An Overview of World War II Reparations

Introduction

After World War II both West Germany and East Germany were obliged to pay war reparations to the Allied governments, according to the Potsdam Conference.

Other Axis nations were obliged to pay war reparations according to the Paris Peace Treaties (1947).

Austria was not included in any of these treaties.

Payments

According to the Yalta Conference, no reparations to Allied countries would be paid in money (though that rule was not followed in later agreements). Instead, much of the value transferred consisted of German industrial assets as well as forced labour to the Allies. The Allied demands were further outlined during the Potsdam Conference. Reparations were to be directly paid to the four victor powers (France, Britain, United States, and the Soviet Union); for the countries in the Soviet sphere of influence, the Soviet Union would determine its distribution. To coordinate the distribution of the reparations between the victor powers, the Allied Control Council was established.

The Allies finally agreed for German reparations to be paid in the following forms:

  • Dismantling of the German industry.
  • Transferring all manufacturing equipment, machinery and machine tools to the Allies.
  • Transferring all railroad cars, locomotives and ships to the Allies.
  • Confiscation of all German investments abroad.
  • All gold, silver and platinum in bullion or coin form held by any person/institution in Germany.
  • All foreign currency.
  • All patents and research data relevant to military application and processes.
  • Requisition of current German industrial production and resource extraction.
  • Forced labour provided by the German population.

To oversee the extraction and distribution of the German reparations in their control zone, the Western Allies established the Inter-Allied Reparations Agency (IARA). The distribution of the reparations from Germany was to be allotted by a pre-determined percentage to which the victor powers agreed to. German reparations were to be classified into two categories: A (all forms of German reparations except those included in Category B) and B (industrial and capital equipment, merchant ships, and inland water transports).

The following nations received reparations as part of the proceedings of the IARA:

Country% of Category A Reparations% of Category B Reparations
Albania0.050.35
Australia0.700.95
Belgium2.704.50
Czechoslovakia3.004.30
Canada3.501.50
Denmark0.250.35
Egypt0.050.20
France16.0022.80
Greece2.703.35
India2.002.90
Luxembourg0.150.40
Norway1.301.90
New Zealand0.400.60
Netherlands3.905.60
Union of South Africa0.700.10
United Kingdom28.0027.80
United States of America28.0011.80
Yugoslavia6.609.60

Poland was to be excluded from the proceedings of the IARA by demand from the Soviet Union. The Allies agreed as part of the Potsdam Agreement, that the Soviet Union collects and distributes the Polish share of reparations. Furthermore, the Soviet Union would extract its share of reparations mostly from the territory in its own occupation zone.

Territorial Changes

The Soviet Union annexed the German territories east of the Oder-Neisse, leading to the expulsion of 12 million Germans. These territories were incorporated into communist Poland and the Soviet Union respectively and resettled with citizens of these countries, pending a final peace conference with Germany. Since a peace conference never took place, the areas were effectively ceded by Germany. In the case of Poland, the acquired territory was a compensation for the Polish Eastern Borderlands (Kresy), which were annexed by the Soviet Union.

France occupied the Saar protectorate from 1947 to 1956, with the intention of using its coal and steel industrial output to boost the French economy as reparations for the war. France sought to ultimately annex the Saar as well as the entire Ruhr region into France proper, but was denied so by the rest of the Allies. Following the results of a plebiscite, France had to relinquish its control of the Saar region on 01 January 1957.

The Netherlands sought to annex large parts of Western Germany as reparations for WWII. These efforts were mostly thwarted by the Western Allies and ultimately only approximately 69 square kilometres (27 sq mi) of German territory was annexed in 1949. Nearly all of this territories were returned to the Federal Republic of Germany in 1957. Under the Dutch-German treaty made in The Hague on 08 April 1960, West Germany agreed to pay to The Netherlands the sum of 280 million German marks in compensation for the return.

Belgium and Luxembourg also sought to annex German territory as reparations for WWII. However, only small areas were occupied and then returned after German compensation payments.

Dismantling of Industries

Refer to Allied Plans for German Industry after World War II and Morgenthau Plan.

At the beginning of the occupation, the Allies dismantled the remnants of German industries. Plants and machinery were dismantled, the railroad system deconstructed and everything was transported to the Allies. The German merchant fleet and all other ships were handed over. Foreign stocks of about 2.5 billion dollars were confiscated. The remaining German industries had to give up a share of their production to the Allies. Large shipments of steel, coal, but also other industrial products were seized and transported out of the country. Later the Western Allies softened their stance in favour of the Marshall Plan, while Eastern Germany continued to deliver industrial goods and raw materials to the Soviet Union until 1953.

Dismantling of Rail Infrastructure

In the Soviet Zone of Occupation (later the German Democratic Republic) virtually all double tracked rail lines were reduced to a single track with the material being taken to the Soviet Union. Similarly the (relatively limited) railway electrification was also dismantled with the notable exception of most of the Berlin S-Bahn which retained its third rail infrastructure for the most part.

Similarly, in the French Occupation Zone, key rail lines were dismantled to single track.

