The International Monetary Fund has released a report arguing for Greek debt relief.

In the report it makes reference to the ‘economic miracle’ of Germany after World War II, in which the Federal Republic of Germany (West Germany) had a large chunk of its debt simply forgiven.

The report points out that amongst the creditors was Greece.

In 1953 Greece, along with 20 other countries, effectively wrote-off a large portion of Germany’s loans and restructured what was left. Doing so kick-started what came to be known as the German economic miracle – bringing the economy of the war-ravaged nation back from spiralling inflation and a worthless currency to the economic powerhouse it is today.

But the IMF report also took aim at the Greek government, accusing it of being slow with reforms and obstructive with negotiations.

At the time of the report’s release, Greece’s debts are higher than when they received their first bailout in 2010, a jaw-dropping 180 per cent of their annual GDP.

In 1953 the London Agreement cut the amount owed by Germany and extended the schedule for the remaining repayments at low interest rates.

Lessons had been learned from the disastrous Treaty of Versailles. This treaty was imposed on Germany after World War I. It routed the country economically with usurious interest rates and punitive bills for damages caused by the war.

These terms led to hyper-inflation and an almost total economic breakdown.

Which, in-turn, created a widespread social backlash.

The anger of German citizens against their creditors created a fertile political ground for far-right parties (like the National Socialists).

Which in-turn fuelled the sentiment leading to World War II.

After the end of this war the Allies realised their error. The London Agreement gave sweeping debt forgiveness and protection from creditors in exchange for market reforms.

West Germany was allowed to borrow money through international markets and begin rebuilding its economy.

“The same opportunity should be given to Greece that was given to Germany in 1953,” says Eric LeCompte, the executive director of debt relief organistaion Jubilee USA.

Most of Greece’s debt is held by bailout creditors (including the IMF). And while they have stridently called for reforms to restructure the debt load they appear to have done little to help bring these reforms about.

There is, however, one important distinction between post-war Germany of 1953 and Greece of today – Germany had a history of economic strength. Given economic room to move the USA and other creditors knew the exporting power of Germany would be able to lift the country out of its financial woes.

Not so for Greece.

And this is why Germany is insisting on reforms before it releases further bailout monies.

Greece’s finance minister Yanis Varoufakis argues that, unlike Germany, Greece has been expected to meet its repayments while in an economic depression.

He also points out that the longer bailout monies are withheld from Greece the stronger far-right parties (like the Nazi-inspired Golden Dawn) get.

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