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East Germany: It's not just the economy, stupid!

September 13, 2018

Many of the economic problems facing eastern Germany are similar to those in western Germany and most of Europe. So, why is xenophobia so much worse in the East?

German flags in Chemnitz
Image: picture-alliance/dpa/H. Schmidt

Since the reunification of East and West Germany in 1990, the old West Germany has transferred a massive $2 trillion (€1.7 trillion) in economic aid in an attempt to help former East Germany catch up.

And look where it's got us, some in the West say: The public espousal of nationalism that most West Germans had thought dead and buried and the electoral success of the far-right Alternative for Germany (AfD) party. Add to this the rise in violent incidents by right-wing extremists in eastern Germany, in particular in the state of Saxony.

Read moreEastern Germany's right-wing protesters awash in anxiety

Explanations run from the historical, to the social and cultural, sometimes via the educational, but perhaps above all to the economic. And then back again, as if in an endless loop.

For some former West Germans, perhaps it's easier to believe their eastern compatriots are, you know, a bit backward in the art of democracy and are simply showing their "true" colors. For others, the current rumpus in the East is a domestic version of the Trump-Brexit phenomenon, a domestic reaction to unsettling economic patterns shaping the world.

So, where do the economic arguments fit into this complex explanatory framework?

First the historians 

  • The Nazi era

Felix Hagemeister, a researcher into the AfD at Ludwig-Maximilians-Universität München (LMU) in Munich, in the southern German state of Bavaria, says that there are several "traditional explanations" as to why far-right parties emerge — such as economic factors or a cultural backlash against the presence of refugees.

"But interestingly, we find that these explanations only matter for the rise of the AfD in West Germany and have little or no explanatory power for their success in East Germany," he told DW.

During Hagemeister's research, he saw that the share of refugees did not have a significant impact on the number of AfD votes. "If anything, more refugees in a given municipality led to fewer votes for the AfD, especially in the East," he said.

"We also found a stunning historical correlation: the AfD vote shares in German municipalities of 2017 are correlated with the vote shares for the Nazi party in 1933," Hagemeister added.

Read moreFar-right AfD split over Gauland's Nazi 'bird shit' remark

He went on to say that the correlation is significant and cannot be explained by other factors such as refugees, unemployment, or trade shocks.

A march in the eastern city of Chemnitz attracted nationalists from across Germany
A march in the eastern city of Chemnitz attracted nationalists from across GermanyImage: picture-alliance/dpa/H. Schmidt

"It is also astonishingly large. Thus, our evidence suggests that the historical persistence of far-right voting can explain the recent success of the far-right AfD as well as unemployment can," Hagemeister said.

The researcher also found that an important factor shaping the historical persistence between Nazi and AfD support was the allocation of expellees from the former German areas east of the Oder-Neisse line (Silesia, East Prussia, Sudeten) in the 1950s.

"The persistence is weakened in areas where many expellees settled, and even turns negative for a very high share of expellees. This finding suggests that a municipality whose inhabitants had experienced what it is to be a refugee is not as susceptible to far-right propaganda anymore," the researcher added.

  • Post-modern fascists?

Tomas Nociar, a political scientist at Comenius University in Bratislava, highlights a tendency among some commentators to draw parallels between the AfD and extremist or fascist parties from Germany's past.

"But this is both unhelpful and inaccurate," Nociar said. "The AfD has far more in common with other 'populist' parties who have had success in recent European elections."

Read moreWhen books were burned in Germany

"The key factors in the AfD's success have been the mobilization of voters using xenophobic and populist resentments that have become socially acceptable through the discourse around refugees, and the transferring of anti-Muslim, anti-refugee, and anti-establishment attitudes into votes," he added.

  • The communist era 

Others like to stick the blame on communism, on the German Democratic Republic (GDR) era up to 1990. The European think tank Bruegel studied the AfD's vote against a range of statistics, including education, population age, immigration-related characteristics, religion and urbanism. It put the rise in AfD support down to the failure of the communist regime to deal with the Nazi past and its use of nationalism as a form of control.

