those in Latin America unable to pay their debts during this period. IMF Structural Adjustment Programmes When it became evident that these nations would be unable to service their loans, the IMF came up with conditions which were dubbed Structural Adjustment Programmes (SAP) to solve the debt crisis among developing countries (Shimko, 2009:168). The SAP was proposed by the World Bank and the International Monetary Fund which were formed during the Bretton Woods period. These programmes imposed various conditions for countries especially developing ones that intended to borrow more loans (Jauch, 2009:1). IMF claimed that these reforms were necessary for promoting the economic growth needed to pay back the loans. The IMF required reforms to be carried out in the respective countries before aid could be provided. For example, Mexico whose debt burden grew faster than its own economy was loaned money by IMF to prevent a default. However, Mexico had to certain economic reforms before the loan could be dispatched. Although the conditions imposed on the developing nations differed, the same basic conditions were expected of all the nations (Shimko, 2009:168). The various key reforms according to Shimko 2009:169 included: †¢ Balancing of government budgets: this entailed either increasing the revenue for the government (providing new fees for government services) or drastically reducing the government spending. †¢ Reducing quotas, tariffs and other import barriers: this was aimed at subjecting the domestic industries to international competition. †¢ Liberalization of the capital market: this basically meant reducing the restrictions on foreign investment. †¢ Reducing government subsidies to domestic industries: these subsidies are those that had been part of import substitution strategies. †¢ Privatizing or selling the government-owned industries to the private sector. Nonetheless, these conditions did not alleviate the dire economic nor bring any economic development but rather the conditions intensified the existing situation. Although IMF studies claimed that the growth rates in countries under this programme increased from -15% in the 1980s to only 0. 3% in the early 1990s and 1% by mid-1990s, the World bank declared that there was no evidence whatsoever to account for any economic growth (Shimko, 2009:178). Additionally, lack of government subsidies or protection from foreign competition forced domestic industries to reduce their costs by lowering wages or by laying off workers. Therefore the liberalization of trade and the opening up of economies to unrestricted foreign investment had a deleterious impact on the poor nations and people (Shimko, 2009:177). Effects of the High Oil Prices in the 1970s As a result of the Bretton Woods system and the oil shock, a new wave of globalization began. Recession was prevalent with unemployment peaking at 9. 1% industrial production went down by 15% and high inflation in all areas. Additionally, when the Bretton Woods system of fixed exchange rates collapsed, countries were now opened up to greater capital mobility and they also retained the autonomy of their monetary policies. The Brandy Bonds came into existence when Mexico’s Minister of Finance announced that the country would be forced to default on its debt. The default on loans worsened as more banks in developing nations informed the IMF and Chairman of the Federal Reserve of their inability to service their debts in time (LDC debt crisis, 2010:191). The Brandy Bonds in a bid to resolve the debt crisis of the 1980 not only led to the subsequent development of the bonds market but also brought about a new phenomenon especially for emerging economies. Moreover, technological advancement, privatization and deregulation (which resulted in the corporate culture with national interests of decreasing consideration in business decisions) made foreign direct investment and equity investment in the emerging markets even more attractive for households and firms in the developed nations (Schmulker, 2004:2). Overall, there was a severe recession which hit the hardest the Western world. In Wall Street, oil stocks performed well due to the price increase as the profits soared as the rest of the market buckled under the low prices. Before the oil embargo was imposed by OPEC members, the price of crude oil was mainly determined by major oil companies in the West which retained 65% of the revenue of the oil. This type of arrangement was referred to as oligopolistic market arrangement. This meant that oil prices that had been posted in the market were established with the taxes and royalties paid to the exporting governments on the basis of this price. However following the embargo, property rights were transferred to the host countries from the major companies that had operated the industry and hence the cartel was able to take over the functions of the companies and retain more of the revenue generated Thereafter, the determination of crude oil price was passed into