The Reparations Problem Again

Abstract

The mishandled problem of reparations and inter-Allied war debts looms large in customary analyses of the wreckage of the European peace settlement after World War I. The seminal source of trouble then was the insatiable appetite of the Versailles victors for “spoils,” joined by the Shylock American insistence on repayment of war debts.After World War II the war debt problem was gently erased, but reparations proved even more troublesome. Although those powers which a generation before had moulded the Versailles Treaty were, under American leadership, comparatively tame in their reparations demands, the Soviets were not. This is readily understandable, since the German armies spent their destructive fury on Eastern and not on Western lands. The Soviet loss of life and resources in repelling German armies from the heart of Russia was truly colossal. The war wiped out hard-won advances (factories, inventories, power plants, residences, tractors) achieved since 1917 under lash and by dint of incredible austerity.1 The Soviet economy was planned and, with its insistent commodity needs, could absorb immense quantities of manufactured goods. Despite bomb-smashed German city centres and residences, German manpower remained, as well as powerful industrial facilities which operated up to the closing months of the war. Any trained observer would expect the Soviets to demand maximum one-time drainage and continuing arrangements whereby some German industrial facilities would be worked by some German labour to produce goods and services for Eastern benefit. This was precisely the policy later carried out within the Soviet Zone of Germany which, if it was not “milked dry,” was converted into a massive pumping station for current product reparations.2 A less self-regarding Soviet policy toward the leading “ex-enemy” country would have been astonishing in view of the substantive drainage from “liberated” satellite areas.