War reparations

War reparations are payments intended to cover damage or injury inflicted during a war. Generally, the term war reparations refers to money or goods changing hands, rather than such property transfers as the annexation of land.

History
Making the defeated party pay a war indemnity is a common practice with a long history.

In ancient times, the imposition of reparations on a defeated enemy was often the beginning of forcing that enemy to pay a regular Tribute.

Rome imposed large indemnities on Carthage after the First and Second Punic Wars.

The 'unequal treaties' signed by the Qing dynasty in China, Japan, Korea, Siam, Persia, Ottoman Empire, Afghanistan and other countries in the nineteenth century included payments of indemnities to the victorious Western powers, mainly United Kingdom, France and Russia, and later Japan.

Following the Greco-Turkish War (1897), defeated Greece was forced to pay a large war indemnity to Turkey (£4 million). Greece, which was already in default, was forced to agree to see its public finances overseen by an international financial commission.

After the Franco-Prussian War, according to conditions of Treaty of Frankfurt (May 10, 1871), France was obliged to pay a war indemnity of 5 billion gold francs in 5 years. German troops remained in parts of France until the last installment of the indemnity was paid in September 1873, before the obliged date.

Some war reparations induced changes in monetary policy. For example, the French payment following the Franco-Prussian war played a major role in Germany's decision to move on the gold standard. The same holds for Japan's decision to join the gold standard. In this case, it was the 230 million silver taels imposed on defeated China after the Sino-Japanese War which led to the change.

World War I
Russia agreed to pay reparations to the Central Powers when Russia exited the war in the Treaty of Brest-Litovsk (which was repudiated by the Bolshevik government eight months later). Germany agreed to pay reparations of 132 billion gold marks to the Triple Entente in the Treaty of Versailles. The amount of reparations was later reduced by the Agreement on German External Debts in 1953. The last installment of these reparations was paid on 3 October 2010. Bulgaria paid reparations of 2.25 billion gold francs (90 million pounds) to the Entente, according to Treaty of Neuilly.

Europe
After World War II, according to the Potsdam conference held between July 17 and August 2, 1945, Germany was to pay the Allies US$23 billion mainly in machinery and manufacturing plants. Reparations to the Soviet Union stopped in 1953. In addition, in accordance with the agreed-upon policy of de-industrialisation and pastoralization of Germany, large numbers of civilian factories were dismantled for transport to France and the UK, or simply destroyed. Dismantling in the west stopped in 1950.

In the end, war victims in many countries were compensated by the property of Germans that were expelled after World War II. Beginning even before the German surrender and continuing for the next two years, the United States pursued a vigorous program of harvesting all technological and scientific know-how as well as all patents and many leading scientists in Germany (known as Operation Paperclip). Historian John Gimbel, in his book Science Technology and Reparations: Exploitation and Plunder in Postwar Germany, states that the "intellectual reparations" taken by the U.S. and the UK amounted to close to $10 billion. German reparations were partly to be in the form of forced labor. By 1947, approximately 4,000,000 German POWs and civilians were used as forced labor (under various headings, such as "reparations labor" or "enforced labor") in the Soviet Union, France, the UK, Belgium and in Germany in U.S run "Military Labor Service Units".

Germany paid Israel 450 million DM in Holocaust reparations, and paid 3 billion DM to the World Jewish Congress to compensate survivors in other countries. No reparations were paid to the Romanies who were killed during the Holocaust. Some of the estimates of homosexual men and women murdered under the Nazi regime range from 2,000-10,000. Little evidence exists of the numbers of actual homosexuals murdered. Though many homosexual survivors applied for reparations, only one received financial compensation; the presence of many homosexuals in Party organizations such as the S. A. is thought to have had a chilling effect on such claims in post-war Germany.

According to the Paris Peace Treaties, 1947, Italy agreed to pay reparations of about US$125 million to Yugoslavia, US$105 million to Greece, US$100 million to the Soviet Union, US$25 million to Ethiopia, and US$5 million to Albania. Finland agreed to pay reparations of US$300 million to the Soviet Union; Finland also was the only country which fully paid its war reparations. Hungary agreed to pay reparations of US$200 million to the Soviet Union, US$100 million to Czechoslovakia and Yugoslavia. Romania agreed to pay reparations of US$300 million to the Soviet Union. Bulgaria agreed to pay reparations of $50 million to Greece and $25 million to Yugoslavia. According to the articles of these treaties, the value of US$ was prescribed as 35 US dollars to one troy ounce of pure gold.

Japan
According to the Treaty of Peace with Japan and the bilateral agreements, Japan agreed to pay around ¥1.03 trillion. For countries that renounced any reparations from Japan, it agreed to pay indemnity and/or grants in accordance with bilateral agreements.

United States
The government of the United States under the Reagan Administration officially apologized for the Japanese American internment during World War II in 1988 and paid reparations to former internees and their descendants.

Iraq and Kuwait
After the Gulf War, Iraq accepted United Nations Security Council resolution 687, which declared Iraq's financial liability for damage caused in its invasion of Kuwait. The United Nations Compensation Commission ("UNCC") was established, and US$350 billion in claims were filed by governments, corporations, and individuals. Funds for these payments were to come from a 30% share of Iraq's oil revenues from the oil for food program. It was not anticipated that US$350 billion would become available for total payment of all reparations claims, so several schedules of prioritization were created over the years. The UNCC says that its prioritization of claims by natural people, ahead of claims by governments and entities or corporations (legal persons), "marked a significant step in the evolution of international claims practice."

Payments under this reparations program continue; as of July 2010, the UNCC stated that it had actually distributed US$18.4 billion to claimants.

There have been attempts to codify reparations both in the Statutes of the International Criminal Court and the UN Basic Principles on the Right to a Remedy and Reparation for Victims.

Criticisms and negative effects
John Maynard Keynes claimed that overall influence on the world economy of exacting reparations from Germany would have been disastrous.

Many observers hold that war reparations were an indirect, but major, cause of World War II. After the end of World War I, the 1919 Treaty of Versailles imposed heavy war reparations upon Germany. Some claim these reparations payments exacerbated German economic problems, and the resulting hyperinflation ruined the chances of the Weimar Republic with the public and allowed the rise of the Nazi Party and Adolf Hitler. After the Franco-Prussian War, the amount of reparations was set at a fixed value. Moreover, the post–World War I amount was subject to frequent recalculations, which encouraged Germany to obstruct payments. Eventually, all payments were cancelled after Hitler rose to power.

The experience of the post–World War I reparations led to the post–World War II solution, where winning powers were supposed to take reparations in machines and movable goods from the defeated nations, as opposed to money. Moreover, policies like the Marshall Plan emphasized shared economic development of the Western European states (removing much of what critics saw as the incentives giving rise to World War I) rather than punishment of the former Axis powers.