area handbook series 


a country study 


a country study 

Federal Research Division 
Library of Congress 
Edited by 
Eric Solsten 
Research Completed 
August 1995 

On the cover: The Brandenburg Gate in Berlin 

Third Edition, First Printing, 1996. 

Library of Congress Cataloging-in-Publication Data 

Germany : a country study / Federal Research Division, 
Library of Congress ; edited by Eric Solsten. — 3rd ed. 

p. cm. — (Area handbook series, ISSN 1057-5294) 
(DA Pam; 550-173) 

"Supersedes the 1988 edition of East Germany : a coun- 
try study, edited by Stephen R. Burant; and the 1982 edi- 
tion of Federal Republic of Germany : a country study, 
edited by Richard F. Nyrop." — T.p. verso. 

"Research completed August 1995." 

Includes bibliographical references (pp. 545-593) and 

ISBN 0-8444-0853-0 (he : alk. paper) 

Copy 3 Z663.275 .G47 1996 

1. Germany. I. Solsten, Eric, 1943- . II. Library of 
Congress. Federal Research Division. III. Series. IV. 
Series: DA Pam ; 550-173. 
DD17.G475 1996 96-20927 
943— dc20 CIP 

Headquarters, Department of the Army 
DA Pam 550-173 

For sale by the Superintendent of Documents, U.S. Government Printing Office 
Washington, D.C. 20402 


This volume is one in a continuing series of books prepared 
by the Federal Research Division of the Library of Congress 
under the Country Studies/Area Handbook Program spon- 
sored by the Department of the Army. The last two pages of this 
book list the other published studies. 

Most books in the series deal with a particular foreign coun- 
try, describing and analyzing its political, economic, social, and 
national security systems and institutions, and examining the 
interrelationships of those systems and the ways they are 
shaped by historical and cultural factors. Each study is written 
by a multidisciplinary team of social scientists. The authors 
seek to provide a basic understanding of the observed society, 
striving for a dynamic rather than a static portrayal. Particular 
attention is devoted to the people who make up the society, 
their origins, dominant beliefs and values, their common inter- 
ests and the issues on which they are divided, the nature and 
extent of their involvement with national institutions, and their 
attitudes toward each other and toward their social system and 
political order. 

The books represent the analysis of the authors and should 
not be construed as an expression of an official United States 
government position, policy, or decision. The authors have 
sought to adhere to accepted standards of scholarly objectivity. 
Corrections, additions, and suggestions for changes from read- 
ers will be welcomed for use in future editions. 

Louis R. Mortimer 

Federal Research Division 
Library of Congress 
Washington, DC 20540-4840 



This edition supersedes East Germany: A Country Study, pub- 
lished in 1988, and Federal Republic of Germany: A Country Study, 
published in 1982. The authors wish to acknowledge their use 
of portions of those volumes in the preparation of this book. 

The authors also are grateful to individuals in various United 
States government agencies who gave their time and special 
knowledge to provide information and perspective. These indi- 
viduals include Ralph K. Benesch, who formerly oversaw the 
Country Studies/Area Handbook Program for the Department 
of the Army. Frank J. LaScala reviewed portions of the manu- 
script. Margaret A. Murray of the Office of Management and 
Budget supplied valuable information. 

The authors wish to thank various members of the staff of 
the Embassy of the Federal Republic of Germany in Washing- 
ton, D.C., and of the German Information Center in New York. 
Uwe Petry, consul in the German Consulate General in Los 
Angeles, provided photographs and other assistance. Monika 
Dorman of Northern Germany Representation in New York 
also provided photographs. Often helpful for specific queries 
were the staffs of the German Historical Institute, the Friedrich 
Ebert Foundation, and the American Institute for Contempo- 
rary German Studies of The Johns Hopkins University, all 
located in Washington, D.C. Special thanks for many varieties 
of assistance must also go to William Collins, Douglas Griffin, 
Hans Kohler, Gisela Peters, and Werner Peters. 

Dr. Christa Altenstetter, author of Chapter 4, wishes to 
acknowledge the financial support of the GSF Research Center 
for Environment and Health in Munich-Neuherberg during 
her sabbatical in 1992. She extends particular thanks also to 
Professor Dr. Wilhelm van Eimeren, director of MEDIS; to the 
organization's scientific staff — Dr. Jiirgen John, Dr. Andreas 
Mielck, and Dr. Walter Satzinger — for valuable suggestions; 
and to the MEDIS support staff. Dr. Altenstetter is also grateful 
to Dr. Bernd Schulte of the Max-Planck-Institut fur Ausland- 
isches und Internationales Sozialrecht in Munich for his coun- 
sel and to Dorothee Schray, M.A., Staatsinstitut fur 
Schulpadagogik und Bildungsforschung, likewise in Munich, 
for her library assistance. 


Various members of the staff of the Federal Research Divi- 
sion of the Library of Congress assisted in the preparation of 
the book. Sandra W. Meditz, Federal Research Division coordi- 
nator of the handbook series, made helpful suggestions during 
her review of all parts of the book, as did Andrea M. Savada. 
Tim Merrill reviewed the sections on geography and telecom- 
munications. Thanks also go to David R Cabitto, who designed 
the cover and some of the chapter art and provided graphics 
support; Marilyn L. Majeska, who managed editing and also 
edited portions of the manuscript; Laura C. Wells, who helped 
prepare the Country Profile; Andrea T. Merrill, who managed 
production; Harriett R. Blood and the firm of Greenhorne and 
O'Mara, who prepared the topographical map; Thomas D. Hall 
and the firm of Maryland Mapping and Graphics, who pre- 
pared the other maps; Barbara Edgerton and Izella Watson, 
who did the word processing; and David R Cabitto, Janie L. Gil- 
christ, and Izella Watson, who prepared the camera-ready copy. 

The following individuals are gratefully acknowledged as 
well: Vincent Ercolano, who edited most of the chapters; Sheila 
Ross, who performed the prepublication editorial review; Joan 
C. Cook, who compiled the index; and Marty Ittner, who cre- 
ated many of the chapter illustrations. 




