The Luxembourg Agreement: the mirage of reconciliation

Exactly seventy years ago, in September 1952, the Reparations Agreement between Israel and the Federal Republic of Germany known also as Luxembourg Agreement was signed. The West German government agreed to the demands of the young Israeli state and to pay substantial compensation. Traditionally seen as a form of reparation after the Shoah, the Luxembourg Agreement was in fact a much more subtle transaction that was not considered reparation or reconciliation. Historian Constantin Goschler examines the ins and outs of this agreement and the German and global geopolitical context that informs it.

 

German Chancellor Konrad Adenauer signing the Luxembourg Agreements on September 10, 1952.

 

The negotiators met in silence and seclusion. The Federal Republic had sent delegates, as had Israel and the Jewish Claims Conference, which had been founded shortly before and was responsible for compensating Holocaust survivors around the world. At the Hotel Oud Castel, a moated castle in the Dutch town of Wassenaar, they spent several months from March 1952 discussing an issue that could not have been more sensitive: German compensation payments for the Nazi persecution of Jews. The atmosphere was frosty. The reason for this was later summed up by one of the participants, Benjamin B. Ferencz (pictured far right), now 102 years old, an American of Hungarian descent, chief prosecutor at the Nuremberg Einsatzgruppen trial after the war, and legal adviser to the Jewish Claims Conference in 1952. “How do you start?” he said in a 1971 interview, “What do you want to say when you’re sitting across a table from representatives of a government that tried to kill all the Jews?” Although it was not the Adenauer government that had set the Holocaust in motion, in the eyes of many survivors it represented the perpetrators of old. 

It became difficult negotiations, accompanied by mistrust and protests. Seventy years ago, on September 10, 1952, they came to an end. On that day in neutral Luxembourg, German Chancellor Konrad Adenauer (CDU), the President of the World Jewish Congress and Chairman of the Jewish Claims Conference Nahum Goldmann, and Israeli Foreign Minister Moshe Sharet signed an agreement that is still considered exemplary today. In the agreement, the Federal Republic of Germany undertook to pay Israel global compensation amounting to three billion German marks, which corresponded to one ninth of the federal budget. A further 450 million went to the Jewish Claims Conference, which used it to support the reconstruction of Jewish communities worldwide. In addition, the Federal Republic promised improvements in the individual compensation of Jewish victims of National Socialism. The agreed “reparations” were to be paid over a period of 14 years, one third of the sum was to be settled by the delivery of German goods; a further 30 percent was earmarked for the purchase of crude oil. The photos of the signing show the parties involved with stiff faces. 

Even the road to the negotiating table had been full of obstacles. For example, the Israeli government, which had taken the initiative, had initially not wanted to negotiate directly with the German states. Instead, it tried to enlist the support of the Allied victorious powers for its demands. But none wanted to make any commitments in the matter. The catastrophic economic situation of the Israeli state, founded in 1948, which had since been in permanent conflict with its Arab neighbors and had taken in hundreds of thousands of Holocaust survivors from Eastern Europe, finally forced the government in Jerusalem to talk to the Germans without intermediaries. 

While the GDR turned a deaf ear, the Federal Republic entered into negotiations. On September 27, 1951, Konrad Adenauer declared in the Bundestag that “unspeakable crimes had been committed in the name of the German people […] which oblige us to make moral and material reparations, both with regard to the individual damage suffered by Jews and to Jewish property” – a formulation with which he accepted responsibility and at the same time rhetorically exonerated the Germans. A few weeks later, the Chancellor met in London with Nahum Goldmann, who represented Diaspora Jews as president of the World Jewish Congress.

Manifestation de 1952 en Israël contre tout accord avec l'Allemagne avec sur scène Menahem Begin. Le panneau indique : « Notre honneur ne sera pas vendu pour de l'argent ; notre sang ne sera pas expié par des biens. Nous effacerons la honte ! ». Licence Wikimedia Commons
Menachem Begin protesting against the Agreement in March 1952. The sign reads: “Our honor shall not be sold for money; Our blood shall not be atoned by goods. We shall wipe out the disgrace!”. Licence Wikimedia Commons

In Israel, the talks met with fierce criticism, since they meant indirect recognition of the Federal Republic by Israel and thus a breach of the symbolic ban imposed on Germany (Israeli passports at that time bore the note that they were valid for all countries except Germany). Many Israelis found it intolerable to open negotiations with the country of the perpetrators seven years after the Holocaust. When the Knesset debated the move for three days in January 1952, tens of thousands demonstrated in Tel Aviv and Jerusalem, and a crowd incited by Menachem Begin, leader of the right-wing Cherut Party, was prevented from storming the parliament building only by military force and tear gas. The opposition from both the right and the left complained loudly that the memory of those murdered was being sold for money. 

