East Germany’s reparation debt must be demanded

It is high time for Prime Minister Benjamin Netanyahu to explain why he has not demanded repayment of this debt by the German government in the past, and why he is not demanding it today.

By AHARON MOR
March 27, 2019 22:41
4 minute read.
East Germany’s reparation debt must be demanded

German Chancellor Angela Merkel gestures during a news conference with Israeli Prime Minister Benjamin Netanyahu in Berlin. (photo credit: AXEL SCHMIDT/REUTERS)

 
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Amid renewed debate on Case 3000, the so-called “Submarines Affair,” the debt of the former East Germany to Israel has been forgotten. Reparations pertaining to the agreement have not been repaid to this very day. This debt, known as the “missing one-third,” is currently estimated at $19 billion. It is an obligation the German government is required by international law to pay to Israel. By the repayment of this debt, Israel could finance the cost of the submarines and ships from Germany, thus saving Israeli taxpayers about $2 billion. In addition, that money could help finance planned increases in the defense budget and assist needy Holocaust survivors for the remainder of their lives.

It is high time for Prime Minister Benjamin Netanyahu to explain why he has not demanded repayment of this debt by the German government in the past, and why he is not demanding it today.

Not only has the prime minister not referred to my request on this matter, but none of the following have referred to it: members of the policy and security cabinet, the National Security Council, the director-general of the Finance Ministry, the Foreign Affairs and Defense Committee of the Knesset, the attorney-general and the state comptroller. Perhaps they are terrified of Case 3000.

But the moral imperative of Holocaust reparations is much more significant, and requires that repayment of Germany’s debt to Israel be demanded at once. It is inconceivable that Israel would give up on this huge German debt, and no excuse to give it up seems acceptable.

The special cabinet for policy and security was presented with a proposal that funding for planned additions to the defense budget for the next 10 years would come from a German grant (“The Color of Money,” KAN Reshet Bet Radio, August 21, 2018). Such a grant is an extra-budgetary source and is, of course, preferable to cutting billions of shekels from social budgets and infrastructure in order to finance the increase, or to increasing Israel’s debt, as the Bank of Israel suspects will occur.

The possible source of funding is from the former East Germany’s part of the reparations agreement, which has not yet been paid to Israel. The value of the missing third is now estimated to be more than NIS 60 billion. Since additions to the defense budget are intended for Israel’s defense, it corresponds to Germany’s commitment to Israel’s security and survival. The distribution of the planned addition to the defense budget over 10 years corresponds to the outline of the reparations agreement, which was also divided over 10 years.

SINCE THE reparations agreement was to be paid in German goods, and the planned addition to the defense budget is to a great degree for non-German products, this would require adjustment. One can consider facilitating Germany’s buy-back commitments that have not yet taken place.


The missing one-third part of the East German reparations agreement was estimated in 1952 at $417 million. In 2018, this figure was estimated at $19 billion, updated according to the interest of 30-year US government bonds. The new estimate was made by American economist Sidney Zabludoff, a former employee of the US Treasury Department, the White House and the CIA.

Subject to the consent of the German government, this money could be used to finance measures to protect Israel, to pay for German goods (as was done in the Reparations Agreement), for the benefit of Holocaust survivors and other needs.

The original Reparations Agreement was signed in 1952 with the West German government, which refused to pay East Germany’s obligation. Therefore, the agreement was set at only two-thirds of the total amount, according to the ratio of the populations and territory of the two German states at the time. In the 1950s, after the signing of the reparations agreement, the Israeli Foreign Ministry turned to East Germany on the issue and was refused. The USSR was also approached but did not respond at all.

In January 1990, after German reunification, a preliminary search for the missing third was made by then-foreign minister Moshe Arens. He approached German foreign minister Dietrich Genscher, who responded by saying that if the Israeli government approached the German government, the German government would discuss the matter. In the end, the issue was never discussed by the governments. Nonetheless, the Israeli government has never given up on the missing one-third – and as far as is known, has not received any other value in its place.

United Germany took upon itself all the obligations of East Germany, including the missing one-third. Therefore, under international law, Germany is now obliged to pay Israel that missing one-third. There is precedent for Germany providing Israel with free goods, such as when it supplied it with the first two submarines in the wake of the first Gulf War. As noted before, the German foreign minister agreed to examine the missing one-third. Journalist Eldad Beck claims in The Chancellor (Yedioth Books, 2017) that until now, Germany has complied with all of Israel’s requests. In this situation, it would be strange if the cabinet ignored the proposal to demand the missing one-third without first examining it with the German government.

The writer was an adviser in the Prime Minister’s Office for restitution of Jewish property, director at the International Relations Department of the Finance Ministry, and senior director of the Restitution of Rights and Jewish Property Department of the Senior Citizens Ministry (now the Social Equality Ministry).

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