Germany is finally paying off World War I reparations, with the last 70 million euro (£60m) payment drawing the debt to a close.
Interest on loans taken out to the pay the debt will be settled on Sunday, the 20th anniversary of German reunification.
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When Germany became two countries - East and West - it threw up new questions about which state inherited the debt.
“When one state succeeds another, there is always a question of whether it takes on its assets and liabilities,” says Prof Harrison.
“It’s unlikely that either of the German states believed they had obligations”.
A new agreement in 1953 - the London Treaty - agreed to suspend many payments until Germany was unified.
By the time country was reunified, in 1990, the world had changed dramatically since the days of Versailles, and policymakers decided to write off most of the original sum.
Mr Schulz says it was, essentially, a return to the conditions in the 1932 Lausanne agreement, and a reduced amount of payments was reactivated.
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I had no idea that debt still existed - I figured it was written off completely after WW2.
I’d be willing to bet someone figured that there would be a quick reunification(one way or another), so you’d better get what you are owed in writing now. Then when it happens you can collect. That would explain the post WWII treaty.
Why anyone thought Germany, with a new and less than cooperative leadership, would pay anything from WWI to when WWII started is the part that throws me off.
However, historically one government’s downfall means creditors pass the debt onto the victors. The victors typically agree to pay off the debt because otherwise their economy gets a scarlet letter and the economy tanks. Or, the nation is a small Latin-American Republic and failure to pay debts means US marines show up and seize custom houses. There are exceptions. Haiti after its revolution comes to mind.
If a country, like Germany, divides into two states, which one gets the assets based overseas? Does each half deserve half of the internal gold reserves?
Even when there isn’t a split, there can be problems. Like when Iran had a revolution, and the US refused to recognise the new regime. They held onto billions of dollars in Iranian assets held by American banks.
Oh nice. Now the idiots at both extremes of the political spectrum will remember the WW2 reparations Germany owes Greece and they’ll start again with the whining. I hope they don’t notice.
