Unlike other participants in WW2, Germany has never denied its guilt and has apologized many times. It has made reparations to Israel and the victims of the holocaust many times more than was demanded.
Israel is on good terms now with the new Germany.
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The agreement meant economic security for the new Zionist state, as Goldmann explained in his autobiography:
What the Luxembourg Agreement meant to Israel is for the historians of the young state to determine. That the goods Israel received from Germany were a decisive economic factor in its development is beyond doubt. I do not know what economic dangers might have threatened Israel at critical moments if it had not been for German supplies. Railways and telephones, dock installations and irrigation plants, whole areas of industry and agriculture, would not be where they are today without the reparations from Germany. And hundreds of thousands of Jewish victims of Nazism have received considerable sums under the law of restitution.
Goldman said in 1976:
Without the German reparations, the State of Israel would not have the half of its present infrastructure: every train in Israel is German, the ships are German, as well as the electricity, a large part of the industry ... without mentioning the individual pensions paid to the survivors ... In certain years, the amount of money received by Israel from Germany exceeds the total amount of money collected from international Jewry-two or three times as much.
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Conclusion
The Luxembourg Agreement obligated the West German government to pay three billion German marks to the State of Israel and 450 million marks to various Jewish organizations. Accordingly, the West German Finance Minister announced in 1953 that he expected that the reparations payments would eventually total four billion marks. Time would prove this a ludicrous underestimate.
By 1963, the German people had already paid out 20 billion marks, and by 1984 the total had risen to 70 billion.See 25. In late 1987 the West German parliament approved an additional 300 million marks in "restitution to the victims of National Socialist crimes."
The Bonn government announced at that time the 80 billion marks had already been paid out and estimated that by the year 2020 the payoff would total 100 billion marks which, at recent exchange rates, would be the equivalent of $50 billion.
http://www.ihr.org/jhr/v08/v08p243_Weber.html
http://www.facinghistorycampus.org/campus/memorials.nsf/0/DC396F572BD4D99F85256FA80055E9B1