• Why is #Germany so tough on #Greece? Look back 25 years | Dirk Laabs | Comment is free | The Guardian
    http://www.theguardian.com/commentisfree/2015/jul/17/germany-greece-wolfgang-schauble-bailout?CMP=share_btn_tw

    The situation in the former GDR was not too dissimilar from that in Greece when Syriza swept to power: East Germans had just held their first free elections in history, only months after the Berlin Wall fell, and some of the delegates from East Berlin dreamed of a new political system, a “third way” between the west’s market economy and the east’s socialist system – while also having no idea how to pay the bills anymore.

    The West Germans, on the other side of the table, had the momentum, the money and a plan: everything the state of East Germany owned was to be absorbed by the West German system and then quickly sold to private investors to recoup some of the money East Germany would need in the coming years. In other words: Schäuble and his team wanted collateral.

    • But the reality of what the #Treuhand did is different from the popular perception – and that should be a warning for both Schäuble and the rest of Europe. Selling East Germany’s assets for maximum profit turned out to be more difficult than imagined. Almost all assets of real value – the banks, the energy sector – had already been snapped up by West German companies. Within days of the introduction of the West German mark, the economy in the east completely broke down. Like Greece, it required a massive bailout programme organised by Schäuble’s government, but in secret: they set aside 100bn marks (£35bn) to keep the old East German economy afloat, a figure that became public only years later

    • In reality, the #Treuhand became not just a tool for privatisation but a quasi-socialist holding company. It lost billions of marks because it went on paying the wages of many workers in the east and kept some unviable factories alive – a positive aspect usually drowned out in the vilifications of the agency. Because Kohl and, during the summer of 1990, #Schäuble weren’t Chicago economists keen on radical experiments but politicians who wanted to be re-elected, they pumped millions into a failing economy. This is where parallels with #Greece end: there were political limits to the austerity a government could impose on its own people.