Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Rebuilding East Germany "has failed"
Reuters | 4/05/04

Posted on 04/05/2004 8:24:37 AM PDT by kattracks

BERLIN (Reuters) - Germany's bid to modernise its former communist eastern states with 1.25 trillion euros (830 billion pounds) of transfers since 1990 has failed, and the region will remain a serious drag on the wider economy, according to a leaked report.

The study, commissioned by Economy Minister Wolfgang Clement and Transport Minister Manfred Stolpe, concludes that the 90 billion euros Berlin spends annually on rebuilding the so-called new federal states is largely wasted, weekly news magazine Der Spiegel reported.

The 13 experts on eastern Germany charged with compiling the report, including former Hamburg Mayor Klaus von Dohnanyi, industry and union officials and economists, said the east has ground to a halt and the west is falling into ruin as a result.

"The ongoing internal west-east transfer of cash and other consequences of German unification are directly or indirectly responsible for about two thirds of the country's economic weakness," Der Spiegel quoted the report as saying.

Chancellor Gerhard Schroeder promised in 1998 when he took office that rebuilding the eastern states would be a top priority for his coalition of Social Democrats and environmentalist Greens.

Recently, however, opposition politicians including Christian Democrat leader Angela Merkel, an east German, have accused him of ignoring the east's woes as reforms to the wider economy, terrorism and other issues have taken centre stage.

Heinz Schmalholz, an economist specialising in structural change at the Ifo Institute's branch in Dresden, eastern Germany, said that while it is easier with hindsight to identify mistakes made after reunification, no politically viable alternatives have been put forward.

WESTWARDS MIGRATION

"One of the main criticisms has been that wages rose much too quickly after reunification," boosting unemployment, he told Reuters.

"But what would people then have done without that? They would of course have migrated to the west where there were higher wages," he added. "I don't know whether the politicians would have wanted to take responsibility for that."

Although east Germany makes up just a quarter of the total German labour force, it accounts for half the nation's unemployed, said Lehman Brothers' economist Sandra Petcov.

That meant that nearly half of the gross transfers to the east during the second half of the 1990s was spent on social security payments. Investment accounted for just 15 percent.

The leaked government report suggests some remedies to reverse damage caused to the east's economy in the last decade and officials in four working groups are currently evaluating which can feasibly be implemented, Der Spiegel said.

The suggestions include long-term tax relief for eastern German companies and cash incentives for guaranteed jobs; concentration of economic aid in specific growth centres; a new reconstruction master plan; and the inclusion of at least one eastern German firm in tenders for government contracts.

Some analysts, including Lehman's Petcov, are more upbeat about the process of reunification and suggest former Chancellor Helmut Kohl's goal of creating "blooming landscapes" in the east is gradually being achieved.

"It may well be that another 10 or 15 years are required until full convergence has been achieved, but the costs of getting there are likely to decline as the goal is approached," Petcov said.

"An optimist might even argue that if current structural reform plans are implemented, Germany may yet eventually emerge economically stronger than west Germany ever was," she added.

Minister Stolpe, who is also responsible for rebuilding east Germany, said on Monday that the government needed to re-think funding for the east and a "readjustment" was in order.



TOPICS: Foreign Affairs; Front Page News; Germany; News/Current Events
KEYWORDS:
Navigation: use the links below to view more comments.
first 1-5051-59 next last

1 posted on 04/05/2004 8:24:39 AM PDT by kattracks
[ Post Reply | Private Reply | View Replies]

To: kattracks
You mean massive investment in socialism has failed?

Aw, that's a shame.

And a really big surprise!
2 posted on 04/05/2004 8:27:40 AM PDT by samtheman
[ Post Reply | Private Reply | To 1 | View Replies]

To: All

The Other Belly Girl


Donate Here By Secure Server

Or mail checks to
FreeRepublic , LLC
PO BOX 9771
FRESNO, CA 93794

or you can use

PayPal at Jimrob@psnw.com

STOP BY AND BUMP THE FUNDRAISER THREAD-
It is in the breaking news sidebar!


