Germany will finally pay off the last of its debts from World War One this Sunday, on the 20th anniversary of German reunification. Germany’s federal office for central services and unresolved property issues (BADV) said on Tuesday a bond issued to pay remaining debts stemming from the conflict would mature on Oct. 3, two decades after West and East Germany united. The final 70 million euro ($94 million) installment will close a 92-year chapter that saw Germany plunge into totalitarian dictatorship and trigger a second world war that ended with its division during four decades of Cold War.
“On Sunday the last bill is due and the First World War finally, financially at least, terminates for Germany,” the country’s biggest-selling newspaper, Bild, said on Tuesday.
The Treaty of Versailles, a peace settlement signed by Germany and the Allies in 1919, made Germany solely responsible for World War One, requiring it to pay reparations for the damage done to the Allied countries and peoples between 1914 and 1918.
The sum was eventually fixed in 1921 at some 6.6 billion pounds ($10.4 billion), a vast sum for the time, which many historians argue was beyond Germany’s ability to pay.
“Germany will not be able to formulate correct policy if it cannot finance itself,” warned British economist John Maynard Keynes, who represented the British Treasury at Versailles and resigned in 1919 over the scale of reparations demanded.
Efforts were made to reduce the strain, notably with the Dawes Plan in 1924 and the Young Plan in 1929, during which Berlin was granted loans to meet its reparation payments. But the heavy burden nevertheless unleashed massive resentment in Germany and helped to fuel the rise of Adolf Hitler and his Nazi party.
Germany stopped paying the reparations under the Nazis, and the Western Allies — the United States, France and Britain — reached a new agreement on Germany’s foreign debts in 1953.
The London agreement stipulated that some debts were not to be paid off until Germany reunified, the BADV said.
[Source http://www.msnbc.msn.com ]