For many East Germans, the end of suppression of regional identities under communist rule was a cause for celebration. But generations of easterners had been heavily indoctrinated by a powerful state ideology that allowed few expressions of minority identity. And after 1990, collective expression of regional identity in places like Saxony became a confused mixture.

Read moreTo understand Saxony, look at its history 

Demographics, sociology and all that

  • An imbalanced society

The East's population is also aging more rapidly than the West's, because immigrants are much less likely to settle in the East. With 24 percent of people over 65, eastern Germany would be one of the oldest countries in the world.

Following reunification, many young women left for the West. The Federal Statistical Office has calculated that, among 18-19-year-olds, in many areas of eastern Germany, there are up to 25 percent more men than women.

Werner Patzelt, a professor at the Technical University of Dresden, notes this may help explain the high number of frustrated men in the East. The AfD won 26 percent of male votes in the eastern federal states in the September elections — 13 percent more than in the West.

Ex-Chancellor Helmut Kohl hit by eggs in in the industrial region of Halle in former East Germany where many people were unemployed
Ex-Chancellor Helmut Kohl hit by eggs during a 1991 visit to Halle in the former East where many people were unemployedImage: picture alliance/AP-Photo/H. Krauss

"Many East German men feel as if they are the losers of German reunification. They are revolting against the 'West German system' that, in a time of economic transition, has brought them a high unemployment rate, uncertainty, and biographical discontinuity," Patzelt said.

  • The culture gap

The idea of an open, multicultural and multiethnic society comes from the 1968 "cultural revolution" in West Germany but is almost entirely absent from the East, Patzelt added.

"That generation of West German student activists went on to occupy all top positions in media, universities, public administration and political parties. But this intellectual hegemony is coming to an end, because the political, societal and economic problems have changed, and the old answers are no longer sustainable for ordinary people."

Others see this reflected in fear of foreignness, if not also foreigners. "Many people in Eastern Germany are not accustomed to foreigners and therefore they are in fear of any unknown," Joachim Ragnitz, of the German economic institute Ifo, told DW.

Read moreAngela Merkel hits out at AfD on far-right violence

To the economics 

While life-satisfaction levels have risen in the East, the economic gap between the East and West is narrowing at a slower pace, according to an annual government report in 2017 on the state of German unity.

Other reports paint a similar picture. Growth in the former East stands little chance of matching that in the rest of the country over the next decade, according to an Ifo study. The institute predicts that only the states of Saxony and Brandenburg would match the country's overall average growth rate by 2030.

GDP per capita in eastern German states still lags the West by 27 percent and the unemployment rate, at 8.5 percent, is above the national average of 5.7 percent. Of the 500 richest Germans, only 21 are in the East and, of those, 14 are in the capital, Berlin. Wages in the East are lower — at €2,800 ($3,300) a month, two-thirds of the average wage in the West — and property in the East is only worth half as much as in the West.

Read moreMy Europe: Eastern promise and Western pretension

In the eastern states in 2017, workers worked on average 67 more hours than those in the rest of the country. However, the average annual gross wage in the former East German states is €30,172 — almost €5,000 less than in the former West German states.

But, income inequality is higher in West Germany than in the territory of the former GDR, Michael Hüther, director of the Cologne-based German Economic Institute (IW), told DW.

"In fact, there seems to be an inverse bivariate relationship between a change in the unemployment rate and the vote of the right wing populist party AfD during the 2017 election in eastern German regions: regions with the highest AfD vote share experienced the strongest reduction in unemployment," Hüther said.

"It indicates the limited link between economic deprivation and the expressed anger and xenophobia," he added. 

"We observe a decoupling of concerns about migration, crime as well as terrorism on the one hand, and socio-economic background as well as economic deprivation on the other hand. Hence, the assumption that anger and xenophobia in the East might be tamed through an enduring economic upswing or a further expansion of the welfare state misses the mark."

The far right: Can Germany defeat its demons?

