Germany's Holocaust Payoff
to Israel and World Jewry
By Mark Weber
The passions and propaganda of wartime normally diminish with the passage of time. A striking exception is the Holocaust campaign, which seems to grow more pervasive as the years go by. One lucrative expression of this seemingly endless campaign has been Germany's massive and historically unparalleled reparations payoff to Israel and world Jewry for the alleged collective sins of the German people during the Hitler era. Between 1953 and 1992, the Federal Republic of (West) Germany paid out more than $35 billion in reparations to the Zionist state and to millions of individual "victims of National Socialism."
How did this remarkable program get started? How lucrative has it been? What does it suggest about the "six million" figure? And what are its social and political implications?
Bowing to pressure
In September 1945, shortly after the end of the Second World War, Jewish leader Chaim Weizmann submitted a memorandum on behalf of the Zionist Jewish Agency to the governments of the United States, the Soviet Union, Britain and France "demanding" (in the words of the Encydopaedia Judaica) "reparations, restitution and indemnification due to the Jewish people from Germany" The western Allies lost no time in responding favorably to Weizmann's demands. /1 The American government was particularly eager to have the Germans pay up. /2 As a result, the German government set up by the western Allies at Bonn in 1949 never had any real choice but to acknowledge the alleged collective guilt of the German people during the Hitler era, and pay what was demanded.
Indeed, a major provision of the treaty of May 1952 by which the United States, Britain and France granted "sovereignty" to the Federal Republic of (West) Germany obligated the new state to make restitution. /3 German Chancellor Konrad Adenauer laid the emotional and psychological groundwork for the reparations program when he solemnly declared to the Bundestag on September 27, 1951:
The Federal government and the great majority of the German people are deeply aware of the immeasurable suffering endured by the Jews of Germany and by the Jews of the occupied territories during the period of National Socialism ... In our name, unspeakable crimes have been committed and they demand restitution, both moral and material, for the persons and properties of the Jews who have been so seriously harmed ...
Adenauer went on to promise speedy conclusion of restitution and indemnity laws and announced that reparations negotiations would begin soon. Accordingly, delegations representing the Bonn government, the State of Israel and an ad hoc organization of Jewish groups began talks in the Netherlands in March 1952.
The representative of the Jewish organizations was the "Conference on Jewish Material Claims Against Germany, Inc." or "Claims Conference," a body formed for the sole purpose of demanding maximum reparations from the German people. The 20 member organizations represented Jews in the United States, Britain, Canada, France, Argentina, Australia and South Africa. Jews in the Soviet Union, eastern Europe and the Arab countries were not represented. /4
The German government was under pressure to conclude quickly a reparations agreement satisfactory to the Jews. In his memoirs, Chancellor Adenauer wrote:
It was clear to me that, if the negotiations with the Jews failed, the negotiations at the London Debt Conference [which were going on at the same time] would also run aground, because Jewish banking circles would exert an influence upon the course of the London Debt Conference which should not be under-estimated. On the other hand it was self-evident that a failure of the London Debt Conference would bring about a failure of the negotiations with the Jews. If the German economy was to achieve a good credit standing and become strong again, the London Conference would have to be ended successfully. Only then would our economy develop in a way that would make the payments to Israel and the Jewish organizations possible. /5
Zionist leader Nahum Goldmann, President of the World Jewish Congress and chairman of the Claims Conference, warned of a worldwide campaign against Germany if the Bonn officials did not meet the Zionist demands: "The non-violent reaction of the whole world, supported by wide circles of non-Jews, who have deep sympathy with the martyrdom of the Jewish people during the Nazi period, would be irresistible and completely justified." /6 The London Jewish Observer was more blunt: "The whole material weight of world Jewry will be mobilized for an economic war against Germany, if Bonn's offer of reparations remains unsatisfactory." /7
The talks culminated in the Luxembourg Agreement, which was signed on September 10, 1952 by German Chancellor Konrad Adenauer, Israeli Foreign Minister Moshe Sharett and World Jewish Congress President Nahum Goldmann.
