When Greece Wrote Off German Debt in 1953 and How Germany Wants to Forget It

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Greece’s finance minister Constantinos Karamanlis signs the agreement for the German debt write off

Germany could show some good behavior and write off a part of greek debt like Greece did for Germany in 1953. Prime Minister Alexis Tsipras’ speech in the European Parliament on Wednesday touched on an issue that Germany has treated as a taboo during the lengthy negotiations between Greece and international creditors.

After Germany’s Manfred Weber, a member of the conservative CSU party, trashed the Greek prime minister accusing him of bringing Greece to the brink of bankruptcy and destroying confidence in Europe, Tsipras replied bringing up the issue Germany is dreading: That of the generous write off of the German debt in 1953.

Six decades ago, the Western allies decided to erase more than half of postwar Germany’s debt. This helped the country recover from the ruins of war and foster a prolonged period of prosperity.

“When we talk about solidarity you should remember 1953, when Germany, after two world wars, was left devastated and indebted. At the time, Europeans agreed to write off the vast majority of its debt and to put a development clause on the remaining debt. That’s solidarity!” Tsipras told Weber.

In 1953, an international conference was held in London during which the allies decided to write off more than 50 percent of West Germany’s debt that was accumulated after two world wars. The United States persuaded European allies, including Greece, to erase part of the debt and relinquish reparations in order to build an economically stable and secure Western Europe. The deal was part of the Marshall Plan, the U.S. program to rebuild European economies after World War II.

At the time, Constantinos Karamanlis was finance minister of Greece and he was the one who signed on its behalf the German debt write off deal. When he became prime minister in 1955, Karamanlis was the politician who started the procedures for Greece entering the European Economic Community, as the European Union was called at the time. Karamanlis managed to finish Greece’s accession to the EEC in 1979, during his fourth term as Greece’s prime minister.

“Tsipras is right to remind Germans how well they were treated, with both debt relief and money from the Marshall Plan,” said in January Professor Stephany Griffith-Jones, an economist at Columbia University.

The similarities between West Germany’s debt at the time and today’s Greek debt are numerous and significant. The International Monetary Fund stated that the Greek debt is not sustainable. Also, the Greek bailout must have growth clauses in order for the economy to come out of the slump. Thirdly, the Greek economy must be supported by international investments, and finally, Greek exports must be heavily supported by European lenders so that they have the incentive to get their money back.

It is time then for Germany, Greece’s biggest lender and Europe’s strongest economy, to show the same generosity poor Greece had shown in 1953 and write off part of its debt. That’s solidarity.

 


  • charlie2010

    Comparing the debt incurred by two world wars to that of simple laziness and fiscal incompetence requires a stretch of the imagination.

  • Grahame

    Just because they CAN doesn’t mean they WILL

  • Thinktank

    A really distasteful comparison. Good luck with that tactic Mr. Tsipras.

  • CountWestwest

    First of all Greece already got a 50% debt reduction three year ago. Secondly,Germany had to accept conditions to get a debt reduction and unlike Greece, it had a viable and productive economy that could sustain itself. Greece on the other hand, even if all the debt is forgiven, needs one billion Euros of charity every month just to meet it’s day to day needs.

  • Cypriot

    But both are unmanageable debts, and it is Germany who’s calling the shots about whether Greece gets out of it, therefore it’s entirely relevant to bring up Germany’s past debt and 60% haircut. One debt was caused by the entire people of a country, the other was caused by a few elite.

  • anonymous

    AND THE USA WANTED STRONG ALLIES LIKE GERMANY, EXPORTS IN KILLING, AND BURNING, AND TORCHOURING INNOCENT HUMAN BEINGS. BECAUSE RUSSIA WAS A THREAT TO THE USA. THEN MOST OF THE NAZIS WHO WERE WELCOMED IN THE USA, ARRIVED WITH LOTS OF MONEY IN THEIR POCKETS AND PURCHASE MUCH LAND FOR FARMING IN THE USA.

    THOSE FARMS WERE PURCHASED FROM GREEK STOLEN GOLD OF 60 TONS, THE NAZIS EMPTY THE GREEK BANKS TO SUPPORT THEIR LAZY GERMANS WHO NEVER EARN THEIR POSSESSION WITH SWEAT BUT WITH HUMAN LIVES AND SUFFERING!

  • anonymous

    A 40 year old like PM Tsipras has the gots to stand against the old German goat, with backwards mentality of 1940’s! He think wearing an expensive suit, everybody should listen. One minute we are Europeans, next we are Globalist, next, I don’t know you when it comes to money.
    This money system is rat race, the most fullish and stupid way of life.
    We all live our lives with pressures that relate to money. Money has cause too much misery, and blood shad in the world. The young generation should leave this money system and find another way to live life with out money pressures. Most of us missing the real life, and we will die with out know it. We all being blown like leafs on the wind, with no destination and control of our lives the way we dream of.
    Al song as we depend on money, we all serve as slaves for the Banks.

