The September 1952 Reparations Agreement between West Germany and Israel: The Beginning of a Remarkable Friendship

Lily Gardner Feldman

Senior Fellow

Dr. Lily Gardner Feldman is a Senior Fellow at AICGS. She previously served as the Harry & Helen Gray Senior Fellow at AICGS and directed the Institute’s Society, Culture & Politics Program. She has a PhD in Political Science from MIT.

From 1978 until 1991, Dr. Gardner Feldman was a professor of political science (tenured) at Tufts University in Boston. She was also a Research Associate at Harvard University’s Center for European Studies, where she chaired the German Study Group and edited German Politics and Society; and a Research Fellow at Harvard University’s Center for International Affairs, where she chaired the Seminar on the European Community and undertook research in the University Consortium for Research on North America. From 1990 until 1995, Dr. Gardner Feldman was the first Research Director of AICGS and its Co-director in 1995. From 1995 until 1999, she was a Senior Scholar in Residence at the BMW Center for German and European Studies at Georgetown University. She returned to Johns Hopkins University in 1999.

Dr. Gardner Feldman has published widely in the U.S. and Europe on German foreign policy, German-Jewish relations, international reconciliation, non-state entities as foreign policy players, and the EU as an international actor. Her latest publications are: Germany’s Foreign Policy of Reconciliation: From Enmity to Amity, 2014; “Die Bedeutung zivilgesellschaftlicher und staatlicher Institutionen: Zur Vielfalt und Komplexität von Versöhnung,” in Corine Defrance and Ulrich Pfeil, eds., Verständigung und Versöhnung, 2016; and “The Limits and Opportunities of Reconciliation with West Germany During the Cold War: A Comparative Analysis of France, Israel, Poland and Czechoslovakia” in Hideki Kan, ed., The Transformation of the Cold War and the History Problem, 2017 (in Japanese). Her work on Germany’s foreign policy of reconciliation has led to lecture tours in Japan and South Korea.

The thorny issue of reparations for war-time crimes against humanity, material losses, despoliation, and human rights abuses has dominated the political sphere in the last several months. On the international front, both Greece and Poland have renewed demands for war-related reparations from Germany. At home, the topic of reparations for slavery, Jim Crow, and all manner of discriminatory social policies and practices has featured prominently in the 2020 presidential campaign. In his June 2014 seminal article in The Atlantic, “The Case for Reparations,” Ta-Nehisi Coates asked whether the September 1952 German-Israeli Reparations Agreement could be instructive for the American debate. The recent anniversary of the Agreement provides us with an opportunity to revisit this question and extend it to international cases. First, we must consider how unusual the agreement was for the two parties. Then we can address the issues of motivation, content, leadership, opposition, and legacy.

Uniqueness

The fact of negotiation and settlement just seven years after the end of the war and the Holocaust was remarkable given the vividness of memory and the depth of physical and psychological wounds on the part of the victims. The chief Israeli negotiator, Felix Shinnar, called the treaty “the most memorable in history.” Moshe Sharett, the Israeli foreign minister at the time, characterized the signing as a “political fact of enormous international significance, something quite unprecedented, which has taken a most momentous place in the history of Israel and of Germany.”

For Germany to this day the Reparations Agreement with Israel has remained unique as the Federal Republic has granted formal reparations to no other country.

For Germany to this day the Reparations Agreement with Israel has remained unique as the Federal Republic has granted formal reparations to no other country. Under the 1953 London Debt Agreement on Germany’s pre-war and war-time debts, it was agreed that the issue of reparations would be shelved until there was a formal peace treaty between Germany and victim countries and claimants. Israel was the only exception as the negotiations with the Jewish state on reparations pre-dated the conclusion of the London Debt Agreement. The September 1990 two-plus-four agreement between the two Germanies and the four war-time Allies, which sealed unification, was technically not a peace treaty, rendering reparations legally and politically settled and a non-issue from the German perspective.

