Amid all the heated discussion surrounding Prime Minister Benjamin Netanyahu’s submarine affair, there’s a question that’s gone unanswered: Why didn’t Netanyahu claim Germany’s debt to Israel under the reparations agreement? Payment of the debt would save the Israeli tax payers about $2 billion in the submarine and ship deals with Germany.
Germany’s debt to Israel is now estimated to total $19 billion and wise use of this sum would have spared us the submarines scandal as well as spay for new and essential deals. In light of the latest findings, the question arises as to why the prime minister would have had a conflict of interest given his official obligation was to exact this debt from Germany.
The submarine affair could have been prevented if the deal had been conducted between Israel and Germany and paid for via Germany’s debt to Israel. This could have been done in the same way the first two submarine deals were conducted, with Israel receiving them as gifts from Germany, with no mediation.
Subject to the German government’s agreement, this debt could have been used to finance the means for Israel’s defense, as payment for German merchandise (per the reparations agreement) as an addition to the defense budget and to the benefit of needy Holocaust survivors.
East Germany’s portion of the reparations deal remains unpaid. Portions of it were estimated in 1952 to total at $417 million. In 2018 it was estimated to be valued at $19 billion, after updating the sum based on 30 years of interest from a U.S. government bond. The new estimate was calculated by independent American economist Sidney Zabludoff, a former CIA, White House and U.S. Treasury official.
The original reparations deal was signed with the former West German government which refused to pay East Germany’s debts. Therefore the sum that was set at the time was just two thirds of the total deal, proportional to the population and the land area of the two former countries. The portion not paid by East Germany has long been referred to as the “missing third.”
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The Israeli government has never formally given up on the “missing third,” nor has it received anything else in its stead. The reunited Germany accepted responsibility for all of East Germany’s debts – including the “missing third,” therefore, according to international law, Germany owes Israel the additional debt by which it has never disavowed.
On the issue of Germany’s debt to Israel, I have approached the prime minister and a list of other officials at the security cabinet and each of its members, separately: the National Security Council, the Treasury’s director-general, the Foreign Affairs and Defense Committee, the Knesset’s Foreign Ministry, the Social Equality Ministry which is responsible for Jewish property, the attorney general and state comptroller. Responses to my questions ranged between totally ignoring it to a perfunctory confirmation of receipt, to saying the question has been relayed to “authoritative officials” without further identifying them.
The Treasury’s director-general relayed the questions to the Prime Minister’s Office, the Knesset’s Foreign Affairs and Defense Committee sent them to the National Security Council, and the security cabinet secretary also sent them to the council for an opinion. To this day I have never received an actual reply. The impression is that this issue is a hot potato, tossed from one agency to another. Is it possible that Case 3000 (the submarine affair), if it indeed exists, has happened for no reason?
There is no doubt that the moral lessons of the Holocaust require action and the prime minister should immediately demand Germany pay its debt to Israel. It’s inconceivable for Israel to give up on such a large debt without trying to claim it and the threat of Case 3000, must not be used as a reason for making any such concession.