A Legal Novelty
This agreement between the Federal German government, on the one hand, and the Israeli state and the Claims Conference, on the other, was historically unprecedented and had no basis or counterpart in international law. For one thing, the State of Israel did not exist at the time of the actions for which restitution was paid. Moreover, the Claims Conference had no legal authority to negotiate and act on behalf of Jews who were citizens of a range of sovereign countries. Jews were represented in an internationally recognized treaty with a foreign state not by the governments of the countries of which they were citizens, but rather by a supranational and sectarian Jewish organization.
It was as if the Catholic citizens of the United States had allowed themselves to be represented in a treaty with a foreign government not by the U. S. government, but rather by some ad hoc supranational Catholic organization or by the Vatican. The Luxembourg Agreement thus legally implied that Jews everywhere, regardless of their citizenship, constitute a distinct and separate national group, and that world Jewry was a formal party to the Second World War. /8
Nahum Goldmann, a co-signer of the Agreement, was one of the most important Jewish figures of this century. From 1951 to 1978, he was president of the World Jewish Congress, and from 1956 to 1958, he was also president of the World Zionist Organization. In his autobiography, Goldmann recalled his role in the negotiations and the remarkable nature of the agreement: /9
My negotiations with German Chancellor Konrad Adenauer and his associates, which culminated in the Luxembourg Agreement of 1952, make up one of the most exciting and successful chapters of my political career.
There hardly was a precedent for persuading a state to assume moral responsibility and make large-scale compensation for crimes committed against an unorganized ethnic group lacking sovereign status. There was no basis in international law for the collective Jewish claims ...
In a 1976 interview, Goldmann said that the agreement "constituted an extraordinary innovation in the matter of international rights," and he boasted that he had obtained 10 to 14 times more from the Bonn government than he had originally expected. /10
The Payoff for Israel
The agreement meant economic security for the new Zionist state, as Goldmann explained in his autobiography:
What the Luxembourg Agreement meant to Israel is for the historians of the young state to determine. That the goods Israel received from Germany were a decisive economic factor in its development is beyond doubt. I do not know what economic dangers might have threatened Israel at critical moments if it had not been for German supplies. Railways and telephones, dock installations and irrigation plants, whole areas of industry and agriculture, would not be where they are today without the reparations from Germany. And hundreds of thousands of Jewish victims of Nazism have received considerable sums under the law of restitution. /11
Goldman said in 1976:
Without the German reparations, the State of Israel would not have the half of its present infrastructure: every train in Israel is German, the ships are German, as well as the electricity, a large part of the industry ... without mentioning the individual pensions paid to the survivors ... In certain years, the amount of money received by Israel from Germany exceeds the total amount of money collected from international Jewry-two or three times as much. /12
As a result of the West German reparations program, wrote Jewish historian Walter Laqueur:
The ships laden with German capital goods began to call at Haifa regularly and unfailingly, becoming an important -- ultimately a decisive -- factor in the building up of the country. Today  the Israeli fleet is almost entirely "made in Germany," as are its modern railway equipment, the big steel foundry near Acre, and many other enterprises. During the 50's and early 60's about one-third of investment goods imported into Israel came from Germany ... In addition to all this, many individual Israelis received restitution privately. /13
It is difficult to exaggerate the impact of the program: the five power plants built and installed by Germany between 1953 and 1956 quadrupled Israel's electric-power-generating capacity. Germans laid 280 kilometers of giant pipelines (2.25 and 2.5 meters in diameter) for the irrigation of the Negev (which certainly helped to "make the desert bloom"). The Zionist state acquired 65 German- built ships, including four passenger vessels. /14
Payments to Individuals
Federal German reparations have been paid out through several different programs, including the Federal Indemnification (or Compensation) Law (BEG), the Federal Restitution Law (BReuG), the Israel Agreement, and special agreements with twelve foreign countries (including Austria). /15 By far the most important of these has been the BEG indemnification law, which was first enacted in 1953 and revised in 1956 and 1965. It was based on a compensation law promulgated earlier in the American zone of occupation.
