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On February
27, 1953 Germany's creditors with the US initiative gathered in
London to settle the debt of Germany and in particular that of West
Germany.
The German
debt (pre-war and post-war) amounted to 32 billion marks, not
counting the war reparations and compensation. Creditors included
countries like the United States, Canada, France, Great Britain,
Iran, Italy, Spain, Switzerland, Yugoslavia, South Africa and Greece.
Russia and the Eastern European countries were not involved in the
negotiations.
The
negotiations lasted about six months and in August 8, 1953 the London
Agreement on German External Debts was signed, which had provided for
a "haircut" of 60% and repay of these debts with German
marks in 30 years.
An important
stipulation was that the repayment would be done if the West Germany
had a trade surplus and the debt service would not exceed 3% of its
revenue from the export trade. On the Greek side, the agreement was
signed by the Greek Ambassador in London, Leon V. Melas, and ratified
by the Greek Parliament through the 3480/56 Law.
The
"haircut" of the German debt, together with the Marshall
Plan, helped decisively to economic "take-off" of the
devastated from the war West Germany and helped the country to be
smoothly integrated into the international institutions.
Because of
its economic growth, the debt repayment was easy for West Germany.
The last installment was paid on October 3, 2010, when Greece was
entering in the first Memorandum.
The
"haircut" of the German debt in 1953 was used as an example
of non-governmental organizations (ATTAC, etc.) for the remission of
the debts of the indebted Third World countries.
The then
president of SYRIZA and current Prime Minister Alexis Tsipras,
invoked the haircut of the Greek debt during his visit to the
European Parliament on September 27, 2012.
Translated
from the original source:
Tsipras
repeated the argument of the German debt relief back in 1953 under
such terms that permitted Germany to breathe economically and return
to growth, during his latest speech as PM of Greece in the
euro-parliament before Greece's capitulation and the new disastrous 'agreement' under blackmail.
Of course,
there was no chance that Greece could be treated similarly by the
European Financial Dictatorship today for many reasons. One of these
reasons, according to a new study by the Halle Institute for Economic Research, is that Germany
had a huge benefit from the Greek crisis, equal to more than 100
billion euros during the period 2010 to 2015.
The study
concludes that “... the maximal uncertain and future costs of
bailing out Greece to Germany are smaller than the benefits already
accrued to the German budget. Even if Greece indeed does not repay
any of its loans, Germany comes out ahead. If Greece does pay or pays
at least in part, the savings are substantial.”
There seems to be only one solution to this vicious circle and that is to break it by issuing IOUs or by GREXIT. No other choice I am convinced.
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