Greek Plan Stirs Memories in Germany

http://www.nytimes.com/2015/07/24/world/europe/greek-plan-stirs-memories-in-germany.html

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BERLIN — No nation peers into its past with the same institutionalized acuity as Germany. Yet, shift the historical dial from the horrors of Nazism toward the joyous, uncertain days of unification in 1990, and the vision is not so clear.

In those days, 25 years ago, West Germany confronted the enormous and costly challenge of absorbing the broken, state-run East German economy into its “Wirtschaftswunder,” the economic miracle.

The agency that was supposed to oversee the process was known as the Treuhand — meaning, roughly, trust agency — short for the name of an official institution, initially conceived by East German politicians, that would subsume the faltering, frail economic entities of a command economy and ready them for privatization.

If that sounds suddenly contemporary, it is. Just this month, as the European negotiations over the battered Greek economy unfolded in Brussels, officials devised a similar solution. They proposed, among many other tough conditions, that a fund — Treuhand in all but name — be established under the supervision of foreign creditors to sell Greek ports, airports, real estate, energy suppliers and other concerns in the hopes of raising 50 billion euros, about $55 billion.

The plan has been widely depicted here as the inspiration of Wolfgang Schäuble, the German finance minister and advocate of stern austerity, who ranked among the closest advisers to former Chancellor Helmut Kohl in the 1990s.

The proposal is unpopular in Greece, and it has stirred painful memories in Germany. “The sell-off of East German state assets became an El Dorado for adventurers, particularly from the West,” the journalist Bastian Brandau wrote on the website of the broadcaster Deutschlandfunk. “There were many documented cases of fraud, corruption and false accounting.”

When it began its operations, the Treuhand controlled a portfolio of businesses employing four million East Germans. When it wound up its operations in 1994, hundreds of thousands of jobs had been lost and, instead of raising money, the agency had run up huge debts.

For many East Germans, the Treuhand came to denote sharp- elbowed Westerners looting their land — a cautionary tale in a new century.

“Schäuble should have learned from history that the Treuhand gamble had catastrophic psychological consequences,” Dirk Laabs, a German journalist and filmmaker, wrote in The Guardian. “Even though the agency was run by Germans, who spoke German, still it was seen by many in the east as an occupying force.”

Then, as now, though, privatization was seen as a kind of collateral: If West Germany was to pump billions into the moribund East, the sale of assets would defray the costs. Instead, it magnified economic dysfunction.

For many Germans, the arguments against repeating the experiment in Greece are overwhelming, particularly since earlier Greek attempts to sell state assets have faltered.

Such is Greece’s economic ruin, the columnist Stephan Kaufmann wrote in the newspaper Frankfurter Rundschau, that privatization alone will not raise the kind of money the Europeans are demanding.

Prices are depressed, the real estate market has collapsed, and companies are losing money and in debt, he wrote. “Investors turn away. Greece is under pressure to sell at all costs. That gives buyers the chance to push down prices.”

As Germans know well from their history before and after reunification, moreover, shame and resentment stir deep political currents.

When Yanis Varoufakis, who resigned under pressure as Greek finance minister at the beginning of the month, likened the European bailout terms to the crushing war reparations and conditions imposed on Germany with the Treaty of Versailles in 1919, the inference was clear: National humiliation and the imposition of impossible demands lead only to instability.

The historical parallels are, of course, imperfect. If West Germany sought to appear generous toward the East in the 1990s, it was, Mr. Laabs wrote, because “there were political limits to the austerity a government could impose on its own people.” A quarter-century later, in a broader European arena, the rules of play have sharpened.