1.2 Political developments

An SMAD decree of June 10 granted permission for the formation of antifascist democratic political parties in the Soviet zone; elections to new state legislatures were scheduled for October 1946. A democratic-antifascist coalition, which included the KPD, the SPD, the new Christian Democratic Union (Christlich-Demokratische Union--CDU), and the Liberal Democratic Party of Germany (Liberal Demokratische Partei Deutschlands --LDPD), was formed in July 1945. The KPD (with 600,000 members) and the SPD (with 680,000 members), which was under strong pressure from the Communists, merged in April 1946 to form the Socialist Unity Party of Germany (Sozialistische Einheitspartei Deutschlands--SED). In the October 1946 elections, the SED polled approximately 50 percent of the vote in each state in the Soviet zone. In Berlin, which was still undivided, the SPD had resisted the party merger and, running on its own, had polled 48.7 percent of the vote, thus scoring a major electoral victory and decisively defeating the SED, which, with 19.8 percent, was third in the voting behind the SPD and the CDU.

The SED modelled itself as a Soviet-style "party of the new type." To that end, German communist Walter Ulbricht became first secretary of the SED, and the Politburo, Secretariat, and Central Committee were formed. According to the Leninist principle of democratic centralism, each party body was controlled by its members. Ulbricht, as party chief, carried out the will of the members of his party. The SED committed itself ideologically to Marxism-Leninism and the international class struggle.

Many former members of the SPD and some communist advocates of a social-democratic road to socialism were purged from the SED. The middle-class CDU and LDPD were weakened by the creation of two new parties, the National Democratic Party of Germany (NationalDemokratische Partei Deutschlands--NDPD) and the Democratic Peasants' Party of Germany (Demokratische Bauernpartei Deutschlands--DBD). The SED accorded political representation to mass organizations and, most significant, to the party-controlled Free German Trade Union Federation (Freier Deutscher Gewerkschaftsbund--FDGB).

In November 1948, the German Economic Commission (Deutsche Wirtschaftskomission--DWK), including antifascist bloc representation, assumed administrative authority. On October 7, 1949, the DWK formed a provisional government and proclaimed establishment of the German Democratic Republic (East Germany). Wilhelm Pieck, a party leader, was elected first president.

2 Early years, 1949-1954

The SED controlled the National Front coalition, a federation of all political parties and mass organizations that preserved political pluralism. The 1949 constitution formally established a democratic federal republic and created the States Chamber and the People's Chamber. The People's Chamber, according to the constitution the highest state body, was vested with legislative sovereignty. The SED controlled the Council of Ministers and reduced the legislative function of the People's Chamber to that of acclamation. Election to the People's Chamber and the state legislatures (later replaced by district legislatures) was based on a joint ballot prepared by the National Front; voters could register their approval or disapproval.

All members of the SED who were active in state organs carried out party resolutions. The State Security Service (Staatssicherheitsdienst, better known as the Stasi) and the Ministry of State Security acted as a counterpart to Western intelligence agencies, acting in the same functions.

The Third Party Congress of July 1950 emphasized industrial progress. The industrial sector, employing 40 percent of the working population, was subjected to further nationalization, which resulted in the formation of the Publicly Owned Enterprises (Volkseigene Betriebe--VEBs). These enterprises incorporated 75 percent of the industrial sector. The First Five-Year Plan ( 1951- 1955) introduced centralized state planning; it stressed high production quotas for heavy industry and increased labor productivity. The pressures of the plan caused an exodus of East German citizens to West Germany. In 1951 monthly emigration figures fluctuated between 11,500 and 17,000. By 1953 an average of 37,000 men, women, and children were leaving each month.

Stalin died in March 1953. In June the SED, hoping to give workers an improved standard of living, announced the New Course . The New Course in East Germany was based on the economic policy initiated by Georgi Malenkov in the Soviet Union. Malenkov's policy, which aimed at improvement in the standard of living, stressed a shift in investment toward light industry and trade and a greater availability of consumer goods. The SED, in addition to shifting emphasis from heavy industry to consumer goods, initiated a program for alleviating economic hardships. This led to a reduction of delivery quotas and taxes, the availability of state loans to private business, and an increase in the allocation of production material.

