Germany’s Reparation Debts to Greece

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Germany’s Reparation Debts to Greece

By Karl Heinz Roth


Following the liberation of Greece from the German occupying forces, economists and experts from the National Bank of Greece began to take stock of the economic effects of the German occupation. They addressed themselves to the participants of an inter-allied conference on reparations held in Paris in late 1945 and early 1946. On 14 January 1946, the conference issued an agreement on reparations and set up an Inter-Alled Reparations Agency (IARA), charged with implementing the agreement.[1] Two expert reports were particularly relevant to the negotiations over reparations owed to Greece.[2] A. Angelopoulos estimated that the sum withdrawn from the Greek national economy in order to pay for the costs of the occupation amounted to 4,050 billion US dollars ($). He estimated the damage done to the overall economy to amount to 3,172 billion $, thus arriving at a total of 7,222 billion $, on the basis of the US dollar’s 1938 purchasing power. A. Sborounis provided an alternative estimate, arriving at an overall sum of 12 billion $, also in the US dollar’s 1938 purchasing power. The conference eventually agreed on a total sum of 7,1 billion $ in the purchasing power of 1938; this sum included the costs of the occupation, among them the occupation bond raised in 1942 and all claims by private aggrieved parties. Far higher sums were calculated in some subsequent – and reliable – estimates.[3] This, however, is irrelevant to the issue at hand, since the agreement on reparations, which was ratified in all due form and has not been annulled to this day, and from which it emerged that about 3.5 % of all reparations to be paid by Germany were to be paid to Greece,[4] provides a solid basis for further considerations, one that is entirely in accordance with international law.  Since the purchasing power of the US dollar  has decreased by a factor of 15 (inflator) between 1938 and 2010, Greece’s reparation claims as established by the Paris Agreement amount to 106,5 billion $ today (2010).


In the London Debt Agreement of February 1953, the reparation claims established seven years earlier and addressed to the West German occupation zones and the later Federal Republic of Germany were suspended until the signing of a peace agreement with Germany. The main reason for this was that the USA and Britain now prioritised the servicing of Germany’s pre-war debt to private creditors over the reparation claims resulting from the war.[5] This meant that, on the level of international law, the Greek government’s hands were tied. In order to continue exerting pressure on the Federal Republic of Germany, the Greek government now linked the issue of reparations to the search for German war criminals and the reparation claims of their victims. Representatives of the Greek government made repeated visits to Bonn; demonstrably, such visits occurred especially frequently in 1956.[6] One year later, the Greek government became more insistent, having arrested a war criminal who had entered Greek territory, the former director of the Administrative and Economic Division of the Wehrmacht Commander for Thessaloniki and the Aegean, Max Merten. Two years later, an Athens military tribunal sentenced Merten to 25 years in prison; he was however extradited to the Federal Republic of Germany several months later.[7] The government of the Federal Republic rewarded Prime Minister Konstantin Karamanlis’ decsision by including Greece in a series of general inter-state agreements by which compensation was provided to those persecuted for racial, religious and ideological reasons in the former occupied territories of the Western hemisphere; this gesture of good will was also intended to bolster West Germany’s claim to sole representation against East German efforts to address the issue of reparations.[8] Following extended negotiations, the Greek government was granted, in March of 1960, a one-off payment of 115 million DM. In a note in the minutes of the agreement, the Greek government stated that Greece’s suspended reparation claims were not rendered void by this agreement.[9]


When East Germany was annexed, the prospect of a peace agreement gave new urgency to the issue of reparations. But those who hoped this situation would yield a binding agreement were soon disappointed. The agreement ratified by the four Allied powers and the two German states on the eve of German unification doubtless amounted to a peace agreement, but it entirely failed to mention the issue of reparations.[10] Consequently, we must assume, until the opposite is proven (e.g. by the publication of additional clauses hitherto kept secret), that the USA, Britain and France have now tacitly renounced their claims to reparations from West Germany, much as the Soviet Union renounced its claims, in all due form, in August of 1953. This fait accompli did not, however, affect the smaller victors of the Second World War, such as Greece. While the CSCE Act later involved these nations seconding the principles agreed on in the Two Plus Four Agreement, one cannot deduce from this an implicit renunciation of the reparation claims that were established, in accordance with international law, in the 1946 Paris Agreement. By implication, the government of the Federal Republic of Germany cannot legitimately consider these claims to have been renounced. On the contrary, the governments affected remain free to assert their still unsatisfied reparation claims against Germany.