the hands of OPEC which set an official selling price for the best known among its crude. At the same time individual members were given the opportunity to adjust their selling prices in relation to this market according to the quality of the oil being produced (Trumbore, 2010:1). The continued high oil prices encouraged the exploration and subsequently the production of oil in high-cost oil regions such as Canada, Mexico, and North Sea. During the 1970, the increased demand of fossil fuels and increased prices for the product greatly reduced globalization. As the nations became more advanced, the rate of globalization declined. Although globalization grew for a while after the embargo, the rate of growth began to decline as the oil prices decreased (Okogu, 2003:1). The oil embargo impacted severely on the economy of Japan resulting in energy price inflation since by this time it was the only developed nation that relied heavily on oil with very few hydrocarbon reserves or any other alternatives. Japan was therefore forced to reconsider its industrial model. The oil shocks catalyzed the rapid turnaround which enabled Japan to become the leading energy efficiency country. The petroleum Supply and Demand Optimization Law was aimed at setting oil targets and restricting oil use. Japan’s vision after the oil embargo was to reduce its dependence of oil from the Middle East, therefore it started to charge import taxes on all petroleum products especially those that were used to generate power. Japan therefore became a pioneer in liquefied natural gas which today accounts for half of the worlds market. During this period, Japanese car brands like Toyota and Honda which had previously sold poorly enjoyed enormous success in the US market. Americans who had traditionally been fond of big cars were now confronted with a new challenge that included higher oil prices accompanied by long queues at the gas stations and rationing of gasoline. They therefore began to demand more of the Japanese brands for their small size and fuel-efficiency (Stewart and Wilczewski, 2009:1). Conclusion Even today, the Dollar System is still the real source of global inflation since t is the only global reserve currency as it has been witnessed worldwide since the 1971. Other countries in the world have to ensure that the reserves of their central banks are in dollars if they are to trade in the international market. This helps to guarantee against currency crisis, to back their export trade and to finance the importation of oil. Today, 67% of all central bank reserves are dollars (Engdahl, 2003:1). The debt crisis in the 1970s created by various variables including the oil embargo, the unprecedented borrowing and poor economic planning crippled the economy of many developing nations in Africa and Latin America. Despite efforts by the World Bank and IMF to offset these payment balances, the situation remained virtually unchanged. Ironically, other countries like Japan and US though they were affected by the rise in oil prices, were able to rise above the situation through oil exploration in their own countries which reduced their reliance on the imported oil from Middle East. Therefore, though the oil embargo did touch the economies of all the different nations, the degree and intensity was not the same. While other countries were completely devastated e. g. Third World nations others in the West found ways of reviving and even propelling their economies to greater heights. References Bordo, M, Eichengreen, B and National Bureau of Economic Research (1993). Bretton Woods System: A Retrospect. London. University of Chicago Press. Dammasch, S. (2010). The Bretton Woods System. [Online:] Available from http://www. ww. uni-magdeburg. de/fwwdeka/student/arbeiten/006. pdf Dietz, J and Cypher, J. (2008). Economic Development Process. New York. Taylor Francis. Eicher, T, Mutti, J and Turnovsky, M. (2009). International Economics. Taylor Francis. Engdahl, W. (2003). The Dollar System US Economic Reality. [Online:] Available from http://www. engdahl. oilgeopolitics. net/1973_Oil_Shock/Dollar_System/dollar_system. html Garber, P, Dooley, M and Folkerts-Landau, D. (2005). International Financial Stability. [Online:] Available from http://people. ucsc. edu/~mpd/InternationalFinancialStability_update. pdf Gavin, F. The Cold War Gold Battles. American Monetary Policy the Defense of Europe, 1960-1963. [Online:] Available from http://www. utexas. edu/lbj/faculty/gavin/articles/gold_battles. pdf Jauch, H. (2009). How Africa was destroyed by the World Bank, IMF- Structural Adjustment Programmes (SAP). [Online]: Available from http://www. newsrescue. com/2009/05/how-the-imf-world-bank-and-structural-adjustment-programsap-destroyed-africa/ Kenen, P. (1994). Managing World Economy. Washington. Institute for international Economics. King, E, J. (2003). The Elgar Companion Economics. Cheltenham. Edward Elgar Publishing Limited. Kitschelt, H. (1999). Continuing Change in Contemporary Capitalism. Cambridge. Cambridge University. Okogu, B. (2003). Changing Oil Market in North Africa Middle East. [online:] Available from http://www. imf. org/external/pubs/ft/med/2003/eng/okogu/okogu. htm Patel, H. (2007). The Eurodollar Market Contribution to the Modern Financial World. Online: Available from. http://www. pharmasuppliers. com/index. php? option=com_contentview=articleid=14catid=13Itemid=20