In the words of a background article about the reparations program that appeared in a 1985 issue of Focus On, an official publication of the Bonn government, the BEG laws "compensate those persecuted for political, racial, religious or ideological reasons-people who suffered physical injury or loss of freedom, property, income, professional and financial advancement as a result of that persecution." It also "guarantees assistance to the survivors of the deceased victims." /16
The BEG compensation law defined "persecution" and "loss of freedom" very liberally. It stipulated payments for Jews who had simply been required to wear the yellow star, even in Croatia, where the measure was ordered by non-Germans. Payments were also ordered for any Jew who was ever in a concentration camp, including the one in Shanghai, China, which was never under German control. The BEG law authorized payments to any Jew who was ever arrested, no matter what the reason. This meant that even Jews who were taken into custody for criminal acts were entitled to German "compensation" for "loss of freedom." /17
The 1965 revision of the BEG specified that Germany was to be held accountable for measures taken by Romania, Bulgaria and Hungary as early as April 1941, if these actions had deprived the victims of all their freedom. The fact that these countries acted against Jews in 1941 independently of Germany did not matter. /18
Significantly, the many Jewish survivors living in the Soviet Union and the other Communist countries of eastern Europe were not covered by Germany's BEG compensation program. /19 And, of course, Jewish "Holocaust survivors" who died before the Federal German compensation law (BEG) was enacted in 1953 or before it really became effective in 1956 also never received BEG restitution money.
By the end of 1980, a German government agency reported, the number of successful claims was 4,344,378, with payments reaching 50.18 billion German marks. About 40 percent of the claimants lived in Israel, some 20 percent were living in West Germany, and 40 percent elsewhere. /20 The Focus On article cited above noted that between October 1953 and the end of December 1983, the Federal German government paid out 56.3 billion marks on a total of 4,390,049 claims from individuals under the BEG legislation. /21
Nevertheless, the Atlanta Journal and Constitution stated in 1985 that about half of the Jewish "survivors" in the world have never received reparations money. "An estimated 50 percent" of the Holocaust "survivors throughout the world are on West German pensions," the newspaper reported. /22 In addition to survivors in Communist countries who are not entitled to German compensation, the paper reported that many Jewish survivors living in the United States have never received reparations money. The paper found that 79 percent of the Jewish "Holocaust survivors" living in the Atlanta area had, at one time or another, asked the Bonn government for restitution. About 66 percent received something.
About 40 percent of those receiving BEG compensation money live in Israel, the Focus On article reported, while 20 percent live in Federal (West) Germany and 40 percent live in other countries. /23 It would thus appear that about 80 percent, or 3.5 million, of the 4.39 million claims are from Jews.
Although the number of BEG compensation claims is larger than the number of individual claimants, it is nevertheless difficult to reconcile these figures with the familiar "six million" Jewish wartime dead, particularly since at least half of the world's Jewish "survivors" never received German compensation.
The Luxembourg Agreement obligated Federal Germany to pay three billion German marks to the State of Israel and 450 million marks to various Jewish organizations. Accordingly, the German Finance Minister announced in 1953 that he expected that the reparations payments would eventually total four billion marks. Time would prove this a gross underestimate. /24
By 1963, the German people had already paid out 20 billion marks, and by 1984 the total had risen to 70 billion. /25 In late 1987 the German parliament approved an additional 300 million marks in "restitution to the victims of National Socialist crimes." The Bonn government announced at that time the 80 billion marks had already been paid out and estimated that by the year 2020 the payoff would total 100 billion marks which, at recent exchange rates, would be the equivalent of $50 billion. /26
Although the German reparations program is accepted and often praised in the democratic West, it is also, at least implicitly, strikingly undemocratic in two fundamental respects:
First, it regards Jews not as equal and fully integrated citizens of whatever country they live in, but rather primarily as members of an alien and cosmopolitan national group.
