The Case for Greece When It Forgave Germany’s Debt. Is Greece the Same as Germany Post-WWII?

• The Case for Greece When It Forgave Germany’s Debt. Is Greece the Same as Germany Post-WWII?
  by PAN PYLAS and DAVID MCHUGH, Associated Press, via http://www.usnews.com/  
  Germany resists debt relief for Greece, but benefited from such a plan after WWII.
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  LONDON (AP) — Forgiving debt, if done right, can get an economy back on its feet. Though Germany is resisting Greece’s pleas for some relief, it should know better than most what it can achieve. After the hell of World War II, the Federal Republic of Germany — more commonly known as West Germany — got massive help from its former foes.
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  Among its creditors then? Greece. The 1953 agreement, in which Greece and about 20 other countries effectively wrote off a large chunk of Germany’s loans and restructured the rest, is a landmark case that shows how effective debt relief can be. It helped spark what became known as the German economic miracle.
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  So it’s perhaps ironic that Germany is now among the countries resisting Greece’s requests to have part of its debts written off. Greek Finance Minister Yanis Varoufakis claims debt relief is the key issue that held up a deal with creditors last week and says he’d rather cut off his arm than sign a deal that does not tackle the country’s borrowings.
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  In a closely-watched report on Thursday, the International Monetary Fund backed the call to make Greece’s debt manageable. Despite years of budget cuts, Greece’s debt burden is higher than when its bailout began in 2010 — over 300 billion euros ($332 billion), or 180 percent of annual GDP — because the economy has shrunk by a quarter.
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  Here’s a look at the case when Greece helped Germany and the lessons it might hold for today.
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  FORGIVE US OUR DEBTS
  The 1953 deal, hammered out over months, was generous to West Germany. It cut the amount it owed, extended the repayment schedule and granted low interest rates. And crucially, it linked West Germany’s debt repayment schedule to its ability to pay — tying repayments to the trade surplus it was running and expected to run. That created an incentive for trading partners to buy German goods.
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