When Greece formally asked for reparations and payment of forced loans and debts in June 2019 (informal requests began in 2015 at the height of the Greek debt crisis) to the tune of $330 billion, Germany used the two-plus-four argument to reject the claims. Germany further believes that its provision of some $54 million to Greece in 1960 also settled the issue of compensation whereas Greece insists this comprised mainly (inadequate) payments to individual citizens (mostly Jewish) and not to the state.

The 2015 election of the conservative Law and Justice party in Poland moved the question of reparations to the top of Poland’s agenda with Germany. By August 2019, following the work of a parliamentary commission, Germany’s reparations debt was assessed at more than $850 billion. Germany insists that the 1990 two-plus-four agreement made reparations moot, and besides Poland gave up its right to claims when it signed the Bierut Treaty with the German Democratic Republic in 1953. Poland retorts that the Soviet Union forced it to conclude the agreement, making it invalid. The head of Poland’s parliamentary Committee on Reparations has drawn a direct comparison with payments to Israel and individual Jewish recipients: “[There are still Polish citizens alive] who experienced the same suffering as the Jewish nation [but received nothing from Germany].”

Motivation

What propelled Israel and Germany to negotiate just seven years after the end of the Holocaust and Germany’s total defeat? Chancellor Konrad Adenauer’s memoirs reveal an important moral imperative for Germany given the fact and nature of its crimes. But Adenauer’s thinking was also highly pragmatic: he knew that Germany would not return to the “family of nations” unless it dealt with its horrific past. The United States in particular, in the person of John McCloy first as U.S. Military Governor in Germany and then as U.S. High Commissioner, insisted in July 1949 that Germany be pro-active: “The world will carefully watch the new West German state, and one of the tests by which it will be judged will be its attitude towards the Jews and how it treats them.”

Adenauer’s thinking was also highly pragmatic: he knew that Germany would not return to the “family of nations” unless it dealt with its horrific past.

In Israel, in 1951 and 1952 moral arguments concerning direct negotiations with Germany could be found among both advocates and opponents. One side argued the moral justice of claims, while opponents contended that there was a moral obligation to refuse any contacts with Germany or Germans. Israeli leaders also employed highly pragmatic reasoning: the fledging Israel economy was on the brink of collapse and there was little financial support coming from the outside world; the only place where economic help could be found was Germany.

Content

The negotiations over reparations and material losses were preceded by a major public statement on the part of Adenauer in the Bundestag on September 27, 1951. It recognized that “unspeakable crimes [against Jews] have been committed in the name of the German people” during the Third Reich and the Holocaust and offered to negotiate with Israel and representatives of world Jewry over compensation.  The negotiations were shrouded in secrecy, were conducted in a third country, and the Israeli negotiators, most of whom had a German-speaking background, refused to speak German. The German-Israeli Reparations Agreement of September 1952 was signed in a third city, Luxembourg, and involved neither handshakes nor speech. It was ratified in March 1953.

The Agreement provided Israel over a twelve-year period with 3 billion DM ($7 billion today), as goods in kind rather than cash payment, that built the infrastructure of the Israeli economy. The figure was based on the amount required by Israel to absorb 500,000 refugees (those escaping Nazism before the Holocaust and those who survived the Holocaust). Israel assessed the cost of absorption at $3,000 per immigrant. In addition, the Conference on Jewish Material Claims Against Germany, representing world Jewry, received 450 million DM for disbursement to individuals. Germany also committed itself to pass indemnification and restitution laws to cover individual victims. The Indemnification Law was passed in 1953 and amended in 1965; the Restitution Law was enacted in 1957, with a final amendment in 1969. Forty percent of the recipients of these two pieces of legislation lived in Israel. Germany uses the term “Wiedergutmachung” or “making good” to describe the composite compensation that derived from the 1952 Agreement. Israel instead uses the term “shilumim” suggesting material compensation as Germany can never make up for the “massacre and despoliation” it wrought against Jews.

