Mar 222015
 March 22, 2015  Posted by at 12:59 am Finance Tagged with: , , , , , , ,

Harris&Ewing Kron Prinz Wilhelm, German ship, interned in US in tow 1916

German magazine Der Spiegel digs deep(er) into the ‘Greece question’ this weekend, and does so with a few noteworthy reports. First, its German paper issue has Angela Merkel on the cover, inserted on a 1940’s photograph that shows Nazi commanders against the backdrop of the Acropolis in Athens. The headline is ‘The German Supremacy: How Europeans see (the) Germans’. The editorial staff has already come under a lot of fire for the cover, and I’ve seen little that could be labeled a valid defense for further antagonizing both Germans AND Greeks (and other Europeans) this way. Oh, and it’s also complete nonsense, nobody sees modern day Germans this way. It’s just that their government after 70 years is still skirting its obligations towards the victims. That’s what people, the Greeks in particular, don’t like.

Second: Spiegel’s German online edition has a sorry that claims Greek paper To Vima will come with revelations on Sunday accusing Georgios Katrougalos, Syriza’s deputy minister for Policy Reform and Public Service (I’m translating on the fly) of corruption in the case of the reinstallment of public workers that had been fired under the Samaras government under pressure from the Troika.

Allegedly, Katrougalos’ law firm (in which he has had no active role since becoming a member of the European parliament last year) has a contract with these workers that will pay it 12% of whatever they receive in back pay. Predictably, the opposition has called for Katrougalos’ firing, but Tsipras has said he talked to him and is satisfied with the explanation he was given..

It smells a bit like something Bild Zeitung (Germany’s yellow rag) would write, but there you are. Which makes the following perhaps somewhat surprising. Because:

Third: Spiegel English online edition has a long article on a report just out by a special Greek commission, instated by former governments, on the German war reparations that Tsipras has repeatedly talked about, and that German FinMin Schäuble has famously high handedly tried to sweep off the table. That may not be so easy anymore now. There are already increasingly voices in Germany itself that want Berlin to change its approach to the matter, and the report will only make that call louder. Let’s see if I can get this properly summarized:

Nazi Extortion: Study Sheds New Light on Forced Greek Loans

Last week in Greek parliament, Greek Prime Minister Alexis Tsipras demanded German reparations payments, indirectly linking them to the current situation in Greece. “After the reunification of Germany in 1990, the legal and political conditions were created for this issue to be solved,” Tsipras said. “But since then, German governments chose silence, legal tricks and delay. And I wonder, because there is a lot of talk at the European level these days about moral issues: Is this stance moral?”

[..] there are many arguments to support the Greek view. SPIEGEL itself reported in February that former Chancellor Helmut Kohl used tricks in 1990 in order to avoid having to pay reparations.

A study conducted by the Greek Finance Ministry, commissioned way back in 2012 by a previous government, has now been completed and contains new facts. The 194-page document has been obtained by SPIEGEL. The central question in the report is that of forced loans the Nazi occupiers extorted from the Greek central bank beginning in 1941.

Should requests for repayment of those loans be classified as reparation demands – demands that may have been forfeited with the Two-Plus-Four Treaty of 1990? Or is it a genuine loan that must be paid back? The expert commission analyzed contracts and agreements from the time of the occupation as well as receipts, remittance slips and bank statements.

Note: the Two-Plus-Four Treaty of 1990 (aka Treaty on the Final Settlement with Respect to Germany) was the result of negotiations about the reunification of the two Germany’s. It was signed by both, and by France, Britain, Russia and the US, the four nations who held former German territory at the end of WWII.

It’s noteworthy that Der Spiegel says that Greek demands for reparations ‘may have been’ forfeited with the treaty (something Germany claims), while Tsipras insists on the exact opposite: that the treaty created the legal and political conditions for the reparations issue to finally be resolved. As we will see, many experts lean towards Tsipras’ interpretation. Greece never signed, and nobody else had the right to sign in its name, that’s the crux. But there’s more:

They found that the forced loans do not fit into the category of classical war reparations. The commission calculated the outstanding German “debt” to the Greek central bank and came to a total sum of $12.8 billion as of December 2014, which would amount to about €11 billion.