3 posted on 04/05/2004 8:28:47 AM PDT by Support Free Republic (Hi Mom! Hi Dad!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: kattracks
After East Germany (along with the rest of the soviet bloc) economically collapsed, you wouldn't think they needed another lesson on socialism not working. Then again...it seems we need another lesson too.
4 posted on 04/05/2004 8:29:28 AM PDT by blanknoone (End the occupation! Bring the Troops Home! (from Germany)
[ Post Reply | Private Reply | To 1 | View Replies]

To: kattracks
What is the chance with Iraq... ?
5 posted on 04/05/2004 8:29:39 AM PDT by traumer
[ Post Reply | Private Reply | To 1 | View Replies]

To: kattracks
How much have we poured into the inner cities to like effect?
6 posted on 04/05/2004 8:33:00 AM PDT by sphinx
[ Post Reply | Private Reply | To 1 | View Replies]

To: kattracks
Interesting -- always assuming, of course, that the article, and the assessment, are accurate. Something about this gives me the sense of there being an agenda at work here -- in the analysis, and in its convenient leak.

One could speculate about any number of agendas, including a variety of nationalistic ones. ("Nationalism" is always a troublesome word when it's used in the context of Germany....)

7 posted on 04/05/2004 8:34:34 AM PDT by r9etb
[ Post Reply | Private Reply | To 1 | View Replies]

To: kattracks
The saddest part is that the east votes almost uniformly socialist. In the last election, it was very close and the conservatives almost won. If it weren't for East Germany, the Germans would have elected a conservative government in 2002 and would have supported us in Iraq.
8 posted on 04/05/2004 8:36:44 AM PDT by thedugal (I is a genious.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: r9etb
A bottomless pit remains a bottomless pit. Eastern Germany is the sound of prosperous West Germany being bled dry with precious little to show for it.
9 posted on 04/05/2004 8:37:33 AM PDT by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives On In My Heart Forever)
[ Post Reply | Private Reply | To 7 | View Replies]

To: traumer
Never mind Iraq - let's watch Spain spin down the flush bowl.
10 posted on 04/05/2004 8:39:17 AM PDT by LurkedLongEnough (Bush '04 --- in a F'n landslide.)
[ Post Reply | Private Reply | To 5 | View Replies]

To: kattracks
1.25 trillion euros (830 billion pounds) of transfers since 1990 has failed

But per the UN and EU, the Coalition in Iraq is supposed to have the nation up and running and prosperous and peaceful, yada yada yada, within the next 3 months (just over a year after their liberation).
11 posted on 04/05/2004 8:40:58 AM PDT by TomGuy (Clintonites have such good hind-sight because they had their heads up their hind-ends 8 years.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: kattracks; Dubya's fan
Kattracks thank you for this article. I knew it from beginning it would not work.
12 posted on 04/05/2004 8:41:25 AM PDT by bogdanPolska12
[ Post Reply | Private Reply | To 1 | View Replies]

To: samtheman
Yet Poland, the Czech Republic, and East Germany's other neighbors transitioned nicely without trillions in handouts. Hmmmmmm.
13 posted on 04/05/2004 8:42:36 AM PDT by AngryJawa (Thank You Troops!)
[ Post Reply | Private Reply | To 2 | View Replies]

To: r9etb
It is pretty accurate, according to Germans, some of whom have posted the same sort of stories on FR.

For a personal note, my neighbor is a former West German who immigrated to the U.S. and takes regular vacations back home to Bavaria. She says they hate the East Germans, that they are lazy slugs and nothing but a drag on the rest of Germany.

14 posted on 04/05/2004 8:42:46 AM PDT by xJones
[ Post Reply | Private Reply | To 7 | View Replies]

To: xJones
It is pretty accurate, according to Germans, some of whom have posted the same sort of stories on FR.

I'm sure there's some accuracy to the report. But I still have a suspicion that there's an agenda at work in this convenient leak.

15 posted on 04/05/2004 8:44:37 AM PDT by r9etb
[ Post Reply | Private Reply | To 14 | View Replies]

To: kattracks
Couldn't happen to a nicer country. Well, except maybe France.
16 posted on 04/05/2004 8:45:43 AM PDT by Buck72
[ Post Reply | Private Reply | To 1 | View Replies]

To: kattracks
I remember well a conversation with a naturalize german co-worker at the time of reunification. He shuddered to think of the awesome task of reintegrating the east, thought it unrealistic. But when I high mindedly pressed him on the debt owed to the countrymen who spent generations enslaved to the Soviets he reluctantly agreed that it was the only moral thing to do. The right thing is being done and it is painful and unbelieveably expensive.
17 posted on 04/05/2004 8:47:23 AM PDT by nkycincinnatikid
[ Post Reply | Private Reply | To 1 | View Replies]