Foreword iii 

Acknowledgments v 

Preface xvii 

Table A. English Equivalents of Selected German 

Place-Names xix 

Table B. Selected Abbreviations xxi 

Table C. Chronology of Important Events xxiii 

Country Profile xxix 

Introduction xxxvii 

Chapter 1. Historical Setting: Early History to 

1945 1 

Eric Solsten 



The Merovingian Dynasty, ca. 500-751 7 

The Carolingian Dynasty, 752-91 1 7 

The Saxon Dynasty, 919-1024 8 

The Salian Dynasty, 1 024-1 1 25 9 

The Hohenstaufen Dynasty, 1138-1254 11 

The Empire under the Early Habsburgs 14 


Martin Luther 19 

Resistance to Luther anism 21 

The Peace of Augsburg 22 

THE THIRTY YEARS' WAR, 1618-48 22 

The Counter-Reformation and Religious 

Tensions 23 

Military Campaigns 24 

The Peace of Westphalia 25 



1789 26 

Austria and Prussia 26 

The Smaller States 28 



Economic and Political Trends Toward 

Unification 32 

The Revolutions of 1848 36 

The Restoration 37 



Political Parties 42 

The Economy and Population Growth 43 

The Tariff Agreement of 1879 and Its Social 

Consequences 45 

Bismarck's Foreign Policy 45 

Foreign Policy in the Wilhelmine Era 46 

World War 1 47 


The Weimar Constitution 50 

Problems of Parliamentary Politics 53 

The Stresemann Era 55 

Hitler and the Rise of National Socialism 57 

THE THIRD REICH, 1933-45. 60 

The Consolidation of Power 60 

Foreign Policy 62 

The Outbreak of World War II 64 

Total Mobilization, Resistance, and the 

Holocaust 66 

Defeat 69 

Chapter 2. Historical Setting: 1945 to 1990 71 

Bruno F. Steinbruckner 


The Establishment of Occupation Zones 76 

The Nuremberg Trials and Denazification 79 

Political Parties and Democratization 81 

The Creation of the Bizone 83 

The Birth of the Federal Republic of 

Germany 86 


The Birth of the German Democratic 

Republic 89 



Rearmament and the European Defense 

Community 93 

Social Market Economy 96 

Ludwig Erhard and the Grand Coalition 97 

THE ULBRICHT ERA, 1949-71 98 

Consolidation of the New State 100 

Planned Economy 102 

The Warsaw Pact and the National People's 

Army 103 

The Berlin Wall 104 

The "Socialist State of the German Nation" 105 


COALITION, 1969-82 106 

Willy Brandt 106 

Ostpolitik 107 

Helmut Schmidt Ill 

The Student Movement and Terrorism Ill 

The Greens 113 


1983- 114 

THE HONECKER ERA, 1971-89 116 

The Conference on Security and Cooperation 

in Europe 117 

The New East German Constitution and the 

Question of Identity 118 

Relations Between the Two Germanys 119 

The Peace Movement and Internal Resistance .... 122 

The Last Days of East Germany 1 23 

TION 125 

Chapter 3. The Society and Its Environment 131 

David E. Mc Clave 


Topography 135 

Drainage 141 


Climate 142 

The Environment 145 


Historical Background 149 

Fertility 152 

Age-Gender Distribution 153 

Mortality 154 

Population Distribution and Urbanization 155 

Immigration 157 

Ethnic Minorities 162 





Postwar Christianity 1 73 

Judaism 179 

Islam 180 


Social Structure 180 

Social Mobility 187 


Chapter 4. Social Welfare, Health Care, and 

Education 193 

Christa Altenstetter 


Historical Development 198 

Provisions of the Social Welfare System 202 

Current Social Welfare Issues and Outlook for 

the Future 210 


CARE 211 

Development of the Health Care System 212 

Health Insurance 215 

Health Care Providers 217 

Remuneration of Health Care Providers 220 

Current Health Care Issues and Outlook for 

the Future 222 


Historical Background 224 

Educational Policy Making and Administration . . . 229 


Educational Finances 230 

The Education System 230 

Education in the New Lander 238 

Current Education Issues and Outlook for 

the Future 240 

Chapter 5. The Domestic Economy 245 

W.R. Smyser 


History 249 

The Social Market Economy 253 

The Economic Miracle and Beyond 254 

Unification and Its Aftermath 258 

Structural and Technological Questions 264 


The Federal Government Role 267 

Land and Local Governments 271 

Government Subsidies 272 

Government Expenditures and the National 

Debt 273 

The Associations 274 



Labor 280 

Code termination 282 


Agriculture 283 

Forestry 285 

Fishing 285 


Manufacturing 286 

Energy and Natural Resources 288 


The Bundesbank 289 

Banking and Its Role in the Economy 292 

Nonbank Financing 296 


Transportation 297 

Telecommunications 302 

Tourism 303 


Chapter 6. International Economic Relations 305 

W.R. Smyser 


Germany in World Finance and in the Group 

of Seven 308 

The Deutsche Mark as an International 

Currency 313 


Germany in the European Community 316 

The European Single Market 319 

Germany and the European Union 322 

Germany in the European Monetary System 322 

Germany and the European Monetary Union .... 329 


Trade Philosophy and the Trade Balance 336 

International Investment in and by Germany 340 


Chapter 7. Government and Politics 345 

Karen E. Donfried 


The Constitution 348 

Federalism 349 


The President 351 

The Chancellor and the Cabinet 353 

The Legislature 356 

The Judiciary 362 

The Civil Service 365 

Land and Local Government 366 



Christian Democratic Union/Christian Social 

Union 375 

Social Democratic Party of Germany 378 

Free Democratic Party 381 

The Greens 383 

The Republikaner and the German People's 

Union 386 

Party of Democratic Socialism 388 



Business and Industry 390 

Labor Unions 391 

The Churches 393 

Agriculture 395 

Citizens' Initiative Associations 396 


Newspapers 398 

Radio and Television 399 


Chapter 8. Foreign Relations 413 

Jeffrey Gedmin 


Early Developments . . 417 

Postwar Developments 418 

Unification 419 

Foreign Reaction to Unification 426 

Postunification Developments 428 


Institutional Framework 431 

Domestic Influences on Foreign Policy 432 

The Out-of-Area Debate 436 


North Atlantic Treaty Organization 439 

Western European Union 442 

Eurocorps 444 

European Union 446 

Organization for Security and Cooperation in 

Europe 451 

United Nations 454 

Chapter 9. National Security 457 

Jean R. Tartter 


Early History 462 

Prussia's Emergence as a Military Power 463 

The German Military in Two World Wars 465 

Creation of the Bundeswehr 467 



Command and Control 471 


Army 472 

Navy 477 

Air Force 480 

Training 481 

Reserves 485 

Morale 485 






Personnel Policies 496 

Service Obligations 497 

Benefits 498 





Federal Police Agencies 507 

Land Police Agencies 508 

Criminal Justice 511 

Incidence of Crime and Incarceration 512 

Dissidence and Terrorist Activity 513 

Appendix. Tables 519 

Bibliography 545 

Glossary 595 

Index 603 

Contributors 639 

List of Figures 

1 Administrative Divisions of Germany, 1995 xxxvi 

2 The Carolingian Empire Divided by the Treaty of 

Verdun, A.D. 843 10 

3 Germany at the Time of the Protestant Reformation 

in the Sixteenth Century 18 

4 The German Struggle for Unification, 1815-71 34 

5 The Weimar Republic, 1918-33 52 


6 Germany, 1949-90 88 

7 Topography and Drainage 138 

8 Population by Age and Gender, 1992 156 

9 Structure of the Education System, 1994 232 

10 Economic Activity, 1995 290 

11 Transportation System, 1995 300 

12 Inland Waterways, 1995 301 

13 Structure of the Government, 1995 352 

14 Organization of the Ministry of Defense, 1995 474 

15 Officer Ranks and Insignia, 1995 492 

16 Enlisted Ranks and Insignia, 1995 493 



Like its predecessors, East Germany: A Country Study and Fed- 
eral Republic of Germany: A Country Study, this study attempts to 
review Germany's history and treat in a concise and objective 
manner its dominant social, political, economic, and military 
aspects. Sources of information included books, scholarly jour- 
nals, foreign and domestic newspapers, official reports of gov- 
ernment and international organizations, and numerous 
periodicals on German and international affairs. 

The name Germany is used in three senses: first, it refers to 
the region in Central Europe commonly regarded as constitut- 
ing Germany, even when there was no central German state, as 
was the case for most of Germany's history; second, it refers to 
the unified German state established in 1871 and existing until 
1945; and third, since October 3, 1990, it refers to the united 
Germany, formed by the accession on this date of the German 
Democratic Republic (GDR, or East Germany) to the Federal 
Republic of Germany (FRG, or West Germany). The name Fed- 
eral Republic of Germany refers to West Germany from its found- 
ing on May 23, 1949, until German unification on October 3, 
1990. After this date, it refers to united Germany. For the sake 
of brevity and variety, the Federal Republic of Germany is often 
called simply the Federal Republic. 

The Federal Republic of Germany consists of sixteen states 
(Lander; sing., Land). Five of these Lander date from July 1990, 
when the territory of the German Democratic Republic was 
once again divided into Lander. For this reason, when discuss- 
ing events since unification, Germans frequently refer to the 
territory of the former East Germany as the new or eastern 
Lander and call that of the former West Germany the old or 
western Lander. For the sake of convenience and variety, the 
text often follows this convention to distinguish eastern from 
western Germany. 

Chapter bibliographies appear at the end of the book, and 
brief comments on some of the more valuable sources recom- 
mended for further reading appear at the end of each chapter. 
A Glossary also is included. 

Spellings of place-names used in the book are in most cases 
those approved by the United States Board on Geographic 
Names. Exceptions are the use of the conventional English 


names for a few important cities, rivers, and geographic 
regions. A list of these names is found in Table A. 

Measurements are given in the metric system. A conversion 
table is provided to assist readers unfamiliar with metric mea- 
surements (see table 1, Appendix). 

The body of the text reflects information available as of 
August 1995. Certain other portions of the text, however, have 
been updated. The Introduction discusses significant events 
that have occurred since the completion of research, the Coun- 
try Profile and Glossary include updated information as avail- 
able, and the Bibliography lists recently published sources 
thought to be particularly helpful to the reader. 


