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Vol.63/No.43      December 6, 1999 
 
 
Ten years after fall of Berlin Wall, German gov't has failed to bring capitalism to east  
{A Letter from Europe column} 
 
 
BY CARL-ERIK ISACSSON  
STOCKHOLM, Sweden—At the time of the fall of the Berlin Wall in November 1989, there seemed to be no limit to the euphoria among the ruling bourgeois classes the world over. Prospects for enormous profitable capitalist investments seemed to be opening up, as the Stalinist regimes in Eastern and Central Europe shattered and the Soviet Union dissolved. The rulers in Washington and other imperialist centers thought they had regained for capitalist exploitation the huge regions they lost with the coming to power of workers and farmers in Russia 1917 and the overturn of capitalist property relations in Eastern and Central Europe after World War II.

The reunification of Germany, they hoped, would give stagnant capitalist economies in Europe a boost in the 1990s and help to unify Europe.

That was at the opening of the '90s. Now, at the close of this decade, the capitalists' euphoria has faded. Today they are very cautious about investing money in Eastern and Central Europe, let alone Russia. Washington's "new world order" has increasingly become a capitalist world disorder. At the same time the disintegration of the bureaucratic castes that sat on top of the workers states, who pretended for decades to represent communism, has removed an enormous roadblock that stood in the way of revolutionary fighters finding their way to communism. It was imperialism that lost the Cold War.

German reunification has become not a boost for capitalist growth in Germany and Europe but a lid on it, and a huge burden for the ruling class in Germany.

This decade has proven that it is not possible to change the social relations that were shaped by the overturn of capitalist property relations throughout the region, including Eastern Germany, by just pouring in money. Where once revolutionary force by workers and farmers was used to overturn the capitalist property relations, however limited and bureaucratically restricted by the Stalinist misleaderships, counterrevolutionary force by the capitalists must be used to restore capitalist property relations.  
 

Rulers choke trying to swallow east

Nearly 10 years after reunification, the ruling class in Germany has not been able to defeat the workers and farmers in eastern Germany in a fight to restore capitalist property relations there. Instead, a net $800 billion has been poured into eastern Germany from the west over this decade, and no end short of a showdown with workers and farmers throughout the country is in sight. The national debt has tripled to close to $900 billion since 1990 as the government has borrowed on the international capital markets to finance reunification.

Just 25 percent of the money that has gone to the east has been invested in roads, buildings, railways, telecommunication, and other infrastructure. The other three-quarters has gone to pensions, unemployment benefits, make-work programs, and similar spending to avert social upheaval. Eastern Germany is full of tales of west German capitalists who took over companies in the east only to strip their assets and shut them down. The success stories are few as the big-business press draws its balance sheets for the '90s. Jenoptik, a technology enterprise in Saxony headed by a former western politician Lothar Spath, is one of the few pointed to in a recent New York Times article. Even after the new boss laid off half the workforce of an old state enterprise and refused to negotiate with the metalworkers union, that project would have failed if Spath hadn't received huge financial help from the German government.

Most of the old industries in the east are closed or considerably cut down, while very few new industrial jobs have been created. As an example, of the 320,000 textile workers employed in the east before 1990, only 20,000 are still working.

Growth rates in the east are now lower than in the west after surging in the first half of decade. That initial growth was spurred by a brief consumer boom when the eastern mark was exchanged for the West German currency at a rate of one to one, and by a building boom that peaked in 1994.

Unemployment in the east skyrocketed and now stands at 18 percent, compared to about 10.5 percent nationally. But jobs are a big issue throughout the country. More than 1 million jobs have been lost in the west since 1995, many of them at flagship companies like Siemens and Volkswagen. More than 4 million workers in Germany are unemployed, the majority in the west. Wage costs are close to twice as high in Germany as in the United States, so the competitiveness of German industry is low and many companies move production out of the country to exploit labor at lower costs.

This year the German economy—which accounts for a third of the gross domestic product in the "euro zone" of countries that are part of the European Monetary Union—is expected to expand just 1.5 percent, less than other economies in the region except for Italy. Upturns in the German business cycle over the last decade, upon which other capitalists put much hope for the whole of Europe, have been weaker than expected. Just a week after the European Central bank had raised interest rates in early November, amid signs that growth in Europe was picking up, an unexpected 4.5 percent decline in retail sales was reported for September in Germany and the euro fell to close to parity with the U.S. dollar.

The German economy, which is very export-based, is vulnerable to the deflationary pressures at work in the capitalist word economy and the crises it provokes, from Asia to Brazil to Russia. Of the debts owed by Moscow to foreign banks, German banks hold more than 40 percent. Finance capital in Germany is thus very vulnerable to the political instability in Russia.  
 

Push to restore military capacity

The political instability in Germany's traditional "backyard" of eastern and central Europe, including the Balkans, has put the German rulers on a course to restore their military capability, which had been crippled by Berlin's defeat in World War II. The German government took part in the assault on Yugoslavia this spring on equal terms with other NATO members in Europe, and is now part of the occupation force in Kosova. By contrast, in the U.S.-organized war against Iraq in 1990–91, Bonn was not was able to participate militarily, yet was forced to foot a large portion of the bill.

Germany's rulers, now seated in Berlin, are shifting their political focus to the east. They have taken the lead in supporting early membership in the European Union for Poland, Hungary, and the Czech Republic and they are playing a leading role financially in the Balkans. Turkey is much more the focus of German diplomacy today. The German rulers are preparing for a post-Yeltsin era in Russia by cultivating closer ties with his rivals, such as Moscow mayor Yuri Luzhkov.

These moves by the rulers in Germany are putting a strain on its relations with other member states of the European Union, especially France. For example, the German government, which pays five times as much to finance reunification as its net contribution to the European Union, is engaged in a constant quarrel within the EU, arguing that it pays too much. The German rulers' interests are increasingly diverging with Paris on questions such as enlargement of the EU, subsidies to farmers, and military policy.

The reunification of Germany has not unified Europe but instead provoked increasing divisions within the European Union.

The German social democratic government is trying to ram through an austerity package of $16 billion in social cuts, but it is meeting resistance. In early October 55,000 public workers marched in Berlin to protest the government's austerity measures, and at the end of October 10,000 farmers rallied there to protest the government's farm policy.  
 

Political polarization increases

The unpopularity of the austerity measures has dealt electoral setbacks to the social democrats, who have lost heavily in state and local government elections this fall, and political polarization in Germany is growing. Ultrarightist parties like the German People's Union (DVU) are gaining ground on "German jobs for German workers" campaigns, scapegoating immigrants for the high unemployment and targeting the political establishment with demagogy. DVU is now seated in the state parliaments in Brandenburg and Saxony Anhalt.

In several states in the east, 10 years after the fall of the wall, the Party of Democratic Socialism (PDS), as the former ruling party in the east is now called, has become the second biggest party.

When the Berlin Wall came down, "what was opening up as a result of the collapse of the Stalinist apparatuses in Eastern Europe and the Soviet Union was the possibility, for the first time in half a century or more, of collaboration between workers in these countries and workers facing similar assaults on their rights and living conditions in other countries," noted Jack Barnes, the national secretary of the Socialist Workers Party in the United States, in a 1993 speech published in Capitalism's World Disorder. He described watching on television a recent demonstration of metalworkers and their supporters from across Germany to protest the government's decision to renege on promises to bring together the living standards, wages, and working conditions in the east and west.

"That kind of Germany-wide working-class action could now begin to happen again, after more than sixty years," Barnes said. "It will take time, but it is now possible."

Carl-Erik Isacsson is a member of the Metal Workers union in Södertälje, Sweden.  
 
 
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