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11 August, 2015

The "haircut" of the German debt for which Greece also agreed!

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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.

1 comment:

  1. 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.

    ReplyDelete