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The year 2007 marked in Germany an important event 17 years after unification. As the German Statistical Office revealed in February 2008, for the first time after unification the German public budgets (i.e. the central, regional and local governments plus social security funds) have been in a structural surplus. Though the deplorable state of East Germany’s economy became visible after the opening of the border, still most politicians and also most economic experts hoped that unification was largely self-financing, by the revenues of privatization. The last communist prime minister of East Germany, Hans Modrow, estimated in early 1990 the East German collective property (volkseigenes Vermoegen) at around 1,6 trill. Ostmark. Even with a realistic exchange rate for the East German mark, this would have been a meant a handy treasure to pay the costs of unification.But the collective property proved to be a phantom. The Treuhand organization, responsible for privatization of East Germany’s companies, alone accumulated debts of 205 bn. Deutschmark, and this does not include any of the infrastructure investment necessary or any of the social transfers necessary to stop mass migration from East to West. In the course of 20 years after unification the East German economy was completely restructured, but at a high price: the costs for unification were and are enormous and still the East-West gap remains considerable, not in consumption, but in production. A transfer economy was established permanently dependent on West German resources.
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