To: samtheman
"You mean massive investment in socialism has failed?"
I am shocked!
18 posted on 04/05/2004 8:47:27 AM PDT by rrrod
[ Post Reply | Private Reply | To 2 | View Replies]

To: TomGuy
Excellant point!
19 posted on 04/05/2004 8:49:23 AM PDT by rrrod
[ Post Reply | Private Reply | To 11 | View Replies]

To: nkycincinnatikid
Imagine what the bill will be when North Korea falls. From what I have read, they have been reduced and starved to the point of having almost no economy at all.
20 posted on 04/05/2004 8:49:43 AM PDT by Zack Nguyen
[ Post Reply | Private Reply | To 17 | View Replies]

To: thedugal
Doesn't Angela Merkel, the German "Maggie Thatcher", hail from the East?
21 posted on 04/05/2004 8:50:03 AM PDT by Cooter
[ Post Reply | Private Reply | To 8 | View Replies]

To: AngryJawa
The difference in the other countries was that there wasn't a "western brother" with which to compare themselves to. The Germans worked from a presumption that they could raise the East up to the standard of the West. This ignored the huge differences in the two societies with regards to the people's predisposition to the state's role in society. Simply, the East suffered from the old communist handicap of "we pretend to work and they pretend to pay us." Add this to the fact that the West wanted to make the East think that there would be minimal transition pain and you had unrealistically raised expectations. Simply, easterners had a chance to see the west and wanted it all without pain right away, while the other former client states knew they had a tough slog ahead of them. It took years of shock therapy to their economies, but once the primary pain passed the gain could emerge more dramatically for the folks in those countries.
22 posted on 04/05/2004 8:50:33 AM PDT by mitchbert (Facts are Stubborn Things)
[ Post Reply | Private Reply | To 13 | View Replies]

To: Zack Nguyen
That sceneario is truly unthinkable, is'nt it. It will be absolutely impossible for the South to undertake an integration, It would bankrupt and destroy the Souths institutions.
23 posted on 04/05/2004 8:55:41 AM PDT by nkycincinnatikid
[ Post Reply | Private Reply | To 20 | View Replies]

To: thedugal
The saddest part is that the east votes almost uniformly socialist. In the last election, it was very close and the conservatives almost won. If it weren't for East Germany, the Germans would have elected a conservative government in 2002 and would have supported us in Iraq.

Christian Democrat Angela Merkel seems poised to win the next election, though.

24 posted on 04/05/2004 8:56:58 AM PDT by MegaSilver
[ Post Reply | Private Reply | To 8 | View Replies]

To: nkycincinnatikid
It is almost unthinkable. Yet one way or another it will undoubtedly happen. Either N. Korea will invade the South, or N. Korea will collapse. Unfortunately, the NK population is so starved, brainwashed and beaten down that no effective resistance may exist.

Perhaps the entire population should be moved to South Korea. I am fairly serious. Maybe that part of the world should simply be abandoned.
25 posted on 04/05/2004 9:01:35 AM PDT by Zack Nguyen
[ Post Reply | Private Reply | To 23 | View Replies]

To: kattracks
So, a nearly socialist state (West Germany) is having trouble resurrecting a completely socialist state (East Germany) to the same nearly socialist condition through massive infusions of cash, failed socialist nostrums and massively restrictive labor and employment laws and they are wondering why their socialism with a kinder face is not working?

What a shock!

26 posted on 04/05/2004 9:06:12 AM PDT by Gritty ("Europe's Muslims today outnumber all Norwegians, Swedes, Danes, and Finns put together!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: AngryJawa
Yet Poland, the Czech Republic, and East Germany's other neighbors transitioned nicely without trillions in handouts. Hmmmmmm.

The differences in starting conditions are significant, however -- not to mention instructive. In the case of Poland, the Czechs (and now also the Slovakians, apparently), they had the advantage of all being in the same boat, a direct experience that socialism didn't work, and an opportunity to rebuild from scratch.

When East Germany's government collapsed, it was basically replaced by that of the West Germans -- a group that had not yet had to deal with the need to start from scratch, and which believed it could extend the West German social state to the rest of the country. They tried, and are apparently failing.

I wonder if what we're seeing here is not so much a failure on the part of the East Germans, so much as it is a failure on the part of the West Germans. I think somebody in Germany has clued in on this, and is looking to use the leak to promote something different for the entire country.

