In April 1941, Nazi Germany and its fascist ally, Italy, invaded Greece, initiating a brutal occupation that was to last until October 1944. The Nazi administrators put in place a system of tight control and implemented policies that resulted in widespread shortages and starvation. In an attempt to suppress Greek partisan resistance, Nazi troops carried out numerous massacres in villages across the country. Infamous among these was the June 10, 1944, indiscriminate killing of 214 men, women and children in the village of Distomo by the Waffen-SS as a retribution for an attack on a nearby German unit. When Allied forces finally broke the occupation, Greece was left in a situation of financial collapse. Not only had the Nazi occupiers extracted regular occupation costs — an act authorized by the Hague Convention — but they had also forced the Greek Central Bank into providing loans amounting to 476 million reichsmarks to support military efforts in the Balkans, Russia and North Africa.
Following the end of World War II and the fall of the Nazi regime, Greece was among the 23 nations awarded compensation as part of the 1946 Paris Conference on Reparations, which also included the United States, Great Britain and France. Greece received around seven percent of the total amount doled out. The repayment mandated by the treaty, however, was symbolic and did not reflect the full claims of the Greek government. Ultimately, Athens contends that the treaty amount was never fully paid out.
These claims were to go unfulfilled because of the changing strategic orientation within the ranks of the former Allied nations. Following the victory over the Axis powers, the Soviet Union began a push to expand its power in Central Europe. As a result, the West turned its focus from punishing the former fascist states to containing Moscow through the United States' Marshall Plan.
Within this evolving configuration, Germany was key. When East Germany finally fell within the Soviet orbit in 1949, the United States turned to bolstering West Germany. Washington hoped that financial stability there would prevent the emergence of a communist insurgency that would challenge the fledgling nation. To this end, Washington moved to defer the reparations claims of former Nazi-occupied states, striking an informal agreement with the Greek government. The United States provided support against Greek communist militants in exchange for Athens' silence on its reparations claims. The 1953 London Agreement then officially delayed consideration of West Germany's reparations or debts until its reunification with the east. The issue was not addressed again until 1960, when West Germany agreed to pay Greece 115 million deutschmarks (then around $67 million). This was to be the last tranche until the end of the Cold War.
Greece Revisits Reparations
The fall of the Berlin Wall in 1989 and Germany's 1990 reunification, however, brought Greece's claims to the surface once again. In 1990, Greece signed the "Treaty on the Final Settlement with Respect to Germany, also known as the 'Two Plus Four Treaty.'" The signatories of this agreement renounced all rights they formerly held in Germany. In Germany's eyes, this resolved the issue of debt or reparations because the treaty failed to mention them explicitly — although now Greece disputes this interpretation. At the time, Athens was highly optimistic about European integration and was receiving funds following Greece's 1981 accession and did not address the question.
This optimism did not last. The talk of German reparations became a lever for Greece to pressure the European Union. In 1995, Greek Prime Minister Andreas Papandreou proposed talks on Nazi forced loans in an attempt to convince Europe to include Cyprus in the European Union at a time of escalating Cypriot nationalism. In 1997, Greece's highest court, the Areopag, ruled that Germany must pay damages to the families of the victims of the Distomo massacre, although in 2001, the International Court of Justice rejected this based on the 1990 treaty and the incapacity for a Greek court to sue the German state. Then in early 2012, while Prime Minister Lucas Papademos was in the midst of negotiating its second bailout program, he requested that a Greek Finance Ministry commission draft a report on the German war debt owed to Athens. In April 2014, his successor, Prime Minister Antonis Samaras, opted to continue the study and appointed former general director of the Finance Ministry, Panagiotis Karakousis, to lead the team. The commission calculated that the German debt amounted to 11 billion euro ($12 billion). This claim that has not yet been subject to any ruling by an international court, and thus is the strongest of the claims Athens has today.
With the emergence of the eurozone crisis, the dispute over reparations became part of a broader resistance to Germany's EU leadership from several member states. Berlin's push for austerity policies is now facing opposition from major European countries including France and Italy, who favor policies to incentivize investment instead of pushing for spending cuts. The Greeks in particular, as targets of the austerity measures, oppose the German program.
The Greek government is in a delicate position. It needs funds to pay its debt maturities and is running out of options. Athens will likely have to introduce painful measures to secure European funding and bargain with its creditors — led by Germany. In the face of this mounting crisis, Prime Minister Alexis Tsipras and his Syriza party are trying to hold together a parliamentary majority and sustain public popularity. To do so, Tsipras has to show strength in negotiations. This means feeding Greek nationalism with anti-German sentiments. To this end, members of the Syriza government have called for a referendum on a eurozone pullout. Tsipras will also engage in bilateral talks with Russia on April 8-9 to convince the Greek people that the new government is strong. Bringing up Nazi reparations is a rhetorical way for Tsipras to imply that Germany is a debtor itself and has no right to press the Greeks.
From the official German perspective Berlin has no legal obligation to pay Athens. It sees the issue as settled by the 1990 treaty. German Chancellor Angela Merkel and Social Democratic Party leader and Minister of Economy Sigmar Gabriel have already rejected the case, while insisting that it should in no way be related to the current negotiations on the Greek debt.
Merkel's view has raised dissent internally, and the Greek claims have found support within the Bundestag, with members of the Greens and the Social Democratic Party publicly favoring payment. Recently, too, members of Merkel's Christian Democratic Union party have also voiced some support, including the chairman of the Bundestag Committee on Foreign Affairs, Roderich Kiesewetter. He said that Germany should consider making concessions, highlighting the possibility of an increase in financial support for the Greek-German "future fund," which contains 1 million euros and was initially dedicated to exchange at the cultural and civil society level. This has precedent elsewhere in Europe. In 1992, Poland received 7.2 billion zloty (roughly $1.2 billion) through the Foundation for Polish-German Reconciliation — a fund similar to the Future Fund. In her common press conference with Alexi Tsipras on March 23, Merkel mentioned the fund. While she did not commit to anything, she stressed the German responsibility to keep the awareness of Nazi crimes alive.
Merkel, however, is in a constrained position. Germany must continue to maintain the perception of being a strong hand in negotiations over Greek debt. The Christian Social Union has been particularly unwilling to give ground. Peter Gauweiler, the deputy chairman of the Christian Social Union, resigned over the issue. A split with the Christian Democratic Union's partner is not desirable for Merkel. Berlin must also consider that making a payout to Greece could set a precedent that would revive other European claims, particularly those of Poland and Italy. In a time of continuing crisis within the European Union, the issue of Germany's culpability for the actions of the Nazi regime has received new prominence, and, as the union fragments further, this will only increase.