1 July 2015

Germany has no right to lecture Greece on debt transgression


Germany – industrial powerhouse, cultural behemoth – is terrific and there is no need to reiterate all the reasons why here. There is a problem, however, with the country’s attitude to the debts of others. To hear German policy-makers and voters now, one would imagine that the stern teutonic attitude towards spendthrift Greece was rooted in Germany always solemnly paying its debts. Not so.

In an interview with Der Spiegel, on the German news organisation’s English language site, the historian Albrecht Ritschl, Professor of Economic History at the London School of Economics, sets the record straight. Germany, he explains, was the biggest debt transgressor of the 20th century. That being the case it has no right to lecture the Greeks, or its leaders should at least show some humility and be prepared to compromise when they criticise Greece.

“Germany is king when it comes to debt. Calculated based on the amount of losses compared to economic performance, Germany was the biggest debt transgressor of the 20th century.”

The collapse of the Weimar debt pyramid had terrible consequences, but after the Second World War America spent a lot of money ensuring that there was not a repeat while victors such as Britain were crippled by the costs of war.

Ritschl says: “After the first default during the 1930s, the US gave Germany a “haircut” in 1953, reducing its debt problem to practically nothing. Germany has been in a very good position ever since, even as other Europeans were forced to endure the burdens of World War II and the consequences of the German occupation. Germany even had a period of non-payment in 1990.”

The anti-Greek sentiment in German media outlets is highly dangerous, says Ritschl.

“We are sitting in a glass house: Germany’s resurgence has only been possible through waiving extensive debt payments and stopping reparations to its World War II victims.”

You can read the whole thing here. Fascinating stuff.

Iain Martin is Editor of CapX.