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Business

Germany says Privatization of East Complete

Thirteen years after reunification, the privatization of East Germany’s economy has been officially declared complete.

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Many East German businesses fell with the Wall.

Since beginning its work in 1990, the German government’s organization for privatization, known as the Treuhandanstalt and later as the BvS, has reintegrated some 4,000 ex-communist businesses into the private sector. On Wednesday, the organization’s management said that, with it’s job done, it will be dissolved on January 1, 2004.

"Thirteen years are enough," said administrative board chairman Manfred Schüler, in a closing report.

The BvS -- it’s official name in English is the Federal Institution for Special Issues Arising from German Unification -- took over the Treuhand’s work in 1995. It’s main job was hammering out privatization contracts -- some 44,700 in total.

Unrealistic plan

In the summer of 1990, the Treuhand overtook all formerly East German companies that had yet to be privatized -- some 8,500 firms in all, with four million employees in some 45,000 work sites.

The German state's oroginal plan -- to cover the costs of privatization with the proceeds of the sale of East German companies -- was quickly proved unrealistic. Instead, the BvS invested €52.9 billion ($63.1 billion) in companies before investors agreed to take them over. They shouldered a further €37.2 billion in old loans for the privatizing firms.

By its dissolution in late 1994, the Treuhand had a debt of some €104.5 billion. Finishing up

Treuhandanstalt in Berlin Schild

Treuhandanstalt sign

Currently, the BvS still manages 1,450 contracts, oversees contaminated waste sites, and is dealing with some 2,000 pending legal actions. These tasks are expected to be completed in the next two years.

Taking stock of BvS’s accomplishments, President Hans Schroeder-Hohenwarth told reporters in Berlin that he felt the organization had done a good job. While mistakes had been made, especially in the early years up to 1994, he said these were “probably unavoidable.” Schroeder-Hohenwarth noted that the Treuhand’s work was unprecedented -- and that there were “no realistic alternatives to the Treuhand and its work.”

Still, there were real, demonstrable successes, he said, citing the 861,563 jobs secured. Investments reached a volume of €68 billion -- some 14 percent above expectations, he said.

“Neither the Treuhandanstalt nor the BvS thought they could do away with the economic results of 40 years of East German dictatorship,” the BvS president said. The job was much more about how to “translate the economic structure that was in place into something that could survive in a competitive economy.”

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