Germany's Disappointing Reunification How the East Was Lost

By and

Part 6: An Open-Air Museum Tries to Attract Industry

"Naturally, there will be layoffs, but if we were to focus too rigidly on that aspect, we would fail to recognize that an extraordinarily large number of new job opportunities will arise at the same time, not least in the construction sector. For this reason, it is critical that we now establish the necessary conditions for vigorous and dynamic investment."

(Helmut Kohl, May 10, 1990)

When Joachim Paulick, 52, mayor of the picturesque small town of Görlitz on the border to Poland, has visitors, he doesn't know what to show his guests first. The staircase in the town hall, a "masterpiece of the early Renaissance," according to the guidebooks? The so-called King's Room, a magnificent late-Gothic reception room on the upper floor? Or his office, with its impressive wood paneling?

There are roughly 4,000 historic buildings in Görlitz, and even Paulick hasn't seen them all. The town is regarded as the largest contiguous collection of historic buildings in Germany, and its designation as a UNESCO World Heritage Site is on the agenda. Three-quarters of the historic old town, which was uninhabitable in the communist era, now qualifies for historic preservation status. "Never in its history has Görlitz been as beautiful as it is today," says Paulick.

But the mayor still isn't satisfied with the status quo. The city treasury is short of €16 million, which represents a significant part of the budget, and Paulick sees no legal way to save an amount this large. He is thinking about levying an additional tourist tax and a second-home tax, as well as raising parking fees. But even these measures will fall well short of putting the budget on a solid financial footing.

Problem Zones

Görlitz's problem areas are the industrial zones a few kilometers outside the historic city walls. There is a long tradition of machine-building in the region, but few businesses survived German reunification. The only remaining companies today are a railroad car factory, a turbine plant and a brewery. A US investor, lured by the promise of subsidies, manufactured winter clothing in a plant near Görlitz for a while, but then moved on to what it viewed as an even cheaper low-wage paradise.

"We spent millions to renovate the city, but in the early years we didn't pay enough attention to attracting and keeping bigger companies," says Paulick. "It was a political mistake, and now we have to correct it." The mayor has sent about 2,500 letters to companies throughout Germany to promote his town, printed on letterhead with the city's coat of arms at the top. Paulick signed each one himself. It makes the letter look much more credible, he says.

The letter promotes Görlitz as a business location, but it hardly mentions the old town with its historic buildings. Instead, the mayor's selling points are the city's proximity to Poland, its relatively low wages and the fact that in Görlitz, unlike the rest of Saxony, people don't speak a strong dialect.

But companies aren't exactly lining up to move to Görlitz. "A city of this size cannot survive as a kind of open-air museum," says Paulick. "There are worries that it could already be too late."

"I am convinced that (former West German Chancellor) Ludwig Erhard's vision of prosperity for all will also gradually become reality in East Germany."

(Helmut Kohl, May 10, 1990)

Anyone who wants to know how to improve efforts to develop the east should speak to Edgar Most, the former director of the East German State Bank. After reunification, his insider knowledge enabled him to remain in the financial industry and pursue a career at Deutsche Bank.

He has written books about the financial sector, and he likes to hold readings today. He is considered a bestselling author in the east.

Thrown to the Wolves

On this day, almost 100 people have braved the summer heat to come to Strausberg outside Berlin to hear him speak.

"We threw East Germany's capital to the wolves of the west," says Most. The audience, many of them East German retirees, nods approvingly. According to Most, a mentality built around subsidies has developed in the former East Germany. Now the people in the audience are sitting up and listening. "The east is becoming poorer, older and dumber," says Most. At this point, the mood in the room isn't quite as positive anymore.

Most was once a member of Gesprächskreis Ost ("Roundtable East"), a group of advisers established by then-Chancellor Gerhard Schröder, which produced a study six years ago on ways to improve development efforts for the east. A key proposal was to concentrate government funding on research and technology, limit bureaucracy and accept that it didn't make any sense to continue pumping subsidies into remote areas that would be better left to their fate. The group of advisers concluded that the best approach would be to concentrate development efforts on the most promising regions.

The proposals were never implemented. Instead, government money is still being distributed widely in a kind of shotgun approach. In the small state of Brandenburg alone, with its population of 2.5 million, there are now at least a dozen self-proclaimed "growth centers."

Paternalistic Attitude

Economists predict that when the so-called Solidarity Pact, an agreement between the national and state governments to support the former East Germany financially, expires in 2019, all of the eastern states will still depend on support from the west. That also includes Saxony, widely viewed as a model state.

Experts are under no illusions that the principal blame for the botched economic aspects of reunification does not lie in the east, but with those in the west who made the political decisions.

"The west had a paternalistic attitude toward the east, based on the motto: We know what's best for our sisters and brothers in the east," says Interior Minister Thomas de Maizière. "In reality, we didn't know at all."

Translated from the German by Christopher Sultan


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