While the New Course increased the consumer goods workers could get, there were still high production quotas. When work quotas were raised in 1953, it led to the 1953 Uprising. Strikes and demonstrations happened in major industrial centers. The workers demanded economic reforms. The Volkspolizei and the Soviet Army suppressed the uprising, in which approximately 100 participants were killed.

In 1954 the Soviet Union granted East Germany sovereignty, and the Soviet Control Commission in Berlin was disbanded. By this time, reparations payments had been completed, and the SAGs had been restored to East German ownership. The five states formerly constituting the Soviet occupation zone also had been dissolved and replaced by fifteen districts (Bezirke) in 1952; the United States, Britain, and France did not recognize the fifteenth district, East Berlin. East Germany began active participation in the Council for Mutual Economic Assistance (Comecon) in 1950. In 1956 the National People's Army (Nationale Volksarmee--NVA) was created, and East Germany became a member of the Warsaw Pact.

3 Collectivization and Nationalization of Agriculture and Industry

In 1956, at the Twentieth Congress of the Communist Party of the Soviet Union, First Secretary Nikita Khrushchev repudiated Stalinism. Around this time, an academic intelligentsia within the SED leadership demanded reform. To this end, Wolfgang Harich issued a platform advocating radical changes in East Germany. In late 1956, he and his associates were quickly purged from the SED ranks and imprisoned.

An SED party plenum in July 1956 confirmed Ulbricht's leadership and presented the Second Five-Year Plan (1956-60). The plan employed the slogan "modernization, mechanization, and automation" to emphasize the new focus on technological progress. At the plenum, the regime announced its intention to develop nuclear energy, and the first nuclear reactor in East Germany was activated in 1957. The government increased industrial production quotas by 55 percent and renewed emphasis on heavy industry.

The Second Five-Year Plan committed East Germany to accelerated efforts toward agricultural collectivization and completion of the nationalization of the industrial sector. By 1958 the agricultural sector still consisted primarily of the 750,000 privately owned farms that comprised 70 percent of all arable land; only 6,000 Agricultural Cooperatives (Landwirtschaftliche Produktionsgenossenschaften--LPGs) had been formed. In 1958-59 the SED placed quotas on private farmers and sent teams to villages in an effort to encourage voluntary collectivization. In November and December 1959 some law-breaking farmers were arrested by the SSD.

By mid-1960 nearly 85 percent of all arable land was incorporated in more than 19,000 LPGs; state farms comprised another 6 percent. By 1961 the socialist sector produced 90 percent of East Germany's agricultural product s. An extensive economic management reform by the SED in February 1958 included the transfer of a large number of industrial ministries to the State Planning Commission. In order to accelerate the nationalization of industry, the SED offered entrepreneurs 50-percent partnership incentives for transforming their firms into VEBs. At the close of 1960, private enterprise controlled only 9 percent of total industrial production. Production Cooperatives (Produktionsgenossenschaften--PGs) incorporated one-third of the artisan sector during 1960-61, a rise from 6 percent in 1958.

The Second Five-Year Plan encountered difficulties, and the regime replaced it with the Seven-Year Plan (1959-65). The new plan aimed at achieving West Germany's per capita production by the end of 1961, set higher production quotas, and called for an 85 percent increase in labor productivity. Emigration again increased, totaling 143,000 in 1959 and 199,000 in 1960. The majority of the emigrants were white collar workers, and 50 percent were under 25 years of age. The labor drain exceeded a total of 2.5 million citizens between 1949 and 1961.

4 New Economic System

The annual industrial growth rate declined steadily after 1959. The Soviet Union therefore recommended that East Germany implement the reforms of Soviet economist Evsei Liberman , an advocate of the principle of profitability and other market principles for communist economies. In 1963 Ulbricht adapted Liberman's theories and introduced the New Economic System (NES), an economic reform program providing for some decentralization in decision making and the consideration of market and performance criteria. The NES aimed at creating an efficient economic system and transforming East Germany into a leading industrial nation.