Table A. English Equivalents of Selected German Place-Names 

English German 

Baltic Sea Ostsee 

Bavaria Bayern 

Bavarian Forest Bayerischer Wald 

Black Forest Schwarzwald 

Bohemian Forest Bohmer Wald 

Cologne Koln 

Constance, Lake Bodensee 

Danube Donau 

Hanover Hannover 

Hesse Hessen 

Lower Saxony Niedersachsen 

North Sea Nordsee 

Nuremberg Nurnberg 

Mecklenburg-Western Pomerania Mecklenburg-Vorpommern 

Moselle Mosel 

Munich Munchen 

North Rhine-Westphalia Nordrhein-Westfalen 

Rhine Rhein 

Rhineland-Palatinate Rheinland-Pfalz 

Saxony Sachsen 

Saxony-Anhalt Sachsen-Anhalt 

Thuringia Thuringen 


Table B. Selected Abbreviations 

ACDA Arms Control and Disarmament Agency 

BDI Bundesverband der Deutschen Industrie (Federation of German Indus- 

CAP Common Agricultural Policy 

CDU Christlich Demokratische Union (Christian Democratic Union) 

CSCE Conference on Security and Cooperation in Europe 

CSU Christlich-Soziale Union (Christian Social Union) 

DGB Deutscher Gewerkschaftsbund (Federation of German Trade Unions) 

DIHT Deutscher Industrie- und Handelstag (German Chambers of Industry and 


EC European Community 

ECSC European Coal and Steel Community 

EDC European Defence Community 

EEC European Economic Community 

EFTA European Free Trade Association 

EMS European Monetary System 

EMU European Monetary Union 

ERM exchange-rate mechanism 

EU European Union 

FDP Freie Demokratische Partei (Free Democratic Party) 

FRG Federal Republic of Germany 

GATT General Agreement on Tariffs and Trade 

GDR German Democratic Republic 

GKV Gesetzliche Krankenversicherung (statutory health insurance) 

KPD Kommunistische Partei Deutschlands (Communist Party of Germany) 

MfS Ministerium fur Stadtssicherheit (Ministry for State Security) 

NACC North Atlantic Cooperation Council 

NATO North Atlantic Treaty Organization 

NVA Nationale Volksarmee (National People's Army) 

OECD Organisation for Economic Co-operation and Development 

OEEC Organisation for European Economic Co-operation 

OSCE Organization for Security and Cooperation in Europe 

PDS Partei des Demokratischen Sozialismus (Party of Democratic Socialism) 

PfP Partnership for Peace 

RAF Rote Armee Fraktion (Red Army Faction) 

SED Sozialistische Einheitspartei Deutschlands (Socialist Unity Party of Ger- 

SPD Sozialdemokratische Partei Deutschlands (Social Democratic Party of Ger- 

SS Schutz-Staffel (Guard Detachment) 

Stasi Staatssicherheitsdienst (State Security Service) 

WEU Western European Union 


Table C. Chronobgy of Important Events 



ca. 500 B.C.-A.D. 100 

ca. A.D. 100-600 

Merovingian Dynasty (ca. 500-751' 

Carolingian Dynasty (752-911) 

Saxon Dynasty (919-1024) 

Salian Dynasty (1024-1125) 

Germanic tribes settle in Germania. Roman army 
defeated bySuevian tribe at Battle of the Teuto- 
burg Forest in A.D. 9 and pushed west of Rhine 
River. Romans subsequently reconquer some ter- 
ritory up to Rhine and Danube rivers and con- 
struct fordfied fronders. 

Migration of Germanic peoples. Collapse of western 
Roman Empire. Last Roman emperor, Romulus 
Augustus, deposed in 476 by German armies led 
by Odovacar. Frankish tribes setde Gaul (France); 
Lombards settle northern Italy, Anglo-Saxons set- 
tle Britain. 

Merovingian kings rule Frankish tribes. Clovis, 
Frankish king (486-511), rules over Gaul's mixed 
Germanic-Roman people. Pepin the Younger, 
Frankish king (741-68), founds Carolingian 
Dynasty in 752. Chrisdanization of Germany 
under leadership of Saint Boniface (ca. 675-754). 

Frankish rule reaches from Spanish marches into 
central Germany. Charlemagne, Frankish king 
(768-814) , conquers Lombardy in 774. Caroling- 
ian Empire established 800; Charlemagne 
crowned Holy Roman Emperor by pope. Louis I 
(Louis the Pious) Holy Roman Emperor 814-40. 
Treaty of Verdun (843) divides Carolingian 
Empire among three of Charlemagne's grand- 
sons. Germany, France, and Middle Kingdom 
delineated, and imperial dde linked with Middle 
Kingdom. Louis II (Louis the German) rules east 
Frankish tribes (843-76). Charles EI (Charles the 
Fat), German king (876-87) and Holy Roman 
Emperor 881. Arnulf of Carinthia, German king 
(887-99) and Holy Roman Emperor 896. Barbar- 
ian invasions weaken Carolingian rule; German 
duchies of Franconia, Saxony, Lorraine, Swabia, 
and Bavaria rise to power. Louis rV, German king 
(900-91 1) . Conrad I (Conrad of Franconia) 
elected German king (911-18) following exdnc- 
tion of Carolingian Empire in the east. 

Frankish and Saxon nobles elect Henry I German 
king (919-36). Subordination of duchies. Otto I 
(Otto the Great) , German king (936-73), gains 
control of Middle Kingdom, and Holy Roman 
Empire of the German Nadon begins with his 
coronadon as emperor in 962. German empire 
extends to Elbe River and southeast to Vienna. 
Otto II, Holy Roman Emperor (973-83) . Otto HI, 
Holy Roman Emperor (996-1002). Henry II, 
Holy Roman Emperor (1014-24). 

Conrad II, Duke of Franconia, founds Salian 
Dynasty, elected Holy Roman Emperor (1027- 
39). Henry ffl, Holy Roman Emperor (1046-56). 
Henry IV, Holy Roman Emperor (1084-1106), 

Table C. Chronology of Important Events 



Hohenstaufen Dynasty (1138-1254) 

Early Habsburg Dynasty (1273- 

RELIGIOUS WARS (1517-1648) 

challenges Pope Gregory VII. Investiture Contest 
and civil war, 1075-1122; German empire weak- 
ens, and German princes begin rise to power. 
Henry V, Holy Roman Emperor (1111-25). Com- 
promise Concordat of Worms (1122) setdes 
papal-imperial struggle. Lothar HI, Saxon noble, 
elected Holy Roman Emperor (1133-37). 

Hohenstaufen kings struggle to restore imperial 
authority. Conrad III elected German king 
(1138-52). Frederick I (Frederick Barbarossa), 
Holy Roman Emperor (1155-90), seeks long and 
unsuccessfully to establish order and stability in 
the empire. Beginning of Age of Chivalry, 
marked by high achievements in literature. Ital- 
ian expeditions to regain imperial control of Mid- 
dle Kingdom. Henry VI, Holy Roman Emperor 
(1191-97). Civil war (1198-1214). Frederick H, 
Holy Roman Emperor (1220-50), restores impe- 
rial administration in Italy and Sicily, but German 
princes gain concessions. Imperial statute of 1232 
establishes secular and ecclesiasdcal princes as 
virtually independent rulers within their own ter- 
ritories (principalities). Great Interregnum, 
1256-73; anarchy and civil war. German princes 
gain power and vie for imperial title. 

