Economy

Debt Crisis Twist: Does Germany Owe Greece 70 Billion From World War II?

Germany continues to shoulder much of the load when it comes to Europe’s bailout of Greece. For some Greeks, that’s just as it should be. After all, Germany still has billions of euros in unpaid reparations bills from World War II. Die Welt takes a closer

German soldiers raise their flag over the Acropolis in Athens, Greece (1941)
German soldiers raise their flag over the Acropolis in Athens, Greece (1941)

BERLIN - In the current debate about the possible bankruptcy of the Greek state, one largely dormant argument has recently resurfaced with increasing frequency: the widespread damage inflicted by the Nazi regime during World War II means that Germany still owes Greece major outstanding wartime reparations.

While the claims for payment of damages are based on very real facts, one could likewise argue that over the course of 60 years or so, those claims have already been satisfied under international law.

What is at stake? Without having been provoked, the Wehrmacht – the Third Reich's armed forces – took over both Greece and Yugoslavia on April 6, 1941. In both countries, German soldiers set up a brutal occupation regime. As was usually the case in European nations invaded by the Germans, the high cost of the occupation was borne by the occupied country -- and the Greek economy was plundered through forced exports.

This resulted in galloping inflation and a radically lower standard of living for Greeks. Additionally, the Third Reich forced the Greek National Bank to lend Hitler's Germany 476 million Reichsmarks interest-free.

After Germany's surrender, the Allied powers organized the Paris Conference on Reparations in the fall of 1945. Greece laid claim to $10 billion, or half the total amount of $20 billion the Soviets suggested that Germany pay.

The suffering caused to Greece by the Nazis is undeniable. Yet at the same time, human suffering cannot really be measured. Independent historians unanimously agree that the total economically measurable damages suffered by Greece as a result of the German occupation, in both absolute numbers as well as proportionate to the population, put Greece in fourth place after Poland, the Soviet Union and Yugoslavia.

At the Paris Conference on Reparations, Greece was finally accorded 4.5% in material German reparation and 2.7% in other forms of reparations. Practically, this meant that Greece received mainly material goods – such as machines made in West Germany – worth approximately $25 million, or 105 million marks, which in today's money amounts to as much as 2 billion euros.

However, the stipulations made at the Paris conference were all but irrelevant given that the United States opposed heavy economic penalties. U.S. leaders recalled what happened after World War I, when Germany's first democracy, the Weimar Republic, was massively weakened economically by having to pay off reparations. Indeed, one of the consequences of this policy was the rise of Hitler.

All four allies agreed

That is why under the terms of the 1953 London Debt Agreement, reparation payments were put off until a "peace treaty" was signed. That finally happened in 1990, which didn't require Germany to pay further reparations to other countries like Greece.

Greece accepted the treaty, though clearly it had little choice. After decades of partnership with Germany (Greece had been a member of NATO since 1952 and associated with the European organizations since 1961) it would have been politically difficult to demand huge reparations – although periodically the issue of compensation was raised by Greek politicians, mostly to score points in domestic politics.

And yet payments were made over the years – at different times and from different pots – probably as much as 30 billion euros since 1949, although given the variety of agreements that were reached it's impossible to say with certainty.

Independent from all other claims, the Federal Republic of Germany did pay compensation to individual victims of Nazi crimes. On March 18, 1960, an agreement was signed between Greece and West Germany to the effect that Germany would pay 115 million marks to Greek victims of the Nazi occupation. The agreement was made under the stipulation that no further claims for individual damages would be accepted.

However, claims from the descendants of Greek victims continued to be made. The best known case was made by children of the residents of a village called Distomo who were killed on June 10, 1944 in what the Germans called a "retaliatory strike." In 1997, they received a verdict that they were entitled to 37.5 million euros in damages from Germany. After much legal wrangling, the case is now before the International Court of Justice in The Hague.

Another legal issue that has surfaced concerns the 476 million Reichsmarks lent against its will to Germany by the Greek National Bank during the war. If this were to be considered a form of war damage, then in principle it would be subject to reparation – except that according to the 1990 treaty Germany would not have to pay it. If the money were, however, to be considered a "normal" credit, then Greece would be entitled to get the money back.

Without interest, the amount in today's money would amount to 10 billion euros. With interest at 3% over 66 years that would come to at least 70 billion euros. The problem is this: even just partial recognition of such a debt would create a precedent that could bring untold further claims in its wake.

Read the original story in German

Photo - Wikpedia

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Future

How China Flipped From Tech Copycat To Tech Leader

Long perceived as a country chasing Western tech, China's business and technological innovations are now influencing the rest of the world. Still lagging on some fronts, the future is now up for grabs.