The case of the former occupying powers Italy and Bulgaria is different. When Nazi Germany’s former coalition partners Italy, Bulgaria, Rumania and Finland signed a peace agreement with the Allied forces in February of 1947, they were made to pay reparations to the governments of the countries they had helped invade and/or occupy; in return, they were granted renewed recognition of their state sovereignty.[11] In accordance with this agreement, Greece received from Italy the sum of 105 million $, calculated on the basis of the dollar’s purchasing power in 1938; Greece also received 45 million $ from Bulgaria. Expressed in today’s purchasing power (2010), these sums amount to 1,575 billion $ and 675 billion $, respectively – relatively moderate sums. The sums were relatively low because the new protecting powers of the former „Axis“ partners – the USA and the USSR – responded to the emergence of the Cold War frontline by opting for conservative estimates of the reparations to be paid by Italy, Bulgaria, Rumania and Finland. This reparations agreement excluded those with the greatest burden of guilt, the Germans. Germany’s transfer payments had been established in the Paris Agreement on Reparations, and the claim to these payments continued to be asserted until their suspension in the London Debt Agreement.


German Reparation Payments to Greece – A Largely Unsettled Debt[12]


Consequently, the Germans – represented by the Western occupation zones and later by the Federal Republic of Germany – were far from getting away scot-free. The available US sources show that the Reparations Agency established in February of 1946 did not remain idle. It confiscated German foreign assets and repeatedly dismantled physical assets in order to ensure that Germany serviced its debt to the 18 recipients of reparation payments in the Western hemisphere.[13] But because it did not resort to expenseless withdrawals from the economic output of the Western occupation zones, the sums obtained were never as high as the transfer payments the Soviet Military Administration obtained from the Soviet Occupation Zone, and later the German Democratic Republic, in order to satisfy the reparation claims of the Soviet Union and Poland. West German reparation payments amounted to about 4.8 billion $, or only about two fifths of the payments from East Germany.[14] Assuming that about 3.5 % of this sum were transferred to Greece, we arrive at the sum of 168 million $, in the dollar’s 1948 purchasing power. Taking into account the inflator (9.23), the sum of the reparations paid at the time amounts to 1,551 billion $, in round terms and in today’s value.


In 1960, the Federal Republic of Germany effected its global payment of 115 million DM. Although this payment was intended purely as compensation for those who had been persecuted for racial, religious and ideological reasons under the German occupation, while the victims of massacres were excluded, we should not deny that this payment was a reparations payment, if only because of the inter-state character of the transaction. This is all the true as the 1946 Paris Agreement on Reparations explicitly included all individual compensation payments. Taking into account the exchange rate of the time, we arrive at the result that an additional 27,578 million $ were transferred to Greece in 1960. Since the inflator for the time period 1960–2010 is 7.35, this sum amounted to 202.7 million $, in round terms and in today’s purchasing power.


Finally, in 2003, a second group-specific compensation payment was effected by Germany’s federal foundation „Remembrance, Responsibility and Future“; the former forced labourers of Greece were the beneficiaries of this payment. Since our reference point, the 1946 Reparations Agreement, did not yet distinguish between state reparations and individual payments effected on the basis of civil law,[15] we should not exclude these payments either. The former forced labourers of Greece received 20 million euros; on the basis of the 2003 exchange rate, this sum amounted to 22.6 million $, in round terms. The inflator for the time period 2003–2010 (1.19) should also be taken into account; the sum transferred in 2003 then amounts to about 26.9 million $, in today’s purchasing power.


Adding together these partial amounts on the basis of the dollar’s purchasing power in 2010, we arrive at the intermediate sum of 1.781 billion $, in round terms. This sum needs to be substracted from the total sum established in 1946 (106.5 billion $ in the purchasing power of 2010). Taking into account the purchasing power situation of 2010, we arrive at the sum of 104,719 billion $ or – assuming an exchange rate between the $ and the euro of 0.754 – 78,958 billion euros.



Who Will Foot the Bill?


The overwhelming majority of Germans will surely consider the result of this calculation scandalous and reject it with a mixture of anger and resentment – assuming that the wall of silence surrounding the issue is overcome. We hope that this will indeed occur and need therefore to consider the likely comments and counter-arguments.


First, we wish to reject the argument that the Paris Agreement is „yesterday’s news“ because of the 65 years that have elapsed since its ratification, notwithstanding the fact that it was never rescinded on the basis of international law. For instance, Germany’s foreign debt to private creditors, which extended back to the year 1924, continued to be serviced until it had been fully cleared in the 1980s, on the basis of the London Debt Agreement. Why should the standards commonly applied to international non-state debtor-creditor relations not be applied to reparation debts established on the basis of international law?