Rudolf of Habsburg elected German king (1273- 
91) ; acquires Austria and Styria in 1282 and 
makes Habsburgs strongest German dynasty. 
Adolf of Nassau elected German king (1292-98). 
Albert I (Habsburg) elected German king (1298- 
1308). Henry VTI of Luxembourg, Holy Roman 
Emperor (1312-13), founds dynasty that seriously 
rivals Habsburgs from its power base in Bohemia. 
Louis TV (Louis the Bavarian) of House of Wit- 
telsbach, Holy Roman Emperor (1328-47). 
Charles TV of Luxembourg, Holy Roman 
Emperor (1355-78), issues Golden Bull of 1356, 
which grants German princes power to elect 
emperor and provides basic constitution of Holy 
Roman Empire. Wenceslas of Bohemia, German 
king (1378-1400). Rupert of Palatinate, German 
king (1400-10); Sigismund of Luxembourg, Ger- 
man king (1410-37) , Holy Roman Emperor 
(1433-37), last non-Habsburg emperor until 
1742; with this one exception, Habsburgs of Aus- 
tria provide all emperors from mid-fifteenth cen- 
tury until dissolution of Holy Roman Empire in 
1806. Frederick HI, Holy Roman Emperor (1452- 
93). Maximilian I, Holy Roman Emperor (1508- 

Martin Luther posts his ninety-five theses in Witten- 
berg in 1517 and challenges papal authority. 
Charles V, Holy Roman Emperor (1519-56). Pub- 
lication in 1520 of Luther's three revolutionary 
pamphlets. Luther banned by church and empire 
in 1521. Charles V's wars against France in 1521- 
26, 1526-29, 1536-38, and 1542^4. Vienna 
threatened by Turks in 1529. Diet of Augsburg, 


Table C. Chronology of Important Events 







1530; Protestant "Augsburg Confession" pre- 
sented, and Protestant League of Schmalkalden 
formed by German princes. War of Schmalkalden 
(1546-47) between Charles V and Protestant 
princes. Peace of Augsburg, 1555; Catholicism 
and Lutheranism formally recognized in Ger- 
many, and each prince given right to decide reli- 
gion to be practiced in his territory. Ferdinand I, 
Holy Roman Emperor (1558-64). Maximilian II, 
Holy Roman Emperor (1564-76). Ferdinand II, 
Holy Roman Emperor (1619-37). Rudolf II, Holy 
Roman Emperor (1576-1612). Matthias, Holy 
Roman Emperor (1612-19). Bohemian Revolt, 
1618; imperial armies defeat Bohemians at Batde 
of White Mountain near Prague in 1620. Thirty 
Years' War (1618-48) ; Treaty of Prague signed in 
1635; continuation of war by France; Treaty of 
Westphalia, 1648. End of Holy Roman Empire as 
a major European power. 

Frederick William, the Great Elector of Branden- 
burg-Prussia (1640-88), of Hohenzollern 
Dynasty, establishes absolute rule. Frederick I, 
elector of Brandenburg-Prussia (1688-1713), 
assumes tide of king in 1701. Frederick William I, 
Prussian king (1713-40), creates Prussian civil 
and military bureaucracy. Frederick II (Frederick 
the Great), Prussian king (1740-86), reforms his 
country as enlightened despot. War of the Aus- 
trian Succession (1740-48) and Seven Years' War 
( 1756-63) against Austria under Maria Theresa 
(1740-80) expand Prussian territory. Frederick 
William II, Prussian king (1786-97). Frederick 
William IE, Prussian king (1797-1840). French 
invade Rhineland in 1792 and eventually control 
Germany. Prussia, Austria, and Russia defeat 
Napoleon at Batde of Leipzig in 1813. 

Congress of Vienna (1814—15) after Napoleon's 
defeat in War of Liberation (1813-15) establishes 
German Confederation of thirty-seven states. 
Prince Clemens von Metternich, Austrian chan- 
cellor and foreign minister (1809-48) , heads con- 
federation. Reversion to old order of social 
distinctions under Age of Metternich. Struggle 
between absolutism and liberalism. Student 
unions agitate for democratic reform. Carlsbad 
Decrees (1819) outlaw radical student organiza- 
tions. Weimar, Bavaria, Baden, and Wurttemberg 
enact constitutions, 1818-19. "July Revolution" in 
France, 1830, sparks revolutionary movements in 
Germany, Hesse and Saxony enact constitutions. 
Brunswick, Hanover, and Oldenburg enact con- 
stitutions in 1833. Zollverein (Customs Union) 
created in 1834. March 1848 revolution in Ger- 
many. National Assembly at Frankfurt ( 1848-49) 
plans constitutional German nation-state. 
Friedrich Wilhelm IV, Prussian king (1840-58), 
refuses German crown in 1849; National Assem- 
bly dissolved. German Confederation restored in 
1851. Prussia agrees to relinquish plans for a Ger- 


Table C. Chronology of Important Events 

Period Description 

man union under its leadership in Treaty of 
Olmutz. Wilhelm I, Prussian king (1858-88); 
Otto von Bismarck, chancellor (1862-90), unites 
Germany. Constitutional struggle, 1862-66; Prus- 
sian king vies with German liberals in parliament 
on issue of budget for military expansion; Prussia 
defeats Austria in Seven Weeks' War (1866); Ger- 
man Confederation dissolved, and Austria 
excluded from German politics. Austria-Hungary 
(also known as Austro-Hungarian Empire) cre- 
ated in 1867. North German Confederation 
formed, headed by Prussia. Franco-Prussian War, 
1870-71. Germany united as nation-state — Ger- 
man Empire. 

IMPERIAL GERMANY (187 1-1 918) Wilhelm I, German emperor (1871-88). Bismarck, 

chancellor (1871-90). Kulturkampf against 
Roman Catholic Church begins in 1873. Antiso- 
cialist legislation enacted 1878. Dual Alliance 
(1879) between Germany and Austria-Hungary. 
Domestic alliance between aristocrats and indus- 
trialists in Tariff Agreement of 1879. Comprehen- 
sive social legislation program begins in 1881. 
Triple Alliance (1882) among Germany, Austria- 
Hungary, and Italy. German colonies established 
1884-85 in South-West Africa, Togo, the Came- 
roons, East Africa, and some Pacific islands. Fred- 
erick HI, German emperor (March 9-June 15, 
1888). Wilhelm II, German emperor (1888- 
1918). Bismarck's fall, 1890. Leo von Caprivi, 
chancellor (1890-94). Prince Chlodwig zu 
Hohenlohe, chancellor 1894-1900. Naval Bill 
(1898) begins naval race against Britain. Bern- 
hard von Bulow, chancellor ( 1900-09) . Moroccan 
crisis, 1905, in which Germany intervenes in 
French and British sphere of influence. Theobald 
von Bethmann Hollweg, chancellor (1909-17). 
Moroccan crisis, 1911, in which Germany sends 
gunboat to port of Agadir. New Naval Bill, 1912. 
Balkan Wars, 1912-13, a nationalist rebellion 
against Ottoman rule. Assassination of Austria's 
Archduke Franz Ferdinand (June 28, 1914) in 
Sarajevo starts events that culminate in World 
War I (1914-18); Germany defeated. 

WEIMAR REPUBLIC (1918-33) November Revolution, 1918; Wilhelm IPs abdica- 

tion. Social Democrats proclaim republic. Sup- 
pression of left-wing revolt by army in January 
1919. Treaty of Versailles, 1919. Social Democrat 
Friedrich Ebert elected president (1919-25). 
Right-wing Kapp Putsch attempted, 1920. Com- 
munist revolts in central Germany, Hamburg, and 
Ruhr district, 1921. Astronomical inflation, 1922- 
23. Occupation of Ruhr by French and Belgian 
troops, 1923. Hitler's Beer Hall Putsch attempted 
in Munich, 1923. Gustav Stresemann, chancellor 
(August-November 1923) and foreign minister 
(1923-29), formulates policy of rapprochement 
with West. Dawes Plan on reparations, 1924. 
French and Belgian troops withdrawn from Ruhr, 


Table C. Chronology of Important Events 

Period Description 

1925. Paul von Hindenburg, World War I army 
commander, elected president (1925-34). 
Locarno treaties, 1925, and Treaty of Berlin with 
Soviet Union, 1926. Germany joins League of 
Nations, 1926. Young Plan on reparations, 1929; 
Allied troops withdrawn from Rhineland, 1930. 
Economic depression and cabinet crises, 1929- 
33. Heinrich Bruning, chancellor 1930-32; gov- 
ernment by decree (Article 48 of Weimar Consti- 
tution). Franz von Papen, chancellor (May- 
December 1932); Hitler's National Socialists win 
Reichstag elections and emerge as Germany's 
strongest political party, July 1932. Kurt von 
Schleicher, chancellor (December 1932-January 
1933). President Hindenburg appoints Hitler to 
chancellorship, January 30, 1933. 

