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13/06/2009Germany's ex-communist east doing better in crisis

Two decades after easterners ripped open the Iron Curtain, they are doing better than their western cousins in grappling with the troubles currently whipsawing through the world's economies.

Berlin -- Twenty years after the fall of the Berlin Wall, Germany's ex-communist east is weathering the global economic crisis better than the rest of the country, a government report showed Wednesday.

The minister responsible for development of the eastern states, Wolfgang Tiefensee, said the annual study showed the depressed eastern states were gradually catching up with their western neighbours.

And two decades after easterners ripped open the Iron Curtain, they are doing better than their western cousins in grappling with the troubles currently whipsawing through the world's economies.

"Twenty years after the peaceful revolution and the fall of the Wall, the achievements of the east Germans are being recognised in 2009," Tiefensee told reporters after presenting the report to the cabinet.

"For now, the east has not been hit as hard as the west" by the crisis, according to the minister.

He said economic growth and employment in the east had been largely stable in the last year as the crisis ravaged western Germany.

Tiefensee attributed the east's smoother ride to the rise of nimble small and medium-sized companies specialising in high-tech development such as biotechnology and "green" sectors like solar energy.

Meanwhile the manufacturing industry in the west, which is heavily reliant on exports, has borne the brunt of the global downturn.

Tiefensee noted that the western states' "unprecedented solidarity" with the east, including more than one trillion euros (dollars) in subsidies since national unification in 1990, had been crucial to getting the region back on its feet.

Gross national product per person in the east rose to 71 percent of that of a westerner last year, compared to 67 percent in 2000, the report said.

Industry in the east has grown by 7.5 percent over the last three years, compared to 4.3 percent in the west.

But Tiefensee noted that the picture in the east was far from rosy, with unemployment still nearly double that in the west at 13.3 percent versus 6.9 percent and likely to rise further still in the coming months.

The east is also grappling with a high percentage of long-term jobless whose chances of finding work are particularly dim.

The grim labour market situation has also prompted an ongoing exodus of "young, creative" easterners for the west in search of jobs, creating ghost towns in the east with little chance of a fresh start.

About 90,000 people ditched the east for the west each year in the recent past, versus just 40,000 people moving east.

Although two-thirds of easterners still say they are doing better than under communism, Tiefensee said there was still a large group that felt they were treated as "second-class citizens" of the unified Germany.

He said the only way to achieve full national unity was to slash the jobless rate in the east and gradually eliminate ongoing wage inequality with the west.

"There is still a lot to do," he said, adding that so-called "solidarity tax" payments to the east would likely continue for another decade, until 2019.

By that time, he said some of the eastern states could even overtake poorer western regions in terms of gross domestic product.

The opposition, however, accused Tiefensee of trying to score points for his Social Democrats, junior partners in Germany's ruling coalition, with less than four months to go until a general election.

"It is a clumsy attempt to win votes in the east when you tell people that the rest of the job will be finished in 10 years," said the eastern affairs expert for the liberal Free Democrats, Joachim Guenther.

Deborah Cole/AFP/Expatica


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