As such, at issue between Germany and Greece is no longer just the question as to whether the 115 million deutsche marks paid to the Greek government from 1961 onwards for its peoples’ suffering during the occupation sufficed as legal compensation for the massacres like those in the villages of Distomo and Kalavrita. Now the key issue is whether the successor to the German Reich, the Federal Republic of Germany, is responsible for paying back loans extorted by the Nazi occupiers. There’s some evidence to indicate that this may be the case.

It’s a tad strange that the magazine apparently jumps from that ‘may have been forfeited’ interpretation of the treaty to what amounts to a fait accompli, by saying the ‘key issue’ now is the forced loans, not the reparations. I would think it’s very much both. But let’s follow their thread:

In terms of the amount of the loan debt, the Greek auditors have come to almost the same findings as those of the Nazis’ bookkeepers shortly before the end of the war. Hitler’s auditors estimated 26 days before the war’s end that the “outstanding debt” the Reich owed to Greece at 476 million Reichsmarks.

First thing that springs to mind is: say what you will about Germans, but they’re fine bookkeepers!

Auditors in Athens calculated an “open credit line” for the same period of time of around $213 million. They assumed a dollar exchange rate to the Reichsmark of 2:1 and applied an interest escalation clause accepted by the German occupiers that would result in a value of more than €11 billion today.

This outstanding debt has to be paid back “with no ifs or buts,” says German historian Hagen Fleischer in Athens, who knows the relevant files better than anyone else. Even before the new report, he located numerous documents that prove without any doubt, he believes, the character of forced loans. Nazi officials noted on March 20, 1944, for example, that the “Reich’s debt” to Athens had totaled 1,068 billion drachmas as of December 31 of the previous year.

“Forced loans as war debt pervade all the German files,” says Fleischer, who is a professor of modern history at the University of Athens. He has lived in Athens since 1977. He says that files from postwar German authorities about questions of war debt “shocked” him far more than the war documents on atrocities and suffering.

In them, he says German diplomats use the vocabulary of the National Socialists to discuss reparations issues, speaking of a “final solution for so-called war crimes problems,” or stating that it was high time for a “liquidation of memory.” He says it was in this spirit that compensation payments were also constantly refused.

Those are pretty damning words. So far just from one man, granted, but again there’s more:

When work on the study first began in early 2012, the cabinet of independent Prime Minister Loukas Papedemos still governed in Athens. A former vice president of the ECB, Papedemos formed a six-month transition government after Georgios Papandreou resigned. In April 2014, the successor government of conservative Prime Minister Antonis Samaras decided to continue work on the study and appointed Panagiotis Karakousis to lead the team of experts. The longtime general director of the Finance Ministry was considered to be politically unobjectionable.

Karakousis spent five months reading 50,000 pages of original documents from the central bank’s archives. It wasn’t easy reading. The study calculates right down to the gram the amount of gold plundered from private households, especially those of Greek Jews: 7,358.0014 kilograms of pure gold with an equivalent value today of around €235 million. It also notes also how German troops, as they pulled out, quickly took along “the entire cash reserves from branch offices and regional branches” of the central bank: Exactly 634,962,691,995,162 drachmas in notes and coins, which would total about €40 million today.

Above all, the study, with some reservations, provides clarity about the forced loans. “No reasonable person can now doubt that these loans existed and that the repayment remains open,” says Karakousis.

This history of the loans began in April 1941, after the German troops rushed to assist their Italian allies and occupied Greece. In order to provide their troops with provisions, the German occupiers demanded reimbursement for their expenses, the so-called occupation costs. It’s a cynical requirement, but one that became standard practice after the 1907 Hague Convention.

Out of the ordinary, though, was the Wehrmacht requirement that the Greeks finance the provision of its troops on other fronts – in the Balkans, in Russia or in North Africa – despite Hague Convention rules forbidding such a practice. Initially, the German occupiers demanded 25 million Reichsmarks per month from the government in Athens, around 1.5 billion drachmas. But the amount they actually took was considerably higher. The expert commission determined that payments made by the Greek central bank between August and December 1941 totaled 12 billion rather than 7 billion drachmas.

