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Greeks talk reparations while Germans talk euro debt

Mitchell Hartman Apr 7, 2015
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Greeks talk reparations while Germans talk euro debt

Mitchell Hartman Apr 7, 2015
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Greek officials say Germany should pay the country 278 billion euro — approximately $300 billion — in reparations for its actions during the Nazi occupation of World War II. The claim was announced to a parliamentary committee by a deputy finance minister of Greece’s center-left government.

This is the first time Greece has issued a firm figure for reparations it is demanding; previous Greek governments and parties have also called for World War II reparations from Germany.

Meanwhile, Greece is seeking $7.2 billion in additional emergency bailout money by late spring in order to meet its financial obligations and avoid a default. Greece is negotiating to obtain that tranche in exchange for more specific commitments to Greek economic reform; for its part, Greece wants relief from debts and austerity measures required by the European Union and International Monetary Fund, in order reduce unemployment and poverty and spur economic growth.

The claim for World War II reparations includes the costs of death and destruction, looting of gold and architectural treasures, and a forced loan the Germans extracted from the Greek national bank in 194 — which was used in part to fund Germany’s North African campaign.

Reparations payment by Germany would more than offset the 240 billion euro international bailout Greece has received.

“The German war debt reparations is really a separate issue. It’s not part of the current negotiations to keep Athens afloat,” says Jan Randolph, an expert on sovereign risk at IHS in London.

Plus, pressing Germany for compensation may not be possible under international law. Reparations were paid by Germany and accepted by Greece and other countries decades ago, under international agreements and treaties in 1960 and 1990.

Andrew Hilton at the Center for the Study of Financial Innovation in London says launching this claim now offers a “publicity” opportunity for Greece’s center-left ruling party.

“It keeps a nice warm glow in the hearts of the Greeks back home. But there is a legal case for it. Greece was not compensated properly after the war, it was a very brutal occupation,” he says.

However, raising the reparations issue now has angered major political figures in Germany. And Greece needs Germany’s cooperation to get more bailout money, and also gain more policy flexibility to maneuver out of the punishing austerity regime adopted by previous governments.

Randolph says Greece’s strategy appears to be to try to gain sympathy and support from other indebted countries that might also resent German power. But so far, it’s not working.

“Countries like Portugal and Ireland that have been through the bailout, they’ve taken the harsh medicine,” she says. “They’re out now, and they don’t see any reason why Greece should be a special case.”

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