East German Privatization and the Difficult Legacy of the Treuhand
This documentary provides a detailed timeline of the four-year privatization of East Germany following the 1989 fall of the Berlin Wall. The privatization was overseen by the Treuhand Trust. Originally appointed in 1990 by the East German Council of Ministers, it was ultimately run by West German corporate and political elites. Following reunification in August 1990, it was the responsibility of the West German government in Bonn to oversee Treuhand. However the Bundestag provided no oversight at all until a massive Treuhand corruption scandal erupted in 1992.
During its four-year existence, Treuhand privatized 10,000 state-owned East German enterprises, put three million East Germans (70% of the workforce) out of work and permanentlyy deindustrialized East Germany.
According to the filmmakers, some of this disastrous outcome stemmed from the rigid neoliberal bent of Trehand managers; some from bribery and corruption; some from from incompetence; and some from the avarice of West German entrepreneurs who bought West German businesses that competed with them and shut them down. East Germany experienced massive public protests and even a hunger strike as thousands of factories closed and millions of East Germans became jobless.
Some factors contributing East Germany’s financial collapse were beyond Treuhand’s control. At the time the two Germany’s reunited, East Germany lost most of its export market as the Communist regimes in other Eastern bloc countries collapsed. To prevent the East German mark from collapsing, the Bundestag introduced the Deutschmark into East Germany in July 1990. This led to massive price inflation of German consumer goods, leading East German residents to reject them in favor of cheap West German products. With no sales revenue, East German companies were forced to turn to Treuhand for loans and subsidies to pay their staff.
In 1992-93 when the Bundestag intervened, Treuhand was forced to preserve designated East German industries by providing loans and subsidies to businesses willing to modernize.
One-hundred-fifty convictions resulted from the Treuhand corruption scandal. As in the former Soviet Union, East German were promised shares in their state owned enterprises as they were privatized. These shares never materialized.
The Greek documentary Catastroika provides a somewhat different perspective on Treuhand’s role in the wholesale privatization of East Germany’s state-owned industries: See Privatization and the Theft of the Commons
This documentary, which can’t be embedded, can be viewed free at Privatizing East Germany
This takeover of East Germany was a historical scandal of the first magnitude. The East German people wanted reunification but had no idea they would be taken to the cleaners. We have relatives in East-Berlin, he lost his job within days of the takeover and his wife lost her job within weeks. They never worked again despite being highly qualified. One West German minister declared that they don’t need a manufacturing industry in the East because the West could supply everything. Indeed the western industry had spare capacity.
Excellent point. They mention this in the film. That many of the Treuhand board members and advisors were West Germany industrialists who saw an opportunity for their companies to make a fortune.
Please help! I am writing (preparing) a comprehensive paper on the East German privatization, but the film cannot be seen anywhere o
n the internet! Any idea how I could see it? Thank you in advance. Katalin Ferber, historian.
Unfortunately DW has removed it from their website. There is a segment on Treuhand and privatization in this Greek film on YouTube: https://www.youtube.com/watch?v=RORPpFL21dM&feature=emb_logo
And a good article about it in the New Statesman: https://www.newstatesman.com/world/2019/11/germanys-thatcherite-turn-how-privatisation-became-a-flashpoint-in-east-germany