The Fall of the Berlin Wall – 25 years on

The events of 9 November 1989 changed the face of Europe. Two and half decades on from the fall of the Berlin Wall, Charles Lees evaluates the consequences of German unification for its economy, its domestic politics, and its role in the world.

It is rare to be present at a really key historical moment and to grasp the enormity of events as they unfold. But when I joined hundreds of other Berliners – native and adopted – to party on the Berlin wall on the night of the 9 November 1989, it was clear to us all that nothing would be the same again.

With hindsight, what is striking is how quickly things fell apart in East Germany. Only a few months earlier the Tiananmen Square massacre had appeared to demonstrate what might happen in Berlin, Dresden, or Leipzig, if East Germans were to take to the streets. Yet this was exactly what they did in September 1989 and, as the protests escalated, it was not clear how it all might end.

There were elements in the East German regime that advocated opening fire on their own people but wiser, or more fatalistic, heads prevailed. Subsequently the beginning of the end of East Germany had an anticlimactic quality when, on 9 November, the hangdog Berlin party boss and de facto spokesperson for the regime, Günter Schabowski, calmly announced freedom of travel with immediate effect. Within hours East Germans were streaming through the Berlin border crossings. There were no shootings and very little drama; just the efficient implementation of an executive order and 40 years of division came to an end.

 

Image © Press Association

Reawakening the German Giant

The unification of Germany in October 1990 was part of the wider collapse of Communism across Europe. Eventually, this would spread to the Soviet Union itself, leaving only a handful of surviving states, including China, where the Communist party remained in power. A quarter of a century on, Europe has changed dramatically. The European Union has expanded to include 28 member states and Germany is the most powerful of those states.

On the 25th Anniversary of the fall of the Berlin wall, German elites can be forgiven for a sense of quiet satisfaction. Germany has by-and-large overcome its internal divisions, modernised its economy (at some cost to the living standards of ordinary Germans) and once again become the economic powerhouse of Europe. Moreover, in recent years Germany has also begun to punch at something close to its weight in diplomatic terms as well. Indeed, at a point in European affairs when France is preoccupied with its economic troubles and the UK has withdrawn into itself, it sometimes appears as if German power in Europe is only constrained by Germany's own reluctance to exercise it.

But it is worth remembering that things could have been very different – for Germany and for Europe. German unification was not a foregone conclusion and could have been derailed if, for instance, Mikhail Gorbachev had not taken such a clear-eyed view of the limited prospects for maintaining Soviet dominance in Europe, or if US President George H.W. Bush or West German Chancellor Helmut Kohl had overplayed their hands and pushed the Soviets into a corner. At the same time some foreign commentators – such as the arch-Thatcherite Nicholas Ridley – were predicting a horror scenario of an unreconstructed Germany once more seeking to dominate Europe. So on this anniversary, it is worth evaluating the consequences of German unification for the German economy, for its domestic politics, and for its role in Europe and the world.

Rebuilding the German economy

Anyone crossing from West to East Berlin in autumn 1989 would have been struck by the sheer decrepitude of the place. Streets were potholed, façades of buildings were unpainted and often crumbling, and the air was thick with the fumes of the ubiquitous Trabant cars, as well as smog caused by the brown Lignite that fuelled domestic coal ovens and factories alike. But if East Berlin was bad, the rest of East Germany was in worse shape and as East and West Germany prepared for unification the extent of the former's economic woes became apparent.

The legacy of the East German economic system was low productivity, an over-emphasis on heavy industry and chronic bottlenecks and resource misallocations. German policymakers, however, did not respond with the kind of economic shock treatment administered elsewhere in Central and Eastern Europe after 1989. Rather than pursuing the quick fix of a fall in real wages, German policy sought to invest in technology and expertise and stimulate a rapid rise in productivity instead.

The aim of post-reunification German economic policy was to transpose the entire institutional framework of the Federal Republic to the east. For sure this meant the introduction of the D-Mark and the reassertion of the primacy of private property, but it also meant the introduction of West Germany's relatively generous social security system and protected labour market. In addition, the ‘Aufbau Ost’ programme facilitated a massive transfer of funds and expertise to the east. The wholesale introduction of the West German social model was explicitly designed to generate a convergence in living standards and thus prevent a mass migration from the eastern states, but it also aggravated their underlying lack of competitiveness. As economist Rainer Hillebrand has pointed out, the impact of this approach was mixed. On the one hand Gross Domestic Product per capita rose quickly from 45 per cent of that in the West in 1990 to over 70 per cent by 1996, there was a rapid build-up of capital stock and significant public investment in infrastructure. The quality of human capital in the eastern states is now comparable with those of the old Federal Republic. On the other hand, however, the convergence of GDP began to flatline towards the end of the decade and considerable structural weaknesses remain, including lower levels of research and development spending, lower value-added per worker and a subsequent over-reliance on standardised routine-based production. Unemployment also remains stubbornly higher in the east.

