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During the Cold War, western Europe was confused with the term Western Bloc, so "Western Europe" emerged as a term. The part of Europe that the Communists did not control and allied with the USA was the Western Bloc while the rest was either Eastern Bloc (confused with eastern Europe) or neutral countries that are considered a part of the Western Bloc (Sweden, Finland, Switzerland...) or Eastern Bloc (Yugoslavia). The divide caused by the Cold War in Europe between was called the Iron Curtain. Most of the Western Bloc was geographically to the west, except for parts of Greece, most territory of Finland and Turkey.
Today western Europe is more geographic or cultural rather than the part of Europe that does not consist of former Communist countries. The differences between former Communists and Capitalist European countries is reducing over time and the difference is becoming less important. All western European nations achieved very high level of development in Human Development Index.
Now, the use of the term Western Europe (in its Cold War meaning) is considered not only incorrect but also offensive, divisive and provocative, since Europe is now united again.