Note the proposal for tax breaks for East Germany -- can you imagine the rest of Germany feeling happy about that? The EU, of course, would be upset, too.... Which is why I begin to wonder about a nationalistic element to the idea.

27 posted on 04/05/2004 9:10:36 AM PDT by r9etb
[ Post Reply | Private Reply | To 13 | View Replies]

To: xJones
She says they hate the East Germans, that they are lazy slugs and nothing but a drag on the rest of Germany.

I think we need to discount her opinions here, because there are long-standing regional animosities among the various parts of Germany. Sure, there's a nugget of truth, but....

28 posted on 04/05/2004 9:13:28 AM PDT by r9etb
[ Post Reply | Private Reply | To 14 | View Replies]

To: Zack Nguyen
Perhaps the entire population should be moved to South Korea. I am fairly serious. Maybe that part of the world should simply be abandoned.

There will be (industrialized) Feudalism in North Korea. It can't be any other way.

29 posted on 04/05/2004 9:15:37 AM PDT by r9etb
[ Post Reply | Private Reply | To 25 | View Replies]

To: mitchbert
Your post exposes the myth of social welfare payments - they are ultimately destructive to their recipients.
30 posted on 04/05/2004 9:18:42 AM PDT by headsonpikes (Spirit of '76 bttt!)
[ Post Reply | Private Reply | To 22 | View Replies]

To: kattracks
I just got back from Berlin yesterday. I spent a lot of time in east Berlin and I may have spent enough on beer to help revive the economy. East Berlin is a total reck, but it is the mentality that is the real problem. I sat at a pub and watched a construction crew across the street. I stared in amazement while one young man was digging and he was being advised by 3 other co-workers. On a good note I did get drunk and take a leak on Carl Marx Ave.
31 posted on 04/05/2004 9:19:50 AM PDT by The Toll
[ Post Reply | Private Reply | To 1 | View Replies]

To: LurkedLongEnough
Never mind Iraq - let's watch Spain spin down the flush bowl.

At least Spain is doing it with its own money while it is OUR dollars that are going down the flusher in Iraq ;-)

32 posted on 04/05/2004 9:20:48 AM PDT by varon (Allegiance to the constitution, always. Allegiance to a political party, never.)
[ Post Reply | Private Reply | To 10 | View Replies]

To: Zack Nguyen
Whereas east and west germany had always been politically integrated (in the Holy Roman style), and East Germany had the highest economic standards of any any Communist nation, and was only one third the size of the West, one of the richest of all states, putting the pieces back together was plausible if problematic.. In the case of Korea, South and North had only a common historical experience of foreign domination in the modern era. North is probably the poorest non African state on the planet, and it is at least half the size of the South. I just do'nt know what will happen when that evil regime falls, but the South can't absorb it. Imo.
33 posted on 04/05/2004 9:23:15 AM PDT by nkycincinnatikid
[ Post Reply | Private Reply | To 25 | View Replies]

To: kattracks
Aren't these the same people who keep complaining about what hasn't been done yet in Iraq?
34 posted on 04/05/2004 9:27:03 AM PDT by McGavin999 (Expecting others to pay for your enjoyment of FreeRepublic is socialism: Donate now!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: xJones
She says they hate the East Germans, that they are lazy slugs and nothing but a drag on the rest of Germany.

I dated a (West) German girl who said the problem with East Germans is that, though the physical Berlin wall is gone, they still have a "Berlin Wall of the Mind" that keeps them, at least mentally, in the old Soviet Bloc.

She told me a story about her hair stylist. She had hired a Eastern German stylist. The East German woman was under the impression that, rather than doing as many cuts as she could during her shift, she was only required to do 10 haircuts a day, since that was how it was done in the old days.

35 posted on 04/05/2004 9:33:13 AM PDT by Modernman (Chthulhu for President! Why Vote for the Lesser Evil?)
[ Post Reply | Private Reply | To 14 | View Replies]

To: kattracks
Communism leaves its ugly mark.
36 posted on 04/05/2004 9:37:58 AM PDT by vpintheak (Our Liberties we prize, and our rights we will maintain!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: nkycincinnatikid
The "Wall of the Mind" is going to exist in Germany for at least several generations.
37 posted on 04/05/2004 9:40:23 AM PDT by dfwgator (It's only knock and know-all, but I like it.)
[ Post Reply | Private Reply | To 17 | View Replies]

