An intriguing report by the BBC earlier this week that Britain’s war debts are still being paid off, but will be cleared by the end of the year. (Read the report here.)
War debts have a peculiar character. It is one thing to repay debts to neutrals or third parties (Paul Kennedy has an intriguing point in “The rise and fall of the great powers” about how the interest rates charged to Poland rose during the second half of the 18th century as a reflection of impending doom). It is another to settle debts among allies.
During the war itself, soldiers from different countries are supposed to fight alongside each other. Some kind of integrated command is set up to maximise the effect of the assembled fighting forces. Keeping some kind of inter-allied balance sheet of casualties can’t be allowed to get in the way of winning the war. Yet an equivalent balance sheet for money seems to be essential.
There is no debt owed to Canada for the cost in blood of the Dieppe raid, but the cost in money has to be repaid. This seems wrong to me.
Jean Monnet had the right idea when he set up the Anglo-French Wheat Executive during the first world war. Victory for France and victory for Britain were inseparable: similarly, defeat for one would inevitably lead to defeat for the other. It was therefore necessary to fight an integrated war. The Wheat Executive was charged with buying food from the Americas, north and south, and bringing it to Europe, delivering it to wherever it was most needed in three countries (Britain, France, Italy). It was a reversal of normal practice, which was that a country’s own interests should always come first. Monnet asked each country to acquiesce in much needed food supplies being diverted to another country where the needs were even greater. It was in everyone’s longer term interest to meet the most pressing short tern interests.
Racking up debts among allies is the negation of this principle. Former Italian prime minister Francesco Nitti argued for a similar approach in “Peaceless Europe” (published in 1922). It made no sense for allies that had formerly been on the same side now to demand debts to be paid amongst each other, and such debts were unpayable in any case. It would be better to write them off in order to restart prosperous economic life. (This was the approach embodied by Marshall Aid after the second world war.)
Some caution should be taken with Nitti’s motives, given that Italy joined the war on the basis of promised new territories and came out of the war with large debts, and that he calls for Germany’s war reparations to be reduced but not completely scrapped (particularly the payments of coal to Italy) but the fundamental point remains a good one that a peace settlement needs to be based on equality between all parties if it is not merely to lead to another war.
One might also note the extraordinary cost of war, if the British are still paying for the second world war. There are reports that the Americans have already spent more money in Afghanistan and Iraq than they ever did in Vietnam, with no end to the Afghan and Iraqi wars in sight. Altiero Spinelli remarked on the sheer destructiveness of war, that it precluded the attainment of any other political objectives and that therefore to achieve those objectives required first the abolition of the threat of war.