As they say: before you know it, we’re talking about real money. And I see no reason to doubt Karakousis’ assertion that ‘repayment remains open’. Not only was German conduct reprehensible during the war, it remained so after. So it shouldn’t really come as surprise that Tsipras has more than once mentioned the 1953 London Agreement on German External Debts, in which Germany was relieved from much of the claims held against it. Tsipras wants Berlin to do the same for Greece now. A potential weakness is that Greece was signatory to that agreement. Still, the loans were certainly not part of it, only ‘war damage’ was included.

With their economy laid to waste, the Greeks soon began pushing for reductions. At a conference in Rome, the Germans and Italians decided on March 14, 1942 to halve their occupation costs to 750 million drachmas each. But the study claims that Hitler’s deputies demanded “unlimited sums in the form of loans.” Whatever the Germans collected over and above the 750 million would be “credited to the Greek government,” a German official noted in 1942. The sums of the forced loans were up to 10 times as high as the occupation costs. During the first half of 1942, they totaled 43.4 billion drachmas, whereas only 4.5 billion for the provision of troops was due.

A number of installment payments, which Athens began pressing for in March 1943, serve to verify the nature of the loans. Historian Fleischer also found records relating to around two dozen payment installments. For example, the payment office of the Special Operations Southeast was instructed on October 6, 1944 to pay, inflation adjusted, an incredible sum of 300 billion drachma to the Greek government and to book it as “repayment.”

In Fleischer’s opinion, the report makes unequivocally clear that the Greek demands do not relate to reparations for wartime injustices that could serve as a precedent for other countries. “One can negotiate reparations politically,” Fleischer says. “Debts have to be paid back – even between friends.”

Postwar Greek governments sought repayment early on. The German ambassador confirmed on October 15, 1966, for example, that the Greeks had already come knocking “over an alleged claim.” On November 10, 1995, then Prime Minister Andreas Papandreou proposed the opening of talks aimed at a settlement of the “German debts to Greece.” He proposed that “every category of these claims would be examined separately.” Papandreous’ effort ultimately didn’t lead anywhere.

Ergo: for a period of thirty years, the Greeks tried, but to no avail. That’s a pretty ugly record. It’s now another 20 years later, and nothing has changed. All in all, the Greeks have been stonewalled for 70 years.

What should become of this new study, the contents of which had remained secret before now? [..] the question also remains whether the surviving relatives of the victims of Distomo will ever be provided with justice – and whether there are similar cases in other countries.

German governments’ rude behavior may well stem, among other things, from that last point: that if any of the Greek claims are recognized, other countries may come knocking too.

German lawyer Joachim Lau, whose law firm is based in Florence, Italy, represents the interests of village residents of Distomo even today. Lau, born in Stuttgart, a white-haired man of almost 70, is fighting for compensation in the name of the Greek and Italian victims of the Nazis. “I am disappointed by the manner in which Germany is dealing with this question,” he says. He says it’s not just an issue of financial compensation. More than anything, it is one of justice.

In February, Lau warned German President Joachim Gauck in an open letter against propagating the “violation of international law” with careless statements about the reparations issue. In his view, the legal situation is clear: Greek and Italian citizens and their relatives affected by “shootings, massacres by the Wehrmacht, by deportations or forced labor illegal under international law” have the right to individual claims.

This perhaps clarifies the definition of ‘war damage’, the term used in the 1954 London agreement. In Lau’s interpretation, it does not include, let’s say, ‘personal suffering’.

For the past decade, Lau has been pursuing the claims of the Distomo victims in Italy. The Court of Cassation in Rome affirmed in 2008 that the claims were legitimate and that he could pursue the case. Earlier, the lawyer had already succeeded in securing Villa Vigoni, a palatial estate on the shore of Lake Como owned by Germany – and used by a private German association focused on promoting German-Italian relations – as collateral for the suit. In 2009, Lau succeeded in having €51 million in claims made by Deutsche Bahn against Italian state railway Trenitalia seized. On Tuesday, the high court in Rome is expected to rule on the lifting of the enforcement order.