To: Modernman
You beat me to it, about the "wall of the mind" I don't think East Germans want to go back to the old days, it's just that the education system and value systems that they were indoctrinated with leave them at a disadvantage to their Western counterparts.
38 posted on 04/05/2004 9:42:51 AM PDT by dfwgator (It's only knock and know-all, but I like it.)
[ Post Reply | Private Reply | To 35 | View Replies]

To: kattracks
Expell the Turks. Have East Germans fill the jobs. Give cash incentives for Germans to have babies. How hard is that?
39 posted on 04/05/2004 9:43:53 AM PDT by FreedomSurge
[ Post Reply | Private Reply | To 1 | View Replies]

To: xJones
My mom's a West Berliner, and for the last 12 years, she and everyone else have been saying that they should rebuild the wall, twice as high this time.

And don't get her started on the Turks.
40 posted on 04/05/2004 9:50:02 AM PDT by Jhensy
[ Post Reply | Private Reply | To 14 | View Replies]

To: FreedomSurge
Maybe not so hard ,but eireily reminiscent of a Germany at another time which drew the approbation of the world for all time.
41 posted on 04/05/2004 10:00:25 AM PDT by nkycincinnatikid
[ Post Reply | Private Reply | To 39 | View Replies]

To: The Toll
I did get drunk and take a leak on Carl Marx Ave.

A dream of a life time. The other of mine is to take a dump on Lennin's tomb.

...one young man was digging and he was being advised by 3 other co-workers.

I see that all the time with out local utility company.

42 posted on 04/05/2004 10:07:38 AM PDT by oyez
[ Post Reply | Private Reply | To 31 | View Replies]

To: nkycincinnatikid
Did you just call me a Nazi?????
43 posted on 04/05/2004 10:09:11 AM PDT by FreedomSurge
[ Post Reply | Private Reply | To 41 | View Replies]

To: AngryJawa
Poland, the Czech Republic, and East Germany's other neighbors transitioned nicely without trillions in handouts
So what are you saying? That handouts don't work?

You know, we're joking about this but it's really pathetic when you think about it. Communism and socialism have a 100% failure rate since they started trying to organize societies back in the 1800s. 100% failure. 0% success.

And yet, like little leftist energizer bunnies with lots of battery and no brain, they just keep trying and trying and trying and trying...

It would be funny to watch the silly leftists spin their wheels... if they weren't harming real people at the same time.

44 posted on 04/05/2004 10:14:09 AM PDT by samtheman
[ Post Reply | Private Reply | To 13 | View Replies]

To: The Toll
I stared in amazement while one young man was digging and he was being advised by 3 other co-workers.

Gee.......... sounds like the People's Republic of Chicago!!!

45 posted on 04/05/2004 10:19:47 AM PDT by NotJustAnotherPrettyFace (Michael <a href = "http://www.michaelmoore.com/" title="Miserable Failure">"Miserable Failure"</a>)
[ Post Reply | Private Reply | To 31 | View Replies]

To: mitchbert
Sadly, post-Castro Cuba is going face the same fate. The Cuban exiles in Miami are going to return to run the economy, but the Cubans who lived under Castro are going to have an entirely different set of values.
46 posted on 04/05/2004 10:21:48 AM PDT by dfwgator (It's only knock and know-all, but I like it.)
[ Post Reply | Private Reply | To 22 | View Replies]

To: FreedomSurge
The lesson here is that once the hogs feed from the government trough it is almost impossible to wean them. As time passes you will realize the same. The view that a little socialism is alright is false. Freebies are just as addictive in destroying character as opium.
47 posted on 04/05/2004 10:37:59 AM PDT by meenie
[ Post Reply | Private Reply | To 39 | View Replies]

To: kattracks
A large strech of Germany will not be economically productive?

Damn. What a shame.
48 posted on 04/05/2004 10:41:20 AM PDT by Ronly Bonly Jones (killing innocent people is not a hobby that anyone should take up)
[ Post Reply | Private Reply | To 1 | View Replies]

To: r9etb
What's the agenda?
49 posted on 04/05/2004 10:44:00 AM PDT by Piranha
[ Post Reply | Private Reply | To 15 | View Replies]

To: kattracks
The major high tech industries that were in the region before WW II have relocated to other countries. The region can recover when high tech industry returns.
50 posted on 04/05/2004 10:44:41 AM PDT by RightWhale (Theorems link concepts; proofs establish links)
[ Post Reply | Private Reply | To 1 | View Replies]


Navigation: use the links below to view more comments.
first 1-5051-59 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson