National and Regional Strategies of Germany Focusing on its Eastern Part

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1 National and Regional Strategies of Germany Focusing on its Eastern Part by Prof. Dr. Peter Jurczek Chemnitz University of Technology Seoul, 24 September 2009 Peter Jurczek 2009

2 The geopolitical position in Europe prior to the German reunification Source: Diercke Weltatlas, Georg Westermann Verlag, Braunschweig 1974

3 The FRG and the area adjacent to it as well as the GDR prior to the reunification of Germany

4 Jubilation in Berlin on 3 October 1990 German Unification Day (Jubelfoto Wiedervereinigung)

5 After 9 November 1989, many citizens of the GDR traveled to West Germany. Source: Frankfurter Rundschau Nr. 124, 30 May 2009, p.28

6 Source: Folienatlas Deutschland Europa Welt, Justus Perthes Verlag, Gotha 1995 The 16 Federal States after the German reunification

7 Payments from the FRG to the GDR until 1989: since : redeeming (political) prisoners: DM3.4 billion for ca. 33,000 persons since : transit rate for civil traffic FRG Berlin/West: ca. DM8 billion 1983/ : 2 credit guarantees of an amount of DM1.95 billion further sources of revenue in DM 4 : mandatory or minimum obligatory exchange into Mark payed by the GDR for West Germans who entered the GDR charge payed by the FRG for citizens entering officially GDR 1 Weidenfeld/Korte (1993): 362; Schroeder/Alisch (1998): Presse- und Informationsdienst der Bundesregierung (Hrsg.)(1989): 98; Presse- und Informationsamt der Bundesregierung (Hrsg.)(1971): Heydemann (2001) in ( ) 4 Presse- und Informationsdienst der Bundesregierung (Hrsg.)(1989): 153; Schroeder/Alisch (1998): 191

8 Net transfer payments made by the Federation since 1989 for the newlyformed German states: end of 1990: Begrüßungsgeld (= Welcome Money) ( until ) 1 : ca. DM3-4 billion (100 DM per capita) 1 Bundesministerium des Inneren (1998): 601f.; ( )

9 Begrüßungsgeld (Welcome Money): Waiting lines of GDR citizens in front of a branch bank in Berlin (10 November 1989) (c) picture-alliance / Sven Simon

10 Net transfer payments made by the Federation since 1989 for the newlyformed German states: Monetary Reform ( ) 1 : ca. DM130 billion : year Net transfer (billion DM) Purpose: expansion of the infrastructure, support for enterprises, social welfare benefits, staff 1 Schroeder (2004) in FAZ vom eigene Berechnungen nach Ragnitz (2000): 17-21

11 Monetary Reform ( ): monetarian, economic and social union between the FRG and the GDR ( ) Exchange rates: Savings balance: Exchange rate 1 M : 1 DM: up to Children aged under 15 2,000 M Adults aged under 59 4,000 M Pensioners from 65 6,000 M upwards Amounts going beyond these: 2 M : 1 DM recurring payments (rents, salaries, pensions, etc.): 1 M : 1DM debts: 2 M : 1 DM average exchange rate: 1.6 M : 1 DM Betz (1999) in ( ); Presse- und Informationsamt der Bundesregierung, Nr. 63 vom ; Schroeder (2000): 128f.

12 Rough estimates concerning net transfer payments (made by the Federation, old West German states, comunities, social security, EU etc.) since 1989 for the newly-formed German states: annual official transfer payments ( ) 1 : 85 billion official transfer in total ( ) 2 : ca. 1.7 trillion 1 Piper (2004) in Süddeutsche Zeitung vom eigene Berechnungen nach Kroll, IN: Piper (2004) in Süddeutsche Zeitung vom ; ähnliche Schätzung: Schroeder (2004) in FAZ vom

13 Selected transfer programs realized by the Federation for the newly-formed German states: German Unity Fund ( ) 1 volume of transfer payments: DM160 billion fiscal equalization scheme between the more and the less prosperous German states mainly financed by credits (principal debtor: FRG) Communal work Aufschwung Ost (recovery of the East) (1991/1992) 2 volume of transfer payments: DM24 billion aim: economic boom in the newly-formed German states by rising demand purpose: infrastructure (traffic) job creation measures maintenance of municipal institutions of education, health care etc. 1 Mäding (2003): Lillig (1993): 291

14 CONTINUATION: Selected transfer programs realized by the Federation for the newly-formed German states: Solidary Pact I ( ) 1 addition to the fiscal payments between the German states of DM20.6 billion p.a. redemption of debts of DM 420 billion that emerged with the end of the GDR (GDR-national debt, municipal housing industry, monetary reform, privatization of the economy) Solidary Pact II ( ) 2 volume of transfer payments: billion addition to the fiscal payments between the German states of billion (amount decreased annually) 51.1 billion other allocations for newly-formed and old West German states starting in 2020 no more special allocations for the newly-formed German states (planned) 1 Lillig (1993): 297; Mäding (2003): Mäding (2003): 432; ( )

15 Purpose of the transferred money (by the Federation, the old West German states, municipalities, social security, the EU etc.) for the newly-formed German states: Official gross transfer payments according to purpose of expense in % 6% social issues 13% soc 50% independent allocations economic infrastructure promotion of economy 25% other sectors Author s figure based on Ragnitz (2000): 17

16 Development GDP p.c. in the newly-formed German states (West Germany = 100%) Source: Freie Presse Chemnitz, 11 June 2009, p.4

17 Financing of smaller measures to support East Germany in the years after the political turning point by West German states and municipalities realization of infrastructural measures within the German- German border area (e.g. routes, bridges) considerable donations of appliances, materials etc. provision of staff in order to support East German visitors (e.g. in the framework of the payout of Welcome Money ) temporary delegation of short-term experts to East Germany financing of advanced trainings for East German key personalities delegation of long-term experts to the newly-formed German states Source: Chair of Social and Economic Geography at Chemnitz University of Technology 2009

18 Blooming landscapes (Chancellor of Germany Helmut Kohl, )