While economic reparations are often seen as punitive measures, there have been instances where they facilitated better diplomatic relations. A key example is the post-WWII era. Unlike the punitive Treaty of Versailles post-WWI, the approach after WWII was more about rebuilding and cooperation. The Marshall Plan, while not reparations in the strictest sense, was an initiative where the US provided significant economic aid to war-torn European nations. This not only helped in reconstruction but also fostered positive diplomatic ties, anchoring Western Europe closer to the US and establishing a bulwark against Soviet influence.

War debts are specifically accrued due to the financial burdens of warfare, encompassing military expenditure, reconstruction costs, and reparations. They are sudden, massive, and often unforeseen. Regular national debts, on the other hand, accumulate over time due to budget deficits, where a country's expenditure exceeds its revenues. While both types of debt can strain a nation's economy, war debts often have a more immediate and profound impact due to their magnitude and the urgency of repayment. Moreover, war debts can carry political implications, especially if borrowed from foreign nations, potentially affecting sovereignty and diplomatic relations.

Post-war economic protectionism, while intended to safeguard domestic industries, can have long-term societal implications. Firstly, it can lead to inefficiencies: protected industries might lack the incentive to innovate or improve, leading to stagnation. Secondly, consumers might face higher prices for goods due to a lack of competition. On a broader scale, protectionism can hinder international cooperation and foster animosity between nations. Over time, such policies can fuel nationalist sentiments, with societies becoming wary of foreign products, ideas, and influences. This can limit cultural exchange and the benefits that come from a globally connected world.

Yes, there have been instances of countries defaulting on their war debts. For example, following WWI, the war debts and reparations system became complex, with many countries owing and being owed money. The US had lent significant sums to Allied powers. However, the Great Depression of the 1930s strained economies, and many European countries defaulted on their debts to the US. When countries default on their debts, it can lead to a loss of trust in the international financial system, higher interest rates due to increased risks, and strained diplomatic relations. Moreover, defaults can exacerbate economic downturns, as was the case during the Depression.

Before the 20th century, wars were primarily financed through a mix of increasing taxes, borrowing funds, and plundering conquered territories. Taxation was the most direct method, but it had its limits and could lead to domestic unrest. Borrowing was another method; nations would either take loans from wealthy domestic individuals or from other states. Plundering, or extracting wealth from defeated territories, was also prevalent, especially during colonial conquests. For instance, the Spanish Empire extracted significant wealth from its colonies in the Americas, while the British Empire imposed taxes and extracted resources from its colonies in Asia and Africa.