Macedonia Hellenic Land, Θεσσαλονίκη, Thessaloniki - On the German occupation loan from Greece

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On the German occupation loan from Greece

"Those who forget the past cannot have a future"

A. Background

During the early 1940s, in order to support its military and strategic objectives in the Balkans, the Mediterranean basin and Libya, Berlin imposed extraordinary obligations on occupied Greece to finance and sustain German troops on its territory whose field of operations extended to the country's broader area. In addition, Greek foodstuffs were used to supply the German army on the Libyan front.

German objectives focused on Libyan and Middle East oil and on the defence of the Balkans, which provided the German armaments industry with 20% of its requirements in antimony, 50% in mineral oils, 60% in bauxite and 100% in nickel. At the same time, Greece remained the only entry point for the Allies to counteract German influence in the Balkans.

For these reasons, the German demand for funding that Greece should bear was inelastic and had caused reactions even from the Greek collaborationist regime under Georgios Tsolakoglou who had threatened resignation. Moreover, Benito Mussolini himself as well as the German Minister Plenipotentiary to Greece Gunther Altenburg pressured Berlin to lower occupation costs for Greece.

The unbearable weight of Greece's German occupation was made worse by the pillage of all goods by occupation forces. The result was famine, about which Altenburg had warned Berlin. At the same time, Papal Nuncio Angelo Roncalli, later to become Pope John XXIII, concluded that deaths from famine had tripled in the Athens/Piraeus area during the winter of 1941- 42. In a diary entry, Joseph Goebbels noted, " . hunger [in Greece] has become an endemic disease. People are dying by the thousands from exhaustion in the streets of Athens." The problem of famine was being made worse by London, which had placed Greece on foodstuffs quarantine, seeking to incite the Greek population against occupation.

Germans could not ignore the increasingly threatening hunger, lawlessness or pro-English sentiments. The famine motivated popular reactions and resistance. Occupation forces had to confront two inelastic and contradictory demands: On the one hand, the funding by Greece of their military operations in its broader region and, on the other, a rebellion-inducing famine.

In October 1941, they sent several financial experts to Greece, but there were no results. Later, the problem was high on the agenda of the Italian-German Fiscal Experts Conference in Rome, from January to March 1942. German insistence on extracting substantial funding from Greece was leading the conference to a dead end.

At that point the Italian banker and Economic Plenipotentiary of Italy to occupied Greece d'Agostini proposed the idea of a loan. In other words, funds beyond the immediate costs of occupation extracted from Greece would take the form of a loan to Germany and Italy.

Β. The Loan

A loan agreement was finally signed on March 14, 1942 by Altenburg and Gidzi, the German and Italian occupation authorities plenipotentiaries to Greece respectively. Greece had not been invited and was not present. Nine days later, Greece was informed of the agreement by Altenburg via diplomatic note 160/23.3.1942 and by Gidzi by notice Νο4/6406/461/23.3.1942.

The agreement stipulated the following:

· The Greek Govt is obligated to pay occupation costs of 1.5 billion drachmas every month. [Article 2]

· Withdrawals from the Bank of Greece over this amount will be charged to the governments of Germany and Italy as an interest-free loan, in drachmas, to them by Greece. [Article 3]

· The loan will be repaid later. [Article 4]

· The agreement is retroactive to January 1, 1942. [Article 5]

This loan contract was an agreement between Germany and Italy and its implementation was imposed as compulsory on Greece. Loan withdrawals would the form of monthly advances, the amount and number of which was not specified. No date was specified as to when repayment might begin, while it was specified that it was interest-free and in drachmas.

The Greek collaborationist minister of Finance instructed the Bank of Greece, by confidential memo 4092/4.1942, to comply with Altenburg's directive and to proceed with loan advances.

The initial compulsory contract was amended three times by joint agreement of the contracting parties. Accordingly, the initial compulsory contract is modified to a conventional contract and the compulsory loan becomes a commonly contracted loan.

With the first amendment on December 2, 1942, it is specified that loan amounts are modifiable and that repayment is to begin in April 1943 (Article b, paragraphs 2 and 3).

In fact, there were two repayment instalments that were then stopped, which should make the loan interest-bearing due to arrears. The loan was now both interest-bearing and denominated in a stable currency.