Under the NES, the task of establishing future economic development was assigned to central planning. Decentralization involved the partial transfer of decision-making authority from the central State Planning Commission and National Economic Council to the Associations of Publicly Owned Enterprises (Vereinigungen Volkseigener Betriebe-- VVBs), parent organizations intended to promote specialization within the same areas of production. The central planning authorities set overall production goals, but each VVB determined its own internal financing, utilization of technology, and allocation of manpower and resources. As intermediary bodies, the VVBs also functioned to synthesize information and recommendations from the VEBs. The NES stipulated that production decisions be made on the basis of profitability, that salaries reflect performance, and that prices respond to supply and demand.

The NES brought forth a new elite in politics as well as in management of the economy, and in 1963 Ulbricht announced a new policy regarding admission to the leading ranks of the SED. Ulbricht opened the Politburo and the Central Committee to younger members who had more education than their predecessors and who had acquired managerial and technical skills. As a consequence of the new policy, the SED elite became divided into political and economic factions, the latter composed of members of the new technocratic elite. Because of the emphasis on professionalization in the SED cadre policy after 1963, the composition of the mass membership changed: in 1967 about 250,000 members (14 percent) of the total 1.8 million SED membership had completed a course of study at a university, technical college, or trade school.

The SED emphasis on managerial and technical competence also enabled members of the technocratic elite to enter the top echelons of the state bureaucracy, formerly reserved for political dogmatists. Managers of the VVBs were chosen on the basis of professional training rather than ideological conformity. Within the individual enterprises, the number of professional positions and jobs for the technically skilled increased. The SED stressed education in managerial and technical sciences as the route to social advancement and material rewards. In addition, it promised to raise the standard of living for all citizens. From 1964 until 1967, real wages increased, and the supply of consumer goods, including luxury items, improved.

5 Ulbricht Versus Détente

Ulbricht's foreign policy from 1967 to 1971 responded to the beginning of the era of détente with the West. Although détente offered East Germany the opportunity to overcome its isolation in foreign policy and to gain Western recognition as a sovereign state, the SED leader was reluctant to pursue a policy of rapprochement with West Germany. Both Germanies had retained the goal of future unification; however, both remained committed to their own irreconcilable political systems. The 1968 East German Constitution proclaimed the victory of socialism and restated the country's commitment to unification under communist leadership.

However, the SED leadership, although successful in establishing socialism in East Germany, had limited success in winning popular support for the repressive social system. In spite of the epithet "the other German miracle," the democratic politics and higher material progress of West Germany continued to attract East German citizens. Ulbricht feared that hopes for a democratic government or a reunification with West Germany would cause unrest among East German citizens, who since 1961 appeared to have come to terms with social and living conditions.

In the late 1960s, Ulbricht made the Council of State the main governmental organ. The twenty-four-member, multiparty council, headed by Ulbricht and dominated by its fifteen SED representatives, generated a new era of political conservatism. Foreign and domestic policies in the final years of the Ulbricht era reflected strong commitment to an aggressive strategy toward the West and toward Western ideology. Ulbricht's foreign policy focused on strengthening ties with Warsaw Pact countries and on organizing opposition to détente. In 1967 he persuaded Czechoslovakia, Poland, Hungary, and Bulgaria to conclude bilateral mutual assistance treaties with East Germany. The Ulbricht Doctrine, subsequently signed by these states, committed them to reject the normalization of relations with West Germany unless Bonn formally recognized East German sovereignty.

Ulbricht also encouraged the abrogation of Soviet bloc relations with the industrialized West, and in 1968 he launched a spirited campaign to convince the Comecon states to intensify their economic development "by their own means." Considering claims for freedom and democracy within the Soviet bloc a danger to its domestic policies, the SED, from the beginning, attacked Prague's new political course, which resulted in intervention by the Soviet military and other Warsaw Pact contingents in 1968.

Domestically the East German regime replaced the NES with the Economic System of Socialism (ESS), which focused on high technology sectors in order to make self-sufficient growth possible. Overall, centralized planning was reintroduced in the so-called structure-determining areas, which included electronics, chemicals, and plastics. Industrial combines were formed to integrate vertically industries involved in the manufacture of vital final products. Price subsidies were restored to accelerate growth in favored sectors. The annual plan for 1968 set production quotas in the structure-determining areas 2.6 percent higher than in the remaining sectors in order to achieve industrial growth in these areas. The state set the 1969-70 goals for high-technology sectors even higher. Failure to meet ESS goals resulted in the conclusive termination of the reform effort in 1970.

