​Payback time? Greek PM seeks reparations over Nazi occupation & war-time loan

Greece's Prime Minister Alexis Tsipras (Reuters/Remo Casilli)
Prime Minister Alexis Tsipras, referring to Nazi Germany’s four-year occupation of Greece and a forced war-time loan during World War II that saddled the Greek economy in huge debt, wants Berlin to pay reparations.

Tsipras, leader of the anti-austerity Syriza party, said Athens had a “historical obligation” to claim from Germany billions of euros in reparations for the physical and financial destruction committed during Nazi Germany’s occupation of Greece.

Beyond the historical obligation, he said Greece had "a moral obligation to our people, to history, to all European peoples who fought and gave their blood against Nazism," he said in a keynote address to parliament on Sunday.

READ MORE: Euro hits 11yr low after ‘anti-austerity’ Syriza election win

The Greek leader’s comments have resonated far beyond Athens as they place the issue of his country’s recent massive bailout at the behest of international creditors in a whole new light.

After Nazi forces took control of Greece in 1941, the stage was set for one of the bloodiest confrontations of World War II as Greek resistance fighters put up a fierce struggle to end the occupation.They were powerless, however, to prevent the Third Reich from extracting an interest-free 476 million Reichsmarks loan from the Greek central bank, which devastated the Greek economy.

A 2012 report by the Bundestag, Germany’s lower house of parliament, estimated the value of the loan at US$8.25 billion. Greece, however, puts the value of the loan at €11 billion, the To Vima newspaper reported in January, citing confidential financial documents.

Tsipras claims Germany owes Greece around €162 billion ($183 billion) - about half the country's debt load, which is estimated at over €315 billion.

The figure is said to cover €108 billion for infrastructure damage wrought by the occupying Nazi forces between 1941 and the end of the war, and €54 billion as compensation for the unpaid loan.

Berlin has vehemently refused to consider the payment of any reparations. "Nearly 70 years after the end of World War II, the question of reparations has lost legitimacy," a German finance ministry spokesman declared recently.

German Vice Chancellor and Economy Minister Sigmar Gabriel also denies any opportunity of making payments to Greece, as the treaty signed in 1990 did not outline any additional payments in the future.

"The probability is zero,” he said.

However, Greece does not agree and says the payments must be discussed with united Germany – not with the nation as it was in 1990.

On 25 January 2015, Tsipras led Syriza to a stunning victory, attracting 36 percent of the vote and 149 out of the 300 seats in the parliament. Now, the energetic 40-year-old prime minister aims to make good on his pledge to eliminate unpopular austerity measures demanded by the global financial lenders in return for massive loan bailouts.

At the same time, the new Greek government said it would not accept the latest tranche of the IMF bailout valued at €7 billion.

On May 1, 2010, former Prime Minister George Papandreou announced a fourth round of austerity measures, which included steeper public sector pay cuts, pension reductions and new taxes on corporate profits. These measures prompted a nationwide strike on 5 May, which led to the death of three activists as the demonstrations turned violent.

READ MORE: Greeks take to the streets to support government’s anti-austerity stance

Understanding that austerity measures cannot resolve Greece’s problems, Syriza hopes to refill government coffers by issuing treasury bills.

"We only have one commitment: to serve the interests of our people, the good of society," Tsipras said, while emphasizing the "irreversible decision" of his government to carry out its campaign promises.