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The Money Programme Saturday, 6 November, 1999, 10:56 GMT
More 7/11/99
The Money Programme

Pain and Progress - Germany ten years after the Wall

Travel as far East as you can go in present-day Germany - past Leipzig where the anti-Communist protest movement started, past Dresden, bombed to destruction at the end of the war - and you arrive in Goerlitz, a 900 year old town, right on the Polish border. Once a bustling trading centre linking East and West Europe, under communism Goerlitz became a forgotten backwater. Faded pre-war signs on run-down buildings in the long-neglected city centre, are reminders of a more prosperous past.

These ghosts are fast disappearing. Like almost everywhere in former East Germany, Goerlitz is in a frenzy of reconstruction. The town miraculously escaped destruction in the second world war and is now emerging in a dazzling display of Renaissance and Baroque architecture - a sure magnet for future tourists.

But the appearance of regained prosperity is misleading. Like most of the Eastern part of Germany, Goerlitz is still undergoing a painful transition from the repressive communist dictatorship which ruled it until the wall fell in 1989.

At that time, few realised how tough it would be to reintegrate the two Germanys. Amid all the political euphoria, West Germany's then Chancellor Helmut Kohl promised there would soon be "blossoming landscapes" all over the East.

He could hardly have been more mistaken. Instead of blossoming landscapes, reunification produced sudden economic collapse.

At Goerlitz Engineering, the town's biggest employer , managers could scarcely believe their eyes. Founded in the last century, the company produced engines for Hitler's U-boats in the second world War.

By 1989 the factory was run down and shabby after years of underinvestment, but the large industrial turbines they turned out were in strong demand throughout the Soviet Empire. Then, in 1990, under the terms agreed for unification, the old East German currency was exchanged for the West German Mark. "Overnight", Technical Director Dr Reinhard Buerkner told me, "practically all our orders disappeared. It was a total catastrophe". With hindsight the reasons were obvious, Dr Buerkner says. "Our customers in the Eastern bloc didn't have the hard currency to pay us. And firms here in what had been East Germany also had serious problems. Like us they had entered a valley of tears and their orders vanished as well"

While most of Goerlitz's former industries collapsed, Goerlitz Engineering was rescued. The West German industrial giant Siemens bought it for a single German Mark and has already invested around 35m in new plant and equipment. Today the energetic Dr Buerkner proudly boasts a factory with world-class productivity and quality. Once again, his order book is full. But there was a heavy price to pay: of the 2000 former employees, only 650 are left. For those still employed by Siemens, life is good. "I have far more choice now", Hans-Christoph Wolf told me with a broad grin,. "Now I can choose to buy an expensive or a cheap car. Before, we only had the Trabant, This is far better for me".

For the losers in this transformation process, though, change came as a shock. In communist East Germany, there was officially no unemployment at all - until reunification. To head off widespread disaffection and a scary whiff of neo-Nazi politics among angry youth, West Germany started pouring staggering quantities of cash into the East. The 50bn a year already transferred is already eight times more than America provided under the Marshall Plan for the reconstruction of the whole of post-war Western Europe. But still unemployment in the East remains stubbornly high - In Goerlitz it's over 20%, - more than double the rate in the Western part of Germany. That's without counting people on government-backed make-work schemes.

Some new jobs have been attracted to Goerlitz - a Canadian railway manufacturer and an America textile company among them - but the latest forecasts predicts unemployment in the East will fall far more slowly than in the West.

On the bridge over the Neisse river which links Goerlitz with its sister town on the Polish bank, I came across two of Goerlitz Engineering's former employees, no longer needed by Siemens. A couple of times a week, Erwin and Gudrun Stachlewitz cross to Poland to help stretch their unemployment benefit. In Poland, they told me, many of the basics of life are half the price in Germany.

EU restrictions now make it hard for Polish people to live or work on the German side of the river. Sometime in the next five years, though, that's set to change as Poland joins the European Union. Then Polish workers will be able to compete with Germans. The Stachlewitz couple benefit from low Polish prices, but they worry about the low wages many Polish workers are prepared to accept. Now in their fifties Gudrun Stachlewitz told me she and her husband have little chance of finding another job. But she wishes there was work in Goerlitz for their children. Instead, all of them have left to find work in the West of Germany. "It's very sad", Mrs Stachlewicz told me. "The family is all broken up and we are alone". But while some worry about the threat to jobs from the expansion of Europe, for others it's an opportunity.

After the wall came down, Edgar Scheller returned from 40 years in exile to reclaim the brewery his family owned from early this century. He took me to a high window and pointed across the river Neisse to what is now Poland on the other bank.

"It makes me very emotional", the white-haired 72-year old told me as his eyes moistened. "As a child I used to play over there. Then it was all Germany for 100s of kilometers. Now it is all Poland. That makes me very sad."

It's not just nostalgia that upsets Mr Scheller. The new border is bad for business. Poland imposes heavy duties on imported beer so the brewery's old customers across the river are cut off. When Poland joins the EU, that market will once again be open.

No-one I met in Goerlitz thinks the enlargement of Europe will be easy - or doubts that there are still huge social and economic problems to solve on the German side of the border. Mostly, though, even among the unemployed, you find a sense of hope and anticipation - as their town begins to regain its place in the centre of a new greater Europe.

The real dividend of the massive German investment in the Eastern part of their country has been to turn the former repressive bankrupt dictatorship into a normal society - just another part of democratic Europe.

For Germany, the price has been stupendous - but for Europe's future, it's money well spent.

Michael Robinson

A shorter version appears in the Daily Express 5/11/99

Links to more The Money Programme stories are at the foot of the page.

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