Note: there could be a legal precedent here that that can serve as a ‘conduit’ to allow Greece to seize German property in its country.

Following a ruling made by Italy’s Constitutional Court in October 2014, private suits in Italy against Germany have been possible again. One of the justices who issued the ruling is the current president of Italy, Sergio Mattarella. It remains unclear whether this ruling will unleash “a wave of new proceedings” in Italy, says Lau, who currently represents 150 cases, including various class-action lawsuits.

The bones of victims of the Nazi killings in Distomo feature as part of the village’s memorial to the massacre.

Everything connects in the mountain village of Distoma – the present and past, guilt and anger, the Greek demands on Germany today and past calls for reparations. Efrosyni Perganda sits in the well-heated living room of her home. The diminutive woman, 91 years of age, has alert eyes and wears a black dress. She survived the massacre perpetrated by the Germans at Distomo and she’s one of the few witnesses still alive in the village. When the SS company undertook a so-called act of atonement in Distomo following a fight with Greek partisans, the soldiers also captured her husband. Efrosyni Perganda stood by with her baby as they took him. She never saw him again.

As the Germans began to rampage, she hid behind the bathroom door and later behind the living room door of the house in which she still lives today. She held her baby tightly against her chest. “I forgive my husband’s murderers,” she says. Loukas Zisis, the deputy mayor, silently leaves the house as the woman finishes telling her story. He needs a break and heads over to the tavern, where he orders a glass of wine.

“I admire Germany: Marx, Engels, Nietzsche,” he says. “The prosperity. The degree to which society is organized. But here in the village, we aren’t finding peace because the German state isn’t settling its debt.”Zisis admires Germany, but the country remains incomprehensible to him. “We haven’t even heard a single apology so far,” he says once again. “That has to do with Germany’s position in Europe.” This is something that he just doesn’t understand, he says.

German occupation troops in the ransacked Greek village of Distomo on June 10, 1944, shortly after 218 local residents were executed as part of Nazi reprisals.

I hope – and I think – that Germany will pay up. It seems to me to be the only way to save the European Union it has made its economy so dependent on. I don’t see the war reparations go away anymore. So either Berlin pays what legal experts determine should be paid, or it risks becoming a pariah in its own neighborhood.

That the Germans in the 1950s and 1960s, at home and in schools, chose not to tell their children anything about their crimes cannot serve as an excuse to silence the children of their victims. Germany will need to eat a lot of humble pie with its beer.

Home Forums Looks Like Germany May Have To Pay Up

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  • #20027

    Harris&Ewing Kron Prinz Wilhelm, German ship, interned in US in tow 1916 German magazine Der Spiegel digs deep(er) into the ‘Greece question’ this wee
    [See the full post at: Looks Like Germany May Have To Pay Up]


    @ Ilargi,

    “It’s just that their government after 70 years is still skirting its obligations towards the victims.”

    Yikes. That statement reeks of entitlement.

    I wonder what obligations North Americans have to the Native Peoples? Or to enslaved African Americans who were brought here to work on plantations as slaves? Or Asian immigrants who were coerced into high-risk / low-pay labour in mines & railways. Or nowadays, where everywhere in Toronto I see Filipinos working at McDonalds, Tim Hortons and other menial jobs for minimum wage so we here in the near-heart of Empire can enjoy the middle-class standard of living we think we deserve (i.e. whereby a “lower class” – Filipinos, other immigrants, the poor – do all of the work we find otherwise undesirable).

    Again, it’s not that I’m arguing atrocities weren’t committed during WWII, but I think it’s lubricious to suggest we can ever determine what is “owed” to the victims beyond immediate remuneration/restitution that is within reason. Further, I think that statement goes completely against what I’ve come to learn here on the Automatic Earth – that unrealistic promises (i.e. pension plans, high asset values, and in this case – long-term reparations?) will not be honoured, and that there are huge consequences to trying to hold a people to paying something that is due when either a) it is unreasonable to expect them to pay or b) they cannot afford to pay it.