  • anonymous

    Put the bank out of Business. Pull your money out.

  • Cypriot

    Leftists are a problem. They think they are owed something.

  • durka durka

    hardest working in europe actually but hey 80% of the industry destroyed and the highest casualties with 17% o the population gone.

  • durka durka

    and what is the reason ww1 started?

  • durka durka

    actually it is corruption most of which is german bribes.

  • durka durka

    actually it was called by the elite in greece too.

  • durka durka

    last time i checked it was against the EZ rules

  • durka durka

    well its not like you can look up those facts and find how wrong you are.

  • durka durka

    89% of the bailout went to the banks just saying.

  • durka durka

    All you are saying here is that greece had no choice and the debt wasnt paid, on top of that germany made 100 billion of the greek crisis.

  • durka durka

    That is not a debt reduction they simply looted the country, pension funds, hostpital funds etc.

    “, it had a viable and productive economy that could sustain itself.”

    Which is why greece cant pay.

  • durka durka

    No it has to do with a bunch of corrupt people in the goverment i can tell you stories but long story short they seem to be connected and spend a ton of money in military budget and not bothering with corruption and tax evading since they are the ones doing it.

  • durka durka

    actually the money went to offshore companies of politicains and defence programs,

  • durka durka

    oh and you might wanna look at productivity greece is more productive than poland who got what greece rightfully deserves.

  • Marisya

    Greece can spend what it earns,as its in BNP, the rest are loans, the same with Poland.
    And thats what a country “rightfully deserves”.

  • Marisya

    Adress your politicians and ask them where the money has gone, dont ask the creditors, ask them who spent it.

  • durka durka

    Then germany and usa are bankrupt because their debt is higher than anything else and it cant be paid.

  • Marisya

    They still manage to pay their interest without free donations of others dont they? So i dont understand where you got the idea that they cant meet their obligations to the financial markets.
    As you can see in the difference of interest that exists for German and Greek bounds reflecting the trust of the world.

  • durka durka

    ” they cant meet their obligations to the financial markets.”

    Their “obligations” are extended to “at some point they wil have to pay” because they are a secure market, they have a 220% debt of gdp which is against the eu rules but they look away and say “yeah we can pay them” germany has the lowest interest rates in Eu because they are a trustworthy economy.

    Once they find out that their banks are basicly bankrupt you will see a burst bubble just like it happen to so many countries.

    Germany is fine with austerity becasue the entire country is an industry, so while everyone is forced to austerity which means they will have to reduce their spending and sell out assets for mere pennies to produce investments from other countries, germany has contant production and a stable economy. So all the capital is going there all the investements are going there and everyone else cant get out of this mess.

    Germany has surplus and most of the money in Eu are ending up in germany, while the rest dont have germany’s industry and they cant dig them selfs out of the mes germany’s deutche bank and US banks created back in 2008.

    No one is getting “donations” those loans are paid in full, greece has paid over 800 billion from 1994 to 2013 in loans, the only time they didnt pay was in july when ECB closed down the banks that were insolvent because of the bank runs that happen with all the terror about a grexit on the media.

    At this point they have managed to crash the economy, the economy is so small that the debt cannot be paid without any industry that can produce that much money and their argument is “hey if you offload another loan on you in order to pay your upcoming debts you somehow manage to pay us back”

    its nonsense its just extend and pretend and they will keep doing it until they find gold or oil or greece decides to give up every public building and organization for mere pennies which will not save them either.

    Let me remind you germany has made 100 billion from the greek crisis and the forced loan they got from greece with the first payment already fullfilled is at a 1 trillion with interest.

    Countries like greece and spain helped germany get back on its feet by erasing debts and giving them money, but we dont talk about that.

    So essentially nothing can be done, greece is done for, spain is not recovering no matter how many times they say “look guys we got growth” the reallity is that nothing has improved, just more people dying with very high unemployment and everything closes down and italy managed to survive through it by increasing their industry, other countries like ireland had a bank problem. In reallity austerity hasnt worked anywhere. Now finland who did everything right is doing austerity too so they will increase their “competitivenes” because no one buys their products due to austerity that doesnt leave them any money.

    So at some point this debt will have to be written off as well as germany’s upcoming bubble and USA will agree to it. This is why brittain is making deals with the chinesse, because if china crashes the whole world is screwed.

  • Marisya

    My remark before was about Germany, they can manage to pay their obligations, not Greece.
    Its very simple: a trustworthy country paying its obligations is rewarded by low interest, a country like Greece not.
    Greece is economicly protected by the EU costing alot of money, so does Draghi, keeping interests low in a way that, mostly southern EU countries, can loan an enormous amount of money at costs of the savings of working ppl. and pensionfunds mostly in the north, , his remark doing so to step up inflation is a plain lie, so we are wretched another time by that gangster.
    Every time the northern countries have to bleed and their prosparity is getting lower and lower thanks to the east and southern countries in the EU, this cant go on like this.