Under the impression of the protests and in order to avoid any false conciliation, a “ritual distance” was staged in the moated castle of Wassenaar; this is how historian Dan Diner described it in his book of the same name in 2015[1]. Usual diplomatic courtesies were omitted, and negotiations were conducted in English, at least initially, although most in the room – including the Israeli delegation – spoke German. 

Soon there was a scandal

Attempted assassinations from the nationalist Cherut party further strained the meeting. In March, a letter bomb addressed to Adenauer detonated, killing a policeman; two other explosive devices sent to the heads of the German Wassenaar delegation were rendered harmless. The Dutch police had strictly cordoned off the conference hotel. 

Above all, the German and Jewish sides entered the negotiations with completely different expectations: The representatives of Israel and the Claims Conference insisted that their demands be treated as a priority. The leaders of the German Wassenaar delegation – the economist Franz Böhm (in the upper picture on the right) and the lawyer Otto Küster – agreed with them. But the banker Hermann Josef Abs, who headed the German delegation to the London debt conference, took a different view. In London from February 28, negotiations were underway on the repayment of loans to the victorious powers and reparations for the damage caused by the war, and Abs suggested that Jewish claims be discussed in this overall context. Adenauer vacillated between the two positions: “Restoration of our credit in the world depends on the success of both negotiations,” he said in the cabinet meeting of May 16, 1952, and that was “now the purpose of it all.” 

This soon led to an éclat: after the first round of negotiations, the Germans accepted the three billion marks demanded, but they did not want to determine the effective amount and mode of payments until the London Conference had made further progress. The Israeli side saw this as an affront, since it put the murder of European Jews on the same level as business loans and war damages. In the end, Adenauer relented because he feared negative international reactions. 

Konrad Adenauer en 1952 - Licence Wikipedia Commons
Konrad Adenauer in 1952 – Licence Wikipedia Commons

The episode contributed to the repeated claim that the Luxembourg Agreement had been a ticket to the West for the Federal Republic. But in terms of regaining sovereignty and commercial and moral credit, this issue was less important than Bonn’s contribution to strengthening the Western alliance in the Cold War. The U.S. government, then, stayed out of the Wassenaar talks, implying to the Jewish side that a negotiated outcome would have to come about as a German self-obligation. In this way, it wanted to avoid being indirectly called upon to finance the future agreement. Conversely, of course, Washington knew how concerned it was in Bonn about the reputation of the young Federal Republic, and let the Germans know that a failure of the talks would be exceedingly damaging. 

Realpolitik and moralpolitik were thus closely intertwined in the so-called reparations – with the actual cause of the negotiations being shrouded in a cloak of “communicative silence.” The genocide of the Jews remained in Wassenaar and Luxembourg, as in Adenauer’s declaration before the Bundestag, a crime “unspeakable” in the literal sense of the word. Officially, the three billion marks agreed with Israel were not declared as compensation for the murder of six million Jews. How could a crime against humanity such as the Holocaust have been “made good” at all? Instead, it was about material losses and the costs for the integration of Jewish refugees in Israel. In order to refute the accusation of “blood for money,” the Israeli delegation and the Claims Conference strictly separated material benefits from moral recognition. 

In doing so, they denied the German side the reconciliation it had hoped for – to which the deeply religious Catholic Konrad Adenauer reacted sensitively. Shortly before the signing, he canceled the prepared speeches because he found the tone of the planned speech by the Israeli foreign minister “Old Testament-like.” While the Germans spoke of reparations, Sharet had chosen the term “shilumim,” which in the Old Testament denotes payments without forgiveness and retribution without forgiveness. Adenauer had also tried in vain to replace the word “crime” with “injustice” in the preamble to the agreement. As it stood, he found the paragraph in question “somewhat very embarrassing.” Against this background, agreement on a common interpretation of the incriminating past remained impossible. 

For Israel, the German payments meant great help at a critical time. But before the first goods could be delivered and the first funds disbursed, new difficulties had to be overcome: Some Arab states protested vehemently against the ratification of the hard-won agreement, fearing that Israel would be strengthened militarily by the reparations. 

