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Von Clausewitz and the Politics of Debt: German War Reparations Owed Greece Re-Emerges as “Time Bomb”

[1]

Financial watchdog for the EU

Dave Emory’s entire lifetime of work is available on a flash drive that can be obtained here. [2] (The flash drive includes the anti-fascist books available on this site.)

Joseph Goebbels, Hitler’s pro­pa­ganda chief, once said [3]: ‘In 50 years’ time nobody will think of nation states.’ 

COMMENT: In the rancorous debate over the imposition of the discredited and brutal “austerity” doctrine on troubled European economies, an element of historical reality has emerged.

We have noted in the past [4] that Greece’s economic problems have been exacerbated by Germany’s failure to compensate Greece [5] for damage done during the occupation of World War II.

Elements within the Greek government have compiled a report documenting the extent of the war compensation owed Greece. Indeed, the relatively lofty position of Germany and the dire circumstances enveloping the troubled eurozone countries cannot be properly understood without grasping the macro economic aspects [6] of the Second World War and the German occupation.

(Our analysis should NOT be misunderstood as dismissing mismanagement of the economies of the troubled countries. There were mistakes aplenty and blame to go around, however those mistakes would have been much easier to rectify had those countries maintained their own currencies and not quaffed the German Kool-Aid.)

[7]An important, characteristically interview from Der Spiegel (accessed by Germany Watch and excerpted below [8]) analyzes Germany and its self-conscious manipulation of the politics of debt in the 20th century. Germany has been the worst financial transgressor of the 20th century, its conduct was absolutely deliberate. 

As set  forth in another incisive post [9] from Germany Watch (which feeds at the right-hand side of the front page of this website), German manipulation of international fiscal matters is a manifestation of the theoretical principles advanced by Carl von Clausewitz. (This post, too, is excerpted below.)

Maximizing the damage to the societies subjected to German occupation through the killing off of the educated classes, the destruction of economic and agricultural infrastructure and, most importantly, the deliberate theft of wealth from the conquered nations [10], Germany envisioned the brutality of  World War II as part of an ongoing process of imperial domination.

The ongoing economic subjugation of Europe is part and parcel to that process and was long envisioned as such!

“Vast Greek War Claims against Germany Explode like a ‘Time-Bomb'” by Ambrose Evans-Pritchard; The Telegraph [UK]; 4/9/2013. [11]

EXCERPT: Premier Antonis Samaras held a special meeting with the foreign minister Dimitris Avramopoulos and other key officials this morning to limit the diplomatic damage from the 80-page report.

The document – stamped “Aporito”, or secret – was drafted by a panel of experts appointed by the Greek finance ministry and delivered to officials last month.

The alleged claim against Germany reaches a grand total of €162bn, including €108bn for rebuilding the country’s infrastructure after the Nazi occupation from 1941 to 1944. This is 80pc of Greek GDP.

The probe was chaired by Panagiotis Karakousis, director-general of the General Accounting Office at the Finance Ministry, and relied on 190,000 pages of documents scattered through the country’s ministries and archives. . . .

. . . . The Greek foreign ministry said this morning that the report would be sent to the State Legal Service “so that legal elaboration, assessment and setting out of the claims of the Greek State can be carried out and a relevant opinion submitted.”

The report was first leaked to the Greek newspaper To Vima over the weekend in a story entitled “What Germany Owes Us”.

The panel concluded that Athens has legitimate grounds to press claims. “Greece never received any compensation, either for the loans it was forced to provide to Germany or for the damages it suffered during the war,” it said.

The newspaper said the issue has “detonated like a bomb” at a critical juncture when Greece is under intense pressure from creditors. “The government should publish all the findings and determine its position on this sensitive issue,” it said. . . .

. . . . There has long been a vociferous lobby calling for war reparations from Germany, with the so-called “National Council” calling for as much €500bn to cover stolen art work and the loss of 50pc of economic output over almost four years.

They claim that Germany’s debts were forgiven after the war at the London Conference in 1953 – including its debts to Greece – and that Berlin should remember that Germany’s Wirtschaftwunder was built with US Marshal aid and American help. Some 300,000 Greeks died under the Axis occupation, mostly from starvation.

Yet this report is an official document and carries the imprimatur of the finance ministry. It is unclear what Athens hopes to gain by stirring up a highly emotional issue.

The report is certain to be viewed by German officials as a form of moral blackmail as tough talks continue over each stage of Greece’s EU-IMF Troika programme.

Sources in Greece say the document was prepared as a bargaining chip to be put away in a draw and used only if Germany and other EU creditor powers overplay their the hand, though the circumstances are murky. . . .

“Germany: the Biggest Debt Transgressor in History”; Germany Watch; 11/8/2013. [8]

EXCERPT: . . . .SPIEGEL ONLINE: Mr. Ritschl, Germany is coming across like a know-it-all in the debate over aid for Greece. Berlin is intransigent and is demanding obedience from Athens. Is this attitude justified?

Ritschl: No, there is no basis for it.

SPIEGEL ONLINE: Most Germans would likely disagree.

Ritschl: That may be, but during the 20th century, Germany was responsible for what were the biggest national bankruptcies in recent history. It is only thanks to the United States, which sacrificed vast amounts of money after both World War I and World War II, that Germany is financially stable today and holds the status of Europe’s headmaster. That fact, unfortunately, often seems to be forgotten.

SPIEGEL ONLINE: What happened back then exactly?