In August 1970, the Soviet Union and West Germany signed the Moscow Treaty , in which the two countries pledged nonaggression in their relations and in matters concerning European and international security and confirmed the Oder-Neisse line. Moscow subsequently pressured East Germany to begin bilateral talks with West Germany. Ulbricht resisted, further weakening his leadership, which had been damaged by the failure of the ESS. In May 1971, the SED Central Committee chose Erich Honecker to succeed Ulbricht as the party's first secretary. Although Ulbricht was allowed to retain the chairmanship of the Council of State until his death in 1973, the office had been reduced in importance.

6 Honecker and East-West Rapprochement

Honecker combined loyalty to the Soviet Union with flexibility toward détente. At the Eighth Party Congress in June 1971, he presented the political program of the new regime. In his reformulation of East German foreign policy, Honecker renounced the objective of a unified Germany and adopted the "defensive" position of ideological Abgrenzung. Under this program, the country defined itself as a distinct " socialist state" and emphasized its allegiance to the Soviet Union. Abgrenzung, by defending East German sovereignty, in turn contributed to the success of détente negotiations that led to the Four Power Agreement on Berlin ( Berlin Agreement ) in 1971 and the Basic Treaty with West Germany in December 1972.

The Berlin Agreement and the Basic Treaty normalized relations between East Germany and West Germany. The Berlin Agreement (effective June 1972), signed by the United States, Britain, France, and the Soviet Union, protected trade and travel relations between West Berlin and West Germany and aimed at improving communications between East Berlin and West Berlin. The Soviet Union stipulated, however, that West Berlin would not be incorporated into West Germany. The Basic Treaty (effective June 1973) politically recognized two German states, and the two countries pledged to respect one another's sovereignty. Under the terms of the treaty, diplomatic missions were to be exchanged and commercial, tourist, cultural, and communications relations established. In September 1973, both countries joined the United Nations, and thus East Germany received its long-sought international recognition.

The Main Task , introduced by Honecker in 1971, formulated domestic policy for the 1970s. The program re-emphasized Marxism-Leninism and the international class struggle. During this period, the SED launched a massive propaganda campaign to win citizens to its Soviet-style socialism and to restore the "worker" to prominence. The Main Task restated the economic goal of industrial progress, but this goal was to be achieved within the context of centralized state planning. Consumer socialism -- the new program featured in the Main Task--was an effort to magnify the appeal of socialism by offering special consideration for the material needs of the working class. The state extensively revamped wage policy and gave more attention to increasing the availability of consumer goods.

The regime also accelerated the construction of new housing and the renovation of existing apartments; 60 percent of new and renovated housing was allotted to working-class families. Rents, which were subsidized, remained extremely low. Because women constituted nearly 50 percent of the labor force, child-care facilities, including nurseries and kindergartens, were provided for the children of working mothers. Women in the labor force received salaried maternity leave which ranged from six months to one year. The state also increased retirement annuities.

7 Two Germanies

From the mid-1970s, East Germany remained poised between East and West. The 1974 amendment to the Constitution deleted all references to the "German nation" and "German unity" and designated East Germany "a socialist nation-state of workers and peasants" and "an inseparable constituent part of the socialist community of states." However, the SED leadership had little success in inculcating East Germans with a sense of ideological identification with the Soviet Union. Honecker, conceding to public opinion, devised the formula "citizenship, GDR; nationality, German." In so doing, the SED first secretary acknowledged the persisting psychological and emotional attachment of East German citizens to German traditions and culture and, by implication, to their German neighbors in West Germany.

Although Abgrenzung constituted the foundation of Honecker's policy, détente strengthened ties between the two Germanies. Between 5 and 7 million West Germans and West Berliners visited East Germany each year. Telephone and postal communications between the two countries were significantly improved. Personal ties between East German and West German families and friends were being restored, and East German citizens had more direct contact with West German politics and material affluence, particularly through radio and television. West Germany was East Germany's supplier of high-quality consumer goods, including luxury items, and the latter's citizens frequented both the Intershops, which sold goods for Western currency, and the Exquisit and Delikat shops, which sold imported goods for East German currency.

