War-Related Debts of Other Countries to the U.S. Government (2024)

War-Related Debts of Other Countries to the U.S. Government (1)

The issue of delinquent principal and accrued interest on loans extended by the United States during World War I, and the related question of reparations owed by Germany, has remained unresolved for nearly 60 years. Although the amounts borrowed by our World War I allies totaled approximately $12.4 billion at the time, the amount outstanding has grown to $31.6 billion by December 31, 1994, including accrued but unpaid interest and after deduction for all payments made. Some countries -- including Cuba, Finland, Hungary, Liberia, and Nicaragua -- paid their World War I debts to the U.S. in full, although the amounts originally lent to these countries were relatively small.

As you may be aware, these debts present special problems. Most debtor countries fulfilled their commitments under the original debt agreements until the great depression of the 1930s. With the exception of the former U.S.S.R. -- which repudiated all foreign debts in January 1918 -- the principal debtor countries have never denied the validity of these debts. However, these debts to the U.S. were bound up with the issue of German war reparations and the intra-European debts generated by World War I. Many European nations are net creditors on World War I indebtedness, with Germany owing to them more than they in turn owe to other nations. These countries have maintained since the 1930s that they would resume payment on their war debts to the United States on the condition that the issue of Germany's war reparations to them be satisfactorily settled.

Resolution of the issue of government claims against Germany arising from World War I was subsequently deferred "until a final general settlement of this matter" by the 1953 London Agreement on German external debts to which the U.S. is a party. This agreement was ratified after receiving the advice and consent of the U.S. Senate and has the status of a treaty. Thus, while the U.S. has never formally recognized any legal connection between the World War I obligations owed to the U.S. and reparations claims on Germany, in practical terms a linkage has been established.

The case of debts arising from World War II is somewhat less complicated. At this time only four countries, discussed below, owe the U.S. government debts of any size arising from World War II programs to aid our allies. Other countries have paid their debts in full.

The United Kingdom still has amounts outstanding from World War II and its immediate aftermath which it continues to repay on a regular basis. World War II-era claims on Iran have been incorporated into the claims being adjudicated by the Iran-U.S. Claims Tribunal, established after the 1979 Iranian revolution. Lend Lease claims against the former Soviet Union arising from World War II were settled in a 1972 agreement between the U.S. and U.S.S.R. In the 1972 agreement, the U.S.S.R. pledged to make three initial payments totaling $48 million and to repay the remaining Lend Lease debt once the United States had granted Most Favored Nations (MFN) trade status. The Soviet Union made the three initial downpayments, but because it did not obtain MFN status at that time -- because of conditions set forth in the 1974 Trade Act -- its obligation to make the remaining payments toward its Lend Lease debt was not triggered before the dissolution of the U.S.S.R. However, MFN status was extended to the Russian Federation in 1992, and accordingly, in 1993, Russia signed an agreement with the U.S. in which it acknowledged its liability and agreed to a repayment schedule for the former U.S.S.R.'s Lend Lease debt. Finally, the U.S. continues to work for a resolution with Taiwan of the issue of debts arising from World War II-era loans extended to China.

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War-Related Debts of Other Countries to the U.S. Government (2)

International Finance and Development | Economic and Business Affairs | Department of State

War-Related Debts of Other Countries to the U.S. Government (2024)

FAQs

Do countries still owe the US money from WWII? ›

The United Kingdom still has amounts outstanding from World War II and its immediate aftermath which it continues to repay on a regular basis. World War II-era claims on Iran have been incorporated into the claims being adjudicated by the Iran-U.S. Claims Tribunal, established after the 1979 Iranian revolution.

What happens to debt when countries go to war? ›

Countries will pass laws against trading with the enemy or sending money out of the country. After the war, the winning country will claim the pre-war debts AND probably demand reparation payments, the loser will have to write off the debts.

What was the British war debt to the United States? ›

From 1st July, 1932, the repayments were suspended in accordance with the arrangements made at the Lausanne Conference and have not since been resumed.At the end of 1964 the unpaid balance of the United Kingdom's World War II and Post-War debt to the United States of America was $4,222 millions.

Who owes the US the most money? ›

1. Japan
  • Japan. $1,098.2. 14.52%
  • China. $769.6. 10.17%
  • United Kingdom. $693. 9.16%
  • Luxembourg. $345.4. 4.57%
  • Cayman Islands. $323.8. 4.28%

How much does China owe the United States? ›

The United States pays interest on approximately $850 billion in debt held by the People's Republic of China. China, however, is currently in default on its sovereign debt held by American bondholders.

Does Russia owe US money for WWII? ›

Does Russia owe the US money from World War II? Yes, the Soviet Union had owed some money. They started paid back in 1946 and paid for while, but Cold War creates lots of tensions between Allies, so payments were stopped.

Does Britain still owe America money from ww2? ›

The last payment was made on 29 December 2006 for the sum of about $83m USD (£45.5m) to the United States, and about $23.6m USD (£12m) to Canada; the 29th was chosen as it was the last working day of the year.

Is Japan still paying reparations for WWII? ›

Payments of reparations started in 1955, lasted for 23 years and ended in 1977. For countries that renounced any reparations from Japan, it agreed to pay an indemnity and/or grants in accordance with bilateral agreements.

What happens to your money in the bank if the war breaks out? ›

Hyperinflation or currency devaluation may occur, eroding the purchasing power of your savings. Risk of Loss: There's a risk of losing your savings if banks collapse or if the government seizes assets to fund the war effort. Deposits may be at risk, especially if banks are not adequately capitalized or insured.

How does the US pay for wars? ›

Prior to 9/11, U.S. wars were financed through a mixture of higher taxes and budget cuts, and funded mostly through the regular defense budget. One third of the costs of World War I and half the costs of World War II were met through higher taxes.

Do you still pay a mortgage during war? ›

You still owe the money to the bank, so you have to keep paying the mortgage. As an added bonus, most property insurance policies have an act of war clause that allows the insurer to not have to pay for the damage.

When did Germany pay off WWII debt? ›

West and East Germany were officially unified in 1995, and the country officially paid off its debts in October of 2010.

Did the war of 1812 leave the US in debt? ›

The War of 1812 was financed mainly through the use of borrowed funds. Total public debt increased from $45.2 million on January 1, 1812, to $119.2 million as of September 30, 1815.

How did the UK pay off WWII debt? ›

There were low-interest loans made during the war, and a big loan in 1945. In 1950, the debt started being paid off in 50 annual payments. Payment was deferred several times with agreement, and at the end of 2006, the final payment was made.

Who owes the US debt? ›

1 Foreign governments hold a large portion of the public debt, while the rest is owned by U.S. banks and investors, the Federal Reserve, state and local governments, mutual funds, pensions funds, insurance companies, and holders of savings bonds.

Who does the US borrow money from? ›

Federal Borrowing

The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury. Treasury securities are attractive to investors because they are: Backed by the full faith and credit of the United States government.

Does Russia hold US debt? ›

The value of U.S. Treasury securities held by residents of Russia amounted to 33 million U.S. dollars in June 2023, the lowest over the period under consideration. Furthermore, in March 2020, the figure decreased sharply to 3.85 billion U.S. dollars, down from 12.6 billion U.S. dollars one month prior.

Does Russia owe us money for WWII? ›

Does Russia owe the US money from World War II? Yes, the Soviet Union had owed some money. They started paid back in 1946 and paid for while, but Cold War creates lots of tensions between Allies, so payments were stopped.

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