Second, we wish to point out that our calculations have consistently been based on minimum assumptions and minimum figures. In converting the relevant sums, we have used a price index that is based exclusively on the development of consumer prices and takes account of changes in purchasing power by introducing an inflator into the calculation. But since the reparations payments are intended as compensation not just for pillaged goods and services but also for withheld wages and incomes, we ought in principle to also have considered the wage index or the social product index, in order then to calculate a combined mean value.[16] Had we proceeded in this manner, we would have arrived at a considerably higher sum. Moreover, we have refrained from calculating the interest on the Greek claims established in 1946. Assuming the internationally current interest rate of 4 %, we would have arrived at a sum of 284 million $ in interest for the year 1946; the sum increases to 4.26 billion $ by 2010, thus considerably augmenting the total sum due. The reason we have refrained from taking interest into account is that, despite the moratorium on reparations being lifted by the 1990 Two Plus Four Agreement, the Greek government has neglected to formally advance its claims as established in 1946. Even if the Greek government were to change its policy on this issue (as we hope it will), it will hardly be in a position to demand interest payments. It can only be a question of exacting the unpaid reparation payments in today’s purchasing power, or of prompting the Federal Republic of Germany to finally clear its reparation debt.


A third line of argument will invoke populist feelings of resentment: are German pensioners, already the victims of old-age poverty, now to expiate the crimes committed by the Wehrmacht in Greece? In responding to his line of argument, we should refer back to the historical facts. Aside from the Reichsbank, the Reich treasury and the trade associations, it was mainly large firms who organised and profited from the pillage of Greece, via the managers they dispatched, as their delegates, to Nazi Germany’s economic task forces. The majority of these firms still exist today and continue to play the Greek card: ThyssenKrupp (formerly Fried. Krupp AG), the tobacco industry,  Rheinmetall, the Siemens corporation, the leading construction companies (the former „Einsatzfirmen“ of the Organisation Todt), the major banks (first and foremost Deutsche Bank AG) and numerous other firms easily identified on the basis of written documents. They should be made to foot the bill, just like the German Bundesbank, the legal successor of the Reichsbank, and the successors of the DEGRIGES commercial monopoly (the Federal Association of German Industries, Bundesverband der Deutschen Industrie, and the Federation of German Wholesale, Foreign Trade and Services, Bundesvereinigung des Groß- und Außenhandels). The present situation represents a congenial occasion for a generous payment to Greece, funded from the capital assets of those with a historical responsibility to the country. In other words, there is no need to burden the average tax payer.


The sum to be mobilised is equivalent to the volume of the Papandreou government’s second austerity programme. Even if one or two billion euros were diverted for the purpose of compensating the descendants of the victims of massacres, such a payment would provide considerable relief to the Greek national economy. Its protagonists could implement an anti-cyclical reconstruction programme geared especially to the needs of ordinary people, thereby providing a Europe-wide impulse for the direct democratic self-administration of the economy.


Calculation of Greek Reparation Claims

10 August 2011



I. 7.1 billion USD, based on the dollar’s purchasing power in 1938 (Paris Agreement on Reparations, January 1946)


II. Conversion factor to the dollar’s purchasing power in 2010 = 15 (CPI)


Amount 2010 = 106. 5 billion USD


III.  Interest p.a. = 4 %, to be calculated for the years 1946–2010  =  64 years

1946 = 284 million USD – increases to 4.26 billion USD by 2010


This interest is not taken account of, because the Greek government has largely failed to insist on payment of reparations. Accordingly, compound interest is also disregarded.


IV. Sums to be substratced (reparation and compensation payments already effected):


1) Probable West German reparation payments to Greece until the early 1950s:


Greek share of total reparations due to signatory states in 1945 = 3.525 %

Funds from reparation categories A (2.7 %) and B (4.35 %) = ca. 3.5 %


Total amount of direct and indirect reparation payments effected by West Germany according to Jörg Fisch = 4.8 billion USD


Greek share = 168 million USD

Amount in today’s purchasing power (inflator between 1948 and 2010 = 9.23) =

1,550,640,000 $ =  1,551 billion $ in round terms


2) 1960: 115 million DM lump-sum payment (compensation paid to those persecuted for racial and ideological reasons)


Exchange rate between the DM and the USD in 1960 = 4.17

Sum in USD =  27,578 million USD

Inflator for the period 1960–2010  =  7.35

In today’s purchasing power, the sum therefore amounts to 202,698,300 =  202.7 million $ in round terms.


3) 2003: 20 million euros worth of compensation payments to former Greek forced labourers


Exchange rate between the dollar and the euro in 2003 = 0.885 = 22.59 million USD in round terms

Inflator between 2003 and 2010 = 1.19

In today’s purchasing power (2010), the sum therefore amounts to 26,882,000 $ = 26.9 million $ in round terms.


