The forced occupation loan

by Epaminondas Marias

24 Jan 2011

THE ISSUE of the German wartime compensation has now been put on the table. As we have already analysed in the Athens News, on 13 December 2010 the Greek government officially accepted in parliament that the relevant compensation claims of the Greek state involving Germany amount to a total of 162 billion euros without interest, 108bn of which concerns war reparations and 54bn the forced occupation loan.

The forced occupation loan was imposed by the occupying German and Italian forces on Greece under the terms of a unilateral decision which they took in Rome on 14 March 1942, and which was subsequently notified to the collaborationist government in Athens.

Under the laws of war in force at the time, in particular the 1907 Hague Convention, an occupied country had to bear the costs of its occupation. So the Germans and Italians forced the collaborationist government to pay them 1.5bn drachmas per month in occupation costs.

However, the Germans, in order to fund Rommel’s war operations in North Africa, imposed on Greece a forced occupation loan. 

Accordingly, the Bank of Greece was obliged to open an interest-free loan account in drachmas for each of the occupying powers. Germany stated that it would repay the loan later. The original, forced occupation loan agreement was amended later and was also signed by the collaborationist Greek regime.

The amount of the loan received by the German side during the occupation was estimated in 1947 to amount to 135.8m dollars. 

It is worth noting that the German side already paid, during the occupation, two loan repayment instalments. The subsequent refusal to pay the loan instalments has since converted the loan into an interest-bearing one due to arrears. Finally, it should be noted that after the war Italy acknowledged its debt resulting from the occupation loan and proceeded to a settlement with Greece for its repayment in conjunction with the payment of related war reparations.

The issue of the occupation loan was raised by the Greek side in 1955 when it was noted to the Germans that the occupation loan was still due since it was comprised of “normal credits that should be paid”. Then the question of the occupation loan was informally raised by Greece in 1964 through professor Angelos Angelopoulos.

However, the issue of the occupation loan was formally raised for the first time by Andreas Papandreou, then a member of parliament, when he visited Bonn in 1965.

This is attested by the report submitted by Papandreou on 23 February 1965 to then prime minister George Papandreou, in which, inter alia, he referred to the occupation loan.

Then, on 24 February 1965, Andreas Papandreou submitted to the director-general of the ministry of finance of West Germany, a Mr Kaizer, a relevant statement regarding the loans granted, during the war, by the Bank of Greece to the German occupation authorities, in conjunction with the application for a longterm development loan to Greece.

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