The World Unreported

When Germany surrendered in 1945 the Allies were desperate to avoid a repeat of the mistakes that had been made at the end of First World War. The 1919 Treaty of Versailles had harshly punished Germany and forced it to pay huge reparations to the victorious powers. Those reparations payments were political fuel for the Nazis, and by 1939 Europe was at war again.

At the end of the Second World War the US believed that a strong West Germany could help to prevent the USSR from dominating Europe. As such, Washington propped up the German economic recovery, and by 1957 the German economy was performing better than Britain’s.

At the same time, another country born out of the trauma of the Second World War was struggling to find its feet. Israel had gained its independence in 1948, and was established as a homeland for the Jewish peoples of the world in the wake of their attempted destruction at the hands of the Nazis. Establishing an independent Jewish state was an expensive process, as hundreds of thousands of immigrants from around the world had to be resettled.

By 1952, housing shortages meant that 200,000 immigrants were living in tent cities in the new state, and supply shortages led to austerity and rationing. Israel had also been physically fighting for its existence since 1947. What was initially a civil conflict between Arab and Jewish forces in the British Mandate of Palestine exploded into a wider conflict following Israeli independence in 1948. 

An association of Arab states including Egypt, Transjordan, and Syria entered Jewish settlements and attacked Israeli forces, leading to ten months of intense, and expensive, fighting. This meant that while West Germany was enjoying an economic “miracle” largely thanks to the United States, the fledgling Israeli state was left to fend for itself, and was struggling, badly.

This fuelled resentment among Israelis. In 1952, Israel’s first Prime Minister David Ben-Gurion began discussing reparations. His argument was that Jewish wealth should be recovered so that “the murderers do not become the heirs as well.” That money could then be used to finance the integration of Holocaust survivors into Israel. The Allies had been under pressure to pursue reparations for the Jewish community as early as September 1945. The Jewish Agency had appealed for monetary compensation for “mass murder, human suffering, the annihaliation of spiritual, intellectual, and creative forcesm which are without parallel in the history of mankind.”

There were two main stumbling blocks: The Allies wanted Germany to get back onto its feet, and many Israelis were fiercely opposed to receiving what they considered “blood money” for the death of six million of their kin. Menachem Begin, leader of the Herut Party and future PM of Israel, led the opposition to the reparations push. Violent anti-reparations protests broke out in Jerusalem, and Israel’s parliament (the Knesset) building was attacked.

In the end, the Knesset narrowly passed a resolution to enter negotiations with West Germany by 61 votes to 50.  Israel’s initial claim was $1.5bn, based on the cost of integrating and rehabilitating European Jews into Israel. West German Chancellor Konrad Andenaur, who had himself been imprisoned by the Nazis, publicly supported the reparations push in 1951.

In September 1952, Israel and West Germany signed a reparations agreement. Israel’s claim had been reduced to $1bn, with the remainder to be claimed at a later date from East Germany. West Germany agreed to pay its balance over a period of 14 years, mostly in the form of materials, heavy industry and infrastructure. The agreement would underpin 12-14 percent of the Israeli’s import industry over the coming years – a much-needed boost for the struggling state.

In subsequent decades Israelis became generally more comfortable with the idea of receiving reparations, and Germany continued to struggle with its collective guilt. In 1988 West Germany agreed to pay Holocaust survivors $290 a month for the rest of their lives. In 1990, East Germany admitted its role in crimes against humanity during WWII.

At the turn of the millennium, German industry’s role in the Holocaust came under increasing scrutiny. Companies such as Siemens, VW, Opel, BMW and Deutsche Bank were all sued for cooperating with Nazi Germany. The German Government sought dismissal of all such lawsuits by compensating all those that were involved. $5bn was set aside, and 140,000 Jewish survivors received between $2,500 and $7,500.

The payment of reparations by Germany to Israel was more of a moral dilemma than a legal one. Israel’s case would’ve stood up in any court, and Germany was keen to make amends for its crimes under Hitler. But can monetary compensation really make amends for such heinous crimes? Many Israelis didn’t think so, and there is a good chance that the Israeli Government wouldn’t have gone after that “blood money” had the state not been in such a dire economic predicament in its fledgling years.

Today, Germany and Israel have a strong relationship. Germans, generally, are well educated about the crimes of the Nazis, and there is a strong sense of national guilt over the Holocaust. The Israeli Air Force trained with the Luftwaffe earlier this year in a symbolic exercise over Germany.