According to the Bank of Greece, the amount of the loan (excluding interest) was equivalent to 227,940,201 million U.S. dollars in 1944, while according to Altenburg it was equivalent to 400 million post-war German marks. With adjustments and interest the loan comes to some tens of billions of euros.

In conclusion, the German occupation loan from Greece is conventional and not compulsory, denominated in a stable currency and, as of April 1943, interest-bearing. It is a conventional obligation of Germany to Greece and not one involving reparations. As such, it cannot be subsumed under the 1953 London Agreement that suspends German reparations and compensations.

C. Greek Claims on the Loan

Greece has consistently separated the issue of the loan and the demand for its repayment from the issue of war reparations in all relevant international meetings, i.e., in the 1945 Reparations Conference, in the 1946 Paris Conference and in the November 1947 Conference of Foreign Ministers of the major powers.

Greece never ceased to demand repayment of the German occupation loan.

· In 1964 with Greek Government Representative A. Angelopoulos.

· In 1965 with A. Papandreou.

· At the Greek-German talks in Athens in 1966, when Germany presented the assertion that PM Constantine Karamanlis had renounced the claim in writing. This assertion was then amended to an oral renunciation by Karamanlis, who refuted it. Finally, in a March 31, 1967 diplomatic note, Germany accepted that Karamanlis had never renounced the claim.

· In 1974 X. Zolotas brought up the issue.

· Then Minister of Foreign Affairs A. Samaras posed the issue verbally and informally to his German counterpart on April 18, 1991.

· On November 11, 1995, Greece posed the issue in a diplomatic note.

Germany has consistently rejected this claim with the following arguments:

· The loan is subsumed under the London agreement [suspending unrelated reparations].

· Constantine Karamanlis renounced the claim. This has been repeated since 1990 despite the March 1967 German diplomatic note to the contrary.

· Such claims cannot be raised 50 years later. (In fact, Greece has been raising the claim since 1945.)

D. Conclusion

The German arguments lack a legal basis or even logical coherence. Moreover, following the unification of Germany in 1990, it can no longer be argued that a claim cannot be raised against a divided country. Consequently, the claim can be raised immediately on political and legal grounds. The claim can be raised by the Greek government, by the Bank of Greece or by any of its shareholders (over a certain number of shares) as well as by the Greek people through their political institutions. The Greek claim is strengthened by the precedents of Yugoslavia and Poland, against which Nazi Germany had imposed similar occupation loans which were repaid after the occupation by at that time West Germany (in 1956 and 1971 respectively).

Germany today must remind itself that it extended a loan to itself from the Greek state in violation of Article 49 of the 1909 Hague Convention, which is still in force today. It took a loan from a state that Nazi Germany itself had designated as indissoluble and that the Nazis themselves not only never challenged the fact of the loan, but began its repayment, while in 1964 Chancellor Erhardt had committed himself to its repayment after the reunification of Germany.

Germany must remind itself that German occupation is responsible for the economic holocaust of Greece in the period 1940-1944. Suffice it to say that inflation in German during the German occupation increased 15,3 million times, while German occupation authorities forced Greece to pay military reparations. This economic holocaust of Greece was recognized by the Italians, with Gidzi noting, "Greece has been squeezed like a lemon". Mussolini, himself has been quoted as saying that "Germans snatched from Greeks even their shoelaces". German Minister of Finance Funk wrote in an article, in June 1943: "Greece suffered from the evils of war perhaps more than any other country in Europe".

For reconstruction Greece would require its 1946 national income multiplied 33 times. Greece sought these funds through external borrowing. It is remarkable that a united since 1990 and democratic Germany should refuse to repay the occupation loan. This behaviour wounds the post-occupation pro-German feelings of the Greek people, as they were characterised by Chancellor Kohl, and the German government bears the responsibility.

· Adapted into English by Michael Youlton of ILR, this article was written by Tasos Minas Iliadakis, a mathematician and political scientist, with a Phd in Sociology, who lectures at the Greek National Security School. He was a member of the Greek delegation at the 1997 London International Conference on Nazi gold, a presenter at the 1996 Greek - German Conference in Delphi as well as at the 2005 National Conference on the Public Debt in Alexandroupolis in 2005.

· Citations can be found in the original Greek article, published on January 25, 2010 in "Patris", a daily paper published in Crete

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