‘Greatest moment of solidarity’: Tsipras reminds EU of post-WWII Germany debt cut

Greece's Prime Minister Alexis Tsipras. (Reuters / Francois Lenoir)

Greece’s Prime Minister Alexis Tsipras. (Reuters / Francois Lenoir)

Greek PM Alexis Tsipras had a hard time defending his country’s aim for a fair debt deal in front of an EU Parliament session in Strasbourg, opting to remind MEPs that even the strongest European economy was once on its knees seeking solidarity.

Facing an onslaught of
criticism from several chamber members over his inability to
produce “concrete” proposals for the country’s
creditors, as well as over his failure to implement
“necessary” reforms at home, the Prime Minister spoke
instead of solidarity.

Tsipras reminded the MEPs who were “highly rhetorical”
about the Greek government’s “inability” to find
“solidarity with Europe[an] partners” that “lending
is certainly a form of solidarity.”

MORE: Grevolt? Voices supporting Athens grow in European

As negotiations about Greece’s future continue, Athens has
officially asked for a three-year loan facility from the European
Stability Mechanism (ESM) and agreed to quick reforms, promising
to present a new plan on July 9 at the latest.

“But we want a sustainable program. We want to be in the
position to repay the loans we have accepted. And when we ask to
reduce the debt, we ask for that because we want to repay this
back. We don’t want to be forced again and again to accept new
loans to pay back the old ones,”
Tsipras said in Strasbourg.

Tsipras admitted that his government did not introduced as
reforms deep, as its creditors would love to see, but that he
says was partially because they spend most of their time on
keeping the economy afloat and negotiating with the Troika.

On June 30 Greece asked for a 2-year bailout program just hours
before the country missed a deadline to repay €1.6 billion to the
IM. That request also included a debt restructuring plan, which
the Eurogroup rejected.

Last week, Tsipras said that the only way to make Greek debt
sustainable is to cut it by 30 percent and introduce a 20-year
grace period. Now, Tsipras admits that Greece is on the verge of
bankruptcy and needs debt relief to survive, and is seeking
solidarity from EU.

“The strongest moment of
solidarity in Modern European history was in 1953 when your
country [Germany] came out of two World Wars and Europe showed at
the London Conference in 1953 the greatest possible
Tsipras said.

“Fifty percent of German debt was written off at the time.
And that was the biggest extension of solidarity in modern
European history,”
Tsipras added.

MORE: Tsipras asks for 30% debt haircut, 20yr grace period

The London Agreement on German External Debts of 1953 covering
money owed before and after WWII, reduced West German debt by 50
percent and stretched the repayment out over 30 years. This
enabled Western Germany to quickly recover after the defeat and
reemerge as a world economic power.

Reducing German debt in 1953 was made possible with the help from
Washington that poured over $13 billion at the time ( $150bn
today) into rebuilding Europe and, as a long term trade-off,
received a loyal and reliable trading partner that served as a
bulwark against the USSR. Germany received $1.4bn of that money
while Greece that suffered under German occupation got four times

More than half a century later the world’s economic landscape has
somewhat changed, but Greece apparently hopes that the 1953
scenario could be applied to keep Greece in the eurozone.

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