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Germany

Former Communist Leads Berlin Economy

Now that negotiations for a red-red coalition in Berlin have concluded, the financial future of Germany’s capital rests in the hands of a former communist, Gregor Gysi.

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Gregor Gysi is set to lead Berlin's economy into a new era.

Late this week Chancellor Gerhard Schröder’s ruling Social Democrats (SPD) forged an alliance with the reformed communist Party of Democratic Socialists (PDS) to jointly govern Berlin. It is the first time the two parties have come together to rule such an important municipality. And many observers are already doubting the coalition’s effectiveness, especially when it comes to the position of the city’s new economics minister, Gregor Gysi.

During coalition negotiations, the PDS insisted on appointing Gysi to head up Berlin’s economic ministry, a position the party representative and former communist eagerly accepted.

Although Gysi is a strong advocate of healing past wounds and modernizing the German capital, opposition leaders and members of the SPD are uneasy about his taking over such an important position. They question his background in connection with the former ruling party of East Germany and his connection to the secret police. Business leaders are especially skeptical about his designs for investment and improved economic opportunities.

The managing director for the association of businesses in Berlin and Brandenburg, Christian Amsinck, said Gysi must distance himself radically from the political agenda of the PDS. The PDS has a deep-seated mistrust of anything related to business, Amsinck said in a radio interview with Deutschlandfunk.

"It is an extremely sad signal when a long believer in the planned economy –one whose party platform recalls Havana and Pyongyang more than (ex-chancellor) Ludwig Erhard – becomes economy minister," Hans-Olaf Henkel, former director of the German industry lobby stated in the populist Bild newspaper.

Financial difficulties

Compounding the uncertain situation in Berlin politics is the city’s mounting debt. At last count it was around $35 million and growing.

The current red-red government was stuck with the hefty price tag after the former conservative-led city government collapsed in June over a financial scandal. In addition, Berlin has the slowest economic growth among Germany’s 16 federal states. Part of this is the result of the city’s divided history and the subsequent need for subsidizing the eastern side, but most of the debt can be attributed to poor finance management.

And this is where supporters of Gysi say he can make a difference. They say his charismatic leadership will help turn Berlin around and attract new investment and create new jobs.

In his platform, Gysi said he wants to cut bureaucracy, redirect subsides from individual firms to infrastructure and seek to lure companies through sharing state-financed research.

"I accept that some people have reservations, that is a result of history," Reiner Strutz, Gysi’s campaign advisor said. "But I think Gysi will succeed in convincing people that they should not have any angst. It will take some time."

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