World War II (1939–1945)

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The alliance between the Western Allies and the Soviet Union had begun to deteriorate even before the war was over.

Germany had been de facto divided, and two independent states, Federal Republic of Germany and German Democratic Republic were created within the borders of Allied and Soviet occupation zones, accordingly.

The rest of Europe was also divided onto 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, Poland, Hungary, East Germany, Czechoslovakia, Romania, and Albaniabecame Soviet Satellite states. Communist Yugoslavia conducted a fully independent policy causing tension with the USSR.

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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 proxy wars.

In Asia, the United States led the occupation of Japan and administrated Japan's former islands in the Western Pacific, while the Soviets annexed Sakhalin and the Kuril Islands.

Korea, formerly under Japanese rule, was divided and occupied by the US in the South and the Soviet Union in the North 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.

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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 colonial 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 US emerged much richer than any other nation; it had 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 UK and US pursued a policy of industrial disarmament in Western Germany in the years 1945–1948.

Due to international trade interdependencies this led to European economic stagnation and delayed European recovery for several years.