The Price of Unity: Was the Deutsche Mark Sacrificed for Reunification?

By Michael Sauga, and Klaus Wiegrefe

As the German people celebrated the fall of the Berlin Wall, the governments in Bonn and Paris were secretly haggling over European monetary union. According to internal government documents, the negotiations almost collapsed. Was West Germany's beloved currency, the deutsche mark, sacrificed at the altar of reunification to win France's support?

Photo Gallery: Did a Currency Fall Victim to Reunification? Photos
AP

The architect of Germany's reunification is furious. Current Finance Minister Wolfgang Schäuble, the interior minister under the then-Chancellor Helmut Kohl, has deep furrows on his brow as he fires off a series of expressions of his immense dissatisfaction. They are harsh words, but ones the chief negotiator of his country's reunification treaty does not want to see in print.

Schäuble holds a thick book in his hand. On its cover, Schäuble's predecessor as finance minister -- Peer Steinbrück of the center-left Social Democratic Party (SPD) -- looks resolutely into the distance. Not that Schäuble, a member of the governing center-right Christian Democratic Union (CDU), has anything personally against Steinbrück. Schäuble recently listened to a speech Steinbrück gave about democracy and the media. Nor does Schäuble disagree much with Steinbrück's theories on the financial crisis.

What Schäuble is annoyed about is an unassuming sentence in the second chapter of Steinbrück's book, hidden in a long treatise about the "lame duck" that is Europe. "Abandoning the deutsche mark for the (equally) stable euro was one of the concessions that helped pave the way to German reunification," Steinbrück wrote.

There aren't very many political statements that can rile the long-serving Schäuble. But claiming German unity was achieved by way of a swap against the deutsche mark is clearly one of them. "No such trade-off ever occurred," Schäuble insists. The question of European monetary union had played "at best a minor role" in the decision-making on German reunification.

Steinbrück, however, is convinced he is right. He says that for anyone who meets with French government representatives, this theory will be backed up dozens of times.

Twenty years have passed since the collective euphoria of 1990, when the two halves of the divided Germany were brought back together again. For 20 years now, Germans have explored every aspect of what it was that led to the miracle of reunification: The bravery of the East German civil rights movement, the collapse of the Soviet Union, the determination of West German Chancellor Helmut Kohl.

However, for most Germans the very notion that the relinquishment of their beloved deutsche mark may have had an influence on the reunification of the communist East with the capitalist West is a remote one -- not least because of the timeframe. The first euro notes and coins first came into circulation in early 2002, more than a decade after Germany's reunification.

A Debate That Runs Along the Franco-German Border

Nevertheless, the politicians of the time have for years been locked in a bitter dispute over the question of whether or not the two most important political and economic mergers of the last two decades were indeed linked. And it is no coincidence that the front line in the debate often runs along the Franco-German border.

Hubert Védrine, who served as an adviser to then-French President Francois Mitterrand, for example, is convinced that his boss would not have consented to any expansion of Germany without German concessions on monetary union. "Mitterrand did not want reunification without advances toward greater European integration," Védrine says. "And the currency was the only topic that was open to debate."

Védrine's German counterpart, Joachim Bitterlich, who was the liaison with Paris at Kohl's Chancellery in Bonn at the time, denies any suggestion that the two countries' heads of state struck a deal. "European monetary union would have taken place even without German reunification," Bitterlich says.

At issue is more than just a dispute between politicians and ministerial officials. It is about how history will judge the central governmental projects of the last few decades. After all, if the French are right, it would do more than cast a shadow over Germany's day of national celebration.

A 'Sickly Premature Baby'

It would also damage the euro, which had been taking a beating in Germany even before the European Union was forced to bail out Greece and other ailing euro-zone countries. Critics like former SPD Chancellor Gerhard Schröder have always suggested that the single European currency was a "sickly premature baby." Now they can even claim that Germany was basically forced into accepting the euro.

Historians like the British euro chronicler David Marsh have long known that important decisions on reunification and monetary union were interwoven in those fateful fall days of 1989.

Previously classified documents from the archive of the German Foreign Ministry, which SPIEGEL has obtained, now show that the connection was far closer than previously known. The papers reveal that a broad Western European alliance threatened to oppose reunification, and that the long-standing Franco-German relationship was at breaking point. At the time, Mitterrand bluntly warned the German government that it could find itself as isolated in Europe "as in 1913," in other words, the period leading up to the World War I, when imperial Germany found itself up against an alliance between England, France and Russia.

The documents also show that history might have taken a very different course had Bonn and Paris not settled their differences in those dramatic days with regard both to the international negotiations about German reunification and those relating to monetary union.

After all, up until the precipitous events of late 1989, the debate over a single European currency had progressed at the usual tempo for any undertaking of what was then the European Economic Community (EEC); that is, slowly and ploddingly, as matters had so often been since the end of World War II. European statesman had repeatedly tried to promote the idea of a common currency ever since the days of Konrad Adenauer and Charles de Gaulle, West Germany's first chancellor and France's first postwar president respectively. Never had these ideas got off the ground. Time and again such attempts faltered because of the clash of interests between the high-inflation southern member states -- Spain, Portugal, Greece and Italy -- on the one hand, and the so-called hard-currency belt centered on Germany and the Netherlands on the other.

