Germany owes greece money for the war – but morality needn’t come into it

Hagen Fleischer

published at The Guardian, Tuesday 10 February 2015

Instead of focusing on the emotionally charged issue of reparations for the second world war, Berlin and Athens should set up a future fund for the joint rehabilitation of a ‘shared’ history‘Calls for repayments are often seen as being a sleight of hand … But it’s worth having a closer look at what kind of debt we are actually talking about.’

The triumph of Alexis Tsipras’s Syriza in last month’s elections means that the old debate about whether Germany still owes Greece wartime reparation payments is emphatically back on the table. “I can’t overlook what is an ethical duty, a duty to history … to lay claim to the wartime debt,” Tsipras said, while addressing parliament on Sunday.

Germany’s deputy chancellor, Sigmar Gabriel, has rejected Tsipras’sdemands outright: “The probability is zero.” Calls for wartime repayments are often seen as being a sleight of hand on behalf of those “bankrupt” Greeks, trying to cover their debts by tricking poor German taxpayers out of their hard-earned euros. But it’s worth having a closer look at what kind of debt we are actually talking about.

Nazi Germany’s 3.5-year occupation of Greecewas bloody and destructive. The Paris reparations conference in 1945 accepted calculations that estimated damage to Greece to amount to 7bn pre-warUS dollars. It should be made clear that this wasn’t automatically the suggested reparation payment, as often has been maintained by Greek politicians and journalists: the purpose of the conference was not to come up with absolute sums but to work out percentages of a then still unspecified reparations pool.

But the criteria for how this pool should be divided up, drawn up by the US, worked predominantly in favour of the great powers rather than the “smaller allies”. Contributions to the total allied war effort (war expenditures, army-service and war production) were compensated more generously than suffering, death, destruction and resistance efforts. In the following years, Greecewas compensated by the Inter-Allied Reparations Agency with goods amounting to, according to varying claims, $25-80m.

At the same time, a growing consensus was emerging among western states that West Germany needed to be built up and strengthened as a bulwark against the Soviet threat. Hence, reparation in kind by dismantling of industry plants (“demontage”) was gradually discontinued and the Marshall planwas drawn up to rebuild destroyed west European infrastructure. In 1953, a US-induced “haircut” for German external debt from the pre- and postwar era was agreed in London, while “considerations of claims arising out of the second world war” were “deferred until the final settlement of the problem”, which was not expected before the event of German unity (which, in turn, was not expected at any time soon).

Towards the end of the 50s, the German government eventually bowed to pressure and agreed to pay a lump sum for those “affected by national socialist persecution on the basis of their race … or world view”, as a “voluntary compensation”. Greece received 115 million Deutsche Marks – a sum that has since been subject to myths and legends from both sides of the Greek-German divide.

It was an open secret that Germanyactively tried to postpone the payment indefinitely, even after reunification. Further compensation for war damages were denied, supposedly on the grounds that only a reunified Germany could agree to make such payments, but it was an open secret

that Germany’s government actively tried to postpone the payment indefinitely (“until Greek calends”)– even after reunification. In May 1990 the then foreign minister, Hans-Dietrich Genscher, moved quickly to supply various German embassies affected (including the one in Athens) with secret memos outlining how calls for reparations could be fended off.

By the early 90s, German politicians’ most common argument against reparations was the lapse of time – even though Germany had been forced by the German-allied court of arbitration to pay DM47m in compensation in 1974 for first world war damages 60 years after the start of the war. Another argument used was that Greece had since received generous bilateral support from Nato and the EU, in which Germany would have been the largest contributor – further muddying issues of investment in future cooperation and wartime guilt and atonement.

As wrong as the German government’s arguments may have been, they were perhaps understandable. Once one reparation payment had been granted to one country, officials in newly unified Germany with urgent investment needs in the east asked themselves where it would end.

Yet it’s important in this case to make a distinction between reparation payments for war crimes and repayments of so-called Besatzungsanleihe: monthly loans demanded from the Greek government in 1942-44 to pay for the maintenance costs of the German army in Greece and further military activity in the Mediterranean, even delivering food from starving Greece to Rommel’s “Afrika-Korps”. In early 1945, in the final days of the Third Reich, a group of high-ranking German economists calculated this “German debt (Reichsschuld) to the Greek state” to amount to 476m Reichsmarks, which would be roughly €10bn today.

Compared with the highly emotionally charged issue of wartime reparations, this debt is relatively FREE of moralistic baggage. It could – and should – form the basis for talks about the foundation of a “future fund”, a foundation dedicated to a joint rehabilitation of a “shared” history and the financing of a symbolic infrastructure project.

This would however require a major change of attitude on Germany’s behalf. Only Berlin has the power to open talks about a historic consolidation with Greece. Until then, we continue to exist with an absurd situation where democratically elected German postwar governments of all colours continue to be in denial about the existence of this debt, which was officially recognised even by the Nazi regime.

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