69 years to the day since Greece renounced Germany’s war debt – Greek City Times
On February 27, 1953, the German-led United States creditors met in London to settle Germany’s debt, especially West Germany’s debt. The German debt (pre-war and post-war) amounted to 32 billion DM, not counting war reparations and indemnities. Creditors included countries such as the United States, Canada, France, Britain, Iran, Italy, Spain, Switzerland, Yugoslavia, South Africa and Greece. Russia and Eastern European countries did not participate in the negotiations.
Negotiations lasted about six months and on August 8, 1953, the London Debt Accord was signed (London Debt Accord), which provided for a haircut of 60% and repayment over 30 years. An important condition of the agreement was that repayment would be made if West Germany had a trade surplus and debt service would not exceed 3% of its export trade earnings. From the Greek point of view, the agreement was signed by our ambassador in London, Leon V. Melas, and ratified by Parliament with Law 3480/56
What is the London Debt Agreement?
February 27, 1953 was the day the “London Debt Agreement” was signed, an extraordinary agreement that canceled much of Germany’s pre- and post-war debts. The uniqueness of this agreement is its comprehensive nature – it canceled a large part of Germany’s debts, and it was signed by countries that were only at war a few years before, including the new Federal Republic of Germany. heavily indebted Germany (Hitler’s successor Germany), and Germany’s creditors, the Western Allies, led by England, France and the United States, but also countries like Greece which have recently experienced German military occupation.
Germany had been destroyed by war and was unable to pay its external public debts in the post-war years. Despite some agreed reduction in its post-war debt, its pre-war debts remained huge and unsustainable. The Agreement canceled about 50% of German debt – roughly equivalent to the value of 75% of German exports in 1950. On the remaining stock of German debt, further relief was granted through a reduction of interest payments due on its various components.
The London Conference agreed on a comprehensive solution on how to deal with Germany’s unpaid debts relating to two constituent parts:
- Borrowings that Germany had taken out during the Weimar Republic era to meet the reparation provisions of the 1919 Treaty of Versailles, which had been postponed twice and then partially cancelled. In addition, there were the debts of other public institutions and German private debtors amounting to 5.8 billion DM (or nominally 2.9 billion euros), so that all pre-war debts of 13.5 billion DM (or nominally 6.7 billion euros) were on the board and discussed.
- Loans the federal government had received from Western powers, particularly the United States, after World War II to fund reconstruction.
3. Who was involved?
Twenty-two representatives of creditor countries took part, as well as the Bank for International Settlements (BIS) and representatives of private lenders, the driving force behind the negotiations being the American government. During the negotiations, German private and public debt owed to public and private entities of the following countries was dealt with, and all were signatories to the Agreement: Belgium, Ceylon (now Sri Lanka), Denmark, France, Greece, Iran, Ireland, Italy, Yugoslavia, Canada, Liechtenstein, Luxembourg, Norway, Pakistan, Sweden, Switzerland, Spain, South Africa, Great Britain and the United States. In 1963, the following states and territories joined the agreement: Aden, Egypt, Argentina, Australia, Belgian Congo (now DRC), Channel Islands, Chile, Finland , the Falkland Islands, Gibraltar, Israel, Cambodia, Cameroon, Malta, Morocco, New Guinea and Nauru, New Zealand, Netherlands, Northern Rhodesia and Njasaland, Austria, Peru, Syria and Thailand.
In March 2015, Greek Prime Minister Alexis Tsipras unsuccessfully called on Germany to repay more than €160bn (£112bn) in WWII reparations as his country was pressed by creditors to restructure its economy in exchange for vital bailout funds.