Why does Germany still owe money for the first world war?
In a few days Germany will pay its final reparations to the Allies for the first world war, 92 years after it finished
According to Bild magazine, the first world war will finally end this weekend when Germany pays off the last instalment of the interest it owes on loans it took out in the 1930s to pay £22bn in reparations to the allied powers. The sum would, of course, have been paid off much earlier were it not for Adolf Hitler, who exploited public resentment at the economic crisis caused by said reparations to a) refuse to pay them, and b) kick off a whole other war – leading to a whole other load of reparations. But news that Germany was still paying reparations from 1919 in 2010 does rather prompt the question: what for?
The idea isn't new, of course: Rome exacted punitive indemnities from Carthage after the Punic wars in the second century BC. But there has long been a feeling that the practice might be unfair: the people who end up paying are rarely those responsible. There are few more eloquent examples of the injustice of reparations than Haiti, which has never recovered from having to compensate France for the loss of slaves and property after independence in 1804. At one stage this absorbed 80% of Haiti's budget, and the interest on the foreign loans Haiti took out to meet the bill was not paid off until 1947, by which time its economy was pretty much shot.
Mainly, though, it's now understood that bankrupting a beaten country won't necessarily achieve the desired result. Partly in recognition of this, Germany's second world war reparations were exacted, in theory at least, in machinery, movable goods and know-how rather than money, and shared economic development was prioritised over punishment.
In a further advance, the UN Compensation Commission, set up after the Gulf war, decreed that Iraq's reparations for the invasion of Kuwait should not be expressed in a cash sum but limited to 30% of its revenues under the oil-for-food programme, with concrete claims from actual people prioritised over abstract ones from governments and companies.
That's sensible, because otherwise reparations can get out of hand: in 2007, a disgruntled American founded the International Coalition for British Reparations, demanding £31tn from Britain as "the greatest criminal nation on earth . . . responsible for such atrocities as genocide, the industrial revolution and global misrule (but particulary in the Middle East), as well as atrocious inventions such as machine guns, slums, child labour and concentration camps," from the time of the Crusades to the second Iraq war. http://www.guardian.co.uk/world/2010/sep/29/germany-reparations-first-world-war
NOTE: THE INITIAL DEBT WAS ONLY 50K...BUT THAT COMPOUND INTEREST IS A BITCH