A 'Half-Baked' Deal: Former German Chancellor Considered Buying East Germany

Newly released documents from the CIA and State Department suggest that former German Chancellor Ludwig Erhard wanted to purchase German unity from the Soviet Union for around $25 billion. But the Americans didn't take the German leaders suggestion very seriously at the time.

Fomer German Chancellor Ludwig Erhard in an archive photo: "a half-baked and unrealistic" plan

Foto: DER SPIEGEL

German Chancellor Ludwig Erhard had wanted to tell US President John F. Kennedy about his pet political project in a face-to-face meeting, and the date had already been set. In the end, though, the head of the West German government was only able to pay his last respects to the West's most powerful man. Only a few feet divided Erhard on Nov. 25, 1963 at Arlington Cemetery from the casket of the murdered president and his mourning wife.

For the time being, the arduous efforts that had been made only weeks earlier by the diplomatic ground troops at the United States Embassy in the West German capital of Bonn and in Washington would remain unspoken at the highest levels of government -- namely the intention of Germany to seek to buy its unity back from the Soviet Union that is detailed in formerly classified documents recently made available in Washington.

The spectacular plot some 50 years ago, was largely unknown in Germany. Here, Erhard, a heavy-set, cigar-smoking man, is best regarded for the work he did as a minister under former Chancellor Konrad Adenauer. Erhard was considered the father of the German economic miracle, which saw the country's fortunes rise dramatically in the postwar period during the 1950s.

But newly released and reviewed documents from the Central Intelligence Agency and the State Department suggest that Erhard, whose term as chancellor between 1963 and 1966 was rather unremarkable, actually had far more ambitious plans as Germany's leader. The Americans had been made privy to the planned deal as potential mediators between the West Germans and the Soviets.

How Much Would Reunification Cost?

There are few documents about this plan in the German national archives. This may in part be a result of the fact that conservative Christian Democrat Erhard avoided expressing his intentions to other politicians and officials. The only person he appears to have mentioned it to was his rival at the time, Willy Brandt of the center-left Social Democrats. In an interview with SPIEGEL published in 1984, Brandt recalled an episode during his term as Berlin's mayor in which Erhard had asked him during a ride in a car how much "it would really cost for Russia to concede the GDR to us?"

For Erhard, the issue was more than a theoretical scenario, as several dossiers and transcripts from US diplomats show. In confidential discussions with the US ambassador in Bonn, George McGhee, the German chancellor spoke of a "necessary sacrifice" or a new gesture.

The Soviet economy was under pressure, Erhard pontificated, and the Kremlin would welcome any money from West Germany, although there was a risk that any money lent would not be seen again. Such aid, which would not be repayed, could be the "price for reunification," Erhard said, according to the documents . The documents also state that Erhard said he was considering the delivery of German industrial plant and equipment for the development of Siberia. In exchange, Soviet leader Nikita Khrushchev could be obliged to a "phased program" involving "the wall, reunification, self-determination and freedom for Germany."

The Christian Democrat wanted to entice the communists on the other side of the Iron Curtain with enormous sums of money. His closest confidante, Chancellery Chief of Staff Ludger Westrick, even went so far as to name them at a dinner with Ambassador McGhee on Oct. 21, 1963: Loans of perhaps $2.5 billion a year for 10 or more years, or approximately 100 billion deutsche marks at the currency exchange rate at the time.

Soviet Hardships

Erhard based his assumptions on the problems the Soviet superpower was facing at the time. The Soviet Union feared China as a rival and was also suffering one of its biggest economic crises. The Kremlin had been bargaining for long-term loans, and its gold reserves were disappearing. In the end, Moscow had to purchase millions of tons of wheat from the West in exchange for hard currency.

In his reports to Washington, Ambassador McGhee referred to the originality of the plan and said it reflected Erhard's "tendency to think in predominantly economic terms." But he also described what he felt was "considerable political naiveté."

The State Department offered a similar assessment. The acting secretary of state at the time, George Ball, considered the plan to be "half-baked and unrealistic," instead saying that a "complete plan" was needed that would also deal with the problems surrounding the denuclearization of Germany and the withdrawal of foreign troops based on German soil. Economic aid, it was concluded in a briefing, would hardly be the appropriate means needed to secure political concessions from the Soviet Union. The US diplomats concluded  there was almost "no possibility that the Soviets would seriously consider such a deal at the present time."

Shortly after Christmas in 1963, Erhard accepted an invitation to visit President Lyndon B. Johnson at his ranch in Texas. The men had a barbeque and later Johnson told a confidant: "That Erhard was all over me. He was ready to go in the barn and milk my cows if he could find the teats."

When Erhard asked the president to present the plan to Soviet leader Nikita Khrushchev, Johnson responded coolly, saying that, for the time being, he had no intention of meeting with the Soviet leader.

A further meeting between Erhard and Johnson at the White House in June 1964 was during the US election campaign, and the issue of reunification wasn't discussed any further. The circumstances also changed. Khrushchev was toppled in October 1964; and, by that time, the British, French, Italians and Japanese were providing the Soviet Union with cheap loans.

In January 1965, the chancellor determined that his plan was no longer "politically realistic." The idea of buying reunification remained an elusive vision for some time to come. Perhaps this was fortunate for the sake of the German federal budget, as well, given that two and a half decades later, the Soviet troops would withdraw from East Germany at a bargain price: an expense compensation of just under 15 billion deutsche marks.