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Author`s name Dmitry Sudakov

Germany Still Pays WWI Debts to Democratic Friends

Germany still has to repay its debt associated with World War I. According to Boris Knapp of the German Finance Agency, "The amount still owed for interest and clearance payments is around 56 million Euros," Germany plans to pay off its “Versailles debts” by October 3, 2010.

Germany could have paid the debt earlier, but according to the London Agreement of 1953, the outstanding balance was suspended since the country has lost a part of its territory in World War two, pending a reunification of East and West Germany.

Up until 1983, Germany had paid its “democratic friends” 14 million Deutschmarks. After the two states officially became one on 3 October, 1990, the old debts went into effect again and are still being paid.

According to article 235 of the Treaty of Versailles of June 28, 1919, “… Germany shall pay in such installments and in such manner (whether in gold, commodities, ships, securities or otherwise) as the Reparation Commission may fix, during 1919, 1920 and the first four months of 1921, the equivalent of 20,000,000,000 gold marks.”

Some of Germany’s territories were taken away, and Germany was deemed responsible for “causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies.”

Repayments were a heavy burden for the German economy and were one of the reasons for the Nazi to come to power. Amounts and conditions of reparation payments were reconsidered a number of times. The USA loaned gigantic sums of money to Germany. In 1931, Germany received a moratorium. After World War II which provided a great economic push for the USA, the situation changed again.

In September of 1950, ministers of foreign affairs of three western allies met at a conference in New York and obliged Germany to continue payments agreed upon in Versailles agreement.

Germany is still paying debts associated with World War II. Significant amounts of money are spent for payments of compensations to Jews, prisoners of wars and their families.

In 1944, Germany used labor of 10 million of forced workers and prisoners of war who worked in the industrial and agricultural sectors. By 2000, Germany had paid $60 billion after World War II (over $100 billion in today’s equivalent). It agreed to pay another $4.8 billion to former prisoners of Nazism and forced workers from occupied territories.

Money Times
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