Economic liberals might argue that the citizens of the eastern states of Germany were ill-served by these policies and that a more laissez-faire approach might have allowed the former East Germany to emerge from what would have been a very rough transition period with a more genuinely innovative and competitive industrial base. But the fear at the time was that such an approach would not only lead to wholesale migration to the west but might spark a ‘race to the bottom’ across Germany, as firms moved east to take advantage of lower levels of social protection. This is certainly why the German trades unions supported the policy and, until the Hartz IV reforms of 2004–5, being poor and/or redundant in the former East Germany remained arguably more endurable than it would have been in Sheffield or Hull, let alone Gdansk or Donetsk. This was the German social model in action and it eased the transition to a social market economy for millions of Germans.

Domestic Politics

The unification of Germany brought together two populations that had developed in distinct ways over the previous four decades. Following the defeat of the Third Reich in 1945, the two Germanys emerged four years later out of the Allied occupation zones in response to the onset of the Cold War. Both Germanys inherited a common Nazi legacy but, whilst West German society became increasingly open and tolerant over the intervening years, in East Germany the effects of Nazi dictatorship were compounded by 40 years of authoritarian Communist rule.

Back in the 1960s, political sociologist Ralf Dahrendorf called East Germany ‘the first modern society on German Soil’ in which ‘the comrade has already won the day, and the new society [was] complete.’ Dahrendorf argued that East German society had become ‘co-ordinated’ through the privileging of positive social rights over negative freedoms, the political direction of education, and the elimination of intermediate ties and inherited loyalties. Dahrendorf regarded these changes as irreversible and, although this has proved not to be the case, the residual impact of Communist social reforms on the political dimension of the unification process was profound. From very early on in the process, it became clear that East Germans were strangely decoupled from the institutions and practices of the new unified Germany. Some of this disconnect was cognitive, which made it hard for elites to cultivate engagement with their new citizens, and some of it was down to a sense of colonisation, in which the institutions of civil society were not indigenous but rather imported from the old West Germany and imposed upon the East.

And East Germans were different from their West German fellow citizens. Research carried out in the 1990s showed that East Germans were far more likely (42.2 per cent of the population) to be manual workers than were West Germans (35.9 per cent) and far less likely to be self-employed (6.5 per cent compared with 9.2 per cent). Conversely, there were significantly lower levels of civil servants (2 per cent) and the self-employed (6.5 per cent) than in the old West Germany (7.9 and 9.2 per cent respectively). Moreover, although the former German Democratic Republic had traditionally been a Protestant heartland, East Germans were far less likely (25 per cent of the total population) to self-report as Protestant than were their West German fellow citizens (43 per cent) and much more likely to claim no religious affiliation at all (69 per cent compared with 17 per cent). Whilst 40 per cent of West Germans self-reported as Catholics – the traditional bedrock of West German Christian Democracy – only 6 per cent of East Germans did so.

 

21st century Germany – A Complex Polity

A degree of disconnect still persists between east and west and for many years this had a debilitating impact on political parties’ campaign strategies and organisation. Political parties not only found it hard to anticipate and respond to the needs of eastern voters, but difficulties in recruiting members in the east meant that party organisations were ‘thinner’ and less resilient than in the west. Results from the September 2013 Bundestag election, however, show that the divide has diminished to the extent that many polling organisations are no longer ordering their data along east-west lines. Support for nearly all of the main parties was roughly comparable between east and west, although support for the formerly communist Left Party remains much higher in the east. In addition, there is still a clear divide in voter turnout, with some states in the former East Germany barely reaching 50 per cent turnout in the 2013 Bundestag election, compared with the mid-60s in the former West Germany.

