Agreement on German External Debts
The London Agreement on German External Debts, also known as the London Debt Agreement (German: Londoner Schuldenabkommen), was a debt relief treaty between the Federal Republic of Germany and creditor nations.
The London Debt Agreement covered a number of different types of German debt from before and after the Second World War. Some of them arose directly out of the efforts to finance the reparations system, while others reflect extensive lending, mostly by U.S. investors to German firms and governments.
The parties that were involved besides West Germany included Belgium, Canada, Denmark, France, Great Britain, Greece, Iran, Ireland, Italy, Liechtenstein, Luxembourg, Norway, Spain, Sweden, Switzerland, South Africa, the United States, and Yugoslavia and others. The states of the Eastern Bloc were not involved. The negotiations lasted from February 27 to August 8, 1953.
The total under negotiation was 16 billion marks of debts resulting from the Treaty of Versailles of World War I which had defaulted in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the U.S., France and Britain. Another 16 billion marks represented postwar loans by the U.S. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.
An important term of the agreement was that repayments were only due while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings. This gave Germany’s creditors a powerful incentive to import German goods, assisting reconstruction.
The agreement significantly contributed to the growth of the post-war German economy and reemergence of Germany as a world economic power. It allowed Germany to enter international economic institutions such as the World Bank, International Monetary Fund and World Trade Organization.
Some of the agreement included debts to be paid after reunification of Germany. Over decades it seemed unlikely to transpire, but in 1990 there were another 239.4 million Deutschmark of unpaid coupons revived. On 3 October 2010 the last payment was made with 69.9 million euro. This is considered to be the last payment of Germany on all known debts resulting from both world wars.
- German reparations for World War II
- Marshall Plan
- World War I reparations
- Dawes Plan, 1924–29
- Young Plan, 1930–32
- Osmańczyk, Edmund Jan; Anthony Mango (2003). Encyclopedia of the United Nations and International Agreements: G to M (2003 ed.). Taylor & Francis. ISBN 978-0-415-93922-5.
- Timothy W. Guinnane, "Financial Vergangenheitsbewältigung: The 1953 London Debt Agreement" (Economic Growth Center, Yale University, 2004) online
- Osmańczyk 2003, p. 797
- Timothy W. Guinnane, "Financial Vergangenheitsbewältigung: The 1953 London Debt Agreement" (Economic Growth Center, Yale University, 2004) pp 17. 20, 21, 27-8, 30 online
- Heather Stewart (18 January 2015). "A new idea steals across Europe - should Greece's debt be forgiven?". The Observer. Retrieved 25 January 2015.
- stern.de of 3. of October 2010.
- Text of the treaty
- Éric Toussaint, The Marshall Plan and the Debt Agreement on German debt
- Timothy W. Guinnane, Financial Vergangenheitsbewältigung: The 1953 London Debt Agreement