But is the West best?

The West has its problems too, so why no AfD surge there? Germany after all has a welfare system providing a basic living standard for the poorest and a progressive tax structure to redistribute wealth. But Europe's richest economy also has the highest level of wealth inequality, at least in the eurozone (i.e. excluding the UK). 

According to official government figures, about 40 percent of German households have no net wealth at all and about 20 percent of workers are atypically employed, either on very low wages, temporary jobs, in part-time work or a combination of those. Those 40 percent with the lowest wages have experienced a decline in real wages over the last 20 years.

The richest 10 percent of households saw their real incomes jump by 27 percent between 1991 and 2014, according to the IW. Middle class incomes increased by 9 percent over the same period, while households at the bottom saw their incomes drop 8 percent.

Risk of poverty
Meanwhile, the share of Germans at risk of falling into poverty rose from 11 percent two decades ago to 16 percent in 2014. About 7 million Germans work part time in precarious "mini jobs" that pay up to €450 a month, and many rely on welfare payments. But there's some dispute as to whether inequality is actually increasing. According to Ragnitz of the Ifo, "inequality in incomes has not really been rising in Germany since 2005, when substantial labor market reforms were initiated."

Read moreOne in 10 German workers earn below minimum wage

"But there is a growing risk of poverty of those being in employment: While in West Germany the share of employees with a low income increased from 6.8 percent (2005) to 8.8 percent (2015), in East Germany the corresponding figure went up from 12 percent to 17.4 percent. This reflects the fact that the catching-up process in East Germany is not as strong as it was assumed," Ragnitz said.

In a recent ARD television survey, voters rated social inequality as second only to Berlin's refugee policies among the country's biggest problems. Unemployment was in fifth place.

How the wealthy view the income divide

 No civil society 

Weaker trade unions, tax reforms that benefited the rich and an increase in single-person households have contributed to inequality, said Markus Grabka, an economist with the German Institute for Economic Research in Berlin, adding that "automation has made the situation even worse."

"Socialism and trade unionism prevented capitalism from destroying its non-capitalist foundations — trust, good faith, altruism, solidarity within families and communities, and the like," Wolfgang Streeck, emeritus director of the Max Planck Institute for the Study of Societies in Cologne, told DW. This is not so any more, he added.

But, perhaps, more importantly, the social and economic buffer provided by civil society was starkly lacking in the East from the very moment the GDR as a state collapsed in 1990. 

Read moreRisk of poverty at new high in Germany

"On the psychological side, the enormous disruption caused by unification in the 1990s did not lead to a reorganization in the East of social life on the western model," Streeck said.

"Trade unions are hardly existent, political parties have almost no members, voluntary associations are largely missing ... the infrastructure is falling into pieces or can no longer economically sustained." And this, he added, gives rise to a widespread feeling of being deserted and not respected, of being "in short, a disorganized society without autochthonous economic strength."

The unions point to Agenda 2010 as the trigger, that is to the labor reforms enacted by former Chancellor Gerhard Schröder's government in 2005 to deregulate the labor market, cut unemployment benefits and move Germany toward more flexible and temporary work.

As the AfD MP Jürgen Pohl told parliament in late 2017, labor market changes have created poorly regulated, precarious jobs. The AfD, Pohl said, "is a new people's party that cares about the little people." When several center-left MPs laughed, Pohl pointed at the television cameras. "Go ahead and laugh," he said, "your voters are watching."

Where to from here? 

"As a first step, it seems to be necessary that policy returns to a debate about actual, practical problems of those in stagnant regions," Ragnitz said.

"In Saxony, for example, the prime minister has begun to visit all regions to discuss with the citizens. Even if the effect on political decisions might be small, this can be regarded as a 'signal' to the population that policy takes care of the situation in those regions," he added. And of course, policy [and media] has to bring convincing arguments against any kind of xenophobia and right-wing ideologies." 

Few foreigners - but a hotbed for xenophobia?

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Jo Harper Journalist and author specializing in Poland