Who still owes what for the two World Wars?

WWII debt: Does Germany owe Greece?
WWII debt: Does Germany owe Greece?   

Relations between Germany and Greece hit a new low last week after the Athens government said it would pursue reparations from Germany for war crimes committed by Nazi troops in World War II.

Greek Prime Minister, Alexis Tspiras, stated that Germany had "never properly paid reparations for the damage done," according to Reuters. It was only last week, that the U.K. government announced that they had finally finished paying back their debt loan from World War I.

So why are countries still paying back debt from the wars of the last century and who has to pay the most? Most of the sums involved are the subject of intense speculation and do not have a precise figure put to them. Most sums were originally agreed in now obsolete currencies and have been renegotiated countless times.

CNBC takes a look at who owes what to whom after the two world wars.

What are war reparations?

At the end of a war, countries are required to make payments as a way of making up for the damage inflicted. This was the case at the end of World Wars I and II. The debt can be paid back for many reasons, including machinery damage, and forced labor. Typically, compensation comes in the form of money or material goods.

After World War II, a number of treaties were signed to make sure countries like Greece, Israel, and the Soviet Union were compensated for the destruction caused. Those who lost the war were therefore required to pay the victors.

Krisztian Bocsi/Bloomberg | Bloomberg | Getty Images

The only Allied country who won but paid compensation was the USA, to Japan. In 1988, under the Civil Liberties Act, U.S. President, Ronald Reagan, apologized to the Japanese-Americans interned in camps during World War II and agreed to pay $20,000 to each surviving former detainee.

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Germany

Germany was required to pay the most for World War II, however, the original total still appears unclear – mainly because Allied countries demanded different forms of repayment at different meetings to discuss Europe after the war. It was believed that initially the Allies suggested that Germany owed up to $320 billion in filed reparation claims -- a total, which they shortly realized couldn't be fulfilled by Germany at the time, especially with the added World War I debt.

At the conference on German External Debts, in London, 1952, Germany's post-war debts were written down to just under 7 billion deutschemarks (worth about $3 billion at today's currency rates) from 16.2 billion deutschemarks, whilst its pre-war debts were reduced to 7.3 billion deutschemarks,

Additionally, Germany had to relinquish the country's power and divide itself initially into four Allied-owned zones, which were demilitarized and removed of their weaponry.

'Fingergate' and other troubles between Greece and Germany
'Fingergate' and other troubles between Greece and Germany   

According to one of the allied meetings, the Potsdam Conference, "payment of reparations should leave enough resources to enable the German people to subsist without external assistance."

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On January 14th 1946, in Paris, two forms of reparation were set up for the allies, in forms of shares: all reparations including funds, and those in the form of 'industrial and other capital equipment'. The U.K., U.S., France and Yugoslavia were the biggest shareholders.

On top of that, Germany signed an agreement on September 10th 1952, confirming that West Germany would agree to pay 3 billion deutschemarks to Israel in instalments and 450 million deutschemarks to the World Jewish Congress, a federation which represents Jewish communities, over 12 years.

Similar to the situation with Greece, Israel's finance minister, Yuval Steinitz, announced in 2009 that he wanted Germany to pay between 450 million to 1 billion euros in reparations for Jews forced into slave labor during the Holocaust – despite the fact that Germany had paid off their allocated debt to Israel.

While it remains unclear on how much Germany originally owed and how much it has to pay back now – given interest on top of the original loan and countries claiming they haven't been paid enough – one writer has hazarded an estimate. According to Pablo De Grieff, author of "The Handbook of Reparations", by September 30th 1965, Germany had paid $4.5 billion, which rose to a total of more than $38.6 billion by 2000.

Japan

For Japan, paying back its WWII reparations were more complicated. After WWII, it was estimated that by the Allies that Japan had lost 42 percent of its national wealth. Therefore in 1951, Japan signed a treaty to which would work for both sides.

Signed in San Francisco 1951, the 'Treaty of Peace with Japan', meant that "Japan will transfer its assets and those of its nationals in countries which were neutral during the war, or which were at war with any of the Allied Powers, or, at its option, the equivalent of such assets, to the International Committee of the Red Cross which shall liquidate such assets and distribute the resultant fund to appropriate national agencies."

In total, Japan's government agreed to make a payment of $6.67million to the International Red Cross, as compensation to former prisoners of war.

U.S. Dollar Japan Yen currencies money
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Christopher Gerteis, Senior Lecturer in the History of Contemporary Japan, at the SOAS, University of London, told CNBC via email, that "the amounts paid, though seemingly small, were negotiated and paid during the 1950s. Indeed, most East and Southeast Asian governments consider the matter of reparations closed.

"What is important to note here is that an significant minority of South Koreans and Chinese do not accept these reparations as adequate – no matter what agreements have been signed. It is a complex issue, fraught with legal, moral, and historical concerns that strike deep at those who choose to think about it."

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Who else?

There are other countries that had to pay reparations as part of the Paris Peace Treaties agreement in 1947.

Italy ($360 million)

Italy was one of the main Axis Powers alongside Germany and Japan. Under a peace treaty, it was required to pay $125 million to Yugoslavia, $105m to Greece, $100m to the Soviet Union, $25m to Ethiopia and $5m to Albania.

Finland ($300 million)

Out of all the countries that were required to pay reparations from World War II, Finland is the only one known to have paid its bill in full when it sent $300 million to the Soviet Union in 1952.

Hungary ($300 million)

Under a peace treaty, Hungary was required to pay $200 million to the Soviet Union, and $100m to Czechslovakia and Yugoslavia.

Romania ($300 million)

Under a peace treaty, Romania had to pay $300 million to the Soviet Union, for the damage it caused with its "military operations". According to the treaty, it was to be made "payable over eight years from September 12, 1944, in commodities."

Bulgaria ($70 million)

Bulgaria was asked to pay $45 million to Greece, and $25m to Yugoslavia. For the full $70 million, the treaty said it was to be made "payable in kind from the products of manufacturing and extractive industries and agriculture over eight years."

By CNBC's Alexandra Gibbs