They did not want to leave the field to the GDR

In the Federal Republic, they met with a not entirely disinterested understanding. Above all, the Federal Minister of Finance, Fritz Schäffer (CSU), and the deputy chairman of the CDU/CSU parliamentary group, Franz Josef Strauß, invoked the threat of damage to the traditional “German-Arab friendship. They did not want to leave this field to the GDR, which was also courting the favor of the Arab states. According to a poll conducted by the Allensbach Institute in August 1952, only eleven percent of West Germans favored reparations. In the final vote on the Luxembourg Agreement in the Bundestag on March 18, 1953, Adenauer needed the votes of the opposition SPD. To rein in critics at home, he did not shy away from appealing to the still widespread fear of the “power of world Jewry.” 

German diplomacy countered the Arab critics with a different argument: It recommended the Luxembourg Agreement as a model for compensation for the Palestinians expelled from their homeland after the first Israeli-Arab war of 1948. From the Foreign Office, for example, it was said that the “situation created by the Israeli demands for compensation” gave the Arabs an opportunity “to declaim before the world public about the injustice done to them by the Jews and to point out their own claims against Israel.” At least West German diplomats avoided relativizing German crimes: “The expelled Arabs are refugees; but Nazi Germany has millions of killed Jews on its conscience.” 

As historian Lorena De Vita has shown, the GDR tried to use this tense situation for its own purposes. To the Arab countries, it branded West German benefits to Israel as strengthening their arch-enemy. In this way, it hoped to win partners in the region and achieve diplomatic recognition. 

Autorail de Jérusalem fabriqué par Maschinenfabrik Esslingen, dans le cadre de l'accord de réparation avec l'Allemagne. Licence Wikipedia Commons
Train set manufactured by Maschinenfabrik Esslingen in the old Jerusalem Railway Station, shortly after delivery as part of the reparations agreement with Germany, 1956. Licence Wikipedia Commons

The Federal Republic relied on its superior economic potency to stabilize the delicate balance between its relations with Israel and with the Arab states. From 1952 onward, it also transferred funds to the United Nations Relief and Works Agency for Palestine Refugees in the Middle East on several occasions – as a kind of compensation for payments to Israel. 

To this day, the Luxembourg Agreement remains the reference point for other compensation claims, such as in the dispute over the genocide of the Herero and Nama peoples by German colonial troops. Why was there a Luxembourg Agreement after the Holocaust, but none after the campaign of extermination in German Southwest Africa? Such questions provoked not only recently debates about what distinguishes the Holocaust from other genocides and mass crimes and what does not. 

The Germans’ handling of their history of violence is not without bitter irony: In 1952, Israel and the Jewish Claims Conference had persuaded the Federal Republic to negotiate with the argument that the German murder of Jews was unique. Today, the Federal Republic itself likes to refer to the singularity of the Holocaust in order to reject other claims for compensation – not only those for colonial crimes, but also claims in connection with the Second World War, such as the claims of Greece or Poland. 

Thus, on the one hand, the Luxembourg Agreement has become the epitome and prelude to that ostensible “miracle of reconciliation” invoked by German President Frank-Walter Steinmeier in 2020 at the Israeli Holocaust memorial Yad Vashem. On the other hand, it serves as a negative reference point to criticize the lack of compensation in other cases of mass historical violence. At worst, the agreement thus becomes a projection surface for a postcolonial victim competition – which is no less questionable than the German longing for redemption through material “reparations.” 

Both readings fail to recognize the special nature of the 1952 agreement: that it could come about precisely because the demands did not refer to the murdered, but to the survivors – to the plight of Jewish refugees. The fact that the Jewish side deliberately emphasized the similarities with the integration of German refugees from the eastern territories made it easier for Adenauer to push the treaty through in domestic politics. Paradoxically, it was precisely the refraining from explicitly addressing the genocide that made possible the only agreement on compensation for a genocide to date. The history of the Luxembourg Agreement is thus not only that of a negotiating success and a responsible way of dealing with the consequences of mass violence: it is at least as much a testimony to the difficulties involved – and shows what painful compromises the representatives of the victims sometimes have to make in the process. 


Constantin Goschler

Constantin Goschler has been Professor of Modern History at the Ruhr University in Bochum since 2006. He is currently a visiting professor at the London School of Economics and the German Historical Institute in London.

 

The German version of this text is available here on the website of Die Zeit. 

Notes

1 Dan Diner, Rituelle Distanz. Israels deutsche Frage. Deutsche Verlagsanstalt, München 2015.

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