Ritschl: From 1924 to 1929, the Weimar Republic lived on credit and even borrowed the money it needed for its World War I reparations payments from America. This credit pyramid collapsed during the economic crisis of 1931. The money was gone, the damage to the United States enormous, the effect on the global economy devastating.

SPIEGEL ONLINE: The situation after World War II was similar.

Ritschl: But right afterwards, America immediately took steps to ensure there wouldn’t be a repeat of high reparations demands made on Germany. With only a few exceptions, all such demands were put on the backburner until Germany’s future reunification. For Germany, that was a life-saving gesture, and it was the actual financial basis of the Wirtschaftswunder, or economic miracle (that began in the 1950s). But it also meant that the victims of the German occupation in Europe also had to forgo reparations, including the Greeks.

SPIEGEL ONLINE: In the current crisis, Greece was initially pledged €110 billion from the euro-zone and the International Monetary Fund. Now a further rescue package of similar dimensions has become necessary. How big were Germany’s previous defaults?

Ritschl: Measured in each case against the economic performance of the USA, the German debt default in the 1930s alone was as significant as the costs of the 2008 financial crisis. Compared to that default, today’s Greek payment problems are actually insignificant.

SPIEGEL ONLINE: If there was a list of the worst global bankruptcies in history, where would Germany rank?

Ritschl: Germany is king when it comes to debt. Calculated based on the amount of losses compared to economic performance, Germany was the biggest debt transgressor of the 20th century.

SPIEGEL ONLINE: Greece can’t compare?

Ritschl: No, the country has played a minor role. It is only the contagion danger for other euro-zone countries that is the problem.

SPIEGEL ONLINE: The Germany of today is considered the embodiment of stability. How many times has Germany become insolvent in the past?

Ritschl: That depends on how you do the math. During the past century alone, though, at least three times. After the first default during the 1930s, the US gave Germany a “haircut” in 1953, reducing its debt problem to practically nothing. Germany has been in a very good position ever since, even as other Europeans were forced to endure the burdens of World War II and the consequences of the German occupation. Germany even had a period of non-payment in 1990.

SPIEGEL ONLINE: Really? A default?

Ritschl: Yes, then-Chancellor Helmut Kohl refused at the time to implement changes to the London Agreement on German External Debts of 1953. Under the terms of the agreement, in the event of a reunification, the issue of German reparations payments from World War II would be newly regulated. The only demand made was that a small remaining sum be paid, but we’re talking about minimal sums here. With the exception of compensation paid out to forced laborers, Germany did not pay any reparations after 1990 — and neither did it pay off the loans and occupation costs it pressed out of the countries it had occupied during World War II. Not to the Greeks, either. . . .

“The Continuation of War by Other Means”; Germany Watch; 8/30/2011. [9]

EXCERPT: General Otto von Stuelpnagel who ruled France for Hitler from 1940 to 1944:

“What does a provisional defeat matter to us if because of the destruction of manpower and material which we will have been able to inflict on our enemies and neighbouring territories, we have obtained a margin of economic and demographic superiority greater than before 1939? The conquest of the world will require numerous stages, but the essential is that the end of each stage brings us an economic and industrial essential greater than that of our enemies.”

“With the war booty which we have accumulated, the enfeebling of two generations of the manpower, the destruction of the industries of our neighbours and that which we can save of our own, we shall be better placed to conquer in twenty-five or even fifty years than we were in 1939. The interval of twenty-five years is a limited interval, for that is the time which will be required for Russia to repair the destruction we have visited on her.”

The memorandum mentioned some of the elaborate devices by which the rulers of Germany would seek to evade a Just peace; “We do not have to fear peace conditions analogous to those which we would have imposed because our adversaries will always be divided and disunited. Our enemies recognize already that the 1919 formula, ‘Germany will pay,’ lacked sense and worth. We will furnish them some brigades of workers, we will restore some art objects or out-of-date machines, and we can always say that those which we do not restore were destroyed by enemy bombardments.
We should immediately prepare as camouflage a list of such objects destroyed by Anglo-American bombs.”

The basic aim of the German plan, in 1945 as in 1918, was to secure a final peace settlement, no matter how severe it may appear on the surface, or how hard on the German people, which would leave German economic power intact.

In 1915 a man called William Bainbridge wrote a detailed report about Germany’s Political class for the US government. It is Document 26, First Session of the 68th Congress of the United States. The document was written from transcripts of a conversation with a superior German Officer in Berlin about their plans for a post-war campaign.

During the conversation, the German officer revealed; “The immediate competitors in the economic and commercial world will be so crippled that, when it is all over, the Germans will be outselling them in the markets of the world long before they can get on their feet. Following the war, there will be economic hell. We will set class against class, individual against individual, until the nations will have pretty much all they can cope with at home, and not bother with us.” Reference this with the great depression, and Germany’s apparent manipulation of markets – Germanys Long Game?

The reason this German Officer could be so confident about this, is that he knew the German political class and heads of industry, had always accepted that to achieve their aims of a German empire could take 100 years. They knew it would take both military and covert peace operations using terrorism and financial chaos to achieve their Pan-German dream. As early as 1922, Germany was already re-arming, and had moved its aircraft production to other European states using ‘front’ companies. It also had vast sums of wealth hidden in neutral countries, including (according to the Neue Zeucher Zeitung, June 1919) ‘emigrated capital’ in Switzerland of 35 billion Marks! The manipulation of financial markets in the 1920s was just one of many German post-war campaigns using non-official German funds. . . .