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News : EU Economy Last Updated: Mar 26, 2015 - 7:31 AM


Euro would survive Greek exit: Tsipras to visit Berlin/ Moscow
By Michael Hennigan, Finfacts founder and editor
Mar 18, 2015 - 7:23 AM

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German army officers at the Acropolis of Athens, May 1941 Photo: Bundesarchiv

A Eurozone finance minister has suggested that there are sufficient safeguards in place for the euro to survive a Greek exit. Meanwhile Alexis Tsipras, Greece's prime minister, will pay an official visit to Moscow on April 8 according to a report in Kathimerini, the Athens newspaper on Tuesday. It follows an announcement on Monday that the PM has accepted an invitation from Angela Merkel, German chancellor, to visit Berlin on March 23.

At a time of tense Greco-German relations the Financial Times reported Monday that Johan Van Overtveldt, Belgian finance minister, said the currency bloc had sufficient safeguards in place to endure a Greek departure, adding he believed other ministers shared this view.

“What we have now in place would certainly allow us to survive that,” Van Overtveldt said. “Nobody talks too much about that very openly, but my feeling is [the view] is quite present around the table.”

Greece has to meet reform conditions before it can get access to the remaining €7.2bn in its bailout programme and last week the Greek government backed demands for German war reparations which have got support from some members of the SPD, the junior partner in the German governing coalition.

Meanwhile a planned May meeting between Alexis Tsipras and Vladimir Putin, Russian president, has been brought forward by a month in an apparent effort to put pressure on Eurozone governments.

The Greek government says it wishes to see Greece remain part of the euro system and it does not appear to have plans to handle a sudden exit - nevertheless, this remains a possibility.

“My feeling — and I can only talk about my feeling — [is] they still feel that they have some leeway in putting on pressure. They really think that they can still play the fear game,” Johan Van Overtveldt, who is author a book, 'The End of the Euro.'

"They won't get their debts paid by conjuring up German obligations from World War II," Wolfgang Schäuble, German finance minister, said in a speech on Monday night.

Schäuble added that trust in the Greek government had been "destroyed," and said Athens wasn't being honest with its citizens by placing the blame for the country's debt problems on Brussels, Berlin, and the rest of Europe.

War reparations

Deutsche Welle, the German broadcaster, reports that in an interview with German news magazine Der Spiegel published Tuesday, leading politicians from the junior partner in Germany's governing coalition have lent their support to the idea that Germany should pay reparations from World War II to Greece.

"It's about recognizing the fact that we committed a serious injustice in Greece," Gesine Schwan, chairwoman of the Social Democratic Party (SPD) values committee, told Spiegel.

The damages in question date back more than 70 years. Under the German occupation in WWII, thousands of Greeks were murdered, infrastructure was destroyed, and Greece's central bank was forced into giving Germany a loan. Germany never reimbursed individual claims.

DW says that the German government has repeatedly pointed out that 115m deutschmarks were paid out under an agreement in 1960 with several European governments. Furthermore, Berlin argues there was an extensive system of compensatory measures in place that Greece also benefitted from.

Germany has stood firm in its belief that any outstanding claims to war reparations were settled in the "Two plus Four Treaty," agreed upon between Britain, France, the former Soviet Union, and the United States as Germany moved toward reunification.

The SPD's deputy chair Ralf Stegner said "we should hold a discussion about reparations," adding that there were decades-old human rights issues to be cleared up and "we shouldn't connect the matter of reparations with the current debate about the euro crisis."

The opposition Greens' parliamentary leader Anton Hofreiter joined the Left party, telling Spiegel "Germany can't just sweep the demands of Greece off the table. Morally and legally, this chapter is far from complete."

An estimated 250,000 died during the Nazi occupation and the FT says Greek politicians have aired three separate demands. The first is a general claim to wartime reparations they have put at €160bn. There is also a €28m claim arising from the massacre of 214 people in 1944 in the village of Distomo, central Greece, for which the Greek high court in 2000 found Germany responsible. Berlin denies liability, citing sovereign immunity.

The Greek government is also seeking the repayment of a compulsory 476m reichsmark loan the Nazis extracted from the Greek central bank in 1943. The FT says Greek estimates put its current value at €11bn, plus interest, which could raise the total to €50bn and beyond. Greek lawyers regard this claim as particularly strong because it is well documented and even the Nazis made moves to start repayments towards the end of the war.

A Bundestag report on the forced loan said that doubts remained regarding the claims of the German government that the issue had been resolved.

Sylvie Goulard, the French member of the European Parliament, wrote last month here on why opening up the issue of war reparations is a bad idea.

Europe's Worst Exporter: Poor export performance of Greece

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