Two decades after reunification, Germany settles WWI debts

Berlin – Germany will pay off the last of its World War I debts this weekend, 92 years after the 1914-18 conflict ended.

These “reparations” were intended partly by the Allies, particularly France, to keep Germany weak. But the ultimate effect was the opposite, playing a key role in Adolf Hitler’s rise to power and World War II, historians say.

Interest on loans taken out to pay will finally be redeemed this Sunday.

In 1919, as the loser of the War To End All Wars, in which more than nine million people were killed and countless more maimed and traumatised by the horrors of trench warfare, Germany was held responsible.

The victors forced the Germans to admit in effect in the 1919 Versailles treaty that the war was their fault, and to commit to pay crippling amounts for decades to come.

“The French wanted compensation for the terrible losses they had suffered, but also wanted to use reparations as a means of keeping the Germans weak for years to come,” historian Martin Kitchen wrote in Europe between the Wars.

After much bickering among the Allies – who were also in debt to each other from the war – the defeated country, on the brink of starvation and revolution, was presented with a bill of 269 billion gold marks.

It soon became clear that Germany could not pay.

First came hyper-inflation, which saw at its height a billion-mark note, and France, frustrated by the lack of payment, occupied Germany’s Ruhr industrial area in 1923, the same year as Hitler’s abortive Beer Hall Putsch in Munich.

The 1924 Dawes plan and the 1929 Young plan dramatically reduced the burden, and the 1932 Lausanne Conference suspended all repayments in the wake of the Great Depression.

Many historians say that Germany in fact could have paid, particularly after the reparations were sharply reduced and Germany was loaned huge amounts of money.

But it was their symbolism that counted.

Hitler was able to play on resentment to the reparations and the famous “War Guilt Clause” in the Versailles Treaty to gain support in the chaotic inter-war years.

“The point is that it’s not so much the financial burden but a political burden. Financially it probably was doable,” Richard Bessel, professor of history at York University in Britain, told AFP.

After World War II, the new West Germany – but not the communist East Germany – agreed at the 1953 London conference to repay its interwar debts, albeit a much reduced amount, something it completed in 1980.

One loose end though was interest payments on loans taken out under the Dawes and Young plans that piled up between 1945 and this conference in the British capital.

It was agreed that this would be paid when and if East and West Germany ever reunified.

This was seen as so unlikely at the time that it was akin to forgiving the debt, and the original loan certificates became historical curiosities for sale at flea markets.

But in 1990, the unthinkable happened, and Germany – while celebrating unity after decades of painful division – said it would repay, costing it around €200 million (about R1.9 billion).

The debts have been resold so many times that nobody really knows whom exactly Germany now owes.

On Sunday at midnight, they will receive their final instalment of some €70 million, and a chapter of Germany’s traumatic 20th century will be quietly closed. 

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