REPARATIONS RIDDLE

Those trying to follow the recent interminable wrangling between Greece and her creditors, led by Germany, were probably surprised by the Greek demand for war reparations for the crimes and devastation inflicted upon her by Nazi Germany from 1941 to 1944. Surely all that is ancient history, many must have thought, and Greek claims are a fanciful distraction from her present difficulties. The truth is much less clear-cut than that and the Greek moral case, at least, is compelling.

Nazi troops at the Acropolis in 1941

Manolis Glezos MEP, Greek resistance hero, aged 92

Raising the reparations issue was a commitment in SYRIZA’s manifesto and is in part a tribute and a political debt to iconic Resistance hero, Manolis Glezos, who electrified Occupied Greece in 1941 by tearing down the Nazi swastika flag flying over the Acropolis. Glezos was 18 and was condemned to death in his absence, but he survived. He fought against the Germans and later was a Communist guerrilla fighting in the bitter Civil War (1946-49). After years of imprisonment and exile, Glezos, like all Civil War combatants and exiles, was at last re-admitted to Greek public life by the Andreas Papandreou ministry of the 1980s. Glezos became a SYRIZA MEP and has always vowed to press for reparations from Germany.

The Germans behaved appallingly in Greece, looting the country and brutally murdering about 20,000 civilians. Greece suffered grievously although the Poles, Russians and Yugoslavs fared worse. The facts are not disputed by Germany. Some Reparations have been paid although the whole issue is a complex one in international law. Since the crippling reparations imposed on Germany by Versailles in 1919, castigated by Keynes in The Economic Consequences of the Peace, politicians have been chary of pushing the issue too far since reparations were reckoned a contributory factor to the rise of Hitler, and nobody wants to repeat past mistakes. 

Germany had paid relatively modest reparations to Greece of DM 115m (then about $45m) in 1960 in compensation for Nazi oppression, which Greece maintains was a down-payment, pending reunification of Germany. In comparison, Poland received substantial German territory, notably Silesia and the great cities of Danzig and Breslau, east of the Oder-Neisse line, the new Polish frontier. Poland also received DM 13bn in 1975 and a further 4.7bn zlotys to support aged dispossessed Poles. Russia was able to loot East Germany of industrial plant and labour after the war and it absorbed much of East Prussia, the city of Konigsberg and other eastern territories from which 12m Germans overall were expelled. Yugoslavia in due course received $36bn worth of German industrial plant. The Netherlands annexed and then sold back some German territory for DM 280m in 1957.

As can be seen, there is much disparity in these arrangements and there is no common pattern. Germany maintains that the reparations issue has been closed by the “Two plus Four treaties” of 1990 when the 4 war-time allied powers (to whom alone Germany surrendered in 1945) recognised the reunification of West and East Germany, their new borders and gave up their residual privileges. Greece was not a party to this treaty and her rights cannot be overruled by its provisions.

Greece believes she was short-changed on reparations. Forgetting about the emotions released by war and human suffering, reparations are not related to body-counts but are intended to compensate for measurable material losses. One central issue for Greece is the forced loan of 476m Reichsmarks extracted from Greece at 0% to pay for the German occupation. In 1965 Chancellor Erhard said this loan would be repaid when Germany was reunified but not one cent of this has been received:  its present value at 0% interest is €11bn – at 3% interest it would swell to €95bn. The German government refuses to discuss the matter, though some Germans on the Left entirely acknowledge the liability. German finger-wagging at Greece about “a debt is a debt and must be paid” plays badly in Greece in view of Germany’s failure to repay this forced loan.

A heavily indebted country, distrusted by its creditors, seeks debt relief. No, I am not talking about Greece, I am talking about Germany, prostrate after the war in 1953. The London Debt Conference was called and was attended by the US, UK, France and many other European countries including Greece. It generously cut Germany’s external debt by over 50%, from €32bn to €15bn, stretched out debt maturities and only asked for repayments if Germany ran a trade surplus. This was an incentive to creditors to trade with Germany and the package greatly helped the German “economic miracle” of the 1950s.

Yet when Greece asks Europe for similar generosity she is told debt reduction is “impossible” – impossible for Greeks maybe, but certainly not for Germans. Nobody claimed that Germany “deserved” relief in 1953 but she patently “needed” relief. The same is true of Greece. Prime Minister Tsipras has said that Greece runs out of money before the end of April, so it is time for constructive action.

The atmosphere between Greece and Europe is bad, partly through rather shrill Greek populism but also thanks to the visceral anti-Left prejudices of the European elite. A constant stream of toxic denigration of Greece emanates daily from Germany and her satellites - I call them the FANGS (Finland, Austria, Netherlands, Germany and Slovakia). Greece can be crushed, if that is what Europe wants, but there is a better way, given the necessary political will, which should be conducted in a mutually respectful manner:

(1)    Germany can open civilised discussions on the repayment of the Nazi forced loan.

(2)    Europe can constructively approach debt relief for Greece on the 1953 German model.

(3)    Interim relief can be given to Greece in the context of an acceleration of existing discussions between the EuroGroup and Greece.

SMD

22.03.15

Text Copyright Sidney Donald 2015