THIRD REICH (1933-45) Reichstag fire; Hitler demands presidential emer- 

gency decree, February 1933. Enabling Act 
accords Hitler's cabinet dictatorial powers, March 
1933. Germany declared one-party National 
Socialist state, July 1933. Death of Hindenburg, 
August 1934; Hider combines offices of president 
and chancellor. German rearmament, 1935. 
Rhineland remilitarized and Berlin-Rome Axis 
formed, 1936. At secret conference, Hitler 
announces intention to begin eastward expan- 
sion, November 1937. Austrian Anschluss (annex- 
ation), March 1938. Czechoslovak Sudetenland 
annexed, October 1938. Germany occupies 
Czech-populated provinces of Bohemia and 
Moravia, March 1939. Poland invaded, Septem- 
ber 1939. World War II (1939-45). Germany 

POSTWAR DIVISION (1945-90) Yalta Conference (February 1945) determines divi- 

sion of Germany into occupation zones. Three 
zones under United States, British, and French 
control become Federal Republic of Germany 
(West Germany) in 1949. Soviet zone becomes 
German Democratic Republic (East Germany) 
same year. Konrad Adenauer of Christian Demo- 
cratic Union elected first chancellor of West Ger- 
many (1949-63); Walter Ulbricht of Socialist 
Unity Party of Germany appointed head of East 
Germany (1949-71). West German economic 
boom in 1950s; Stalinization of East Germany in 
same period. Both states remilitarized in mid- 
1950s; West Germany becomes member of North 
Adantic Treaty Organization (NATO), East Ger- 
many joins Warsaw Pact. Treaty of Rome creating 
European Economic Community (EEC) signed, 
1957, with West Germany as member. Berlin Wall 
built by East Germany (1961). Social Democrat 
Willy Brandt elected West German chancellor 
(1969-74); Ulbricht dismissed, and Erich 
Honecker named East German head (1971-89). 
Brandt's Ostpolitik results in treaties with Soviet 
Union, Poland, Czechoslovakia, and Four Power 
Agreement on Berlin. Basic Treaty between East 
Germany and West Germany recognizes two Ger- 


Table C. Chronology of Important Events 

Period Description 

man states, 1972. Admission of both Germanys to 
United Nations, 1973. Social Democrat Helmut 
Schmidt replaces Brandt as West German chan- 
cellor (1974-82). Christian Democrat Helmut 
Kohl becomes West German chancellor (1982- ). 
Helsinki Final Act signed, July 1975. NATO's 
Dual-Track Decision announced, December 
1979. Single European Act signed, December 
1985. Growing economic difficulties and internal 
opposition, coupled with Mikhail Gorbachev's 
attempts to reform Soviet Union and its empire 
and his decision not to intervene militarily in East 
German affairs, lead to collapse of East German 
regime, late 1989-early 1990. 

UNITED GERMANY (1990- ) Rapid path to unification of the two German states 

according to provisions of Article 23 of Basic Law 
chosen by popular pressure. First free elecdons in 
East Germany end with Chrisdan Democratic vic- 
tory, March 1990. Economic and currency union 
established between West Germany and East Ger- 
many, July 1, 1990. At meeting with Kohl in Soviet 
Union, Gorbachev agrees that united Germany 
may remain in NATO and Soviet troops will leave 
East Germany in four years, July 1990. Treaty on 
the Final Settlement with Respect to Germany 
(the Two-Plus-Four Treaty) establishing Ger- 
many's full sovereignty signed, September 1990. 
Treaty on Good-Neighborliness, Partnership, and 
Cooperadon between West Germany and Soviet 
Union signed, September 1990. Germany united, 
October 3, 1990. First all-German Bundestag elec- 
tion held; Christian Democratic victory, Decem- 
ber 1990. Maastricht Treaty signed, December 
1991. Article 16 of Basic Law amended, restrict- 
ing right to asylum in Germany, July 1993. Euro- 
pean Union established, November 1993. Federal 
Constitutional Court decides that Bundeswehr 
may participate in international military opera- 
tions outside of NATO territory, provided that 
Bundestag approves, July 1994. Last Russian 
troops leave Germany, August 1994. Second all- 
German Bundestag election held; Christian Dem- 
ocratic victory, October 1994. 

Country Profile 


Formal Name: Federal Republic of Germany. 
Short Form: Germany or Federal Republic. 
Term for Citizen(s): German(s). 
Capital: Berlin. 



Size: 356,959 square kilometers. 

Topography: Terrain rises from northern coastal lowlands to 
belt of central uplands, complex and varied in form. To south 
of uplands, a high plain suddenly rises to Alps in country's 
extreme south. Most important rivers: Rhine, flowing to north; 
Elbe, flowing to northwest; and Danube, flowing to southeast. 

Climate: Cool, continental climate with abundant rainfall and 
long overcast season. Lower temperatures with considerable 
snowfall in east and south. Prone to rapid weather variations 
from merging of Gulf Stream and extreme northeastern 
climate conditions. 


Population: 81,338,000 (July 1995 estimate) with growth rate of 
0.26 percent (July 1995 estimate). 

Ethnic Groups: 95.1 percent German, 2.3 percent Turkish, 1.7 
percent Italian, 0.4 percent Greek, and 0.4 percent Polish; 
remainder mainly refugees from former Yugoslavia. 

Languages: Standard German, with substantial differences in 
regional dialects. Three very small linguistic minorities, which 
speak Sorbian, Danish, or Frisian. 

Religion: Protestants, mostly in Evangelical Church in 
Germany, 30 million; Roman Catholics, 28.2 million; Muslims, 
2.5 million; free churches, 195,000; and Jews, 34,000. 

Education and Literacy: 99 percent literacy rate in population 
over age fifteen (1991 estimate). Education compulsory until 
age eighteen. At age ten, after primary school (Grundschule) , 
students attend one of five schools: short-course secondary 
school (Hauptschule); intermediate school (Realschule); high 
school ( Gymnasium) ; comprehensive school ( Gesamtschule) ; or a 
school for children with special educational needs (Sonder- 
schule) . At about age fifteen, students choose among a variety of 
vocational, technical, and academic schools. Higher education 
consists of many kinds of technical colleges, advanced voca- 
tional schools, and universities. 

Health and Welfare: About 90 percent of population covered 
by comprehensive compulsory insurance for sickness, 


accidents, disability, long-term care, and retirement. Most of 
remainder enrolled in voluntary insurance programs; the very 
poor are covered by state-financed welfare programs. Quality of 
medical care generally excellent. Comfortable pensions paid 
according to life-time earnings and indexed to meet cost-of- 
living increases. Wide variety of other social welfare benefits 
managed by both government and private agencies available to 
those in need. Life expectancy 76.6 years for total population 
(73.5 years for males and 79.9 years for females) (1995 
estimates). Infant mortality rate 6.3 deaths per 1,000 live births 
(1995 estimate). Total fertility rate 1.5 children born per 
woman (1995 estimate). 


Gross Domestic Product (GDP): In 1994 US$1,840 billion, or 
about US$27,800 per capita. Real growth rate 2.4 percent, 
inflation rate 3.0 percent, and unemployment rate 8.2 percent. 

Agriculture: 3 percent of labor force and 1 percent of GDP in 
1992. Main crops wheat, potatoes, sugar beets, and barley. 

Industry: 38 percent of labor force and 38 percent of GDP in 
1992. Products highly specialized goods, including machine 
products of all varieties, chemicals, electrical products, 
construction, food and beverages, lignite, textiles, and 
petroleum and gas refining. 

Services: 59 percent of labor force and 61 percent of GDP in 

Exports: US$428 billion in 1994, mainly highly specialized 
industrial products, including motor vehicles, machines, 
electronic goods, and chemicals. 

Imports: US$376 billion in 1994, including food, petroleum 
products, manufactured goods, electrical products, 
automobiles, and apparel. 

