As the Athens-Berlin spat intensifies, both sides must approach the eurozone crisis with humility or face dire consequences
Greece forgets much of its history when it demands Germany repays loans made during the second world war.
The foreign minister, Dimitris Avramopoulos, told the parliament in Athens on Wednesday: "We will exhaust every means available to arrive at a settlement. One can't compare the times, but also one cannot erase the memories."
His speech, which was light on details, followed a leak this month of a finance ministry report showing that Greece wants Berlin to repay €162bn – consisting of €108bn for infrastructure damage during the occupation between 1941 and the end of the war, and €54bn as compensation for an interest-free loan Germany demanded to support its war effort.
Avramopoulos has launched the claim for damages in response to taunts by German policymakers that Athens must fork out such vast sums for the country's recklessness before and after the banking crash. Private sector debtors have forgiven some of Greece's debts, but loans from Berlin via Brussels must be repaid in full – and with interest – says the German chancellor, Angela Merkel. Loans to Brussels and the International Monetary Fund amount to €240bn.
In one sense Athens is right to point out that Berlin is hypocritical when it accuses indebted eurozone countries of reckless behaviour. Germany was an aggressor in two world wars and failed to pay the debts it incurred. During the second world war it forced countries such as Greece to hand over huge sums in the form of 0% loans that were not repaid.
Greece was ordered to pay $528m by Adolf Hitler. It was not just a huge sum – equivalent to $7.1bn now – it weakened the currency and, according to Apostolos Vetsopoulos, in his 2002 doctoral thesis for University College London, "aggravated inflation in the Greek economy because the Bank of Greece was forced to issue inflationary notes to cover these extraordinary expenses". Avramopoulos has applied compound interest to this sum to reach $54bn.
The trouble with the Greek stance is that by the end of the war Germany was broke and in huge debt. It was not only unable to pay outstanding loans, but also unable to pay the reparations many countries wanted to cover the cost of all the damage wreaked by the Wehrmacht.
France wanted reparations and so did the Benelux countries. So did Britain. They got their money, though not from Germany. Their recompense came from the US, which had come to the conclusion that punishing Germany, Japan and all the Axis nations would trigger a return to fascism. So it stepped in with large sums of cash from 1945 onwards, which in 1947 turned into the Marshall plan.
Like most of Europe, Greece was a beneficiary of the Marshall plan. The sums were so large they replaced the money due from Germany and more. In effect, Washington paid Berlin's debt.
Vetsopoulos points out that much of the problem for Greece then, and it is probably true today, is that the money was wasted. First, Greece descended into civil war after 1945 when other countries were busy rebuilding. From 1947, when things settled down, the corruption in public life and schlerotic business sector meant much of the money went unspent, at least not on investment to re-tool a largely agricultural economy.
So the point is that no one extracted any money from the Germans after the war. Almost all its debts were forgiven, first at an international conference in 1953 and then in 1989, when Helmut Kohl said he could not possibly absorb East Germany and pay second world war debts.
And there is another twist. If the Greeks refuse to relinquish their 70-year-old claim, they should also approach the Italian government for unpaid loans. As Germany's Axis partner, Rome was a beneficiary of the same deal, and Benito Mussolini's soldiers helped destroy much of Athens.
In the end, the lesson both sides need to learn is humility, because both are wrong. But that said, Germany should revise its position on eurozone debt. It must recognise the hypocrisy of its current stance and, more importantly, the dire consequences of making it stick. The Americans were wise when it came to German debts, it is time Germany adopted the same stance.
 |
| READ THE ORIGINAL POST AT www.guardian.co.uk |