The Law and Politics of Greece’s claims for German War Reparations
“The historical roots of the European Union lie in the Second World War”, according to the EU’s official website. It is then perhaps not surprising that in the current tumult of the Eurozone the War re-surfaces. Mark Mazower describes how, in the German Occupation of Greece (1941-1944), “the Wehrmacht had requisitioned food while people died of hunger; how its financial demands upon the Greek state caused a rampant inflation in which olive oil became the chief currency and a loaf of bread cost 2 million drachmas; how mass resistance led to bloody reprisal operations and the shooting of civilian hostages.” Moreover, the devastation caused by the Occupation created the political setting for the Greek Civil War (1944-1945, 1946-1949), which was the first act of the Cold War in Europe.
Now that the European and, even more dramatically, the Greek political orders are being challenged by the Eurozone crisis, the claims founded in the violations of international law of the founding period are also gaining in prominence. The Greek Government has raised the matter at the highest level, while the German Government has reacted consistently curtly to such claims – declaring the matter closed and considering such claims a cynical ploy to appease the austerity-afflicted masses and avoid the hard work of ‘structural reform’. Moreover, recently, the Greek Justice Minister’s suggestion that German property in Greece could be seized was met with anger and incredulity.
While it is hard to separate the matter from the current Eurozone context, (international) law allows, and perhaps requires, such de-contextualisation. Accordingly, this blog post will attempt to present a de-contextualised legal analysis, before concluding with this context in mind.
The Greek claims for reparations can be separated into two categories. The first one broadly addresses war crimes committed by Germany during the Occupation, involving the killing of civilians and the destruction of civilian property. Perhaps the most well-known such incident is the destruction of the village of Distomo, and the mass execution of its 218 inhabitants. Some of these claims were pursued in the Greek court system during the 1990s and a Greek District Court, upheld by the Supreme Court, found for the claimants and calculated compensation at approximately 28m euros. The Greek Justice Minister decided against enforcing the decision in order not to trouble Greek-German relations while expressly stating Greece is not abandoning the claims. The claimants took the matter first to the German courts, which refused to enforce the decision against the German state on the basis of sovereign immunity, and then to the Italian courts. This led to a series of decisions between 2004 and 2011 where the Italian courts recognised the enforceability of Greek (and Italian) claims and rejected Germany’s claim for jurisdictional immunities. As is well known, Germany’s immunity was ultimately upheld by the International Court of Justice, which convincingly, if conservatively, ascertained the lex lata.
The second category of claims focuses on the ‘forced loan’ that the German (and Italian) occupation authorities extracted from the coffers of the Bank of Greece in 1942. On the 14th of March 1942 the Occupying Powers agreed to extract a lump sum from the Bank of Greece, as well as retaining the right to take out more loans, in accordance with their needs, while stating their obligation to repay these, without interest, in the future. Importantly, the money extracted stretched far beyond the belligerent occupation’s needs in Greece, amounting to potentially ten times of the occupation costs, and allowed the financing of the wider German war effort, especially in North Africa. To this extent the ‘forced loan’ constituted a violation of the law of war. At the same time, however, it constitutes a contractual obligation recognised, apparently, by the Nazi regime itself, but reneged postwar.
While the German state’s responsibility violating international law in both cases, and its ensuing obligation to pay reparations, including compensation, is not questioned, the survival of the claim to this day is questioned by the German official position. The intervening years are indeed populated by Germany’s efforts to legally address this past. The first milestone is, undoubtedly, the Potsdam Agreement of 1945, complemented by the Paris Agreement of the same year, during which a group of experts allocated the relevant reparations percentages. While these agreements were covering reparations generally, article 2B of the Paris Agreement stipulates that this is “without prejudice to: (i) the determination at the proper time of the forms, duration or total amount of reparation to be made by Germany”. Moreover, the Greek Government specifically entered a reservation with respect to the forced loan. Indeed, the survival of potential claims against Germany explains the subsequent London Agreement of 1953 which, in article 5(2), provided for the deferral of such claims until “the final settlement of problem of reparation.”