Great Expectations :: Great Expectations Essays

Great Expectations Charles Dickens’ novel Great Expectations is a very enjoyable book for the reader for many reasons. Overall, Great Expectations is a novel that effectively depicts the emotions and feelings of the characters in the story and has a plot that maintains the reader’s interest. These elements, along with others help to make the novel appealing for the reader. When young boy by the name of Philip Pirrup (referred to a Pip by all that know him) encounters an escaped convict in a churchyard, he is extorted to get food and a file for the man. Once Pip retrieves these items for the man, he learns that the man is in fact, an escaped convict. Pip, although being only seven at the time, was part of the group that apprehended the convict. For a few years following this event, Pip frequently visited extremely wealthy old women named Miss Havisham. In the process, he falls in love with the woman’s adopted daughter named Estella. She, however, despises him for being common and not a gentleman and she frequently puts him down and, on one occasion, causes him to cry. After about a year of providing company, she tells him not to visit her any more and pays him for his services. Soon after, Pip is told that his prior plans to be a blacksmith (he was apprenticed to his brother-in-law) were not to be and that he had come into Great Expectations. His benefactor was to remain a secret until the person revealed himself or herself, but Pip was certain that it was Miss Havisham. Pip was very happy not only because his new wealth but also because he was certain that he was to marry Estella whom he still loved. Pip moved to London where he befriended his new tutor’s son and his guardian’s co-worker. Pip was quite shocked, however, when he found his benefactor to be not Miss Havisham, but rather the same man who Pip helped to apprehend when he was a convict. Also his sister, who had raised him since his parents died when he was very young, had died due to an attack she had suffered months before. This devastated him in that he would no longer be wed to Estella. When he professed his love to her, he learned that she was to be married to a person whom he despised. Pip later discovered that his benefactor, named Magwitch was the real father of Estella.

Battle of Stalingrad

The battle of Stalingrad was one of the biggest, cruellest and most important battles of the World War II. The city was called in the name of Stalin, the leader of the Red Army and if the Germans captured it would be great propaganda for them and it would decrease the Russian morale, so Stalin made his army fight until death. Also if the Germans took control of Stalingrad, then the way to Moscow would be open and the Germans might win the war. The city also controlled a lot of crucial water and rail communications with the rest of Russia.After the fail of the Operation Barbarossa, Adolf Hitler began a new offensive in June 1942. General Frederich Paulus, the commander of the 6th German army got an order to invade Stalingrad. The city controlled a lot of rail and water communications. In the summer of 1942 Paulus sent an army of 250000 men, 500 tanks, 7000 artillery guns and 25000 horses. The progress was slow, because there was a lack of supplies until the 7th August 1942. By the end of the month the army killed or captured around 50000 USSR soldiers. At around 35 miles left till Stalingrad the fuel supplies stopped again. When the supplies came the progress continued but Paulus was conserving the fuel, so he only sent his 14th Panzer corps. The Red Army was now giving more resistance and the Germans were forced to stop just outside of Stalingrad. Paulus ordered to delay the attack until the 7th September because his north flank was under attack. While he was waiting the Luftwaffe bombed the city. The USSR suffered lots of civilian casualties and most of the city was reduced to rubble. Stalin brought most of the Russian army together, even from Siberia. Millions of soldiers were in Stalingrad now defending the most important part of Russia. More and more soldiers were needed as more and more German tanks and planes attacked. General Georgi Zhukov the Russian military that was yet not defeated in a single battle was put in charge of the Stalingrad defence. As the Germans progressed through the city the Red Army was fighting for every single building the further the advance was the more casualties each side suffered. The German tanks were not much use in street battles and most of the fighting was done with sniper rifles, machineguns and hand grenades. Germans