Are Reparations Dead ?
THE Lausanne Conference on Reparations will go far towards determining the fate of the Disarmament Conference a week later, and the attitude of the British Delegation may go far towards determining the success or failure of both. That is a measure of the responsibility resting on the Cabinet. Technically the purpose of the Lausanne Conference is to consider the report of the Basle Committee of Experts on Germany's capacity to pay Reparations when the Hoover Mora: torium expires next July. Actually and of necessity there will be linked with that discussions, formal or informal, on the future of inter-Allied debts, most of them debts owed to the United States.
Since debt-payments, as everyone outside the Capitol at Washington recognizes, must depend on Reparation- payments, the primary decision at Lausanne must be whether Germany can continue any Reparation-payments at all, and, if so, how much, and when. The Basle committee has made it clear that she can pay nothing at present. The German Chancellor, in statements to the British and French Ambassadors at Berlin a week ago, used language which was interpreted as implying that she would pay no more ever. But it does not appear that Dr. Bruning spoke in terms of ultimatum or menace, and it need not be assumed that he even demanded the total abolition of Reparations. When he was asked by the British Ambassador what the. German thesis at Lausanne would be, the Chancellor, compelled by the exigencies of domestic polities to approach as near to the intransigent attitude of Herr Hitler as a responsible statesman could, replied very naturally that Germany would contend that she could not go on paying Repara- tions and that the best thing that could happen for the world would be that the payments should never be
resumed. As, of course, it would: .
That is a perfectly clear definition of the policy with which one of the chief participants will go into the Lausanne Conference, and it will provoke little criticism in this country. But it has provoked a great deal in France, though the first hitter outburst died down when the nature and circumstances of Dr. Briining's statement were more clearly understood. France's attitude on Reparations will be the most important factor at Lausanne (though the determining influence may finally be the British), and it deServes a fair and unprejudiced examination. There will be no unity or stability in Europe except on the basis of a spontaneous Franco-German understanding, and in the purely juridical sphere there can, of course, be no Reparation settlement at all without France's full concurrence'. The problem of Lausanne, therefore `is to find a basis of agreement embodying something which Germany can afford to give and France can be content to accept.
France's general attitude is plain. She agrees that Germany cannot pay Reparations this year or next, and very likely not in 1934. But she claims that part of Germany's difficulties is clue to unwise and unnecessary borrowing—which is true, as the Basle report demon- strates—and contends that as the world recovers from its preSent straits there is every prospect that Germany will be capable of paying a reasonable sum in Reparations. That contention is just. As has been pointed out already in these columns, the unconditional payments under the Young Plan, £33,000,000 a ytar at par, are equal to about IOS. per head of the population annually. To produce that is no inordinate task for a Germany restored to anything like normal prosperity. But quite apart from purely financial considerations France is violently opposed on prineiple to any, settlement that looks like tearing up part of the Treaty of Versailles,, for if that happens to the financial clauses to-day it may' happen to the territorial or military clauses to-.morrow; For that argument, again, there is much to be .said.' Whatever the defects of the Treaty of Versailles, . and they are much fewer than common declamation would sometimes suggest, it and the other peace treaties of 1919-20 form the public law of Europe to-day. They need revision, and the ways and means for that must be anxiously sought. But to jettison .therit, would
mean anarchy and war. . .
Are the German and the Frenchattitudes reeoncilable,' and are the other members of the Conference,-PrimarilyI Great Britain, capable of effecting the reconciliation? That raises two subsidiary questionS. Is Gerniany likely to be able in due time to resume Reparation-payments on a moderate scale? The answer to that is almost unques- tionably Yes. Is it desirable, even so, that she should `i The almost universal British answer to that is No. We would far rather wipe out Reparations and debts together and start the world again with a clean slate. The article on those lines in the Popolo d'Italia attributed to Signor. Mussolini will find unreserved endorsement . in Great Britain. But political factors cannot be simply ignored. They are as hard realities as the economic factors-. Reparations cannot be settled over France's dead body,' or in face of immovable French opposition, It would he a hopelessly bad settlement even if they could, for Franco-German agreement, it must be repeated, is an indispensable condition of European recovery.
It is subject to the limitations set by that governing consideration that the basis for an agreement must be sought, and it should not be impossible to find one: France, converted to realism by hard facts, is concerned to-day more with the principle than with the financial yield of Reparations. Of the two parts into which the Young Plan, with its average payment of £100,000,000 a year; is divided she would almost certainly agree to abandoning the conditional part, leaving Germany still liable for the unconditional .£33,000,000. Even that, of course, Ger- many cannot pay at present, and one of the"difficylties of the situation is that no one can foresee when she will find it within her poWer. A three-year, or even a five- year, moratorium might quite well be insufficient. In that case the whole question would have to be reopened, and the uncertainty prevailing in the meantime would in itself have prevented the recovery which alone would enable Germany to pay. A final and permanent settlement is imperative, and Dr. Bruning is perfectly right to resist any avowedly temporary expedient. The most obvious and the most satisfactory course would be for the Lausanne POwers to wipe Reparations out altogether and then make a united dimarche to America on the question' of debts; ' But if French opposition makes that impoisible, as seems likely, there remains a second-best -Settle- ment which is well worth achieving, • The • precise sum Germany may be expected to pay when she • does resume is matter for discussion. If some reduction on the £33,000,000 of unconditional payments can be agreed on, so much the better. The date of resumption 'is obviously an important question, and it clearly•cannot be settled now. But two old ideas, borrowed from former Reparations plans or proposals, point the way to a quite possible solution. Payments could be made to begin automatically when the prosperity-level (ironical though the very mention of that term-seems to-day)- in Germany reaches a certain point. And the payments themselves could be secured (as in the Dawes Plan) on the railways or some industrial concerns whose fortunes arc sufficiently- bound up with Germany's general welfare to make it reasonably certain that her recovery would assure their prosperity., Bonds so issued and secured would become ordinarY stock exchange counters, and the invidious `'`: political tribute " payments from government to gOverninent would disappear.
Such details as these need not be further examined now.
The essential thing is that the British Delegation should go to Geneva resolved to wipe out Reparations altogether if possible and, failing that, to get a'final settlement effected on the basis of payments that Germany may reasonably he expected to find within her power after a further mora- torium. There is no a priori reason why such a settlement should not be reached. After that the American debt ques- tion can be tackled, the general principle being the reduction of debts proportionately to the reduction of Reparations.
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