As part of the general détente between East and West, East Germany participated in the Conference on Security and Cooperation in Europe and in July 1975 signed the Helsinki Final Act, which was to guarantee the regime's recognition of human rights. The Final Act's provision for freedom of movement elicited approximately 120,000 East German applications for permission to emigrate, but the applications were rejected.

Both Germanies continued a search for national identity. From the beginning, the newly formed East German republic tried to establish its own separate identity. Because of Marx's abhorrence of Prussia, the SED repudiated continuity between Prussia and East Germany. In an attempt to obliterate East Germany's Prussian heritage, the SED destroyed the Junker manor houses and the Berlin municipal castle and removed the equestrian statue of Frederick the Great from East Berlin. Instead the SED focused on the progressive heritage of German history, including Thomas Müntzer's role in the Peasants' War and the role played by the heroes of the class struggle during Prussia's industrialization. Nevertheless, as early as 1956 East Germany's Prussian heritage asserted itself in the NVA.

As a result of the Ninth Party Congress in May 1976, East Germany after 1976-77 considered its own history as the essence of German history, in which West Germany was only an episode. It laid claim to reformers such as Karl Freiherr vom Stein , Karl August von Hardenberg, Wilhelm von Humboldt, and Gerhard von Scharnhorst. The statue of Frederick the Great was meanwhile restored to prominence in East Berlin. Honecker's references to the former Prussian king in his speeches reflected East Germany's official policy of revisionism toward Prussia, which also included Bismarck and the resistance group Red Band. East Germany also laid claim to the formerly maligned Martin Luther and to the organizers of the Spartacus League, Karl Liebknecht and Rosa Luxemburg.

In spite of détente, the Honecker regime remained committed to Soviet-style socialism and continued a strict policy toward dissidents. A critical Marxist intelligentsia within the SED nevertheless renewed the plea for democratic reform. Among them was the poet-singer Wolf Biermann, who with Robert Havemann had led a circle of artists and writers advocating democratization; he was expelled from East Germany in November 1976 for dissident activities. Following Biermann's expulsion, the SED leadership disciplined more than 100 dissident intellectuals.

Despite the government's actions, East German writers began to publish political statements in the West German press and periodical literature. The most prominent example was Rudolf Bahro's Die Alternative , which was published in West Germany in August 1977. The publication led to the author's arrest, imprisonment, and deportation to West Germany. In late 1977, a manifesto of the "League of Democratic Communists of Germany" appeared in the West German magazine Der Spiegel. The league, consisting ostensibly of anonymous middle- to high-ranking SED functionaries, demanded democratic reform in preparation for reunification.

Even after an exodus of artists in protest against Biermann's expulsion, the SED continued its repressive policy against dissidents. The state subjected literature, one of the few vehicles of opposition and nonconformism in East Germany, to ideological attacks and censorship. This policy led to an exodus of prominent writers, which lasted until 1981. The Lutheran Church also became openly critical of SED policies. Although in 1980-81 the SED intensified its censorship of church publications in response to the Polish Solidarity movement, it maintained, for the most part, a flexible attitude toward the church. The consecration of a church building in May 1981 in Eisenhüttenstadt, which according to the SED leadership was not permitted to build a church owing to its status as a "socialist city," demonstrated this flexibility

8 Tenth Party Congress

The Tenth Party Congress, which took place in April 1981, focused on improving the economy, stabilizing the socialist system, achieving success in foreign policy, and strengthening relations with West Germany. Presenting the SED as the leading power in all areas of East German society, General Secretary (the title changed from first secretary in 1976) Honecker emphasized the importance of educating loyal cadres in order to secure the party's position. He announced that more than one-third of all party members and candidates and nearly two-third of the party secretaries had completed a course of study at a university, technical college, or trade school and that four-fifths of the party secretaries had received training in a party school for more than a year.