Total amount of reparation and compensation payments already effected, in today’s purchasing power =  1,780,600,000 = 1,781 billion $ in round terms


Amount of reparations still due in 2010 = 104, 719 billion $


Assuming the exchange rate between the USD and the euro = 0.754, we arrive at the sum of


78,958 billion euros (in round terms)










[1] The Reparations Agreement and the most important of the Greek laws that were passed subsequently have been documented (in English and German) in: Bundesministerium der Justiz (ed.), Deutsches Vermögen im Ausland. Internationale Vereinbarungen und ausländische Gesetzgebung, Köln, n.d. (1951), pp. 10 ff., 169 ff.

[2] On this and what follows, cf. Athanassios  Kalafatis, Die wirtschaftliche Katastrophe Griechenlands und die rechtlichen Ansprüche auf Reparation, in: Schwarzbuch der Besatzung, Red. Manolis Glessos, second expanded and corrected edition, Athens 2006 (in Greek and German), pp. 12–22.

[3] Cf. Kalafatis, Die Wirtschaftliche Katastrophe Griechenlands, pp. 20 f.

[4] A distinction was drawn between two categories of reparations: the main category “Be” (withdrawals from German foreign assets, dismantlement of physical assets and the handover of the commercial fleet) and the supplementary category “A”. Greece was accorded 4.35 % of the reparations from the main category “Be” and 2.7 % of the reparations from the supplementary category “A”. Since we do not know how the payments actually effected were divided between these two categories, we have based our calculations (see below) on the mean value 3.525 %, rounded up to 3.5 %.

[5] On this and what follows, cf. Christoph Buchheim, Das Londoner Schuldenabkommen, in: Ludolf Herbst (ed.), Westdeutschland 1945–1955. Unterwerfung, Kontrolle, Integration, Munich 1986, pp. 219-229; Ursula Rambeck-Jaschinski, Das Londoner Schuldenabkommen. Die Regelung der deutschen Auslandsschulden nach dem Zweiten Weltkrieg, Munich 2005.

[6] On this and what follows, cf. the survey of the relevant Greek scholarly literature in: Wolfgang Breyer, Max Merten – ein Militärbeamter der deutschen Wehrmacht im Spannungsfeld zwischen Legende und Wahrheit, doctoral dissertation, University of Mannheim 2003 (unpublished), pp. 106 ff.; on West Germany’s delay tactics, see Hagen Fleischer, „Endlösung“ der Kriegsverbrecherfrage. Die verhinderte Ahndung deutscher Kriegsverbrechen in Griechenland, in: Norbert Frei (ed.), Transnationale Vergangenheitspolitik. Der Umgang mit deutschen Kriegsverbrechern in Europa nach dem Zweiten Weltkrieg, Göttingen 2006, pp. 464–535.

[7] On the trial and the background of Merten’s extradition, cf. Breyer, Max Merten, pp. 115 ff., 126 ff.

[8] GDR diplomats offered to engage in bilateral negotiations on compensation with several Western and Southern European countries in return for diplomatic recognition of their state.

[9] Cf. Gabriele Heinecke, Ärger mit dem Erbe. Reparationen oder der Fall Distomo (Griechenland), August 2000. Available online (various websites).

[10] Cf. Treaty on the Final Settlement with Respect to Germany, 12 September 1990, available on the Internet (Wikisource, search term: “Two Plus Four Agreement”).

[11] The agenda items and results of the Paris Peace Conference, summarised in the peace treaty signed on 10 February 1947, have been extensively documented on the website of the US State Department.

[12] I would like to thank Thomas Bindl and Angelika Ebbinghaus for compiling the statistical materials that provided the basis for the following calculations.

[13] Cf. the debate on the activities of the IARA in the various documentary volumes published under the title “Foreign Relations of the United States” (FRUS), Washington DC, 1946–1950.

[14] Cf. Jörg Fisch, Reparationen nach dem Zweiten Weltkrieg, München 1992, pp. 319 f.; id., Reparationen und Entschädigung nach dem Zweiten Weltkrieg, in: Blätter für deutsche und internationale Politik, 6/2000, pp. 687-696 (table on p. 691).

[15] In the debate on this phenomenon, it is frequently overlooked that the “invention” and elaboration both of individual claims to compensation and of the claims of specific, clearly defined social groups only began when comprehensive reparation payments were subjected to growing restrictions as a result of the Cold War.


[16] For instance, in his well known expert opinion on the compensation of forced labourers, Thomas Kuczynski justifiedly combined the cost of living index (inflator) with the wage index (deflator), calculating a mean value on the basis of the two. Cf. Thomas Kuczynski, Brosamen vom Herrentisch, Berlin 2004.

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