Second, it is based on the premise that the German nation, including even those Germans who grew up since 1945, is collectively guilty of terrible crimes, contrary to the generally accepted notion of individual responsibility for crime.
Germany's lucrative and historically unparalleled payoff to Israel and world Jewry is a legacy and permanent reminder of the nation's catastrophic defeat in 1945, and subsequent domination by foreign powers.
- "Reparations, German," Encyclopaedia Judaica, Vol. 14, pp. 72-73.
- D. v. Westernhagen, "Wiedergutgemacht?," Die Zeit, No. 41, Oct. 5, 1984, p. 33.
- "Restitution in Germany," Focus On, (New York: German Information Center), May 1985, p. 2.
- Kenneth Lewan, "How West Germany Helped to Build Israel," Journal of Palestine Studies, Summer 1975, pp. 48-49.
- Konrad Adenauer, Erinnerungen 1953-55 (Stuttgart 1966), pp. 140-142. Quoted in: K. Lewan, Journal of Palestine Studies, Summer 1975, pp. 53-54.
- Quoted in. K. Lewan, Journal of Palestine Studies, Summer 1975, p.54.
- J. Kreysler and K. Jungfer, Deutsche Israel-Politik (Munich 1965); p. 33. Quoted in: K. Lewan, Journal of Palestine Studies, Summer 1975, p. 54.
- L. Sebba, "The Reparations Agreement: A New Perspective," The Annals of the American Academy of Political and Social Science, Vol. 450, July 1980, p. 206.
- Nahum Goldmann, The Autobiography of Nahum Goldmann, p. 249.
- LeNouvel Observateur, Oct. 25, 1976, p. 120. See also interview with Robert Faurisson in The Journal of Historical Review Winter 1981 (Vol. 2, No. 4), pp. 350, 373.
- N. Goldmann, Autobiography, p. 276.
- Le Nouvel Observateur, 25 Oct. 25, 1976, p. 122.
- Walter Laqueur, Commentary, May 1965, p. 29.
- Nicholas Balabkins, West German Reparations to Israel. Cited in K. Lewan, Journal of Palestine Studies, Summer 1975, p. 42.
- "Restitution in Germany," Focus On, May 1985.
- "Restitution in Germany," Focus On, May 1985, p. 3.
- Raul Hilberg, The Destruction of the European Jews, Vol. 3, p. 1166.
- R. Hilberg, Destruction, Vol. 3, p. 1173.
- R. Hilberg, Destruction, p. 1170. The New York Times reported in 1983 that the clients of the New York office of the Conference on Material Claims Against Germany "are primarily newly arrived Russian Jewish] victims of the Nazi era" (D. Margolick "Soviet Emigre Lawyer ...," The New York Times, Thursday, March 10, 1983, p. B2.)
- Canadian Jewish News, Nov. 12, 1981, p. 4 (or, Dec. 11, 1981, p. 4), and Nov. 26, 1981, p. 6. Source cited: German Information Centre in New York.
- "Restitution in Germany," Focus On, May 1985, p. 3.
- The Atlanta Journal and Constitution, March 31, 1985,14A,15A,17A.
- "Restitution in Germany," Focus On, May 1985, p. 3.
- D. v. Westernhagen, Die Zeit, Oct. 5, 1984, p. 36.; "Restitution in Germany," , May 1985.
- D. v. Westernhagen, Die Zeit, Oct. 5, 1984, p. 36.
- "Bundestag Approves Additional DM 300 Million for Victims of Nazis," The Week in Germany (New York: German Information Center), December 11, 1987. The dollar value of the German mark has fluctuated over the years. A recent exchange rate was 50 cents per mark.
From The Journal of Historical Review, Summer 1988 (Vol. 8, No. 2), pages 243-250. A few changes / corrections were made in April 2012, and also in July 2016.