At the World Semiconductor Conference in Nanjing, China, on June 9

SIPA Asia/ZUMA
Emmanuel Grasland

BEIJING — China's tech tycoons have fallen out of favor: Jack Ma (Alibaba), Colin Huang (Pinduoduo), Richard Liu (Tencent) and Zhang Yiming (ByteDance) have all been pressured by Beijing to leave their jobs or step back from a public role. Their time may be coming to an end, but the legacy remains exceptional. Under their reign, China has become a veritable window to the global future of technology.

TikTok is the perfect example. Launched in 2016, the video messaging app has been downloaded over two billion times worldwide. It has passed the 100-million active user mark in the United States. Thanks to TikTok's success, ByteDance, its parent company, has reached an exceptional level of influence on the internet.


For a long time, the West viewed China's digital ecosystem as a cheap imitation of Silicon Valley. The European and American media described the giants of the Asian superpower as the "Chinese Google" or "Chinese Amazon." But the tables have turned.

No Western equivalent to WeChat

The Asian superpower has forged cutting-edge business models that do not exist elsewhere. It is impossible to find a Western equivalent to the WeChat super-app (1.2 billion users), which is used for shopping as much as for making a medical appointment or obtaining credit.

The flow of innovation is now changing direction.

The roles have actually reversed: In a recent article, Les Echos describes the California-based social network IRL, as a "WeChat of the Western world."

Grégory Boutté, digital and customer relations director at the multinational luxury group Kering, explains, "The Chinese digital ecosystem is incredibly different, and its speed of evolution is impressive. Above all, the flow of innovation is now changing direction."

This is illustrated by the recent creation of "live shopping" events in France, which are hosted by celebrities and taken from a concept already popular in China.

10,000 new startups per day

There is an explosion of this phenomenon in the digital sphere. Rachel Daydou, Partner & China General Manager of the consulting firm Fabernovel in Shanghai, says, "With Libra, Facebook is trying to create a financial entity based on social media, just as WeChat did with WeChat Pay. Facebook Shop looks suspiciously like WeChat's mini-programs. Amazon Live is inspired by Taobao Live and YouTube Shopping by Douyin, the Chinese equivalent of TikTok."

In China, it is possible to go to fully robotized restaurants or to give a panhandler some change via mobile payment. Your wallet is destined to be obsolete because your phone can read restaurant menus and pay for your meal via a QR Code.

The country uses shared mobile chargers the way Europeans use bicycles, and is already testing electric car battery swap stations to avoid 30 minutes of recharging time.

Michael David, chief omnichannel director at LVMH, says, "The Chinese ecosystem is permanently bubbling with innovation. About 10,000 start-ups are created every day in the country."

China is also the most advanced country in the electric car market. With 370 models at the end of 2020, it had an offering that was almost twice as large as Europe's, according to the International Energy Agency.

Photo of a phone's screen displaying the logo of \u200bChina's super-app WeChat

China's super-app WeChat

Omar Marques/SOPA Images/ZUMA

The whole market runs on tech

Luca de Meo, CEO of French automaker Renault, said in June that China is "ahead of Europe in many areas, whether it's electric cars, connectivity or autonomous driving. You have to be there to know what's going on."

As a market, China is also a source of technological inspiration for Western companies, a world leader in e-commerce, solar, mobile payments, digital currency and facial recognition. It has the largest 5G network, with more than one million antennas up and running, compared to 400,000 in Europe.

Self-driving cars offer an interesting point of divergence between China and the West.

Just take the number of connected devices (1.1 billion), the time spent on mobile (six hours per day) and, above all, the magnitude of data collected to deploy and improve artificial intelligence algorithms faster than in Europe or the United States.

The groundbreaking field of self-driving cars offers an interesting point of divergence between China and the West. Artificial intelligence guru Kai-Fu Lee explains that China believes that we should teach the highway to speak to the car, imagining new services and rethinking cities to avoid cars crossing pedestrians, while the West does not intend to go that far.

Still lagging in some key sectors

There are areas where China is still struggling, such as semiconductors. Despite a production increase of nearly 50% per year, the country produces less than 40% of the chips it consumes, according to official data. This dependence threatens its ambitions in artificial intelligence, telecoms and autonomous vehicles. Chinese manufacturers work with an engraving fineness of 28 nm or more, far from those of Intel, Samsung or TSMC. They are unable to produce processors for high-performance PCs.

China's aerospace industry is also lagging behind the West. There are also no Chinese players among the top 20 life science companies on the stock market and there are doubts surrounding the efficacy of Sinovac and Sinopharm's COVID-19 vaccines. As of 2019, the country files more patents per year than the U.S., but far fewer are converted into marketable products.

Beijing knows its weaknesses and is working to eliminate them. Adopted in March, the nation's 14th five-year plan calls for a 7% annual increase in R&D spending between now and 2025, compared with 12% under the previous plan. Big data aside, that is basic math anyone can understand.

https://www.lesechos.fr/idees-debats/editos-analyses/la-chine-est-desormais-une-fenetre-sur-notre-futur-1347064
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