Greece vs Germany: The Curious Case of Unpaid War Debts

Greece finally has a point. Against Germany, no less.

As everyone knows, Greece has made a reputation for itself as being untruthful and evasive, inter alia by hiding its unfit condition for the euro back when that system was adopted, and subsequently by cooking its national budgetary statistics, triggering a Eurozone crisis in 2009. In consequence Greece has not exactly been favorably treated by international media. I joined that chorus (Feb 2nd, 2012). Greece is the black sheep of Europe.

Germany, by contrast, is Europe's star performer. It is also the country with the heaviest involvement in Greek debt, voicing the sternest appeals to Greece to live up to its commitments and stop fooling around. Germany has its public affairs in order; the Greek government's affairs are chaotic. The Greek Finance Ministry is barely able to even collect its taxes. In economic matters, Germany is credible, Greece not.

Therefore, when Greece started talking about German war reparations from World War II, most reactions around Europe were skeptical if not downright dismissive. It was seen as trying to talk about something else to get out of a pinch. I myself, having been quite harsh in my earlier critique of Greek behavior in the debt and bailout business, started out viewing these World War II stories with great suspicion. But I thought they might be worth checking out.

I reasoned the quickest way to get at the truth in this matter - given all the previous Greek lies and evasions - must be to listen to what the German government has to say. I was wrong, ending up on a wild goose chase.

The German government's line is surprisingly succinct: case closed; this is all up and done with, long ago - legally as well as politically. More specifically, the German argument is that reparations were paid in 1960, and the German reunification agreement in 1990 bars any subsequent resumption of the matter. Moreover, Greece has received a lot of bilateral assistance from Germany over the years, which in the Federal Government's view must be seen as relevant to the case. This view has been supported by prominent commentators on both sides of the Atlantic.

It turns out this defense does not hold up. First, there is a political dimension to the case. Commentators rejecting the Greek claims appear to be mostly of the center-right. The other view initially was held by people of the left. Most prominently, the former East German communists, the PDS, raised the Greek case in the Bundestag in 1995. More recently this political split is fading; the Greek argument is increasingly becoming accepted by people of the center and right as well.

The best give-away that something is wrong with the Federal Government's argument has come with German voices of critique. Leading German publications such as Die Welt (reprinted in Time Sept 20, 2011) and Der Spiegel (SpiegelOnline, March 15, 2015) have recently demonstrated that the German line does not stand up to closer examination. The Spiegel account is especially disturbing.

In broad terms, the Greeks have made three claims: 1) reparations for individual suffering (250 000 died during the war), 2) reparations for material damage, and 3) repayment of a forced loan of 476 million Reichsmark (an amount which in today's money adds up to 11 billion euros without interest).

It is true that in 1960 the two governments agreed on the payment of reparations for the suffering of individuals during World War II. Greece accepted in that agreement that no more claims for individual suffering would be made. But other claims, such as damage to Greece's infrastructure, or the forced loan, are not included. The BBC has a nice summary:

323 billion euros is owed by Greece to the Eurozone.

162 billion euros is claimed by Greece in reparations, including 108 billion euros for damaged infrastructure, and 54 billion euros for a forced wartime loan imposed by Nazi occupiers on Greece.

250 000 Greeks died during the German occupation.

(Source: BBC and Open Europe.)

What exactly has been done to settle these claims? First, they were registered in the process of establishing the post-World War II Inter-Allied Reparations Agency in 1946, which made an organized survey of all claims against Germany and her allies resulting from the war, and granted each claimant a share of the total reparations to be awarded. (Agreement in Paris, 14 January 1946)

The realization of the settlement, however, was postponed, due to American fears of another German economic and political collapse like that of the interwar years. Ultimately, another reparations agreement (the London agreement) was entered into by the same parties in 1953, essentially deciding to defer payment until the German question (i.e., reunification) was settled.

In 1960 Greece and Germany concluded an agreement of reparations to individual victims of the conduct of the Wehrmacht during the war, in the sum of 115 million DM, and with the proviso that no further claims for the suffering of individuals would be made.

In 1965, the Greek government sent Andreas Papandreou on a mission to the West German government in Bonn to raise the matter of the outstanding reparations and the forced loan. By Papandreou's own account, "I went to Bonn in 1965 and met Chancellor Ludwig Erhard to discuss, as I was instructed by the Cabinet of the Government of my father, George Papandreou, the issue of reparations and the return of the loan. Mr Erhard acknowledged that our claims were rightful, but he told me that he could not do anything until there is a peace agreement. He did not agree to exactly return to us the loan, but clearly recognized the right basis of our claim, the satisfaction of which was referred in the future tense, after signing a peace agreement." (Retold in the Greek publication Investor in 2010 and 2013.)

In 1990 German reunification was achieved with the so-called "2+4 agreement" between the two German states and the four occupying powers. One might have expected that Germany would now finally accept settlement with Greece. That did not happen.


A legal study put it this way: "The question of reparations, which had been postponed until the formal entering into force of a peace treaty with Germany, is not finally solved. A formal peace treaty could be seen in the 1990 Treaty of Moscow, the so-called 2+4 Treaty. However, this treaty did not regulate the question of reparations, at least not with regard to Greece. First of all, the question of reparations was not mentioned at all. Secondly, the 2+4 Treaty was only signed by the two German states and the four former Allied States, i.e. the Soviet Union, the United States, the United Kingdom and France. According to the pacta tertiis rule laid down in Art. 34 VCLT [Vienna Convention on the Law of Treaties], the signatories could not settle the question of reparations with binding force for third states." (p. 490*) In short, the way was open for Greece to raise its claims of reparations again.


Greece did not give up, and presented a formal diplomatic note in 1995 raising the matter of reparations and the loan once more. The German government again rejected the Greek approach. In a statement before the Bundestag in January 1996, responding to questions from the PDS party representatives, the Federal Government rejected all suggestions that Greece had a claim on reparations. Reparations to individuals had been made by the 1960 payment. Claims for infrastructure damage were covered partly by the silence of the 1990 reunification agreement on reparations, which therefore were moot, partly also by the considerable transfers to Greece of international assistance in programs of European cooperation in the postwar years. The veracity of the Ludwig Erhard statement in 1965 was denied. (See Bundestag documents.)

Afterward, the matter has been regarded as closed by the Federal Government of Germany.

One wonders: Why has not Greece been more insistent? A possible reason is that it would take considerable political courage to endanger what was otherwise a friendly relationship between two governments with a sensitive and serious case like this.

Another matter is, why have so few voiced questions regarding the German evasiveness in this matter? It is embarrassing for Germany, and for all of Germany's friends. That does not make Greece any more trustworthy in general economic affairs. But it does point a way to a more amicable resolution of the current Greek-German standoff.

In my view, reparations for individual suffering may, regrettably (and despite the law study cited), be regarded as settled with the 1960 agreement. The claim for damage to infrastructure needs to be considered in real terms. In any case, the forced loan will have to be repaid.

*) "Jus Cogens vs. State Immunity, Round Two: The Decision of the European Court of Human Rights in the Kalogeropoulou et al. v. Greece and Germany Decision." By Kerstin Bartsch and Björn Elberling. German Law Journal 2003 vol 4 no 5 pp 477-491.