Foreign Trade by Region: Imports in 1994: European Union 
(EU) 47.6 percent, European Free Trade Association (EFTA) 
14.0 percent, developing countries 11.5 percent, former 
European communist bloc countries 8.1 percent, United States 
and Canada 7.7 percent, Japan 5.6 percent, other dynamic 
Asian economies 3.7 percent, and Organization of the 
Petroleum Exporting Countries (OPEC) 2.0 percent. Exports 
in 1994: EU 48.9 percent, EFTA 15.1 percent, developing 


countries 11.5 percent, United States and Canada 8.5 percent, 
former European communist bloc countries 7.1, Japan 2.6 
percent, other dynamic Asian economies 3.5 percent, and 
OPEC 2.6 percent. 

Balance of Payments: In 1994 trade balance US$52 billion; 
current account showed deficit of US$20 billion; capital 
account balance US$24 billion. 

Fiscal Year: Calendar year. 

Currency and Exchange Rate: Deutsche mark (DM) . In April 
1996, exchange rate US$1 = DM1.51. 

Transportation and Telecommunications 

Roads: 226,000 kilometers in 1992, of which 11,000 kilometers 
four lanes or more. 

Railroads: 40,000 kilometers in 1994, of which 16,000 
kilometers electrified. 

Airports: 660 total. Twelve civilian airports provide passenger 
and cargo service within country and to rest of world. 

Ports: Several dozen large, well-equipped ocean and inland 

Inland Waterways: 6,900 kilometers of navigable inland 
waterways, including extensive system of canals. Inland 
waterways account for about 20 percent of freight shipping. 

Telecommunications: Highly developed, modern tele- 
communications service linking all parts of the country and 
connecting with systems abroad. 

Government and Politics 

Government: Basic Law of 1949, as amended, functions as 
constitution. Federalist system whereby federal government 
shares authority with sixteen state (Land; pi., Lander) 
governments. Dual executive consists of chancellor, who is 
head of government, and president, who is head of state. Two 
federal legislative bodies form national parliament: Bundesrat 
(Federal Council or upper house), consisting of sixty-nine 
members appointed by Land governments in proportion to 
population; and Bundestag (Federal Diet or lower house), 
main legislative body, consisting of 672 popularly elected 


members. Chancellor is elected by Bundestag and functions as 
prime minister in cabinet. 

Politics: Since 1982 a conservative coalition in power con- 
sisting of Christian Democratic Union (Christlich Demo- 
kratische Union — CDU); its sister party, Christian Social Union 
(Christlich-Soziale Union — CSU), based in Bavaria; and Free 
Democratic Party (Freie Demokratische Partei — FDP). Oppo- 
sition consists of Social Democratic Party of Germany 
(Sozialdemokratische Partei Deutschlands — SPD), Alliance 
90/The Greens (Bundnis 90/Die Grunen), Party of Demo- 
cratic Socialism (Partei des Demokratischen Sozia-lismus — 
PDS), based mainly in territory of former German Democratic 
Republic, and a number of very small parties. Federal elections 
for Bundestag usually held every four years; Land and local 
elections scattered throughout term of federal officeholders. 
All citizens eighteen and older eligible to vote; high voter 

Judicial System: Independent judiciary using civil law system. 
Highest court is Federal Constitutional Court. 

International Affairs: Member of European Union (EU), 
North Atlantic Treaty Organization (NATO) , Organisation for 
Economic Co-operation and Development (OECD), 
Organization for Security and Cooperation in Europe (OSCE), 
United Nations (UN) and its specialized agencies, and Western 
European Union (WEU). 

National Security 

Armed Forces: In October 1995, Federal Armed Forces 
(Bundeswehr) consisted of army, navy, and air force, totaling 
335,800, including 137,300 conscripts. Army personnel 
amounted to 234,000, including 112,800 conscripts; navy 
28,500, including 4,500 Naval Air Arm personnel and 5,800 
conscripts; and air force 73,300, including 18,700 conscripts. 
Reserves totaled 356,200 (337,100 in army, 12,600 in navy, and 
6,500 in air force.). Enlisted personnel have reserve obligation 
to age forty-five; officers and noncommissioned officers, to age 

Military Budget: In 1996, US$32.2 billion. 

Internal Security Forces: Federal Border Force of 24,000 (early 
1995) under Ministry of Interior. Trained and equipped as 


light infantry, but duty does not include military activities. 
Each Land maintains units of Readiness Police similarly 
trained. Readiness Police can be moved across Land lines if 
needed for emergency duty, such as during civil disturbances. 


■ Brandenburg 

^ o L r '£ti Berlin^ 
Hannover ^Saxony-7 ^-Berlin'* 
<, U i Anhalt i Potsdam ; 

-> 1 ® ^ / 

• Magdeburg ^ 

( < .J \ 


North Rhine- ^ 
Westphalia S J ^' 

®Dusseidorf Ctk ,S\ \ Saxony 

■ J ( Erfu l^~^ [ j^ Dresden® 

Hesse l\ Thurin 9 ia jf ,^ 

|f Rhineland- Swiesbaden^ 
/ \ Palatinate 


^"~i/~Sr- "Saarland W 
LUXEMBOURG'\ Sa | rb / uc/(en ) 








Munich ® 



Figure 1. Administrative Divisions of Germany, 1995 

xxx vi 


GERMANY WAS UNITED on October 3, 1990. Unification 
brought together a people separated for more than four 
decades by the division of Europe into two hostile blocs in the 
aftermath of World War II. The line that divided the continent 
ran through a defeated and occupied Germany. By late 1949, 
two states had emerged in divided Germany: the Federal 
Republic of Germany (FRG, or West Germany), a member of 
the Western bloc under the leadership of the United States; 
and the German Democratic Republic (GDR, or East Ger- 
many), part of the Eastern bloc led by the Soviet Union. 
Although the two German states were composed of a people 
speaking one language and sharing the same traditions, they 
came to have the political systems of their respective blocs. 
West Germany developed into a democratic capitalist state like 
its Western neighbors; East Germany had imposed on it the 
Soviet Union's communist dictatorship and command econ- 

Although the leaders of each state were committed to the 
eventual unification of Germany and often invoked its neces- 
sity, with the passage of time the likely realization of unification 
receded into the distant future. Relations between the two 
states worsened during the 1950s as several million East Ger- 
mans, unwilling to live in an increasingly Stalinized society, fled 
to the West. August 1961 saw the sealing of the common Ger- 
man border with the construction of the Berlin Wall. In the 
early 1970s, however, diplomatic relations between the two 
states were regularized by the Basic Treaty, signed in 1972. Dur- 
ing the remainder of the decade and during the 1980s, rela- 
tions improved, and contacts between the citizens of the two 
states increased greatly. In 1987 Erich Honecker became the 
first East German leader to make a state visit to West Germany. 

As of the late 1980s, however, no well-informed observer 
foresaw German unification as being likely in the near future. 
In fact, its prospect seemed so remote that some politicians 
advocated abandoning unification as a long-term goal. Those 
who remained committed to Germany's ultimate unification 
frankly admitted that decades would probably pass before it 


The events leading to unification in October 1990 were 
unexpected, and they occurred at a frantic pace. In the eleven 
months between the opening of the Berlin Wall in November 
1989 and unification, the forty-year-old East German dictator- 
ship collapsed, Western political and economic systems were 
introduced in the East, new treaties altered long-standing dip- 
lomatic relationships between Germany and neighboring 
states, and two radically different societies began to grow 

The rapid collapse of the East German regime surprised 
everyone. East Germany appeared to be the most economically 
successful of all Eastern-bloc countries. Its citizens enjoyed a 
modest yet decent standard of living and cradle-to-grave secu- 
rity provided by a government-run welfare system. They trav- 
eled to other East European countries for their summer 
vacations, watched West German television, and hoped for bet- 
ter living conditions and more freedom in the future. Most 
East Germans acquiesced in the communist regime's restric- 
tions, having fashioned areas of personal freedom in their pri- 
vate lives. A small opposition movement operated within the 
shelter of the Protestant church, the country's sole relatively 
independent social institution. When opposition figures 
became too troublesome, the regime dealt with them by 
depriving them of their livelihood, sending them to prison, or 
expelling them to West Germany. 

