section_path: Aftermath
section_name: Aftermath
paragraph_text: Aftermath
  
  The Allies established occupation administrations in Austria and Germany, both initially divided between western and eastern occupation zones controlled by the Western Allies and the Soviet Union, respectively. However, their paths soon diverged. In Germany, the western and eastern occupation zones controlled by the Western Allies and the Soviet Union officially ended in 1949, with the respective zones becoming separate countries, West Germany and East Germany. In Austria, however, occupation continued until 1955, when a joint settlement between the Western Allies and the Soviet Union permitted the reunification of Austria as a democratic state officially non-aligned with any political bloc (although in practice having better relations with the Western Allies). A denazification program in Germany led to the prosecution of Nazi war criminals in the Nuremberg trials and the removal of ex-Nazis from power, although this policy moved towards amnesty and re-integration of ex-Nazis into West German society.
  
  Germany lost a quarter of its pre-war (1937) territory. Among the eastern territories, Silesia, Neumark and most of Pomerania were taken over by Poland, and East Prussia was divided between Poland and the Soviet Union, followed by the expulsion to Germany of the nine million Germans from these provinces, as well as three million Germans from the Sudetenland in Czechoslovakia. By the 1950s, one-fifth of West Germans were refugees from the east. The Soviet Union also took over the Polish provinces east of the Curzon Line, from which 2 million Poles were expelled; north-east Romania, parts of eastern Finland, and the Baltic states were annexed into the Soviet Union. Italy lost its monarchy, colonial empire and some European territories.
  
  In an effort to maintain world peace, the Allies formed the United Nations, which officially came into existence on 24 October 1945, and adopted the Universal Declaration of Human Rights in 1948 as a common standard for all member nations. The great powers that were the victors of the war—France, China, the United Kingdom, the Soviet Union and the United States—became the permanent members of the UN's Security Council. The five permanent members remain so to the present, although there have been two seat changes, between the Republic of China and the People's Republic of China in 1971, and between the Soviet Union and its successor state, the Russian Federation, following the dissolution of the USSR in 1991. The alliance between the Western Allies and the Soviet Union had begun to deteriorate even before the war was over.
  
  Besides Germany, the rest of Europe was also divided into Western and Soviet spheres of influence. Most eastern and central European countries fell into the Soviet sphere, which led to establishment of Communist-led regimes, with full or partial support of the Soviet occupation authorities. As a result, East Germany, Poland, Hungary, Romania, Bulgaria, Czechoslovakia, and Albania became Soviet satellite states. Communist Yugoslavia conducted a fully independent policy, causing tension with the Soviet Union. A Communist uprising in Greece was put down with Anglo-American support and the country remained aligned with the West.
  
  Post-war division of the world was formalised by two international military alliances, the United States-led NATO and the Soviet-led Warsaw Pact. The long period of political tensions and military competition between them—the Cold War —would be accompanied by an unprecedented arms race and number of proxy wars throughout the world.
  
  In Asia, the United States led the occupation of Japan and administered Japan's former islands in the Western Pacific, while the Soviets annexed South Sakhalin and the Kuril Islands. Korea, formerly under Japanese colonial rule, was divided and occupied by the Soviet Union in the North and the United States in the South between 1945 and 1948. Separate republics emerged on both sides of the 38th parallel in 1948, each claiming to be the legitimate government for all of Korea, which led ultimately to the Korean War.
  
  In China, nationalist and communist forces resumed the civil war in June 1946. Communist forces were victorious and established the People's Republic of China on the mainland, while nationalist forces retreated to Taiwan in 1949. In the Middle East, the Arab rejection of the United Nations Partition Plan for Palestine and the creation of Israel marked the escalation of the Arab–Israeli conflict. While European powers attempted to retain some or all of their colonial empires, their losses of prestige and resources during the war rendered this unsuccessful, leading to decolonisation.
  
  The global economy suffered heavily from the war, although participating nations were affected differently. The United States emerged much richer than any other nation, leading to a baby boom, and by 1950 its gross domestic product per person was much higher than that of any of the other powers, and it dominated the world economy. The Allied occupational authorities pursued a policy of industrial disarmament in Western Germany from 1945 to 1948. Due to international trade interdependencies, this policy led to an economic stagnation in Europe and delayed European recovery from the war for several years.
  
  At the Bretton Woods Conference in July 1944, the Allied nations drew up an economic framework for the post-war world. The agreement created the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which later became part of the World Bank Group. The Bretton Woods system lasted until 1973. Recovery began with the mid-1948 currency reform in Western Germany, and was sped up by the liberalisation of European economic policy that the U.S. Marshall Plan economic aid (1948–1951) both directly and indirectly caused. The post-1948 West German recovery has been called the German economic miracle. Italy also experienced an economic boom and the French economy rebounded. By contrast, the United Kingdom was in a state of economic ruin, and although receiving a quarter of the total Marshall Plan assistance, more than any other European country, it continued in relative economic decline for decades. The Soviet Union, despite enormous human and material losses, also experienced rapid increase in production in the immediate post-war era, having seized and transferred most of Germany's industrial plants and exacted war reparations from its satellite states. Japan recovered much later. China returned to its pre-war industrial production by 1952.