The underlying social cleavages in the united Germany have moderated themselves over time, but the impact of those early years can still be seen in the structure of Germany's party system. From 1990 until the 2013 Bundestag election the national level party system was made up of six parties in five Fraktionen or party groupings. These were the CDU and its Bavarian sister-party the CSU, the SPD, the liberal Free Democratic Party, the Greens, and the Left Party. But the historical failure of the FDP to scale the electoral five per cent threshold in 2013 has reduced this to four groupings. These changes have real consequences for the distribution of power within the Bundestag.

The emergence in Germany of today's more fluid party system has actually led to a greater concentration of power around the catch-all parties – the SPD and the CDU/CSU. This means that none of the smaller parties (the FDP, Greens, and Left Party) have been able to assume the ‘kingmaker’ function played by the Free Democrats in the 1960s and 1970s. Modern unified Germany is a more complex polity than its West German predecessor.

East Germans, in short, were more proletarian and more atheist than their Western compatriots. Crucially, however, this did not favour the left-of-centre SPD. The early years of the united Germany saw the right-of-centre CDU enjoy disproportionate support amongst manual workers in East Germany compared with its overall share of the vote. In addition, the CDU not only led the SPD amongst Catholic voters, it also commanded a majority of voters with an affinity to the Protestant church. The only section of the population in which the SPD finished ahead of the CDU was amongst those sections of the electorate that claimed no religious affiliation.

Germany, Europe, and the World

German unification enhanced German power. Germany was geographically and demographically weightier and also fully sovereign for the first time since its defeat and division in 1945. Once Germany had absorbed and reformed the moribund eastern German economy it was well placed to become the major European power.

But what was not clear was how much Germany wanted to assume that role. During the Cold War era, Germany was content to play the role of ‘economic giant’ and ‘political dwarf’ (Bulmer and Paterson, 1987). This limited conception of Germany's potential extended to the military sphere in which her strategic defence was contracted-out to the USA. Ordinary Germans could free-ride under the American defence umbrella, content in the knowledge that they had exorcised the ghost of militarism from German soil. Moreover, German elites and their international allies were happy to let them do so.

With German unification and the end of the Cold War, the Federal Republic began to assume its share of security responsibilities. The German military was still restricted to European operations, but areas of this theatre were increasingly unstable. Out of necessity, the Federal Republic's retreat from military power came to an end, as demonstrated by German involvement in the 1999 Kosovo crisis. Crucially, however, the recovery of sovereignty also revealed a Germany that was more assertive in foreign policy and in pursuit of its own interests. This assertiveness revealed itself not just in the refusal to become involved in the invasion of Iraq in 2003, but also in active criticism of the United States and Britain. More recently, Germany's reluctance to do anything that might damage her export performance has also hampered the West's response to Russian aggression and subversion in eastern Ukraine.

Whereas Germany has continued to exercise military caution, it has found itself taking an increasingly dominant role within the European Union. German leadership was enhanced by the crisis of the Eurozone after 2008, in which Germany became the main creditor in the bailout of member states. This reluctant assertion of German power was inevitable. European integration is part of the DNA of the ruling CDU/CSU, even under the atypical leadership of the eastern-born Angela Merkel.

As we come to the end of 2014, Germany appears to be the prominent power in Europe and Angela Merkel unquestionably Europe's de facto leader. But perhaps the personal power of Merkel masks the extent to which Germany has actually failed to grasp the potential for leadership. As a recent piece by Charles Grant for the Centre for European Reform points out:

Germany contributes less to European security than Britain or France: in 2013 it spent 1.4 per cent of GDP on defence, while France spent 1.9 per cent and Britain 2.3 per cent. Nor does Germany compensate by spending more on softer sorts of security: it spent 0.37 per cent of GDP on development aid in 2012, while France spent 0.45 per cent and the UK 0.56 per cent (CER, 2014).

These figures go to the heart of the German failure to lead. Leadership costs money and Germany remains trapped between the free-riding instincts of the past and the slow realisation of the potential of its own power. Twenty five years after German unification, Nicholas Ridley's horror scenario of an over-dominant Germany remains as far away as ever. Germany has neither the appetite nor the means to become the European hegemon. And for that all of Europe should be grateful.

References

  • Bulmer, S. and Paterson, W. (1987The Federal Republic of Germany and the European CommunityLondon: Allen and Unwin.
  • Dahrendorf, R. (1967Society and Democracy in GermanyLondon: Weidenfeld and Nicolson.
  • Grant C. 2014‘What is wrong with German Foreign Policy?’ London: Centre for European Reform. (http://www.cer.org.uk/insights/what-wrong-german-foreign-policy).