Leadership

The Agreement would not have been possible without the visionary leadership of Chancellor Konrad Adenauer and Prime Minister David Ben-Gurion. They both embodied the admixture of political interest and moral necessity; they both saw the short-term and long-term implications of the Agreement; they both negotiated the choppy waters of opposition that plagued both sides and acted decisively to combat it. The personal connection they forged after the Reparations Agreement was expressed in an active correspondence between the two leaders.

Opposition

Opposition to the Reparations Agreement was fierce and entrenched in both Germany and Israel. In Germany, the rejection of negotiations was anchored in political and economic interests. A variety of CDU and CSU Bundestag members opposed the negotiation out of concern about Germany’s ability to pay for it. In the early 1950s, Germany was still deeply challenged by the structural ravages of war. These members voiced their concern by opposing the 1953 ratification of the Agreement. Politicians like Franz-Josef Strauss and Fritz Schäffer, both CSU deputies (Schäffer was also finance minister), objected to the negotiations and conclusion for fear of a threatened Arab economic boycott and loss of markets in the Middle East. The Deutsche Partei and the FDP objected to the Agreement because of its adverse effects on relations with the Arab world. In the end, the Agreement was ratified by 239 deputies with 35 votes against and 86 abstentions, but Adenauer had to rely on the SPD to secure passage. Opposition to the Agreement was also evident in public opinion polls: In a 1952 survey, 44 percent of Germans deemed the Agreement unnecessary and only 35 percent registered positive response (11 percent unqualified support plus 24 percent support if the amount of reparations were reduced).

The very idea of negotiating with Germany generated violent opposition in Israel, most notably on the occasion of the January 1952 Knesset debate on direct negotiations with the Federal Republic. Orchestrated by the Herut Party under the leadership of Menachem Begin (later Israel’s prime minister), there were fierce demonstrations outside the Knesset and clashes with the police; in the end, the army had to quell the riot. The demonstrations outside the Knesset were matched by acrimony within. Begin contended that negotiations would be a “revolting abomination” that would mean taking “blood money” from the perpetrators. Herut was not alone in opposition. The religious parties, Mapam, the General Zionists, and Maki all resisted the government’s plan with the argument that it was immoral to negotiate with Germany. Nonetheless, there was a positive outcome with 60 in favor, 51 against, 5 abstentions, and 4 absentees.

Legacy

The Agreement was the first step on a path leading to reconciliation between Germany and Israel. The way was often strewn with stones. The Agreement led to close economic ties between the two countries for after its end in 1965, Israelis would purchase German machinery and equipment to replace those provided by the Federal Republic. After the ice was broken in 1952, other bilateral “miracles” happened in the 1950s and beyond: the beginning of important relations in science and technology, in defense and intelligence, and in youth exchange. Almost seventy-five years after World War II and the Holocaust, German-Israeli relations are characterized by both countries as a deep “friendship” involving a panoply of bilateral institutions at the governmental and societal levels. However, echoing the situation in the early 1950s, public opinion in Germany is highly critical of Israel, especially its policy toward the Palestinians. Surprisingly, Israeli public opinion overwhelmingly supports relations with Germany, a development that could not have been foreseen when Israel began to negotiate with Germany in 1952.

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Per the Claims Conference, as Germany pursued unification the Conference “engaged in intensive negotiations with the German government. As a result, further compensation was promised in Article 2 of the Implementation Agreement to the German Unification Treaty of October 3, 1990, which reads: ‘The Federal Government is prepared, in continuation of the policy of the German Federal Republic, to enter into agreements with the Claims Conference for additional Fund arrangements in order to provide hardship payments to persecutees who thus far received no or only minimal compensation according to the legislative provisions of the German Federal Republic.'” The agreement was for compensation to individuals and not reparations to the Israeli government.