Why the 1953 cancellation of German debt wont be reproduced for Greece and Developing Countries
Date Written: 15/03/2019
Year Published: 2019
Resource Type: Article
Cx Number: CX23621
Detailed look at the differences between cancellation of Germany's debt and that of developing countries today.
From 27 February 1953 West Germany benefited from the cancellation of most of its debt. After this cancellation, which made it possible for German economy to recover its position as economic leader on the European continent, no other country has benefited from such favorable treatment. It is essential to understand why and how this cancellation occurred. In a nutshell: West Germany's major creditors wanted its economy to be revived for it to be a stable element in the struggle between NATO countries and the Eastern Bloc.
If we compare the treatment granted to West Germany after the war and what is imposed on Developing Countries or on Greece today, we cannot but notice a discrepancy in policies adopted by big powers....
It is enlightening to compare the way post-war West Germany was treated with the treatment of developing countries. Although bruised by war, Germany was economically stronger than most developing countries today. Yet it received in 1953 what is currently denied to developing countries....
Germany was allowed not to spend more than 5% of its export revenues to pay back its debt.
In 2017 Developing Countries had to spend an average of 14% of their export revenues on debt repayment.