The regime's elderly, hard-line leadership opposed the 
reforms of Soviet leader Mikhail Gorbachev, who sought to 
make socialism more efficient by introducing capitalist incen- 
tives and reducing central control. Encouraged by this liberal- 
ization and the application of Gorbachev's reforms in 
neighboring Poland and Hungary, the regime's opponents 
became bolder during the summer and fall of 1989 and 
mounted mass demonstrations that doubled and doubled 
again in size from week to week. 

Soviet officials advised the Honecker regime not to expect 
outside support. Without foreign military assistance for the 
first time, the GDR leadership decided against the use of force 
to quell the burgeoning demonstrations. Honecker was ousted 
in mid-October, and more realistic leaders sought to save the 
regime by making concessions. In November travel abroad 
became possible, and East Germans swarmed into West Ger- 
many, many intending to remain there. Reforms could no 


longer satisfy East Germans, however, who wanted the free- 
doms and living standard of West Germany. 

West German chancellor Helmut Kohl (1982- ) seized the 
political initiative in late November with his Ten-Point Plan for 
unification. Yet, even he thought several years and an interven- 
ing stage, such as a confederational structure, would be neces- 
sary before unification of the two Germanys could occur. By 
early 1990, however, the need to stop the massive flow of East 
Germans westward made speedy unification imperative. In 
addition, revolutionary change in other Eastern-bloc counties 
made solutions that a short time earlier had appeared out of 
the question suddenly seem feasible. The Treaty on Monetary, 
Economic, and Social Union between the two German states 
was signed in May and went into effect in July. The two Ger- 
manys signed the Unification Treaty in August. The Treaty on 
the Final Settlement with Respect to Germany, the so-called 
Two-Plus-Four Treaty, was signed in September by the two Ger- 
manys and the four victors of World War II — Britain, France, 
the Soviet Union, and the United States. The treaty restored 
full sovereignty to Germany and ended the Cold War era. 

When unification occurred on October 3, 1990, it was a 
happy, yet subdued occasion. The many problems of joining 
such diverse societies were already apparent. The vaunted East 
German economy was coming to be seen as a Potemkin's vil- 
lage, with many of its most prestigious firms uncompetitive in a 
market economy. East German environmental problems were 
also proving much more serious than anyone had foreseen; 
remedies would cost astronomical sums. West Germans had dis- 
covered also that their long-lost eastern cousins differed from 
them in many ways and that relations between them were often 
rife with misunderstandings. A complete melding of the two 
societies would take years, perhaps even a generation or two. 
The legal unification arranged by the treaties of 1990 was only 
the beginning of a long process toward a truly united Germany. 

In its long history, Germany has rarely been united. For most 
of the two millennia that central Europe has been inhabited by 
German-speaking peoples, the area called Germany was 
divided into hundreds of states, many quite small, including 
duchies, principalities, free cities, and ecclesiastical states. Not 
even the Romans united Germany under one government; 
they managed to occupy only its southern and western por- 
tions. At the beginning of the ninth century, Charlemagne 

xxx IX 

established an empire, but within a generation its existence was 
more symbolic than real. 

Medieval Germany was marked by division. As France and 
England began their centuries-long evolution into united 
nation-states, Germany was racked by a ceaseless series of wars 
among local rulers. The Habsburg Dynasty's long monopoly of 
the crown of the Holy Roman Empire provided only the sem- 
blance of German unity. Within the empire, German princes 
warred against one another as before. The Protestant Reforma- 
tion deprived Germany of even its religious unity, leaving its 
population Roman Catholic, Lutheran, and Calvinist. These 
religious divisions gave military strife an added ferocity in the 
Thirty Years' War (1618-48), during which Germany was rav- 
aged to a degree not seen again until World War II. 

The Peace of Westphalia of 1648 left Germany divided into 
hundreds of states. During the next two centuries, the two larg- 
est of these states — Prussia and Austria — -jockeyed for domi- 
nance. The smaller states sought to retain their independence 
by allying themselves with one, then the other, depending on 
local conditions. From the mid-1 790s until Prussia, Austria, and 
Russia defeated Napoleon at the Battle of Leipzig in 1813 and 
drove him out of Germany, much of the country was occupied 
by French troops. Napoleon's officials abolished numerous 
small states, and, as a result, in 1815, after the Congress of 
Vienna, Germany consisted of about forty states. 

During the next half-century, pressures for German unifica- 
tion grew. Scholars, bureaucrats, students, journalists, and busi- 
nessmen agitated for a united Germany that would bring with 
it uniform laws and a single currency and that would replace 
the benighted absolutism of petty German states with democ- 
racy. The revolutions of 1848 seemed at first likely to realize 
this dream of unity and freedom, but the monarch who was 
offered the crown of a united Germany, King Friedrich Wil- 
helm IV of Prussia, rejected it. The king, like the other rulers 
of Germany's kingdoms, opposed German unity because he 
saw it as a threat to his power. 

Despite the opposition of conservative forces, German unifi- 
cation came just over two decades later, in 1871, when Ger- 
many was unified and transformed into an empire under 
Emperor Wilhelm I, king of Prussia. Unification was not 
brought about by revolutionary or liberal forces, but by a con- 
servative Prussian aristocrat, Otto von Bismarck. Sensing the 
power of nationalism, Bismarck sought to use it for his own 


aims, the preservation of a feudal social order and the triumph 
of his country, Prussia, in the long contest with Austria for pre- 
eminence in Germany. By a series of masterful diplomatic 
maneuvers and three brief and dazzlingly successful military 
campaigns, Bismarck achieved a united Germany without Aus- 
tria. He brought together the so-called "small Germany," con- 
sisting of Prussia and the remaining German states, some of 
which had been subdued by Prussian armies before they 
became part of a Germany ruled by a Prussian emperor. 

Although united Germany had a parliament, the Reichstag, 
elected through universal male suffrage, supreme power rested 
with the emperor and his ministers, who were not responsible 
to the Reichstag. Although the Reichstag could contest the gov- 
ernment's decisions, in the end the emperor could largely gov- 
ern as he saw fit. Supporting the emperor were the nobility, 
large rural landowners, business and financial elites, the civil 
service, the Protestant clergy, and the military. The military, 
which had made unification possible, enjoyed tremendous 
prestige. Led by an aristocratic officer corps sworn to feudal 
values and opposed to parliamentary democracy and the rights 
of a free citizenry, the military embodied the spirit of the Ger- 
man Empire. 

Opposition to this authoritarian regime with its feudal struc- 
tures was found mainly in the Roman Catholic Center Party, 
the Socialist Party, and in a variety of liberal and regional polit- 
ical groups opposed to Prussia's hegemony over Germany. In 
the long term, Bismarck and his successors were not able to 
subjugate this opposition. By 1912 the Socialists had come to 
have the largest number of representatives in the Reichstag. 
They and the Center Party made governing increasingly diffi- 
cult for the empire's conservative leadership. 

Despite the presence of these opposition groups, however, a 
truly representative parliamentary democracy did not exist. As 
a result, Germans had little opportunity to learn the art of 
practical politics. With few exceptions, this had also been the 
case throughout German history. Although Germany's states 
were usually well managed by an efficient and honest civil ser- 
vice, they were authoritarian. Government was seen as the busi- 
ness of the rulers; the ruled were to be obedient and silent. 

Because they were inexperienced in democratic govern- 
ment, Germans in the nineteenth century were often viewed as 
political children, incapable of governing themselves. In addi- 
tion, seeing the excesses of the French Revolution, many 


thoughtful Germans came to the conclusion that democracy 
was not suitable for Germany. The success of democratic politi- 
cal institutions in Britain and the United States did not con- 
vince these skeptics; they feared that the passions of the 
ignorant masses could too easily be inflamed. Even many Ger- 
man liberals found the idea that ordinary citizens ought to 
determine how public business should be conducted too radi- 
cal a notion. Instead, they recommended that parliaments con- 
sisting of the educated and the prosperous should serve as 
advisory bodies to noble rulers. 

Germany's defeat in World War I in 1918 meant the end of 
the German Empire. The emperor was forced to abdicate, and 
a republic — the Weimar Republic — was established with a con- 
stitution that provided for a parliamentary democracy in which 
the government was ultimately responsible to the people. The 
new republic's first president and prime minister were con- 
vinced democrats, and Germany seemed ready at last to join 
the community of democratic nations. 