    Again, while I’m not suggesting Nazi Germany is innocent in the role it played during WWII, but I do strongly believe that it’s the victors who write the history books – those who suggest otherwise are foolish at best. I found this an enlightening look as some of the otherwise unreported pieces of WWII that one does not get to read about in most history text books or hear from their teachers in school:



    “it’s the victors who write the history books ”

    That is why, “Two atrocities make One right.”


    “Now the key issue is whether the successor to the German Reich, the Federal Republic of Germany, is responsible for paying back loans extorted by the Nazi occupiers.”

    The key issue then is are successor governments responsible for debts incurred by immoral past government actions. If they aren’t then why would Greece be responsible for the debts incurred by the loans its military dictators incurred to buy weapons and line their pockets?


    Excellent point, Mr. Mud.


    RE:“it’s the victors who write the history books ” Germany lost the war, FYI. RE: “reeks of entitlement” Are you serious? What the U.S. will eventually have to pay (rightly) is immaterial to the issue at hand: the pillage of Greece (& potential all southern Europe) by European, mostly German, bankers being carried out under the guise of “morality”–an astonishing term to be bandied about by the Germans, the French, or Belgium (as in Belgian Congo). The North wants cheap labor, Greek islands and facilities, and sloughing off responsibility for theft, as the history of debts exacted under Nazi occupation is on point.


    Seems that the cover of forced Nazi loans is much better than the reality of the ECB as an umbrella looting organization for said Germans. And that is contrasted against the chaos of exit, whether jump or push. All that Euro funny money will evaporate like gasoline on hot pavement, to the great detriment of all things financial. Perhaps it is better to just go ahead and have at it, push the big red button and get the meltdown out of the way. Somehow I don’t see that as an option that is being considered.


    @ dalgal1999,

    Not suggesting the exploitation of Greece and the EU periphery by German and Brussels based banks isn’t dirty pool; just that the idea of the Greeks being owed anything by the Germans after all these years is, at the very least, unproductive given the situation Europe currently finds itself in (and at the most, completely ridiculous). Also, I was under the impression that this blog (which I’ve been following since 2009/10) wasn’t about suggesting who owes who what, but instead pointing out the exploitation of the people by political/economic cliques through ponzi-finance and what should be done now to avoid further exploitation (as well as big-picture ideas on energy, sustainability, economy and realpolitik).

    Interestingly enough, if we are talking blame about who slighted the Greeks, I find it interesting that the UK traded away the futures of Romania and Bulgaria for the future of Greece (though it would seem all these places didn’t have the brightest of futures under any imperialist/exploitative regime):

    Lastly, I came across this speech and found it fascinating:

    Unfortunately, someone yells out “the Jews!” midway through the speech – and perhaps that’s who Hitler was actually referring to. But were someone from today’s age, with no understanding of who Adolf Hitler is nor what happened during WWII, to hear this speech I think they’d think he was talking about the people at the top of the financial food chain, the heads of central banks around the world, and perhaps the heads of governments who are supposed to be defending our rights and freedoms.

    In short, one might think he wasn’t rallying against a specific ethnic and/or religious group, but a group of international power players… a “1%” if you will… who exploit everyone around the world for their own benefit, yet belong nowhere. And when you consider that 53 – 58 nations declared war on Germany between 1933 ( and 1945, as well as the upstart manner in which Germany refused to play by the rules of international financiers, perhaps it is a more realistic reason as to why the world’s most devastating conflict took place – a nation that rises up against the interests of the international power players cannot (and could not) be allowed to survive (modern-day Iraq and Libya seem to suggest this is the case).

    Sorry if I seem to be going off the beaten path here… but I think there are a lot of questions that need to be asked about the period between 1910 – 1950 and how the history books were written by the victors. The Automatic Earth seems like an intelligent and enlightened enough place to have that discussion; if we’re questioning all the bogus financial and political spin that we’re fed every day by financiers and heads of government, I don’t see why we wouldn’t also question the history they’ve written over the last 80+ years.


