[BLOG-LIKE POSTING] The Real East German Problem?
eternityfan has made a couple of fascinating posts (1, 2) on the apparent growth of political extremism in the former East Germany, as länd elections gave the Party of Democratic Socialism (made up of former Communists) 30% of the vote in Brandenburg and the allegedly neo-Nazi National Democratic Party 10% of the vote in Saxony.

Cause for the growth of this political instability in the East has been ascribed to East Germany's lagging economy, which remains consistently behind the more prosperous West, with higher rates of unemployment and poverty and lower levels of income and productivity and purportedly dim prospects. The American publication Business Week argues in the upcoming article "Germany: A Brighter Sun In The East" that by most standards East Germany's economy since reunification has been a success.

In macroeconomic terms, the East has made huge progress since reunification. East Germany, with gross domestic product growth of 54% since 1991, has outperformed Hungary, the Czech Republic, and Estonia, three other former East Bloc countries often praised for their dynamism. East Germany's biggest problem is the building industry, which is still recovering from massive overinvestment in the early 1990s. Strip out construction, and East Germany has outperformed West Germany every year since 1993, including last year when the West barely grew at all while the East managed 1.6%. "We shouldn't just paint a pretty picture, but we shouldn't pretend that nothing has happened in the past 15 years," says Angela Merkel, an Easterner who is leader of Germany's Christian Democrats -- and possibly the next Chancellor.

East Germany's economic achievements since reunification, while mixed, shouldn't be underestimated. This article at Magager Magazin (translated using the ever-convenient Babelfish), for instance, makes the point that following the initial deep post-Communist recession, East Germany's economy entered a major boom in the mid-1990s before growth dropped below West German levels. Further, the bulk of this decline seems to have occurred as a result of the collapse of the construction sector of the East German economy, logically enough once the largest of the massive infrastructural projects initiated after reunification were finished. As this Central Europe Review article suggests, the richest post-Communist economy in Europe, excepting perhaps industrious Slovenia.

Just as importantly, for East Germany the 1990s weren't a decade of relative decline. Marek Dabrowski, Oleksandr Rohozynsky, and Irina Sinitsina's paper "Post-Adaptation Growth Recovery in Poland and Russia – Similarities and Differences" (PDF format) demonstrates just how rare it was for a post-Communist economy to gain relative to the west. Poland experienced the most significant growth in post-Communist Europe, with a GDP in 2003 more than a third larger than in 1989, arguably because it already went through its transitional economic crisis in the 1980s. Estonia--commonly identified as a quick adjuster--is only now regaining 1989 levels of GDP. Poland's particularly rapid growth let it keep pace with the EU-15; the slower growth experienced by Poland's southern and northern neighbours meant that GDP per capita across the region declined as a percentage of EU-15 GDP per capita. Convergence seems to have begun recently, but as this Banque de France report (PDF format) makes clear it will take a long time indeed.

East Germany, uniquely in post-Communist Europe, managed to partly close the gap. Abiola Lapite is correct in saying that reunification on West German terms weakened the East German economy relative to the Polish and the Czech. It's still strong, though.





I've noted previously that since reunification, East Germany has seen massive emigration, with almost one-fifth of the ex-DDR's 1989 population now living in the former West Germany. This is a remarkable change, particularly considering that in the Communist era East Germany absorbed significant numbers of immigrants, and considering that the sheer scale of this emigration has only been approximated elsewhere in post-Communist Europe. The situation in the Baltic States is vaguely comparable, but complicated by the fact that a third of the Estonian and Latvian populations were stateless and alienated from their new nation-states. The scale, in fact, bears the closest similarities to the mass emigration of ethnic Germans since 1987 from across the former Soviet bloc, a demographic phenomenon that has gutted ethnic German communities in countries as far apart as Romania and Kazakhstan in the pursuit of high German living standards.

In 1989 and 1990, Germans on both sides of the Wall seem to have had an unrealistic belief in the shortness of time needed to achieve economic convergence. This was shared by Europeans generally--looking back, it seems like the sheer scale of the collapse of the Soviet economy took almost everyone by surprise. In the east, the failure to completely and rapidly close the gap produced bitterness. That East Germany, unlike Poland and Hungary, was overwhelmed by the sheer force of West Germany's economy and culture was inevitable, as was a backlash, whether expressed by ostalgie or by a rejection of the West German political consensus. In West Germany, in the meantime, the legitimacy of the East German regional identity and history seems to have been underestimated. East Germany certainly wasn't created at the will of its inhabitants, and only in its final year was it a democracy. Still, it existed and it created (or, perhaps, reinforce) a legitimate regional culture, not necessarily distinct in kind from that of Bavaria.

Agnes Stein, writing on Living in Europe, argues that reunification was both as good and as bad as could reasonably been expected, and that both sides are making mistakes.

The underlying presumption is this: Any kind of unification with Western Germany is better than what we had. Mistakes will be made because there is not enough time and also because we are mostly more intelligent in hindsight. But the principal result, to
be rid of a state which treats its people like prisoners, can only be positive. I wonder how many people have the moral clarity to see this, or if the people now ridiculing West German democracy as such were happy in the real existing socialist state of the GDR. There is a lack of thinking and a lack of courage to go forwards in the protests on the streets which must be extremely irritating to the West Germans.

On the other hand there are some of them (West Germans, mainly politicians), who haven't really scored a lot of points on the decency scale. The opportunists who now take their chance to oppose the government without having any good alternatives. Who ride the wave of discontent, even worsening it by warning Schröder of going to the East, it might be dangerous. These kinds of statements form the atmosphere in which attacks take place. I would make those people personally responsible for anything that might happen.

Radical breaks in East Germany's current trajectory--relatively slow convergence with West German standards of living coupled with a Bavaria-like sense of distance from the "center"--aren't very likely, barring unlikely things like an economic miracle in the East at one extreme or the growth of East German separatism on the other. The weight of East Germans within the broader German framework does seem likely to weaken, if only because of the very unfavourable demographic trends established long before reunification.

At the risk of sounding facile, though, reunification won't be achieved in the full sense of the word until the assumptions (of rapid convergence by East Germans, of full assimilation by West Germans) formed by both parts of the German people during die Wende are discarded. It's anyone's guess when or if that will happen.