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Update: Germany rejects new Greek demand for war payments

Germany on Wednesday rejected a fresh demand from Greece for hundreds of billions of euros in World War I and II reparations, insisting the issue had been legally settled decades ago.

Update: Germany rejects new Greek demand for war payments
Merkel and Greek Prime Minister Alexis Tsipras during her visit to Athens in January. Photo: DPA

The leftist government of Prime Minister Alexis Tsipras had called on Berlin in a diplomatic verbal note to negotiate the issue just a month before elections where it faces the risk of defeat.

In Berlin, a foreign ministry spokesman reiterated that — while Germany stands by its moral responsibility and seeks “dialogue with Greece” and a “common culture of remembrance” — it considers the payments issue closed.

“Over 70 years after the end of the war and more than 25 years after the Two Plus Four Treaty (allowing Germany's 1990 reunification), the question of reparations has been legally and politically settled,” said the spokesman, Rainer Breul.

A Greek parliamentary committee last year determined that Germany owes Greece at least €270 billion for World War I damages and World War II looting, atrocities and a forced loan to the Nazi regime.

In addition, the Greek state accounting office has estimated that private claims for war dead and invalids could be worth a further €107 billion.

Germany has repeatedly apologised to Greece for past crimes but insists that when it comes to actual payments, the issue was finalised in 1960 in a deal with several European governments.

Berlin says all former claims were finally settled with the 1990 Two-Plus Four Agreement signed by the former West and East Germany and the post-war occupying powers the United States, Britain, France and the Soviet Union.

'Historical responsibility'

During the Greek economic crisis, which began in 2010, Germany footed a large share of the multi-billion dollar rescue bill.

SEE ALSO: Merkel says Germany recognizes responsibility for Nazi war crimes in Greece

There was tension in Athens over draconian EU austerity and bailout terms seen to be imposed by Berlin hardliners and scheduled debt repayments run beyond 2060.

Reclaiming war reparations from Berlin has been a campaign pledge by Tsipras since 2015.

However, he had put the issue on the back-burner in recent years as he worked with Germany to keep highly indebted Greece in the eurozone and to manage migration and Balkans security.

Ahead of early elections on July 7th, Tsipras trails in the polls and is currently battling to galvanise his Syriza party after losing European and local elections over the last two weeks.

The Greek parliament in April also voted through a resolution demanding the payment of reparations.

With cross-party support, the chamber had approved the resolution to call on the government “to take all the necessary diplomatic and legal steps to claim and fully satisfy all the demands of the Greek state stemming from World War I and World War II”.

German Chancellor Angela Merkel had said during a January visit to Greece that her country “recognised its historical responsibility”.

“We know how much suffering we, as Germany in the time of Nazism, have brought to Greece,” she said.

In 2014, then president Joachim Gauck had sought public forgiveness in the name of Germany from relatives of those murdered by the Nazis in the mountains of northern Greece.

 

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ECONOMY

‘Turning point’: Is Germany’s ailing economy on the road to recovery?

The German government slightly increased its 2024 growth forecast Wednesday, saying there were signs Europe's beleaguered top economy was at a "turning point" after battling through a period of weakness.

'Turning point': Is Germany's ailing economy on the road to recovery?

Output is expected to expand 0.3 percent this year, the economy ministry said, up from a prediction of 0.2 percent in February.

The slightly rosier picture comes after improvements in key indicators — from factory output to business activity — boosted hopes a recovery may be getting under way.

The German economy shrank slightly last year, hit by soaring inflation, a manufacturing slowdown and weakness in trading partners, and has acted as a major drag on the 20-nation eurozone.

But releasing its latest projections, the economy ministry said in a statement there were growing indications of a “turning point”.

“Signs of an economic upturn have increased significantly, especially in recent weeks,” Economy Minister Robert Habeck said at a press conference.

The ministry also cut its forecast for inflation this year to 2.4 percent, from a previous prediction of 2.8 percent, and sees the figure falling below two percent next year.

READ ALSO: Can Germany revive its struggling economy?

“The fall in inflation will lead to consumer demand — people have more money in their wallets again, and will spend this money,” said Habeck.

“So purchasing power is increasing, real wages are rising and this will contribute to a domestic economic recovery.”

Energy prices — which surged after Russia’s 2022 invasion of Ukraine — had also fallen and supply chain woes had eased, he added.

Several months ago there had been expectations of a strong rebound in 2024, with forecasts of growth above one percent, but these were dialled back at the start of the year as the economy continued to languish.

‘Germany has fallen behind’

But improving signs have fuelled hopes the lumbering economy — while not about to break into a sprint — may at least be getting back on its feet.

On Wednesday a closely-watched survey from the Ifo institute showed business sentiment rising for a third consecutive month in April, and more strongly than expected.

A key purchasing managers’ index survey this week showed that business activity in Germany had picked up.

And last week the central bank, the Bundesbank, forecast the economy would expand slightly in the first quarter, dodging a recession, after earlier predicting a contraction.

German Economics Minister Robert Habeck

Economics Minister Robert Habeck (Greens) presents the latest economic forecasts at a press conference in Berlin on Wednesday, April 24th. Photo: picture alliance/dpa | Michael Kappeler

Despite the economy’s improving prospects, growth of 0.3 percent is still slower than other developed economies and below past rates, and officials fret it is unlikely to pick up fast in the years ahead.

Habeck has repeatedly stressed solutions are needed for deep-rooted problems facing Germany, from an ageing population to labour shortages and a transition towards greener industries that is moving too slowly.

“Germany has fallen behind other countries in terms of competitiveness,” he said. “We still have a lot to do — we have to roll up our sleeves.”

READ ALSO: Which German companies are planning to cut jobs?

Already facing turbulence from pandemic-related supply chain woes, the German economy’s problems deepened dramatically when Russia invaded Ukraine and slashed supplies of gas, hitting the country’s crucial manufacturers hard.

While the energy shock has faded, continued weakness in trading partners such as China, widespread strikes in recent months and higher eurozone interest rates have all prolonged the pain.

The European Central Bank has signalled it could start cutting borrowing costs in June, which would boost the eurozone.

But Habeck stressed that care was still needed as, despite the expectations of imminent easing, “tight monetary policy has not yet been lifted.”

In addition, disagreements in Chancellor Olaf Scholz’s three-party ruling coalition are hindering efforts to reignite growth, critics say.

This week the pro-business FDP party, a coalition partner, faced an angry backlash from Scholz’s SPD when it presented a 12-point plan for an “economic turnaround”, including deep cuts to state benefits.

Christian Lindner, the fiscally hawkish FDP finance minister, welcomed signs of “stabilisation” in the economic forecasts but stressed that projected medium-term growth was “too low to sustainably finance our state”.

“There are no arguments for postponing the economic turnaround,” he added.

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