had problems with very well and cleverly camouflaged Russian artillery and machinegun nests. The Red Army also used sniper squads, which were based in the ruins, particularly well. On the 26th September the 6th German army was able to put their flag up over the Red Square of Stalingrad, but the street fight continued. Adolf Hitler ordered Frederich Paulus to take Stalingrad at any cost, but General Kurt Zeitzler, the Chief of General Staff was critically against continuing the attack and asked Hitler to let the German army leave Stalingrad. Hitler denied it and said to the German people on the radio: â€Å"You can be sure, that no one will ever be able to push us out of Stalingrad†. When General Gustav von Wietersheim, the commander of the 14th Panzer division was complaining about great losses at the front, Paulus replaced him with General Hans Hube. Paulus, however, who lost 40000 men entering the city, was short on soldiers and on the 4th October 1942 begged Hitler for reinforcements. A few days later five engineer battalions and a tank division came to Stalingrad. On the 19th October snow replaced rain as Paulus still tried to progress despite the harsh conditions. In November he controlled about 90% of the city, but he was running out of men and supplies. Despite that Paulus planned another big offensive on the 10th November. His army received great casualties in the next two days and the Red Army knowing what happened launched a counterattack and Paulus was forced back south. When he reached the Gumrak airfield Adolf Hitler ordered Paulus to slowdown and resist the Russians. He also promised that the Luftwaffe would supply his army via air. The Paulus’ High Officers were sure that the Russian winter airspace would restrict the air supplying. All the battalion commanders were saying that a successful counterattack was the only option, but Paulus restricted his moves to Hitler’s orders. During the December the Luftwaffe dropped 70 tonnes of supplies a day, but the surrounded German army needed about 300 tonnes a day. All the soldiers only had a third of the normal food portion a day and they also started killing their horses for meat. By the 7th December the 6th army was living on one loaf of bread per five men. The army was about to surrender because of hunger when Hitler ordered the 4th army to launch a rescue operation. The 4th army only had 30 miles until the city, when the Russians stopped them. By 27th December 1942 the 4th army was also surrounded by the Red Army. In about a month over 28000 German soldiers died. Because of the food shortage Erich von Manstein ordered to stop feeding the 12000 useless injured men. Then he wanted to make a massive breakthrough and run away, but his men were too weak to do that and the idea was scrapped. 30th January 1943 Adolf Hitler made Paulus a field marshal, and sent him a message saying that none German field marshals were captured yet and suggested to commit suicide. Paulus stood strong and preferred to surrender to the Russians. The last of the Germans surrendered on the 2d February 1943. The Battle of Stalingrad was over. More than 91000 men were captured, and 150000 men died during the siege. All the German prisoners were sent to Siberia and 45000 of them died on the way there. Only 7000 German survived the war. Battle of Stalingrad The Battle of Stalingrad was the bloodiest battle in the Second World War and marked one of its few major turning points. It was certainly the most decisive battle in the â€Å"Great Patriotic War† or the Second World War on the Eastern front. The battle lasted from 13 September 1942 until the final German surrender on 2 February 1943. A few months earlier, the Russian Red Army seemed to be on the verge of complete defeat and Hitler's evil war machine seemed irresistible.Though the German retreat from Moscow nine months earlier brought a much needed respite to the Russians, it did not bring any real hope. At Stalingrad, however, the tide turned dramatically. In the titanic struggle that raged on the shores of the River Volga, the German Wehrmacht faced a crushing and humiliating defeat from which it never managed to recover. To the Germans, Stalingrad was the single most catastrophic defeat ever, surpassing the annihilation of Prussian Army in the hands of Napoleon at Jena-Aue rstadt in 1806.To the Russians, it was more than their greatest battle victory ever, it represented a great symbol of hope, the triumph of Russian spirit over the most gruesome adversity that had fallen on them since the German invasion in June 1941. The War on the Eastern Front was a particularly brutal and destructive war, even by Second World War standards, unprecedented in its ferocity and lack of any moral constraint. This barbarized warfare exacted an immense death toll of 27-28 million people on the Soviet side, a majority of them being civilians.According to one estimate, each minute of this war cost 9-10 lives, each hour 587, each day 14,000 for a total of 1,418 days. The unleashing