Cyprus Mail
CM Regular ColumnistOpinion

Thorny issue of Nazi reparations

German soldiers raise the Nazi flag in front of the Acropolis

By George Koumoullis

THE RISE to power of Alexis Tsipras has rekindled the demands for reparations, compensation and repayment of the occupation loan, arising from the Nazi occupation of Greece from April 1941 until October 1944. Germany, however, seems uncompromising.

Indicative of this hard-line has been the stance of the German vice chancellor and leader of the SPD Sigmar Gabriel. He categorically stated during a recent conference of his party that these matters had been settled for good with the negotiations which led to the unification of Germany in 1990.

The hardships suffered by the Greeks during the occupation are well known. More than 40,000 died of starvation in Athens and tens of thousands more in the rest of the country from Nazi reprisals. As the doyen of the Greek Left, Manolis Glezos, argued in the European Parliament, Hitler’s troops were accompanied by an economics team which immediately began stripping the Greek economy. It confiscated 10 per cent of agricultural production. It also confiscated all silver, nickel and copper coins, melting them and taking 19 tonnes of silver, 10 tonnes of nickel, 71.1 tonnes of copper and 1.51 tonnes of zinc. It also obliged the enslaved people to feed the occupation army, which numbered 500,000 soldiers.

However, on the issue of war reparations and compensation, Greece’s position is weak for three main reasons. The first – and possibly the most important – is that all pending matters were regulated legally in 1990 with the signing of the ‘2 plus 4’ convention between the two German states and the Allies. This convention was approved by Greece, which in 1960 had received 115 million marks (about 1.8 billion euro in today’s prices) as compensation for the victims of the occupation.

All the applications to the European Court of Human Rights by Greeks that had suffered at Nazi hands over the last 10 years have been rejected on the grounds that post-war agreements had settled the compensation issue. Consequently, the issue is political and not legal, as international relations experts have concluded.

The domino effect is another reason why Germany will not accept the idea of additional compensation. There are other countries that suffered as much, if not more, at the hands of Nazi Germany. If the ‘2 plus 4’ convention is ignored, and Greece receives additional compensation, these countries would demand the same on the basis of equal treatment.

In such a case, the German economy would collapse under the weight of the compensations and, like a black hole, would suck the rest of the European economies into the abyss – a nightmare scenario that nobody wishes.

The other weakness of the Greek case is that it has not demanded compensation from Bulgaria and Italy, two countries that also invaded Greece during World War II and caused massive damage. The Bulgarians, in particular, inhumanly exploited the zone under their control – eastern Macedonia and Thrace. They executed 40,000 (compared to 21,000 executions by the Nazis and 9,000 by the Italians) while forcing the Greek grain producers to harvest under police surveillance and hand over 90 per cent of their production. The production of olives, oil, tobacco and other products came into Bulgarian hands by decree.

Probably, in the case of Bulgaria, Greece knows that you cannot receive anything from the have-nots and Bulgaria is a poor country. In the case of Italy, Greece would not want to upset the friendly relations between the two countries.

Greece, however, probably has a point with regard to the occupation loan of 8 billion drachma given to Germany at 0 per cent interest. This loan is a separate issue from the war reparations demanded by Greece. Hitler had claimed this loan to fund the German campaign in north Africa and it is known as a ‘compulsory loan’.

According to the Greek position, a) the zero interest was an unacceptable condition which the Quisling government was forced to accept; b) if all the interest charges of the last 73 years, based on interest rates set by the Bundesbank in this period, were added, the debt to Greece would total €54 billion. This assumes the debt was calculated in Deutsche Mark from 1942 to 1999 and in euros from 1999 (when the eurozone was established) to today.

Not surprisingly, the Germans reject the Greek positions arguing these are in direct contravention of the articles of the loan agreement which referred to zero interest and that the currency of the loan was the drachma.

If we adopt the German version and calculate the loan in drachmas, its value becomes zero as a result of periodically soaring inflation in Greece (for example in the seventies the inflation rate was about 30 per cent). As if the rate of inflation was not enough, George Papandreou’s ‘National Unity’ government of 1944 introduced the ‘new drachma’ (the notorious Svolou law) which was equivalent to 50 billion old drachma. In short, Svolou’s law was an admission of Greece’s bankruptcy, that is, its inability to service the public debt. In one swipe, the then government wrote off the debt.

For some this move was extremely smart, while for others it was daylight robbery. The irony though was that with the law, Greece had also written off the debts it was owed by foreigners because the law did not exempt the debts of foreigners, including the Germans. In other words the Greeks trapped themselves when it came to the German loan.

So which country is right with regard to the occupation loan, Greece or Germany? It’s a big question.

George Koumoullis is an economist, social scientist

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