    John Day

    In the current situation of trying to get blood from a turnip, it seems fair to try the tactic of offsetting-penalties, there being, in fact 2 bloodless turnips, each owing the other blood. If the unsettled reset of 70 years ago feathers nicely into the reset necessary today, then so may it be.
    All humans suffered horribly, and estimates are that 70 million died in WW-2, mostly civilians, and millions in Dresden and Tokyo were burned alive, on the theory that it would depress and dishearten the war efforts of their nations. “Total War” was the catch phrase. It was Churchill’s baby, but the Americans adopted it , too. Hiroshima and Nagasaki were undefended civilian cities.
    This article from Veterans Today revisits World War as parts one and two.
    It quotes Noam Chomsky’s figures that the US has been responsible for 60 million deaths since WW-2.
    Who is the “US”? My kids?
    It is time for global debt jubilee, accompanied by equitable redistribution of resources, and more humanly and naturally composed ways of living, like small scale local farming, for instance…


    Wow. Raul, that is the dumbest blog I have seen from you. Completely agree with Variable81. Where are you from Raul? Spanish? Portuguese? Should those countries have to pay up for the atrocities committed in South America against the indigenous tribes? Or maybe you are from South America, in which case what is your bloodline? Maybe you need to pay some people who have less European blood than you? And your article contains one absolute untruth and lie that I took particular offense to: “That the Germans in the 1950s and 1960s, at home and in schools, chose not to tell their children anything about their crimes cannot serve as an excuse to silence the children of their victims. Germany will need to eat a lot of humble pie with its beer.” – maybe you could have added “humble pretzel” to be more offensive.

    I am German. Born in 1981. My parents (born in 43 and 47) were told about the atrocities by their parents. Even I, born when I was, visited a concentration camp on a field trip in primary school. Get your facts straight buddy. You may do well reading this:

    Personally I think the Greeks should just default, and start fresh. That is something they have the option of doing. And it would teach the Germans (and other) banks a lesson too… that if you lend money to someone who may not pay it back, it is your own fault, and you can take the losses. And not ask the taxpayer to bail you out. Any taxpayer.

    I fear we are heading towards another world war, and idiots like you will be responsible due to writing garbage like this.

    And one more thing Raul, in terms of learning from history, can you remember what led to the rise of Hitler? Was it maybe ridiculous reparation claims by the victors of world war 1? Seriously, your article here is disgusting, stupid, and ignorant. You are a dangerous fool.

    Will never read anything from you again if I see it on Zerohedge.

    I created an account here just to tell you this. Slap yourself and think a bit harder, you may hate german’s, however that may make german’s hate you, and where does that lead us? Seriously. You probably don’t even realize you are war-mongering. Disgusting.


    Ikargi, your paradigm is wrong, hence you reach wrong conclusions and, this time around, you angered a lot of the ordinary people for whom you care.
    Your thought process is limited to the nation state and the cartoon caricatures that claim to run them.
    This is a fatal flaw in your thought process. “Germany” doesn’t exist. People exist. The average German people are victims of a supranational banking cartel that has put their pensions up to pay for Greece’s eventual default so the private corporate fronts of the Debt Money Monopoly don’t have to take the loss.
    Your claim that Merkel is the most powerful woman in the woman in the world is a joke. She’s a puppet who was financed into office precisely because she was a willing Debt Money Monopolist puppet. If she wasn’t going to BS the people, there are others who would – and they would’ve been financed in Merkel wouldn’t agree to fool people like you.
    The following videos will help to expose the establishment fable…
    The Jones Plantation

    Working Class Hero – John Lennon

    >>I hope – and I think – that Germany will pay up. It seems to me to be the only way to save the European Union it has made its economy so dependent on.<<
    Do you really think that will save the EU, a group of nations oppressed into forced bankruptcy by a private supranational banking cartel? If so, you are missing the Skeleton Key required to comprehend the world in which you live.
    Don’t fall for the divide serf against serf program of the international Banksters. All of us serfs need to stand up against the Debt Money Monopoly criminal class and put an end to their Debt Money Tyrannical system of worldwide oppression.

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