Stating that a relaxation of "democratic centralism" was unacceptable, Honecker emphasized rigid centralism within the party. Outlining the SED's general course, the congress confirmed the unity of East Germany's economic and social policy on the domestic front and its absolute commitment to the Soviet Union in foreign policy. In keeping with the latter pronouncement, the SED approved the Soviet intervention in Afghanistan. The East German stance differed from that taken by the Yugoslav, Romanian, and Italian communists, who criticized the Soviet action.

The SED's Central Committee, which during the 1960s had been an advisory body, was reduced to the function of an acclamation body during the Tenth Party Congress. The Politburo and the Secretariat remained for the most part unchanged. In addition to policy issues, the congress focused on the new Five-Year Plan (1981-85), calling for higher productivity, more efficient use of material resources, and better quality products. Although the previous five-year plan had not been fulfilled, the congress again set very high goals.

9 Fall of the GDR

In August 1989, Hungary removed its border restrictions and many people fled East Germany by crossing the "green" border into Hungary and then on to Austria and West Germany. Many others peacefully demonstrated against the ruling party. These demonstrations prompted the ousting of Honecker and his replacement by Egon Krenz. Notable demonstrations in Dresden and Leipzig demanded the legalization of opposition groups and democratic reforms.

On November 9th the Berlin Wall fell and with it the whole socialist system of East Germany was unraveled when its parliament voted on December 1 that year to abolish the constitutional provision granting the communist party the leading role in the state. Egon Krenz, the Politburo and the Central Committee resigned two days later. Although there were some small attempts to create a non-socialist East Germany, these were soon overwhelmed by calls for reunification with West Germany. After some negotiations which involved the United States and the Soviet Union, conditions for German reunification were agreed on. Thus, on October 3, 1990 the East German population was the first from the Eastern Bloc to join the European Union as a part of the reunified Federal Republic of Germany.

10 Financial situation in 1990

10.1 From the perspective of the GDR

It is frequently maintained that, "the GDR was broke at the end", that is, at the end of the 80s, and that it would be ruined economically.

The state bank claimed that the GDR was able to pay all wages, pensions, credit and interest with its gold reserves. Doubts exist about such a statement, due to estimates of the foreign debt of the GDR. The GDR had a high production capacity estimated at several billion dollars and also had export markets still open to it. Therefore, it is claimed by adherents of the former East Germany that the state would have been able to pay the relevant costs.

There exist no official statements, with the exception of some doubtful comments by some ministers, that the GDR was insolvent or unable to attract foreign credit. Banks with the regime held debts were also paid on time. It is claimed, furthermore, that living standards in the GDR continued to rise until the dissolution of the state.

10.2 From the perspective of the BRD

The GDR was apparently economically healthy up to its collapse: It had gold reserves in the value at that time of approximately 600 million Marks and had available production capacities and large market shares in particular in mechanical engineering. It also exported raw materials in small quantities. The GDR could pay all wages and pensions as well as meet internal obligations. With closer analysis, the situation appears more desperate than it had previously:

• The domestic obligations existed only in GDR-Marks. Since this currency was not convertable, its actual value was could not be determined; the GDR could print more money if it desired.

• The majority of exports were directed to other planned-economy states. As a result, GDR exports were not competing in a free market and could not be deemed to be competitive.

• The gold reserves of the GDR did not cover the foreign debt adequately. This was confirmed after the collapse of the GDR by some of its former politicians. The improvements in living standards had been financed by the raising of credit from the BRD. Even Karl Eduard von Schnitzler , a prominent ideological proponent of the GDR, had to admit: "The supplies of goods were not sufficient to meet the daily need." One of the reasons was the obligation to export to service the debt; the products which were exported were obviously no longer at the disposal of the state. Open signs of failure of the state bank were simply not allowed. The wstern states were surprised by the extent and speed of the GDR's collapse. The other socialist states were, in 1990, in roughly the same economic situation as the GDR, which might have played a role, in addition to the political repression, in the rapid collapse of the socialist regimes in most of those states. In the GDR, the consequences of the economic problems first avoided by monetary union and the entry to the Federal Republic. In the longer term, further crises developed which continue to this day.

11 Reference

• LOC Country studies (public domain text)
• articles in german

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