Germany To Settle Last World War I Debt
ARI SHAPIRO, host:
The last shot of World War I was fired almost a century ago. But in a way the war will really end this weekend with a final payment of nearly $100 million. David Wroe of the German news website The Local joins us from Berlin to discuss who is writing the check and why.
Mr. DAVID WROE (The Local): Hi, Ari. How are you?
SHAPIRO: Good, thanks. So what exactly is this payment?
Mr. WROE: This is the last payment that Germany needs to make stemming from the reparations that it incurred after World War I.
SHAPIRO: Why has it taken Germany almost a century to pay this debt off?
Mr. WROE: Well, under some provisions that were made after World War II, the Allied governments that Germany had fought in World War II decided just to give them a bit of a break and say that the interest that they owed wouldn't have to be repaid until Germany was unified. Of course, after World War II Germany was split into communist East Germany and Western Germany.
And the allies said, OK, you've got enough problems to deal with at the moment. We need to get your economy going again, so we'll give you a little bit of leeway in paying that.
SHAPIRO: So there's a real contrast between the post-World War I approach and the post-World War II approach.
Mr. WROE: Absolutely. Yes. And, in fact, as it turns out, the post-World War II approach was much more effective, because Germany grew into a strong economy, which nobody would've thought was possible seeing what happened after World War I, when the incredibly tough reparations demands made by the Treaty of Versailles essentially strangled the country and gave rise to the Nazis.
SHAPIRO: So could one make the argument that if it weren't for the reparations demands after World War I, World War II might not have happened?
Mr. WROE: That might be taking it too far. But certainly a lot of economists say that the tough reparations from Versailles certainly exacerbated the Great Depression, helped lead to the hyperinflation in Germany in the 1930s that in turn helps pave the way for the rise of the Nazi Party.
John Maynard Keynes, the British economist, most famously warned that the tough Treaty of Versailles was going to destroy Germany and things would end badly. And of course he couldn't have been more right.
SHAPIRO: So when the Germans write this final check this weekend, whose name goes in the To line?
Mr. WROE: Well, that's actually complicated. But essentially it will be private investors, because this debt was privatized a long time ago. They issued treasury bonds, which were sold on the open market and bought by private investors. So in fact what Germany is doing this Sunday is clearing its final debt to private investors.
SHAPIRO: Now, I think most people in the United States are not aware that this landmark is coming this weekend. You're in Berlin. Are German people very aware of this?
Mr. WROE: Absolutely not. In fact, I was just talking to a historian recently who goes by the rather dashing name of Ursula Rombeck-Jaschinski. And she wrote a book about this. And to her knowledge most Germans aren't even aware that they were still paying for World War I.
They're certainly not aware that - until it appeared in the newspapers this week - that they're about to clear their last debt of the First World War.
SHAPIRO: Well, if I could ask you for a moment to take off your journalist hat and put on your philosopher hat, what do you think the significance of this final payment is?
Mr. WROE: I was asking Ursula the same thing. And she felt quite strongly that the agreement of 1953, when all of these reparations payments were worked out between Germany and the Allies, was an absolute milestone for Germany because it was essentially the rest of the world saying to Germany, we are going to start treating you as a normal country again.
SHAPIRO: That's David Wroe of the German news website The Local speaking with us about the last reparation payment from World War I that Germany will make this weekend.
Thanks a lot.
Mr. WROE: No problem, Ari.