An Ossi success amid the disenchantment
Two decades after the fall of Communism, and 19 years after reunification, Victor Sebestyen reports on one of Europe's biggest economic triumphs
Sunday 08 November 2009
Dr Dietmar Roth arguably manufactures more power cells for solar panels than any other businessman in the world. He is a thoroughly modern entrepreneur, with impeccable green credentials. As a scientist, he works on the cutting edge of advances in creating reliable sources of renewable energy. As an industrialist, and chief executive of the Roth and Rau company he founded with his wife, Silvia, he has been a phenomenal success. Company profits rose by double digits even over the past recession year. Roth, 60, owns a sizeable chunk of the firm, conservatively worth €285m. He has just been named German Entrepreneur of the Year.
What makes Roth's story unusual is that he is an Ossi, an East German, from Saxony, the so-called rustbelt part of the country. The point made relentlessly over the past few weeks, as the 20th anniversary of the fall of the Berlin Wall approached, has been that following the euphoria of the revolutions of 1989, the collapse of communism and the reunification of Germany the following year, things have gone depressingly wrong. Some Germans still talk of "the wall in the head" that in many ways continues to separate Ossis, from the Wessis, their more fortunate cousins who grew up and lived in the West.
It is not stated often enough that the fall of the Wall and reunification were the Germans' greatest achievement of the last century. Unfashionable though it may be, yet, to sound upbeat about economic news – and even less so to say anything flattering about the Germans – the past 20 years in Germany on the whole have been a great success story, despite a host of problems, dilemmas and blips, not to mention the financial disaster that has confronted everywhere else in the world.
Dietmar Roth, it can be argued, is no typical Ossi, though his background is. He comes from Chemnitz, where his business is based, which for most of his life was called Karl Marx Stadt. (It recovered its original name only in 1990.) He trained in electronics at the city's Technology University, married a scientific colleague, lived in a traditional, soulless East German apartment block like most of his compatriots, and throughout most of the 1980s taught at the university where he had been a student.
Then came 9 November 1989, the day the Wall came down, and his life changed utterly, as it did for all East Germans. He had interesting ideas then about using plasma technology to make solar power cells, but under communism nobody could set up their own enterprises. In 1990, Roth established his company, which now employs 500 people in Chemnitz, and many more in other countries.
It is true that many East Germans are discontented. The elections a few weeks ago, which Chancellor Angela Merkel – herself an Ossi – won comfortably, if not by the landslide that many pundits were predicting, showed that tensions which have existed for two decades have endured. Unemployment in the East is higher – about 12 per cent compared with 7 per cent in the Western Länder. Women continue to be paid about 15 per cent less than men for the same work.
Living with the memories of the past have been difficult for many – as has been the sight of some old communist and secret police (Stasi) officials doing very nicely. "Sure, some of us have the feeling that old scores have not been settled," says Dr Matthias Müller, a concert promoter who was a student in Berlin in November 1989. "Many of us Easterners think that we are the poorer cousins, and it's true, up to a point. But some of us were suffering from very high expectations and were missing a sense of realism."
The other thing missing is a historical perspective. Go back 20 years and consider the brave and bold steps taken by the government of West Germany led by Helmut Kohl. He is a discredited figure, brought down by revelations of political corruption going back many years in his Christian Democratic Party. But equally, he is a man who deserves an important place in history.
East Germany was bankrupt – the big secret only three of the country's top officials knew in November 1989 was that nearly three-quarters of its national income was going on paying the interest on foreign loans. It had to beg for more loans simply to keep up with monthly payments. It had no property law, no civil society, no culture of democracy. It was an ecological disaster zone with some of the filthiest rivers in Europe.
The new German republic took over all the debts, subsumed a disastrous economy and body politic into itself and made it work. It has provided Ossis with the kind of state benefits and welfare provisions the communists promised but never delivered. It has given 18 million people who had been imprisoned in a police state freedom – as well as breathable air and clean water. It has even given the East a spanking new Porsche factory near Leipzig, along with a practice track that has become a big tourist draw where fantasists and Top Gear viewers can test drive their dream cars whether they're intending to buy or not. This would never have happened under communism.
There has been plenty of angst along the way. But the extraordinary achievements were made with surprisingly little dislocation. This, surely, is something to be praised.
The German political miracle has for long been over – so perhaps, for the time being, are any economic miracles. Yet Germany is better placed than most other countries in Europe to weather the recent storms. Mrs Merkel's election victory was as much an expression of relief that things have not been worse as a resounding endorsement of her policies. Her fiscal rectitude is impressive. Germany is forecast to have a budget deficit next year of 3.5 per cent of GDP, compared to nearly 15 per cent in Britain and around 12 per cent in the US. Germany remains second only to China as an exporter of manufactured goods. Mrs Merkel's policies of tax cuts accompanied by fairly deep cuts in public spending – by German standards – has won widespread approval by independent economic pundits.
A much-quoted figure in the last few weeks has been an opinion poll finding that 10 per cent of Ossis say they would prefer to be living in the old(Communist) German Democratic Republic. This does not seem a surprising number at all. Similar research has been conducted in other parts of the former Soviet bloc, where transition from the command economy to a free market has seen plenty of losers along with the winners, particular among older people who have found the adjustment almost impossible to make.
A recent poll in Hungary found that nearly a third of citizens thought they might have been better off under the old system. In Slovakia it was nearly a quarter and in the Czech Republic the number was about 20 per cent. It is with these countries, which had a similar pre-1989 experience, that a fair comparison can be made. Ossis should perhaps be content that they are being steered by the steady hand of Mrs Merkel in a united land: in Hungary, Latvia and Ukraine the economies are in effect being run by the IMF.
One of the new Germany's great achievements has been the extraordinary transformation and rebuilding of Berlin. The chic places to live, shop, eat and play are all in the formerly Eastern part of the city, the Mitte area, or around Prenzlauer Berg, places that just a few years ago were crumbling ruins. Berlin before 1989 comprised two ugly, boring, provincial cities with the hideous scar of the Wall separating them. It is now one vibrant, exciting, buzzy, thrilling city at the heart of Europe. That is another thing to celebrate.
With additional reporting by Joachim von Halasz
Victor Sebestyen's book, Revolution 1989: The Fall of the Soviet Empire, has just been published by Weidenfeld and Nicolson, £25
GERMANY IN NUMBERS
Population: 82.4 million (2008).
In the area that was the German Democratic Republic, the population is now 17.8 million.
Government: Centre right-Liberal coalition under Chancellor Angela Merkel of the Christian Democrats. The Foreign Minister is Guido Westerwelle, leader of the Free Democrats, the junior coalition partner.
GDP per capita: US$44,729 (2008; fifth highest in the world).
Exports: $1.2trn (second highest).
Labour force: 44 million (services 64 per cent, industry 29.9 per cent; agriculture 2.4 per cent).
Unemployment: 7.7 per cent (second quarter of 2009).
Population above 65: 19.8 per cent.
Economic growth: -3.6 per cent during 2008 recession; positive growth of 0.5 per cent during first half of 2009.
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