Does Germany Owe Greece War Reparations?

by James Hart

This week, Greece’s new Prime Minister Alexis Tsipras brought the issue of war reparations back into the political foreground during his first speech to parliament. The speech was mostly directed toward Greece’s austerity measures imposed by the European Union—Tsipras, a far left member of the Syriza party, roundly rejected plans for more corrective action.

“The Greek people have a strong and clear mandate to immediately end austerity, and to change policies,” Tsipras said, reinforcing his party’s economic platform. “It is the decision of our government to honor and implement in full our pre-election commitments.”

Later, however, Tsipras addressed what has been a long-standing grievance in Greek politics: that his country has “a moral obligation to our people, to history, to all European peoples who fought and gave their blood against Nazism.” The obligation Tsipras referred to is the so-called “war loan” Nazi Germany coerced out of the Greek government in World War II.

Where The Debate Begins

Along with its partner, Fascist Italy, Germany invaded Greece in 1941. As the Axis powers began to occupy Greece, its government collapsed, and the invaders began allocating every resource to their war efforts. There was a massive decline in agriculture as a result, and some 40,000 Greek citizens died of starvation during the massive food shortage.

In addition to plundering the small Mediterranean country, the Third Reich also forced Greece to pay a “war loan” to support their occupation. This was a common tactic Nazi Germany used throughout the war, and the drachma became heavily devalued shortly thereafter.

Has Germany ever paid Greece for its war crimes? It has, at least in part. In 1960, West Germany paid the Greek government $67 million as compensation, and victims of the Third Reich’s forced labor camps were also paid individually for their hardships. However, this repayment was much smaller and entirely separate from the initial “war loan” of 476 million reichsmarks.

Germany now considers the matter to be closed. In a previous statement given to the Athens-Macedonian News Agency (AMNA), the German foreign ministry stated that it was “deeply grieved over the pain of victims,” but that as far as their government was concerned, “the war reparations is not an issue any more.”

Indeed, the 1990 Treaty on the Final Settlement With Respect to Germany laid to rest most claims regarding reparations. Under the statues of the treaty, Germany had paid what it owed. Greece concedes that Germany did pay $67 million in 1960 as compensation for its war crimes, but the coerced loan of 476 reichsmarks was a financial transaction, and as such it has never been addressed.

Citing a finding conducted by a Greek commission of inquiry, Alexis Tsipras’ Syriza party estimates that Germany owes Greece 162 billion euros for the initial loan; if a two percent interest rate were added, the amount would be closer to 1 trillion euros.

Fueled by the Debt Crisis

The matter has of course become more pertinent in recent years, as Greece’s financial crisis continues to escalate; repayment of the war loan would completely cover the country’s collective debt of 315 billion euros. And modern interpretations of international law would dictate that Greece is entitled to a repayment, if its government can prove that the war loan was a legitimate line of credit.

However, legal precedent and moral obligation are both separate debates from today’s reality. Angela Merkel’s vice chancellor Sigmar Gabriel said at a party meeting that “the likelihood is zero” that Germany would ever pay what Greece claims it’s owed, and the European Union seems unwilling to press the issue.