Marbles in their head

ElginSo, Greece is bust. It owes Germany lots of money. So, Greece’s idea is to set off its newly-revived claim for wartime reparations. It wants €162 billion. Germany says, “Oh no”. It says there was a deal in 1960 which settled all of those claims. But Greece says that that deal does not stand on its way. This is what Prime Minister Alexis Tsipras has said about that deal:

 Bilateral Agreement of 1960.

This was when, by its own initiative, it paid 115 million Marks, as reparations, and the (then) Kingdom of Greece acknowledged that there are no further claims to be had. This agreement, however, did not have to do with the reparations that involved the damages suffered by the country, but with the reparations to the victims of Nazism in Greece. And, of course, in no case whatsoever, did it concern the Occupation Loan, or even the claims for reparations given the atrocities of war, the almost-complete destruction of the infrastructure of the country, and the destruction of the economy during the war and the Occupation.

So, there plainly was a deal in 1960. According to Bundesarchives,the agreement was signed in Bonn on 18th March 1960 by the German Federal Republic and the Kingdom of Greece. It was apparently subsequently ratified by the Greek government (ΝΔ 4178/1961) on 21st August 1961 and by Germany on 21st September 1961. The full text is not readily available but according to this source:

 According to Article 1 of the Agreement, payments for the benefit of Greek citizens were those who were persecuted by the National Socialists because of their race or religion or their beliefs and whose freedom or health suffered damage due to this reason. The government of West Germany undertook to pay the Government of Greece in amount of 115 million DM in favour of citizens who fall within the scope of Article 1. The amount will be paid in three instalments as follows: 65 million one month after the entry of Agreement into force, 30 million until March 1, 1962 and the last 20 million by March 1, 1963 “.

Without access to the full text, it would be foolhardy to venture a view about what was or was not settled by 1960 agreement. There might be separate issues about whether it covered damage done generally in Greece by the brutal German occupation during the Second World War, and whether it covered repayment of an interest-free loan forced on the Greeks by the Germans during that occupation. But interestingly, Mr Tsipras seems to found his main attack, not on the strict legal position, but on what he refers to as a “moral stance”:

After the reunification of Germany in 1990, the legal and political conditions were created for this issue to be solved. 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?

The issue is not merely one of morality, but one of practicality. This is what Yanis Varoufakis, now Finance Minister of Greece, said before he took office:

What we need is a little real-politik.

We all know that Greece’s debt is unsustainable. Athens knows it, the IMF knows it, the ECB knows it, Berlin knows it. Like all unsustainable debts, it will be haircut. Alas, the German government is tormented by the prospect of admitting to the German people that it had been lying to them for years, when it was promising that not one cent of monies leant to Greece will be lost.

The reality seems to be that Greece has absolutely no intention of repaying all the money that it owes: it may well be right in thinking that it would be impossible. And so there will probably be some sort of fudge. Either that, or Greece will start confiscating Germany’s assets, the Germans will retaliate and we will be in all sorts of trouble.

There is a joke about Angela Merkel’s visit to Greece in 2007 On her arrival, an immigration officer goes through the usual routine at passport control:

– Name?
– Angela Merkel.
– Occupation?
– No, just visiting.

German banks are Greece’s biggest private creditor, with some €15 billion owing. The French and the Italians are not far behind with €11 billion and €10 billion respectively. By far the biggest exposure is to the European Financial Stability Facility at €141 billion. A lot of that has come from Germany.

Happily, the UK is not in the Eurozone. And its banks are much less exposed. Otherwise, we would be hearing even more about the Elgin Marbles.

So, who is going to win this tussle? Plucky little Greece? Or those German bullies? Probably neither. Those lousy Greek scroungers? The fiscally responsible Germans? Probably not them either. The probable winners will be the baby boomers living in London, who will be able to pick up a nice little holiday home in Greece for next to nothing once the dust settles on this particular train wreck.


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