Intellectual Property

Refer to Allied Plans for German Industry after World War II.

The Allies confiscated large amounts of German patents, copyrights and trademarks worth about $10 billion. (1948, equivalent to roughly $123 billion in 2022)

Forced Labour

Refer to Forced Labour of Germans after World War II.

Millions of Germans were pressed into forced labour for several years to work for the Allies in camps, mining, harvesting or industry.

Occupation Costs

After World War II ended, the main four Allied powers – Great Britain, The United States, France, and the Soviet Union – jointly occupied Germany, with the Allied occupation officially ending in the 1950s. During this time, Germany was held accountable for the Allied occupation’s expenses, amounting to over several billion dollars.

Holocaust Victims

Germany concluded a variety of treaties with Western and Eastern countries as well as the Jewish Claims Conference and the World Jewish Congress to compensate the victims of the Holocaust. Until 2005 about 63 billion euros (equivalent to approximately 87.9 billion euros in 2022) have been paid to individuals. Additional payments by German companies which exploited forced workers have been made.

Recipients

Poland

On 23 August 1953, the People’s Republic of Poland, under pressure from the Soviet Union, announced it would waive its right to further war reparations from East Germany on 01 January 1954. In turn, East Germany was pressured by the Soviets to accept the Oder-Neisse border, which gave around one-quarter of Germany’s 1937 borders to Poland and Russia. In a United Nations note, dated 24 November 1969, the communist government of Poland demanded action from the organisation not only to punish war criminals and those who have committed crimes against humanity but also to establish procedures and divisibility of compensation for war crimes and damages committed by Germany during World War II. In 1970, the 1953 renunciation of reparation rights was confirmed by the Polish Deputy Minister of Foreign Affairs Józef Winiewicz during the course of the negotiations leading to the normalization treaty of November 1970, in which Western Germany recognised the Oder-Neisse as the final border between both countries. On 10 September 2004, the Polish parliament passed a resolution stating that: “The Sejm of the Republic of Poland, aware of the role of historical truth and elementary justice in Polish-German relations states that Poland has not yet received adequate financial compensation and war reparations for the enormous destruction and material losses caused by German aggression, occupation and genocide.” On 19 October 2004 the Polish Council of Ministers put out a statement saying: “The Declaration of 23 August 1953 was adopted in accordance with the constitutional order of the time, in compliance with international law laid down in the UN Charter.” In August 2017, this position was again confirmed in a statement by Deputy Foreign Minister Marek Magierowski, stating that “(…) the 1953 declaration constitutes a binding unilateral legal act of the Polish state – a subject of international law.” According to Władysłav Czapliński, the reparation question has been closed with the conclusion of the Treaty on the Final Settlement with Respect to Germany, negotiated in 1990 between the Federal Republic of Germany, the German Democratic Republic, and the Four Powers (United States, Soviet Union, United Kingdom, and France), to which Poland voiced no protest. The German government took the same position.

Despite this, Poland and Germany concluded several treaties and agreements to compensate Polish victims of German aggression. In 1972, West Germany paid compensation to Poles that had survived pseudo-medical experiments during their imprisonment in various Nazi camps during the Second World War. In 1975, the Gierek-Schmidt agreement was signed in Warsaw. It stipulated that 1.3 billion DM was to be paid to Poles who, during Nazi occupation, had paid into the German social security system but received no pension. In 1992, the Foundation for Polish-German Reconciliation was founded by the Polish and German governments, and as a result, Germany paid Polish sufferers approximately zl 4.7 billion (equivalent to zl 37.8 billion or US$7.97 billion in 2022). Between 1992 and 2006, Germany and Austria jointly paid compensation to surviving Polish, non-Jewish victims of slave labour in Nazi Germany and also to Polish orphans and children who had been subject to forced labour. The Swiss Fund for the Victims of the Holocaust paid compensation between 1998 and 2002 to Polish Jews and Romani who were victims of Nazi Germany.

The reparation issue arose again in late 2017 with comments made by Polish government officials from the Law and Justice party. Since then, the Polish government has taken the position that Poland’s 1953 refusal is non-binding because the country was under the sway of the Soviet Union. In September 2022, Jarosław Kaczyński, leader of the Law and Justice party, announced the government’s intent to officially demand that the German government pays zl 6.2 trillion ($1.32 trillion) in reparations. Przemysław Sobolewski, head of the Bureau of Research of the Sejm, said that the political decision of 1953 was made by the Polish Council of Ministers, even though under the Constitution of the Polish People’s Republic, which came into force in 1952, it was the Polish Council of State, which had the sole authority to undertake such a decision. According to Józef Menes from the Council of the Polish War Loss Institute, no diplomatic note was presented to the East German government. On the 83rd anniversary of the outbreak of World War II, on 01 September, a Polish government report on Polish war losses and damages in 1939-1945 was presented at the Royal Castle in Warsaw. The report also covered the legal issues regarding the 1953 renunciation of reparation rights by Poland, and according the report “the alleged unilateral statement of the Council of Ministers of 23 August 1953 on the renunciation of war reparations by the People’s Republic of Poland violated the constitution of 22 July 1952 in force at that time, because the matters of ratification and termination of international agreements belonged to the competence of the Council of State, not the Council of Ministers” also the report noted that according to the minutes of the Council of Ministers of 19 August 1953, the renunciation concerned only the German Democratic Republic not the Federal Republic, and that no diplomatic note was ever sent to the East German government officially informing it of Poland’s decision. On 14 September 2022, the Sejm passed (418 for, 4 against, 15 abstentions) a resolution stating that: “The Polish state has never renounced its claims against the German state; the Sejm of the Republic of Poland calls on the German government to assume political, historical, legal, and financial responsibility for all the effects caused by the unleashing of World War II.”

