January 9, 1952
The Knesset ends three days of debate by voting 61-50 to accept more than $800 million in Holocaust reparations from the Western German government over 14 years. The decision sparks protests and rioting, but the money is used to finance oil purchases and other raw material imports and proves vital to Israel’s early economy.
Chaim Weizmann, the head of the Jewish Agency, sent a letter to the United States, the United Kingdom, the Soviet Union and France after World War II to demand German reparations for the suffering of the Jewish people in the Holocaust. Moshe Sharett renewed the request to the Allies in March 1951, reminding them about the atrocities the Germans carried out. He said West Germany owed the new state of Israel $1.5 billion, based on the number of Israelis affected by the Holocaust. In September 1951, West German Chancellor Konrad Adenauer agreed in principle to provide reparations to Israel.
When the Knesset in January 1952 took up the debate about whether to accept the money, Menachem Begin and his Herut party led the opposition, viewing the offer as blood money. Israel and West Germany complete negotiations on the reparations with an agreement signed by Sharett and Adenaeur in Luxembourg on Sept. 10, 1952. The agreement goes into effect March 21, 1953. The two countries establish formal diplomatic relations May 12, 1965.