How World War II figures in a new fight over Greek debt

Last week in the Greek village of Nafpolio, Germans Ludwig Zaccaro and Nina Lange handed 875 euro, about $940 at the current rate, to the local mayor. The money, which the mayor said would be given to a local charity, was what the couple figured was their share of Germany’s World War II debt to Greece.

They’d always loved Greece, they said in an interview shown on Greek television, and felt bad about their country’s role in the current economic difficulties.

“Our politicians pretend the Greeks owe debt to Germany, but the reality is that it is the other way around,” Lange said.

Their point of view differs widely from the general German attitude about Greece – 80 percent, polls show, don’t want Germany to give any more aid to Greece and 50 percent want Greece gone from the eurozone – but it strikes at an argument that the new Greek government is pressing: Germany owes Greece money, not the other way around.

Germany has never repaid money that Germany forced Greece to lend it during World War II, says the Greek government. Now the Greeks would like it back, to help repay the $330 billion the country owes – $67 billion to Germany.

The German government of Chancellor Angela Merkel bristles at the suggestion. It insists that any German debt from World War II was eliminated with the so-called Two-plus-Four Treaty that made possible the reunification of Germany in 1990.

“Greece will not be able to cover their debts by constructing German responsibilities dating back to World War II,” German Finance Minister Wolfgang Schaeuble said recently. “Greece suffers not because of Berlin, or Brussels, but because its own elites have failed for decades.”

“This has all been settled, there can be no more claims,” said Volker Kauder, a member of the German parliament.

But the view is not unanimous. Norman Paech, a retired law professor at Hamburg University and one of Germany’s leading experts on war reparations, has been making a case for more than a decade that the Greeks have a case.

“The Greek claims with regard to the loan and German war crimes are legitimate from a political, legal and even more so from a moral point of view,” he said in a telephone interview Wednesday.

Paech argues that German officials are fighting against this obligation for a simple reason: There are other claims.

He said the legal problem is that the 1953 London Treaty officially put all claims against Germany on hold until a lasting peace treaty could be reached. The 1990 treaty that unified Germany is that document, but it was signed only by the two Germanys and the United States, Great Britain, France and Russia. That means claims from any other countries are now active – for example, from Greece.

And gaps are appearing among Germany politicians, too. Can Germans really claim anything from a nation they occupied and looted only 70 years ago?

Not just the fringe parties are raising the question. Some members of the Social Democratic Party, partners in government with Merkel’s Christian Democrats, are leaning toward the position taken by Zaccaro and Lange in Nafpolio: Something is owed.

“It would be good for us Germans to sweep up after ourselves in terms of our history,” Gesine Schwan, a Social Democratic member of parliament, told the magazine Der Spiegel. “Victims and descendants have longer memories than perpetrators and descendants.”

The party’s vice chairman, Ralf Stegner, said it’s time to consider “compensation talks.”

“We should not tie the reparations to the present euro crisis debate,” he said in widely quoted remarks. “But regardless of that, I think we need a discussion about compensation. Dealing with our history requires it.”

Figuring out exactly how much Germany owes Greece would be no easy matter. Greek schoolchildren are taught that the Germans owe Greece $320 billion, about the total of the Greek debt in this current crisis.

The most concrete amount, and one most likely to be mentioned by Germans, stems from a 1942 “no-interest loan” to Adolf Hitler’s Nazi regime from the Greek puppet government. The money, 568 million Reichsmarks, was to fund the occupation of Greece. But even that’s not straightforward: Italy shared the occupation and therefore in the money at that time.

And, many have noted, if it was a legitimate loan that needs to be repaid, it was one without interest. Germany would owe Greece exactly what was borrowed minus the 92 million Reichsmarks Hitler’s Germany repaid the Greeks, meaning 476 million Reichsmark.

The dollar value of a Reichsmark is much debated. In 1942, when there was no dollar-Reichsmark exchange, the official Allies-set rate was 10 Reichsmark to a $1, making the Reichsmark worth about 10 U.S. cents. But just the year before, when America and Germany were not at war, each Reichsmark was worth $2.50. Of course, after the war, a Reichsmark was virtually worthless.

Germans who think their country should repay the loan tend to put the repayment value at about 10 billion euro, or $10.6 billion. That amount hardly scratches the surface of Greek debt.

But Paech thinks that number might well be low. He points out that in 1997, the Greek village of Distomo, near Delphi, won a case in Greek court ordering Germany to pay about $40 million for the Nazi revenge killing of 200 locals. While the amount isn’t in the billions, it’s only one village in only one nation in which the Nazis rampaged.

“There were over 1,000 towns and villages plundered and/or burned down, 1 million people made homeless, 300,000 died of starvation under occupation in Greece alone,” he recently wrote for a German newspaper.

As Paech notes, if the Greek claims stand, Germany will face many, many more.