On 02 October 2022, the Polish Foreign Minister Zbigniew Rau signed a diplomatic note asking the German government to undertake an official negotiation process between Poland and Germany, and on 03 October 2022 presented the diplomatic note to the visiting German Foreign Minister Annalena Baerbock. According to the German government, there is no legal basis for further compensation payments.

Greece

As a result of the Nazi German occupation, much of Greece was subjected to enormous destruction of its industry (80% of which was destroyed), infrastructure (28% destroyed), ports, roads, railways and bridges (90%), forests and other natural resources (25%) and loss of civilian life (7.0211.17% of its citizens). Other sources put the total number of deaths resulting from the Axis occupation at 273,000 to 747,000 Greeks, or 3.7-10.2% of the pre-war population. The occupying Nazi regime forced Greece to pay the cost of the occupation in the country and requisite raw materials and food for the occupation forces, creating the conditions for the Great Famine. Furthermore, in 1942, the Greek Central Bank was forced by the occupying Nazi regime to lend 476 million Reichsmarks at 0% interest to Nazi Germany.

After the war, Greece received its share of the reparations paid by Germany to the Allies as part of the proceedings of the Paris Reparation Treaty of 1946 which the Inter-Allied Reparations Agency enforced. 7.181 billion dollars were initially slated for Greece. This sum rose significantly due to the growing size of the reparations seized by the Allies and Greece ultimately received compensations in the form of money and industrial goods with a worth of about 25 billion dollars.

Greece received an additional share of reparations from other Axis powers as a result of the Paris Peace Treaties from 1947.

Greece was a signatory of the London Agreement on German External Debts in 1953. The signatories agreed to postpone additional German debts until a final peace treaty with Germany would be made. In 1960, Germany concluded a treaty with the Greek government to compensate Greek victims of Nazi German terror which amounted to 115 Million German mark. These payments were explicitly marked as payments to the victims and were not supposed to be a general reparation treaty. Later Greek governments insist that this was only a down payment and further payments need to be made.

In 1990, West Germany and East Germany signed the Treaty on the Final Settlement with Respect to Germany (‘Two Plus Four Agreement’) with the former Allied countries of the United States, United Kingdom, France, and the Soviet Union. This treaty was supposed to close all open questions regarding Germany and the aftermath of WWII and paved the way for German reunification. Germany considers this treaty as the final regulation which concludes the question of open reparations which had been made in previous treaties such as the London Debt Agreement. Greece rejects this notion and on 08 February 2015, the then-Greek Prime Minister, Alexis Tsipras demanded that Germany pay the “complete” reparations to Greece. In April 2015, Greece evaluated the war reparations to be the equivalent of 278.7 billion euros (equivalent to 389 billion euros in 2022. While more German politicians and members of the Bundestag are calling on the federal government to compensate Greece financially for the effects of the Nazi occupation, the German government replied that the stipulations of the Two Plus Four treaty still stand and the issue was resolved in 1990.

Israel

West Germany paid reparations to Israel for confiscated Jewish property under Nuremberg laws, forced labour and persecution. Payments to Israel until 1987 amounted to about 14 billion dollars, equivalent to $36.5 billion in 2022.

The Netherlands

Refer to Dutch Annexation of German Territory after World War II.

The Netherlands demanded 25 billion guilders in reparations but later desired to annex a large part of German territory. They eventually annexed 69 square kilometres (27 sq mi) in 1949, almost all of which was bought back by West Germany in 1963 for 280 million German marks.

Yugoslavia

Refer to World War II reparations towards Yugoslavia.

The Socialist Federal Republic of Yugoslavia received a value of US$36 million, in industrial equipment from the dismantled German factories. West Germany also paid 8 million German marks as reparations for forced human experimentation on Yugoslav citizens.

Soviet Union

The Soviet Union received compensation under the Paris Peace Treaty in 1947 from four Axis allied powers, in addition to the large reparations paid to the Soviet Union by the Soviet Occupation Zone in Germany and the eventual German Democratic Republic in the form of machinery (entire factories were dismantled and shipped to the Soviet Union) as well as food, industrial products, and consumer goods. The USSR was owed $100 million from Italy, $300 million from Finland, $200 million from Hungary, and $300 million from Romania, in total equivalent to approximately $12 billion in 2022.

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