Germany owes Greece for Nazi-era debts

On Feb. 11, finance ministers from 19 eurozone countries held an emergency meeting to discuss Greece’s debt crisis and the terms of its repayment. Greece’s debt of 317 billion euros is likely to dominate the agenda at this week’s EU summit. The enormous debt is a consequence of the global financial crisis: 252 billion of the debt represents bailouts since 2010. EU member states pitched in to keep Greece afloat, with Germany contributing the most — 80 billion euros — to the pool. But the new left-wing government in Greece says the conditions for repayment are untenable. Its efforts to renegotiate the terms, however, have hit a brick wall in Berlin and Brussels, raising the possibility of insolvency and Greece’s exit from the eurozone.

Greece’s Finance Minister Yanis Varoufakis has warned that the collapse of the shared currency would be “catastrophic” for Europe and could lead to another global recession. He is seeking changes to the existing austerity package. He is expected to propose a bridging loan at the EU summit to cover the country’s budgetary needs through August. Germany is opposed to negotiations on previous bailouts and is pressing Greek leaders to provide a viable alternative.

However, lost in the current debate are Germany’s long-standing debts to Greece, which are 70 years overdue. Greeks have long demanded reparations for atrocities committed during World War II and for an outstanding “war loan” that Nazi Germany took from Greece to finance its military campaign in North Africa. But postwar Germany refused to settle with Greece, as it did with Holland, Israel, France and others. Even a partial payment or some debt write-offs in lieu of reparations could help get Greece’s economy going again. It would also set in motion reconciliation between the two countries whose relations are bristling with acrimony, the roots of which lie farther back than the debt crisis.

The Nazis’ crimes in wartime Greece are a little-known chapter of World War II history. Hitler and Mussolini invaded Greece in 1941, commencing a bloody occupation in which an estimated 300,000 Greeks died of starvation and hundreds of thousands were killed fighting the occupying forces. The barbarity of Germany’s war in Greece was outdone only in the Slavic bloodlands, which included the mass plundering of raw materials and foodstuffs. The food shortage during the winter of 1941 and 1942 led to the great famine, which devastated urban centers, claiming the lives of 40,000 Greeks in Athens alone. In 1944, when Allied forces drove the Nazis out of Greece, the Germans carried out a scorched earth policy of torching villages and crops and destroying infrastructure as they retreated.

Unlike Greece’s wartime agony, most Europeans know about the Nazis’ atrocities in northern Bohemia and in southern France. In 1942, for example, the Nazis killed all men over the age of 15 and sent all women and girls to concentration camps, bulldozing the village of Lidice to the ground to avenge a Czech’s assassination of the protectorate’s Nazi commander. Similarly, in Oradour, France, 642 villagers were massacred in 1944 in retaliation for French Resistance strikes.

More than a hundred towns in Greece suffered fates as callous as those of Lidice’s and Oradour’s. In places such as Kommeno, Viannos, Distomo, Kos, Kalavryta, Cephallonia, Lerapetra and many others, whole populations were murdered and buildings burned to the ground. After the war’s end, Greece and Germany became anti-communist allies in the Cold War, brushing the Nazi war crimes under the rug. The Greek civil war from 1947 to 1949 pitted communists against nationalists in the southern Balkans. But Greece’s conservative regime — packed with wartime Nazi collaborators — had little interest in pursuing reparations for war crimes, especially those committed against communist partisans. And Germany’s Federal Republic in the 1950s was stacked with former Nazis who wouldn’t touch the issue. In fact, until the 1970s, German leaders referred to the Nazi crimes in Greece as alleged atrocities and said the Germans were fighting communist bandits.

Greece received zero postwar reparations simply because it did not have a strong lobby to push for its interests at the peace conferences. In 1960 it received $67 million from Germany for racially motivated war crimes. Successive Greece leaders demanded reparations for property losses and war crimes, as well as repayment of a 476 million Reichsmark “loan.” This sum is estimated at about 8 billion to 11 billion euros when adjusted for inflation. A Greek study commissioned by the ruling Syriza party estimated that Germany owes Greece 162 billion euros for all of the pillage and plunder.

For years German politicians did not even pay lip service Nazi atrocities in Greece. But this changed in the 1980s. Leftist parties such as the Greens and the Social Democrats started calling for some kind of payment for the war loan. But the parties dropped the issue when they came to power even though the legitimacy of the loans has never been disputed. Germans now say it is simply too late. Besides, the 1990 unification treaty, which Greece consented to, states that united Germany has settled all its issues from World War II.

Unsurprisingly, Greece’s new leaders don’t share that opinion. The scars left by German cruelty during the nearly four-year occupation are still present in the localities that suffered Nazi violence as well as in the collective psyche of the nation. Athens’ debts to Germany and the debate over the terms of the EU’s austerity plan have caused Nazi war crimes to resurface. It is no coincidence that Greek protesters hoist posters of German Chancellor Angela Merkel with a Hitler mustache.       

In rethinking the terms of Greece’s debt repayment and the conditions for an additional 7.5 billion euros in bailout funding, economists are urging Germany to take a hard look at how they were treated in the late 1940s and 1950s. Germany had massive debts stemming from the war and the Holocaust. It received aid from the United States under the Marshall Plan in 1948, and West Germany was granted generous relief at the London conference in 1953: Half its debt was forgiven. Moreover, West Germany was required to make repayments only when it was running a trade surplus. Its repayments were limited to a mere 3 percent of export earnings.

The peace conferences that followed World War I, most notably the Treaty of Versailles, offer crucial lessons on the effect of imposing enormous debilitating debts. The heavy reparations and debt burden from the war sent the Germans running into the arms of the Nazis. In the aftermath of World War II, the victors chose not to repeat this mistake — a lesson that is still valid.

As European leaders ponder Greece’s debt in Brussels this week, it is important to revisit this lesson. Germany, which runs the world’s largest export surplus, can afford to pay off a fraction of its debt to Greece. This could help stabilize both Greece’s economy and the entire eurozone’s. Germany can start with the least controversial 11 billion euros for the war loan. This would ease the strain of the 20 billion euros that Greece has to pay in 2015, lessening economic hardship and freeing up funds for investment.

To be clear, Greece is not asking for a Marshall Plan, although that is not a terrible idea. But a donors’ summit similar to the London conference of 1953 is a reasonable proposal. Germans should lead such effort by offering to come clean on its World War II responsibilities. After all, much the same formula worked for them.