When Greece forgave Germany’s national debt (despite the atrocities)

Anti-fascist demonstration in Athens, yesterday


Last century Germany was responsible for two world wars of terror, the extermination of six million Jews, the occupation of much of Europe and the deaths of several millions Russians. Germany also occupied Greece and was responsible for the deaths of half a million Greeks, mostly civilians, as well as massacres in that country, the most notorious being at the village Distomo, where over 200 men, women and children were gunned down or bayoneted then hung up on trees to die. Yet in 1953, less than a decade after these atrocities and war crimes had been committed, Greece, along with all other European countries magnanimously forgave Germany’s national debt as an act of goodwill. It is now time that Germany repaid the favour and cancelled Greece’s debt. 

The first conference on reparations, in Paris in the Autum of 1945, granted Greece a percentage of Germany’s reparation payments for WWII damages. Athens received non-cash benefits worth up to 2 billion euros. Then, under the aegis of the USA, the introduction of the deutschemark in 1948 wiped out most of Germany’s domestic debt, which amounted to four times the country’s 1938 gross domestic product. Germany was also granted a waiver on its external debt, including the deferral of interest payments, from 1947 to 1952 as the Marshall Plan was implemented. In 1953, the U.S. also imposed the London Debt Agreement, which wrote off Germany’s external debt.

Albrecht Ritschl, an economic historian at the London School of Economics, estimated that the total debt forgiveness West Germany received from 1947 to 1953 was more than 280 percent of the country’s 1950 gross domestic product, compared with the roughly 200 percent of GDP that Greece was pledged in aid since 2010. While the rest of Western Europe in the 1950s struggled with debts of about 200 percent of GDP, West Germany enjoyed a debt of less than 20 percent of GDP.

Greece was a contributor to the postwar German debt relief. Signatories to the London Agreement, including Greece, agreed to defer settlement of war reparations and debts incurred after 1933 until a conference to be held after Germany’s reunification. Although Germany paid compensation to individuals in the 1960s, the conference never took place and many Greeks now think that more far compensation is due.

In accordance with the 1960 agreement the German government paid 115 million deutschmarks in reparation payments to Greek victims of the Nazi regime. But this ignored how in 1942 Nazi Germany forced the Greek national bank to pay out an interest-free loan to the tune of 476 million Reichsmarks, which the Nazis used to finance their occupation of Greece as well as the military operations – i.e. massacres. This ‘loan’ was never repaid.

In January of this year Syriza demand debt reduction and “the money Germany owes us from World War Two, including reparations”. According to Der Spiegel certain commentators have linked this to repayment of a 476 million reichsmarks zero interest loan that occupied Greece had been forced to give Nazi Germany. The loan corresponds to $14 billion in 2012, or $95 billion if 3% interest had been accrued over 66 years.

However, the current Greek Government has estimated that the unpaid debt to Greece by Germany is around 341 billion euros – far in excess of the 59 million euros that was paid in war reparations to Greece in 1960. It is time that the German war reparations debt to Greece is now fully repaid by cancelling – forgiving – Greece’s current debt, just as Greece joined others in cancelling Germany’s debt in 1953.

German soldiers raise Nazi flag at Acropolis

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