of the â€Å"naked power of evil† that Hitler stood for resulted in untold pain and inconsolable grief for the people of Soviet Union, but it also provoked their indomitable fighting spirit that eventually led them to a great triumph. That fighting spirit fully asserted itself at Stalingr ad. However, more than Russian valor, the chief cause for the Russian victory at Stalin was Hitler’s ineptness.Stalin – the biggest enemy of the Red ArmyIn the summer of 1941, the Soviet Red Army was the largest in the world, but nowhere close to being the mightiest. It had significant weaknesses. Just a year or two earlier it had been humiliated by the Finnish army in the Russo-Finnish War. The chief reason for the debilitated condition of the Red Army was the ruthless purging undertaken by Stalin in late 1930s. A devastatingly large number of officers (estimated around 35,000), many of them belonging to the top echelons, were killed.Only a handful of capable commanders such as Zhukov, Rokossovsky, Chuikov, Malinovsky and Eremenko were spared to execute the Great Patriotic War. Thus weakened, the Soviet army initially presented no effective opposition to the German onslaught in mid-1941. The Germans considered the Red army ill-suited to modern, mechanized warfare, so much so that Hitler did not think twice about opening a major offensive in the Eastern Front while simultaneously engaged on the Western Front with England and the Allies.The Red Army was in fact very well equipped, but was reeling under the loss of most of its experienced and far-sighted leaders in the Great Purge (Zaloga & Volstad 3). Added to the continuing executions, there was paralyzing political interference. As a result of which, though it was well known that German army was headed towards Moscow, the Red Army was surprisingly unprepared. Its preparedness was indeed inexplicably but deliberately mitigated through political directives from Stalin. The invasion order of Hitler's Directive No.21, of 18 December 1940 decreed Operation Barbarossa, which was ‘to crush Soviet Russia in a rapid campaign'. Hitler intended for the Soviet Union to be destroyed and replaced by a group of colonies that would function under the Third Reich (Hoyt 35). By mid-May of 1941, Germany was all set to launch a vicious attack on the Soviet soil. The growing German deployments along the western borders of the Soviet Union were apparent, yet not until June 21, just one day before the actual German invasion commenced, were the border military districts alerted (Horner & Jukes 24).Launched on 22 June 1941, Operation Barbarossa was the largest single military operation of all time. The number of troops involved, the scale of the operations, and the cruelty of German soldiers were all of appalling proportions. At the outset of the Great Patriotic War, the Soviet military were hopelessly unprepared for the chaos and turmoil of war. The ruthless speed of the German advance struck fear and panic in the Soviet people.The road to StalingradThe Nazi army swiftly conquered vast areas of territory, killing and capturing hundreds of thousands of troops, pillaging, plundering and massacring civilian populations.The Soviets retreated, and managed to move most of their heavy industry awa y from the front line, re-establishing it in more remote areas. Smolensk and Kiev fell in September. Leningrad was under siege. Over one million people died in Leningrad due to starvation and cold. The Germans were unstoppable; by October, they seemed to have broken their adversary on the Eastern Front. The German Army marched relentlessly on the road to Moscow, blazing a trail of destruction, murder and mayhem on its path. Hitler proudly declared, â€Å"The enemy has been routed and will never regain his strength† (Gilbert 242).But Russia would not give up so easily. As the extent and reality of the German atrocities became widely known throughout Russia, the will to resist stiffened and the â€Å"patriotic war† became in reality a ‘people's war', but the cost to soldier and civilian alike was horrendous. ((Erickson & Erickson 72). As winter set in, tenacious defense prevented the Germans from capturing Moscow. However, the Russians found a surprising ally. The Germany army was ill-equipped to withstand the freezing severity of the Russian winter and was considerably weakened.The Soviets launched their first counter-attack on December 11, 1941. However, almost a year had to pass before the tide began to turn during the second phase of the Great Patriotic War. With the 1942-43 winter struggle at Stalingrad (along with the crushed German summer offensive at Kursk in 1943), the Soviet Union would consolidate its position and stand as a formidable adversary. The Battle of Stalingrad would mark the end of the German advance, and Soviet reinforcements in great numbers would gradually push the German armies back. 3. Stalingrad in 1941: a prime objectiveStalingrad, originally knownn as Tsaritsyn, had been a prosperous trading town on the Volga during the 19th