Reparations from World War II: That Case Is Not Yet Closed
Valentin KATASONOV | 08.05.2015 | OPINION

Reparations from World War II: That Case Is Not Yet Closed

As a rule, when Western economists offer estimates of the reparations that were delivered to the USSR after the Second World War, they more or less agree with the figures published in the 1980s by the West German government. The overwhelming majority of the reparations sent to the USSR from the countries of Eastern Europe were in the form of the products being manufactured at that time in those nations. It is worth noting that some Eastern European countries were sending reparations to the USSR while simultaneously receiving Soviet aid. The following table provides estimates taken from the work of the American economist Peter Liberman. These figures show that 85% of all the reparations deliveries from Eastern Europe to the Soviet Union came from the German Democratic Republic. 

The balance of transfers from the countries of Eastern Europe to the USSR, 1945-1960 (in millions of dollars)

Country

Reparations to the USSR

Aid from the USSR

Soviet Net Gain

 

Gross Gain

Deliveries (current industrial output)

Booty

Other*

 

 

GDR

16,849

15,063

1,333

453

62

16,787

Romania

1,413

880

333

200

58

1,355

Hungary

977

449

333

150

99

878

Poland

626

626

-

-

842

-216

Bulgaria

6

-

-

6

89

-83

Czechoslovakia

-

-

-

-

16

-16

Total

19,871

17,018

2,000

809

1,166

18,705

(*) Primarily through purchasing shares and equity on favorable terms in local companies / Soviet joint-stock companies and supplying them with raw materials on favorable terms. 

Source: Peter Liberman. Does Conquest Pay? The Exploitation of Occupied Industrial Societies. Princeton University Press, 1998, р. 129

However, estimates vary greatly in regard to how much Germany paid the Soviet Union in reparations. In his book, A Failed Empire: The Soviet Union in the Cold War from Stalin to Gorbachev (University of North Carolina Press, 2007), Vladislav Zubok, a history professor at Temple University (USA), claims, “By 1953 the GDR had paid more than 4 billion U.S. dollars in reparations but still owed the Soviet Union and Poland 2.7 billion dollars, or annual budget expenses of more than 211 million dollars.” From these numbers, one can deduce that the total reparations paid during the eight-year period of 1953-1960 amounted to one billion, 688 million dollars, which can be rounded to $1.7 billion. And from the end of the war until 1960, inclusive, the Soviet Union received $5.7 billion in reparations, although part of those proceeds was transferred to Poland. That total is only one-third of the figure cited by Peter Liberman. 

All of Germany was to pay reparations to the Soviet Union (and via the USSR to Poland). However, in 1946 shipments of reparations to the East from the western occupation sectors came to a halt because of obstruction by the Anglo-American allies. After that, the entire burden of reparations fell to East Germany, which was under the control of the Soviet Union. A study by the German historian Christoph Klessmann (1) claims that by 1950 East Germany had paid a total of $3.66 billion in reparations (almost entirely in kind). According to this data, by the beginning of 1950 the GDR’s outstanding reparations debt came to $6.34 billion dollars. In May 1952, at the request of Otto Grotewohl, Stalin agreed to reduce the remaining balance by half, i.e., to $3.17 billion. Thus, the GDR’s total reparations debt was reduced from $10 billion to $6.83 billion, and the country was given an extra 15 years to repay it. I.e., when calculated annually, that works out to the $211 million Vladislav Zubok mentions. The terms of that agreement were met before the end of 1952, and in 1953 Moscow decided to suspend the reparations payments (or to be more accurate - the reparations deliveries). Between 1945 and 1952, East Germany repaid $4,080.8 million of her reparations commitments. In fact, the reparations paid by the GDR were equal to 40.8% of the original amount of her reparations commitments and 59.7% of the adjusted amount. 

