Following the horrors of the Holocaust which saw six million Jews murdered by German Nazis during World War Two, the Reparations Agreement between Israel and West Germany was brought into force on March 27, 1953. The terse talks were held following calls from Jewish organizations and the State of Israel for the German nation to pay monetary compensation for the losses and trauma suffered by Jews. The negotiations were held between the Israeli Foreign Minister Moshe Sharett and West German Chancellor Konrad Adenauer.
In 1951, Israeli authorities made a claim to the four powers occupying post-war Germany regarding compensation and reimbursement. It was deemed necessary by the Israeli government to receive reparations as they had absorbed 500,000 Holocaust survivors despite economic problems including high unemployment and scarce foreign currency reserves following the Arab-Israeli War of 1948. It was calculated the absorption had cost the country $3,000 per person and the total losses from Jewish property taken by the Nazis was worth $6 billion.
There was great opposition to the signing the agreement from both ends of the Israeli political spectrum. Regardless, the Mapai party and its leader David Ben-Gurion agreed to take a practical approach and accepted the reparations agreement in the hope of sustaining the country's struggling economy. Just one year later, the president of the World Jewish Congress and co-chairman of the Jewish Agency for Israel, Nahum Goldman, held a meeting in New York with 23 major Jewish and international organizations to discuss the Jews' material claim against West Germany. The negotiations eventually led to the Reparation Agreement beginning in March 1952 and being finally signed on September 10, 1952 in Luxembourg.
Over the next 14 years, West Germany paid Israel a total of three billion Marks, with 450 million Marks also being paid to the World Jewish Congress. The money was invested in establishing the country's economy and the reparations amounted to 87.5 percent its income in 1956.
However, many Jews remained unsatisfied with the reparations and campaigned to gain greater compensation for individuals affected by the Holocaust. The movement gained momentum in the 1990s, with Jews making claims for property stolen from them under the Nazi regime by Germans, Austrians, Hungarians and Americans. The goods included gold, silver, paintings, Oriental rugs, furs and other treasures seized from Holocaust survivors.
Survivors' groups also began investigating what had happened to the savings of Jewish victims of the Holocaust held in Swiss bank accounts, calling for payouts to be made. However, the Swiss banks scandalized the world by refusing to honor the dormant accounts
Pressure was also put on companies including Volkswagen, Deutsche Bank and Siemens to compensate Jews who worked for them under forced labor. And in 1992, the German government established a pension called the Article 2 Fund as part of the Holocaust reparations which made monthly payments to survivors averaging $320.
At the turn of the 21st century, the German fund to compensate Nazi-era Jewish laborers was established, with about 40,000 of them receiving $7,500 compensation. As much as $300 million intended to compensate all survivors of the Nazis was made available to pay insurance claims, and about $100 million to pay other claims, including those against banks. Holocaust survivors began to seek reparations within Israel for land, bank accounts, and other assets their parents or grandparents purchased in pre-state Israel but did not live to redeem. By the following year, it was reported Jewish reparation groups had collected almost $11 billion from governments and companies around the world. Some 139,000 people who worked in German labor camps received new one-time payments from Germany worth about $8,000 and by August, almost 60,000 tax-free payments were being made to people living in the United States from a reparation fund established by Germany. Researchers say there may be $40 million in lost bank deposits in Israel and another $90 million worth of unclaimed real estate.
In 2007, the German government gave another $250 million to its pension program for Holocaust survivors over the next decade. The change was expected to benefit around 6,000 people around the world by no longer limiting the Article 2 Fund to pensioners with an income of less than $16,000. Just two years later, Israeli Finance Minister Yuval Steinitz announced plans to demand up to 1 billion Euros in Holocaust reparations from Germany for 30,000 Israeli forced labor survivors.