century. During the Russian Civil War of 1918-21, the Reds had triumphed decisively at Tsaritsyn. Though Stalin's contribution to the Reds' success was not very significant, Stalin named the city after himself when he achieved supreme power in 1925. Subsequently, Stalin's role in the victory of 1920 was enhanced through propaganda, and soon it was Stalin was officially recognized for his crucial role in both the October Revolution of 1917 and triumph of 1927.Thus, Stalingrad came to be strongly associated with Stalin and Russian Revolution, a fact that added an important psychological dimension in showdown between Hitler's and Stalin's forces in the battle of Stalingrad. By 1941, Stalingrad was a city of 600,000 people. It had played an important role in Stalin's industrial drive of the 1930s and is location on the Volga ensured that it was a significant player in the Soviet war economy. Hitler had set his sight on Stalingrad because it was a valuable political, economic, communications and psychological objective.From the Soviet perspective, Stalingrad was important not only as a major industrial center but also as the major connecting point to any operations in the Ca ucasus.Hitler – the Red Army’s biggest allyThe disaster for Germans at Stalingrad did not bring about immediate defeat of Germany, but, after February, 1943, few German officers genuinely believed in victory. The confidence of Hitler himself could not be shaken so easily, of course, one would think. The defeat at Stalingrad drastically widened the rupture of trust between Hitler and the army high command, which began at the battle of Moscow in December 1941.The German defeat at Stalingrad in February 1943 was a heavy psychological blow to the Wehrmacht and to the Germany people who were accustomed to victory. It raised the first widespread doubts about Hitler's leadership and the ability of Germany to win the war. After Stalingrad, Hitler himself was rarely seen in public and his outward behavior became relatively muted. In the mid-1942 the Germany army had already seemed to be in a more subdued condition as compared to its irrepressible aggressiveness an year ago.The new Fall Blau (Case Blue) offensive was intended to be a resumption of the stalled invasion of Russia. Despite Hitler's optimism, the 1941 Campaign — which opened along a 2,000 kilometer front and involved 148 combat divisions — failed to shatter Russia â€Å"to its roots with one blow. â€Å"†¦ The summer campaign of 1942, although still immense, was necessarily less ambitious. (Hayward 7) Overriding his generals, Hitler gave the offensive two separate objectives on 90-degree divergent axes — the Caucasus oilfields and the Volga crossing at Stalingrad.Fall Blau was deeply flawed by ambiguity of strategic aim. Further, Hitler's amateurish attempts to control the deployment of his forces and his opportunistic changes of mind played an important part in compromising the campaign. For Hitler, Stalingrad had become the main objective of German effort; it was an obsession. Hitler was an amateurish strategist with an unshakeable faith in his own genius, which n o facts from the real world could really affect. His campaigns were foredoomed by grand-strategic misjudgment, a prime example of which is his ‘no retreat' policy in Russian from Stalingrad to Berlin.In Hitler's view the summer offensive of 1942 should bring about a final decision in the Russian campaign with the capture of Stalingrad on the Volga and Astrakhan on the Caspian Sea, and by occupying the oilfields in the Caucasus. The outskirts of Stalingrad were reached in August 1942, with the Germany forces already weakened, but the battle stuck in street and house-to-house fighting. Hitler's front commanders did realize how much of a gamble the offensives towards Stalingrad and the Caucasus were.They harbored fears about the strengths of the Russian reserves, and the weakness of the diverging German thrusts, dependent as they were for flank protection on the ill-equipped armies of Hungary, Italy and Romania. Most of them felt that Hitler's tendency to underestimate the Russia ns was becoming dangerous. His leadership displayed a total lack of any understanding of the command machinery and its function. Colonel-General von Kleist warned Hitler against using the Hungarians, Italians and Romanians as flank protectors for the 6th Army during its struggle for Stalingrad, but the Fuhrer would not listen.The Stalingrad catastrophe – a German perspectiveThe battle at Stalingrad was a vicious, close-quarter, street fighting. The 6th Army, commanded by Paulus, slogged on street by street, its flank protection entrusted by Hitler to Romanian troops. Paulus's units were decimated at the rate of 20,000 casualties a week. By the end of October, however, only one tenth of Stalingrad still held out, in the north of the city. But the balance of strength was changing. The earlier German superiority had gone. Stalingrad was the first priority for Russian reserves.Sufficient Russian