And how do the reparations transfers to the Soviet Union compare to the reparations received by the Western countries? The statistics on the reparations that went to the West are extremely ambiguous. In the first few years after the war, the USA, Great Britain, and France focused on exporting coal and coke out of their zones of occupation. In addition, they worked assiduously to chop down forests and export the timber. It is worth noting that the allies refused to allow the Germans to credit most of that wood and coal toward their outstanding reparations balance. Equipment worth three billion marks (about $1.2 billion) was dismantled and exported from the western zones. In addition, the US, Great Britain, and France seized a total of 277 tons of German gold (worth almost $300 million), as well as sea and river vessels valued at $200 million. The Western allies assumed control of Germany’s foreign cash holdings of 8-10 billion marks ($3.2-4.0 billion). The value of the German patents and technical documentation confiscated by the United States and Great Britain has been estimated at approximately $5 billion. It is difficult to assess the worth of all the German reparations received by the West, because much of it (especially patents and technical documentation) was confiscated without being officially registered or tallied, and was never included in the reparations statistics. 

The claim that Germany has paid in full for the damages that the Soviet Union suffered during the Great Patriotic War is, to put it mildly, somewhat dubious. Of course, if one compares it to the number Stalin named at the Yalta Conference as his suggested price tag for the reparations the Soviet Union should receive ($10 billion), then Germany has even overpaid. But the total reparations bill owed by the countries of Eastern Europe to the Soviet Union turned out to be twice as much as Stalin requested in early 1945. However, if one compares the actual reparations to the estimates made by the Extraordinary State Commission of the Soviet Union to assess the damage caused by the war, and then looks at the data from the West German Ministry of Finance, it turns out that the reparations paid by Germany offset only 12.3% of the total direct damages and 4.4% of all damages that were inflicted on the Soviet Union by Nazi Germany and her allies during the years of war. 

Let us not forget that the price for reparations quoted by Stalin at the Yalta Conference - $10 billion - was not an official number. The specific terms for the payment of WWII reparations by Germany and her allies were the subject of fairly lengthy discussions during the meetings of the Permanent Council of Foreign Ministers of the major victorious countries (which functioned until the end of the 1940s). As we have noted, Germany’s total bill for reparations owed was never established. Two obvious conclusions can be drawn in regard to German reparations to the Soviet Union: 1) The commitments for the reparations deliveries from Germany’s western occupation sectors to the USSR were never honored. In 1946, shipments to the East of equipment and manufactured products from these sectors were suspended at the initiative of the US and Great Britain, which unleashed the Cold War. 2) Fewer than half of the original commitments to send reparations from the eastern occupation sector (and from the GDR after 1949) were met. The GDR did not fully honor her reparations commitments even after they were adjusted in 1950. 

But a much clearer picture emerges when looking at the reparations commitments that were met by the countries that were German allies in the Second World War. The victorious countries held a conference in Paris in 1946, where they set the terms of their peace treaties with five states that were allied with Nazi Germany (Italy, Hungary, Bulgaria, Romania, and Finland). The victorious countries signed a great many bilateral peace treaties with those five states. Those treaties are collectively known as the Paris Peace Treaties, and they all went into effect simultaneously on Sept.15, 1947. Each bilateral treaty contained articles (sections) on reparations. For example, the bilateral treaty between the USSR and Finland stipulated that the latter must compensate the Soviet Union for the harm that had been inflicted upon her ($300 million), and return valuables that had been taken from Soviet territory. The Soviet-Italian treaty required Italy to pay the USSR reparations of $100 million.

It should be noted that only Finland fully honored all her reparations commitments to the victorious countries. Experts claim that Italy has not paid her reparations in full. Hungary, Romania, and Bulgaria became members of the Council for Mutual Economic Assistance (CMEA) in 1949, and Moscow withdrew its reparations claims against them. Reparations from the era of the Second World War have not reemerged as a subject of discussion since 1975 when the Helsinki Accords were signed. However, in the late twentieth century the West unilaterally shattered the Yalta-Potsdam system of international relations and circumvented the precepts that had been formalized in the Helsinki Accords in 1975. With this in mind, it makes sense to refresh our collective memory regarding the history of German reparations and resubmit the bill that resulted from that war, which Germany has never paid in full. 

(3) Klessmann C. Die doppelte Staatsgruendung. Deutsche Geschichte 1945-1955. Bonn, 1986.

Tags: Eastern Europe  Germany  Russia  UK  US  USSR 

RELATED ARTICLES