In a few days will be celebrated the 30th anniversary of the Berlin Wall fall, on November 9th. The East-German regime was already weakened by the weekly demonstrations in Leipzig. During summer, Austria had opened its border to allow those who wanted to migrate to West Germany to go there. The spectacle of the prosperity of their neighbors they see at the TV every evening was revealing, more than any political speech, the communism failure. The fall of this symbol which was cutting in two parts the historic German capital was unavoidable as the reunification which followed it. Nevertheless, it is necessary to dismiss from our memories two legends which then gained ground.
The first one is that France, through its president, François Mitterrand, was hostile to the reunification. To the opposite, he allowed it to achieve without any international tension, which was far from being obvious. Tens of thousands of Soviet soldiers were staying in Berlin or around. The integration of a reunified Germany inside NATO was difficult to be accepted by Moscow. It was also necessary that the East-German population was democratically consulted. Above that, in putting as a condition that reunification must be pacific, France got the recognition of the Oder-Neisse border with Poland. Discussion was tough with Helmut Kohl but François Mitterrand succeeded in convincing him. At last, it was necessary to anchor Germany into Europe. The project of a unique currency, which was in preparation since the creation of the unified market was going to lead to the Maastricht Treaty two years after. The truth, it is that the only person who did all what she could to block the German reunification was Margaret Thatcher. She even went to Moscow to convince Gorbatchev to oppose to it.
The second legend was about the risk of an increase of the German industry domination. East Germany had as a reputation to be the champion of the communist countries in that matter. The merger of the two production facilities was worrying the other European countries. The reality was quite different. The East-German industry was in a disastrous situation with a low productivity and with decayed and polluting plants producing low quality products. The comparison between the Trabant which were circulating in Berlin and the Volkswagen showed the gap between the two parts of the reunified Germany. That situation was made worse by the disastrous decision to offer to East-German people the parity between their “ost-marks” and the Deutschmark. That accelerated the closure of the plants. Ten years later, unemployment rate was still above 18%.
During that decade, German growth was inferior to the French one and the country had to spend huge amounts of money to try to upgrade the new provinces and reduce the gap with these located in the West. It was also necessary to stabilize the migrant flows between the two parts of the country. When these flows rebounded in 2000, the social-democrat government of Gerhard Schroeder launched a deep reform of the job market with conditions to have access to unemployment benefits much stricter and the obligation to accept part time and low paid jobs, the famous “mini-jobs”. The expected result was not to improve the German competitiveness, as it is still believed in France, because that was not an issue in the Western part of the country where high wages and stable jobs were considered as an advantage. The purpose was to dissuade these who didn’t find jobs in the East to come in the prosperous cities in the West along with taking advantage of generous benefits. That was also worrying social-democrats because the newcomers were massively voting in favor of Christian-democrats or they stayed loyal to their far-left convictions.
The result was obtained but to the price of an increase of inequalities between the two parts of the country and a spectacular rise of the poverty ratio which is today by large superior to the French one for instance. Regarding political issues, social-democrats did not take any advantage since they didn’t win any national election since Schroeder reforms. But the German economy, thanks to the strength of its industry and the right strategies followed by its enterprises had succeeded until recently in keeping an economic trend which made their neighbors envious. They kept most of the value-added inside the national territory along with increasing their commercial presence, notably in China, to export. It was the triumph of the “German model”, especially felt in France where it was systematically shown as an example. So it is not excessive to consider that the current program of reforms of the French government takes its inspiration from the Schroeder reforms, without having understood its real motivation and its social consequences.
But the model is confronted today with its limits. The German economy is not diversified enough and is too much based on its traditional industrial sectors. The market capitalization of its enterprises suffers the consequences. There is only one German group, SAP, in the DAX 30 index whose value exceeds 100 billion euro. In the CAC 40, they are five, LVMH, L’Oreal, Total, Sanofi and Airbus. The crisis which hurts its car industry occurred under an economic slowing environment and protectionist rising tensions. Growth now is near zero. Demographic fall has an advantage: it makes full employment easier to reach. But it weights on internal demand and leads to a worrying ageing population regarding public finances and pensions systems. The solution, briefly imagined, a massive recourse to immigration revealed it unpopular and the government had to retreat. This new context is not without political consequences and it provoked a rise of populist movements to the detriment of traditional political parties, the CDU-CSU and the SPD. After the 2017 general elections, it took four months to constitute a government, the two traditional parties creating a large coalition without obtaining a majority at the Bundestag.
The resentment is even stronger in East-German provinces where we see, at every regional election a rise of the far-right party, the AfD or of its leftist homologue, Die Linke. During the last three elections, in Saxe, in Brandenburg and in Thuringe, AfD got around 25% of the votes, being first or second. In the former Western Germany, Die Linke is non-existent but AfD is everywhere on a strong rise. Berlin stubbornness to accumulate budget and trade surplus is excluding, until now, any rebound policy, despite the pressures of its European partners. The country is not near to recover a growth rate enough to soften social tensions. So there are few chances that the observed political trends reverse, especially in the East. It will not be without consequences on the result of the general election in 2022.
We would see a surprising reversal of history. Thirty years ago, the neighboring of a prosperous West Germany drove Eastern Germans to rise up and to put an end to the regime which governed them. Today, what we must call the failure of the reunification is favoring the rise of populist parties in the former East Germany to the detriment of traditional political forces creating a risk of destabilizing the country and making it impossible to be governed.