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The Road to Reunification
Nov. 9, 1989 -- The Fall of the Wall
The autumn of 1989 saw thousands of East Germans fleeing their country as other Eastern European countries began opening up their borders. Finally, on Nov. 9, 1989, the Berlin Wall was opened up.
Nov. 13, 1989 -- Leadership Change in East Germany
Hans Modrow becomes Minister President of the German Democratic Republic, soon replacing Egon Krenz -- Eric Honecker's predecessor as General Secretary of the ruling Socialist Unity Party (SED) -- as the nation's most influential politician in East Germany.
Nov. 28, 1989 -- Kohl's 10 Points
West German Chancellor Helmut Kohl presents his "Ten Point Program to Overcome the Division of Germany and Europe" to the parliament in Bonn.
Dec. 16, 1989 -- SED Changes Its Name
The SED, the ruling political party in East Germany, changes its name to the PDS, the Party of Democratic Socialism. More than half of the party's original membership of 2.3 million would leave by the end of January 1990.
Dec. 19, 1989 -- 'We Are One People'
Kohl addresses tens of thousands of people in Dresden, East Germany, waving black, gold and red flags and shouting "We are one people" (a variation on the chant "We are the people" shouted at the Monday demonstrations before the fall of the Berlin Wall.)
Feb. 13, 1990 -- East Germany Wobbles
The GDR is on the verge of collapse. In February 73,000 people would leave the country. Kohl and Modrow agreed to talks on a possible currency and economic union.
March 14, 1990 -- Two Plus Four
Senior officials meet for the first of eight sessions of the Two-Plus-Four talks -- so-called because they are attended by the two Germanys and the four Allied powers. In addition, the two German foreign ministers meet four times in the period from May to September 1990.
March 18, 1990 -- Free Elections in the East
The first free elections are held to elect the East German parliament. The CDU-led (Conservative) "Alliance for Germany" wins, with 48 percent of the vote. The PDS receives just 16 percent of the vote. The election results clearly express popular support for reunification.
April 12, 1990 -- A New GDR Government
Lothar de Maiziere (CDU) forms a grand coalition and becomes prime minister of the GDR. He wants to negotiate with Bonn for a rapid accession under Article 23 of the West German constitution. Article 23 allows East German states to apply to join West Germany, simply incorporating the new eastern states and extending the remit of the existing West German constitution to cover them.
July 1, 1990 -- Economic and Currency Union
The economic, monetary and social union cames into force and the Deutschmark becomes legal tender in the GDR. Industrial production grinds to a standstill as a result. The number of unemployed and partially unemployed East Germans soon exceeds the two million mark.
Aug. 22-23, 1990 -- Accession Vote
During a night session, the East German People's Parliament agrees on the accession of the GDR to the Federal Republic, scheduled for October 3.
Aug. 31, 1990 -- Treaty for Unification
Bonn's Interior Minister Wolfgang Schäuble and East Berlin's State Secretary Günther Krause sign the reunification treaty, which extends the West German legal system to the accession states of the former GDR.
Sept. 12, 1990 -- Two Plus Four Treaty
The Two-Plus-Four Treaty is signed in Moscow. Since the treaty could only come into force after ratification by all parties, the Allied powers suspend all their existing rights in the nation -- Germany becames fully sovereign on October 3.
Oct. 3, 1990 -- Reunification
Germany celebrates the Day of German Unity.

The Response from Abroad
Nov. 18, 1989 -- Thatcher's Borders
British Prime Minister Margaret Thatcher declares at a special summit of EC heads of state and government that the question of territorial borders is not on the agenda.
Dec. 4, 1989 -- Bush Backs Germany
US President George H. W. Bush comes out in support of the German people's right to self-determination, provided that a united Germany remains a member of NATO.
Dec. 8-9, 1989 -- Thatcher Blasts Kohl
Thatcher criticizes Helmut Kohl's "Ten-Point Program to Overcome the Division of Germany and Europe" at the European Council in Strasbourg. The majority of Germany's allies fear unification.
Dec. 11, 1989 -- The Allies Send a Message
The ambassadors of the Allied powers meet in the Allied Control Council building in Berlin -- once home to the short-lived administration of Germany run by the four Allies in the immediate post-war aftermath. It is read as a clear warning to Germany.
Dec. 20-22, 1989 -- Mitterrand Visits East Germany
French President François Mitterrand visits East Germany for the first time. He says he wants to establish the "same kind of relationship" as that between France and the West German government in Bonn.
Feb. 10, 1990 -- Gorbachev Tells Germans to Decide
Kremlin leader Mikhail Gorbachev tells West German Chancellor Helmut Kohl that the Germans "have to know themselves which path they want to take." He had previously expressed a similar sentiment to Hans Modrow, East Germany's last Communist premier.
Feb. 12-14, 1990 -- Outrage in Ottawa
On the sidelines of a conference in Ottawa, the four Allied powers accept the suggestion put forward by East and West Germany of negotiating the question of a unified Germany's external borders in six-way talks. The other countries present are outraged.
May 4, 1990 -- The Soviets Ask for Help
Soviet Foreign Minister Eduard Shevardnadze asks the West German government in Bonn for a credit guarantee for the first time -- the Soviet Union is on the verge of insolvency.
May 30 - June 3, 1990 -- Gorbachev in Washington
During a visit to Washington, Gorbachev declares that the Germans can choose the nature of their union themselves.
July 5-6, 1990 -- NATO Summit in London
At a NATO summit in London, the organization announces a review of its military strategy and proposes comprehensive disarmament negotiations.
July 15-16, 1990 -- Gorbachev Agrees to Soviet Withdrawal
Gorbachev agrees to a quick withdrawal of Soviet troops from East Germany at a German-Soviet summit in Moscow and the Caucasus.
Oct. 9-12, 1990 -- Treaties with the Soviet Union
Two treaties with the Soviet Union define the terms of the Soviet military withdrawal from East Germany and the transferral of associated costs to the West German government in Bonn.
Nov. 14, 1990 -- Oder-Neisse Line Recognized
The German-Polish Border Treaty recognizes the Oder-Neisse line as the border between the two countries.

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