Germany To Settle Last World War I Debt
ARI SHAPIRO, Host:
DAVID WROE: Hi, Ari. How are you?
SHAPIRO: Good, thanks. So what exactly is this payment?
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?
WROE: 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.
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?
WROE: 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?
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?
WROE: 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?
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: Thanks a lot.
WROE: No problem, Ari.
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