Germany pays last instalment of first World War reparations

AFTER 91 years, Germany closed its bank book on the first World War yesterday with the final reparations payment arising from…

AFTER 91 years, Germany closed its bank book on the first World War yesterday with the final reparations payment arising from the Treaty of Versailles.

The bill handed to Germany in 1919 for starting the war totalled 132 billion gold marks, roughly €300 billion today, and left the postwar Weimar Republic struggling for survival during the 1920s economic upheavals.

Some contemporary historians blame the treaty's punitive terms for assisting the rise of Hitler, plunging Germany into the second World War. That in turn triggered the cold war among the victorious Allies and left Europe and Germany divided.

In a neat moment of historical symmetry, the final Versailles-related payment came exactly 20 years after cold war division ended and Germany won back its sovereignty as a unified country.

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Some analysts dubbed yesterday's symbolic payment the "official end of the first World War", but that's stretching it a bit.

Actual Versailles reparations payments finished in 1983 after first being suspended by Hitler and then renegotiated in 1953. That agreement excused the divided Germany from €125 million in interest until after the country was unified, which Handelsblatt newspaper dubbed a "clever bit of negotiation that was the same as putting off payments until doomsday".

But the unification, unthinkable in 1953, happened just 37 years later and, as agreed, interest repayments began again at 3 per cent.

News of yesterday's payment was lost amid the celebrations of the anniversary of unification and the ongoing discussion over its cost: to date it is an estimated €1.7 trillion, roughly €22,000 per head.

By way of comparison, Ireland's €50 billion bank bailout will cost in the region of €11,111 per head.

The main difference is that eastern Germany has plenty to show for the payments - full social welfare parity and an entirely new infrastructure. There are motorways, high-speed train lines, gleaming rail stations and airports, new schools and hospitals.

What will be left behind after Ireland pays its €11,111 per head?