troops were sent into the city to keep the fight going on there. As more Soviet troop s were sent into the city, the fighting began to be a block-by-block slogging match, moving back and forth in bloody fighting. Heavy losses for both sides characterized the street fighting. In early November, the winter came. The temperatures would soon reach thirty below zero. In the middle of that month, Hitler sent Paulus a message urging one last effort to complete the capture of Stalingrad. By mid-November the Russians were strong enough to undertake a major offensive.They had eleven armies, several mechanized, cavalry and tank corps, 900 tanks, 1,115 aircraft for the offensive. The were all set to destroy the German forces at Stalingrad (Hoyt 160). Generals Zhukov and Chuikov directed the defense of Stalingrad. Eremenko was also sent to command the Stalingrad front. Hitler staked more and more on Stalingrad’s capture, but Chuikov's 62 Army refused to yield. On 19 November 1942, the Russian counter-strike forces under Zhukov smashed through the Romanians and on 22 Novemb er completed their encirclement of Paulus's 6th Army.On November 23 Moscow announced triumphantly that Russian forces had a great victory in the bend of the Don, and that the Germans were now entrapped in Stalingrad. That news convulsed the world†¦ By November 28 the iron ring around Stalingrad had closed. (Hoyt 205) This was when a new deteriorating phase opened in Hitler's relations with his generals — that of his utter refusal to face the realities of defeat, of inferior sources, and of the limits to even the German Soldier’s powers of endurance and fighting skill.Hitler saw himself as an infallible military genius and blamed the incompetence and lack of willpower of his generals, or their disloyalty to their fuehrer, for all the failures of the German army on its bitter path back to Berlin in the aftermath of Stalingrad. The Russian attacks fell on weakly held sectors north and south of the city, manned mainly by Romanian forces in the north and by a mixture o f further Romanians and units of the 4th Panzer Army in the south. The Russian plan was simply to encircle all of the German forces in the Stalingrad area.The Russians soon broke through the thin defenses, particularly in the north. The 6th Army at Stalingrad was in serious danger. Decisive action at that time could have saved the situation for the Germans, however. If some units were sent north and south to hold the Russians while the bulk of the 6th army withdrew from the ruins of Stalingrad, it would have been saved. The catastrophe that finally overtook German army at Stalingrad in February 1943 stemmed largely from Hitler's refusal to sanction an early break-out before the Russian ring could be consolidated.Hitler ordered Paulus and his men to remain in Stalingrad as a forward ‘fortress' until the following spring. When the Russians closed the ring on 23 November, Paulus was cut off. General von Seydlitz-Kurzbach, the most senior of the corps commanders at Stalingrad, urg ed Paulus to withdraw without delay before escape became impossible. But Paulus, obedient to his Fuehrer, refused to listen to him. From then on the Germans descended into catastrophe slowly. On January 8 1943 the Russians sent Paulus an ultimatum, offering the alternative of honorable surrender or complete annihilation.Consulting Hitler, Paulus refused to surrender again. The Russians continued their attack. They advanced from west to east, pressing the Germans back into the city. They captured half of the pocked in the first week and then again paused to demand surrender. Again, Paulus consulted Hitler and refused. As long as there was still some hope for at least part of 6th Army breaking out, von Manstein, who commanded the relief efforts, supported Hitler in insisting that Paulus must continue to resist.By 22 January, when the Russians had captured 6th Army’s only remaining airfield, Manstein supported Paulus's request for permission to surrender, which Hitler refused. B y the end of the month, it was nearly all over for Germans. Only a few units held out until February 1. On the 2 February 1943, the momentous battle of Stalingrad came to an end.ReferencesErickson, John & Erickson, Ljubica. â€Å"Hitler Versus Stalin: The Second World War on the Eastern Front in Photographs. † London : Carlton Books, 2004.Gilbert, Martin. â€Å"The Second World War: A Complete History.† New York : Henry Holt and Company, 1989.Hayward, Joel S. A. â€Å"Stopped at Stalingrad: The Luftwaffe and Hitler's Defeat in the East, 1942-1943. † Lawrence, KS : University of Kansas Press, 2001.Horner, D. M. & Jukes, Geoffrey. â€Å"The Second World War (5) The Eastern Front 1941-1945. † Oxford : Osprey Publishing, 2002.Hoyt, Edwin P. â€Å"199 Days: The Battle for Stalingrad. † New York : Forge Books, 1993.Zaloga, Steven & Volstad, Ronald. â€Å"The Red Army of the Great Patriotic War 1941-45† (Men-at-Arms). Oxford : Osprey Publishing, 19 84.

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