Greece, accordingly, did defer the pressing of any further claims. What is more, Germany has argued (through the then Chancellor Helmut Kohl, reported in To Vima 2.6.1991) that in 1958 the Greek PM Konstantinos Karamanlis stated, orally and secretly, that Greece would advance no further claims. No evidence of this commitment has been found, Karamanlis himself had denied this as early as 1966, and Germany had already conceded this point in 1967. Indeed, the existence of such a commitment would make little sense given that on the 18th of March 1960 Germany and Greece concluded a bilateral general reparations agreement, leading to payments of 115m Deutsche Mark which, according to Germany, constitute final settlement. The current argument is arguably countered by the understanding of the time. When the German under-secretary suggested this agreement will preclude any further claims, the Greek Ambassador stated that this was not the understanding of Greece in signing the agreement. Germany confirmed this by specifying, in a letter, that the agreement did not cover general reparations, but only reparations for persecution based on race, religion and a different ‘worldview’. Accordingly, these reparations focused on a particular category of victims, especially Greek Jews, while it did not address the massacres and destruction of civilian property as in Distomo. In any case, it arguably does not cover claims arising from the forced loan.
Lastly, a “final settlement”, as per the 1953 London Agreement, was concluded at the re-unification of Germany, through the so-called 2+4 (meaning a re-unified Germany + US, UK, France, Russia) Treaty, on September 12 1990, which “intend[s] to conclude the final settlement with respect to Germany”, arguably including the settlement of any possible claim for reparations, although the term is absent from that treaty. The question is what effect this treaty has on non-signatory states, such as Greece. One argument is that Greece effectively acquiesced to the consequences of the 2+4 Treaty by signing, two months later, the Charter of Paris for a New Europe, wherein the states participating in the Conference on Security and Cooperation in Europe “note with great satisfaction” the 2+4 Treaty. This may be seen as falling short of a third state “expressly accept[ing]” an obligation, as per article 35 of the Vienna Convention on the Law of Treaties. Moreover, developments since 1990 suggest that the ‘settlement’ was seen in Greece not as modifying its rights, but as concluding the period of deferral of claims, which the London Agreement had brought about. This is reflected both in civil society initiatives discussed above (Distomo) and, more officially, in increasingly assertive statements expressly reserving Greece’s rights by state officials throughout the 1990s.
The final argument against the survival of claims is one based on the passing of time, namely that the claims have lapsed and that, therefore, their pursuit would be abusive and in contravention to friendly relations in an integrated Europe. While prescriptive extinction is recognised as a general principle of international law, the nature of the violations must be taken into account. Moreover, the deferral of claims between 1953 and 1990 combined with repeated statements pressing the claims in the 1990s, especially in relation to the forced loan, further weakens the prescriptive effect of time.
In 2013 a classified, and promptly leaked, report by the Greek Parliament used German archives to calculate the current level of the claims at €162bn. These included 54bn for the loan repayment. A most recent assessment raises the figure to €279bn. The objectivity of any assessment of the legal validity and, especially, quantification of the claims is inevitably called into question by the current economic and political wrangles between Greece and Germany. Monetary claims and their disavowal are political weapons with moral overtones. Moreover, the ICJ has acknowledged that judicial enforcement of such claims is very difficult absent state consent and it encouraged the parties to settle the matter through negotiation. Although the formal legal position is unlikely to have dispositive effect in any such political negotiations, the existence of an arguable case for reparations has led both to supportive statements by German politicians and the potential creation of a Greek-German commission of experts. It seems that the War’s foundational role still resonates, through law, in our current predicament.
Dr. Ioannis Kalpouzos, Lecturer in Law, City Law School, City University London
Readings Recommendations: For the use of the force loan by the occupying forces see G. Ekmetsoglou-Kohen, Axis exploitation of wartime Greece, 1941-1943 (Emory University, 1995). For further analysis see A. Bredimas, The Occupation Loan: an alternative prospect of vindication? (2010) 58:7 Nomikon Vima 1609-1621 (in Greek).
Cite as: Ioannis Kalpouzos, “The Law and Politics of Greece’s claims for German War Reparations”, Völkerrechtsblog, 27 April 2015, doi: 10.17176/20170421-164619.