The Weimar Republic ultimately disappointed those who 
had hoped it would introduce democracy to Germany. By mid- 
1933 it had been destroyed by Adolf Hitler, its declared enemy 
since his first days in the public arena. Hitler was a political 
genius who sensed and exploited the worries and resentments 
of many Germans, knew when to act, and possessed a sure 
instinct for power. His greatest weapon in his quest for political 
power, however, was the disdain many Germans felt for the new 

Many Germans held the Weimar Republic responsible for 
Germany's defeat. At the war's end, no foreign troops stood on 
German soil, and military victory still seemed likely. Instead of 
victory, however, in the view of many, the republic's Socialist 
politicians arranged a humiliating peace. Many Germans were 
also affronted by the spectacle of parliamentary politics. The 
republic's numerous small parties made forming stable and 
coherent coalition governments very difficult. Frequent elec- 
tions failed to yield effective governments. Government poli- 
cies also often failed to solve pressing social and economic 

These shortcomings undermined the legitimacy of the 
Weimar Republic. The upper classes, the judiciary, the police, 
the civil service, educators, the military, and much of the mid- 
dle class gave the republic only halfhearted support at best. 
Many members of these groups despised the republic and 


wanted it replaced with an authoritarian system of government. 
The early years of the Weimar Republic saw frequent attempts 
to destroy it by force, mostly from the right, but also from the 

A modest economic recovery from 1924 to 1929 gave the 
Weimar Republic a brief respite. The severe social stress engen- 
dered by the Great Depression, however, swelled the vote 
received by extreme antidemocratic parties in the election of 
1930 and the two elections of 1932. The government ruled by 
emergency decree. In January 1933, leading conservative poli- 
ticians formed a new government with Hitler as chancellor. 
They intended to harness him and his party, now the country's 
largest, to realize their own aim of replacing the republic with 
an authoritarian government. Within a few months, however, 
Hitler had outmaneuvered them and established a totalitarian 
regime. Only in 1945 did a military alliance of dozens of 
nations succeed in deposing him, and only after his regime and 
the nation it ruled had committed crimes of unparalleled enor- 

In the aftermath of World War II, Germany came to consist 
of two states. One, East Germany, never attained real legitimacy 
in the eyes of its citizens and had to use force to prevent them 
from fleeing to the West. The other, West Germany, was 
resoundingly successful. Within two decades of defeat, it had 
become one of the world's richest nations, with a prosperity 
that extended to all segments of the population. The economy 
performed so successfully that eventually several million for- 
eigners came to West Germany to work as well. West German 
and foreign workers alike were protected from need arising 
from sickness, accidents, and old age by an extensive, mostly 
nongovernment welfare system. 

Along with this material success, a vigorous democracy devel- 
oped. To avoid the Weimar Republic's weak coalition govern- 
ments, the West German constitution, the Basic Law, permitted 
only those parties with at least 5 percent of the vote to sit in the 
Bundestag, the lower house of its parliament. This provision 
meant that stable parliamentary governments could be formed 
fairly easily, and efficient government became possible. In con- 
trast to the Weimar Republic, the Basic Law banned political 
parties opposed to democracy. 

From the first national election in 1949, West German poli- 
tics has been dominated by two large catchall parties (Volks- 
parteien; sing., Volkspartei) , whose support came from voters 


formerly allied to many smaller parties. The moderate Chris- 
tian Democratic Union (Christlich Demokratische Union — 
CDU), allied with its small sister party active in Bavaria, the 
Christian Social Union (Christlich-Soziale Union — CSU), won 
the votes of a broad range of Roman Catholic and Protestant 
voters. For the first time in German history, members of the 
two religions worked together to attain their political goals. 
The CDU/CSU also had left and right wings, which had to 
cooperate if the alliance were to win elections and exercise 
power. After much debate, the CDU/CSU's various wings for- 
mulated the concept of a social market economy — free-market 
capitalism combined with an extensive social net. The CDU/ 
CSU alliance has successfully held together its diverse member- 
ship and, with the exception of the 1969-82 period, has 
headed all the Federal Republic's governments since 1949, 
when CDU leader Konrad Adenauer became the country's first 

The Federal Republic's other large popular party is the 
Social Democratic Party of Germany (Sozialdemokratische 
Partei Deutschlands — SPD), which receives much of the work- 
ing-class vote. In the early years of the Federal Republic, the 
SPD was feared by many voters because of its socialist aims. 
With time, however, the party moderated its positions; for 
example, it accepted West German rearmament in the mid- 
1950s and came to support the social market economy. It also 
won the trust of suspicious voters by participating in many local 
and state {Land; pi., Lander) governments. After joining with 
the CDU/CSU to form a coalition government at the national 
level from 1966 to 1969, the SPD and the small, liberal Free 
Democratic Party (Freie Demokratische Partei — FDP) formed 
a coalition government with SDP leader Willy Brandt as chan- 
cellor. The SPD-FDP coalition lasted until 1982. In that year, 
the FDP and the CDU/CSU formed a new coalition govern- 
ment with Helmut Kohl as chancellor, a coalition still in power 
in mid-1996. 

Many observers maintain that German democracy is in a 
transition stage. The SPD has lost its most steady source of sup- 
port as an increasingly advanced economy has reduced the size 
of the blue-collar working class. An increasingly secular and 
sophisticated society has also cut into the CDU/CSU stable 
pool of confessional voters. Thus, since the 1980s, the large 
catchall parties have been confronted with an increasingly vola- 
tile electorate. Both parties have experienced declining mem- 


berships. As these parties have worked to woo a more diverse 
electorate, they have moderated their stances to such a degree 
that many voters have difficulty telling them apart. 

Despite CDU losses in the October 1994 national elections, 
the CDU/CSU-FDP coalition survived, but with a majority of 
only ten seats. The SPD's share of the vote rose in these elec- 
tions, but not enough to take power at the national level. The 
SPD has been more successful in elections at the Land level in 
recent years and has often controlled the Bundesrat, parlia- 
ment's upper house. However, it lost its sole control of North 
Rhine-Westphalia in the elections of May 1995 and did even 
worse in October 1995 Land elections in Berlin. SPD leader 
Rudolf Sharping was deposed a month later and replaced by 
Oskar Lafontaine, who had led the party to defeat in the 1990 
national elections. Lafontaine's resurrection did not appear to 
solve the party's long-standing leadership problem because it 
lost badly in the Land elections of March 1996 in Schleswig- 
Holstein, Rhineland-Palatinate, and Baden-Wurttemberg. 

As the two large parties face diminishing pools of secure 
votes, growing numbers of young and educated voters have 
come to support the ecological party, Alliance 90/The Greens 
(Bundnis 90/Die Grunen), which, after having elected its first 
representatives to the Bundestag in 1983, in 1994 became the 
body's third-largest party, displacing the FDR As of mid-1996, 
the Greens had a skilled leader, Joschka Fischer, who has trans- 
formed the party from a group of apolitical idealists into a 
highly pragmatic, but still principled, political force that exam- 
ines nearly every facet of German life from a fresh standpoint. 
Some observers hold that the party represents the future of 
German politics. 

The party displaced by the Greens, the FDP, has been a part- 
ner in all coalition governments at the national level since 
1969. Pledged to classic European liberal political values, the 
FDP has distinguished itself by its advocacy of the legal rights of 
the individual. In recent years, however, the party has struggled 
for its survival because of leadership problems and because its 
close embrace of the CDU/CSU has caused it to lose its politi- 
cal identity in the eyes of many voters. By late 1995, the party 
seemed on the verge of political extinction; it suffered a steep 
drop in its vote in the national election of October 1994 and a 
long string of losses in elections at the Land level. In March 
1996, however, the FDP increased its vote and won seats in all 
three Land elections held during the month. Although the 


FDP was represented in only four Land parliaments as of mid- 
1996, these election results allow the party to retain its role as a 
coalition-maker in governments at the national level. 

In addition to the Greens, another new party that has altered 
German politics is the Party of Democratic Socialism (Partei 
des Demokratischen Sozialismus — PDS). Able to win votes only 
in eastern Germany, the PDS has the support of voters who 
regret the extent to which or the way in which East Germany 
was swallowed up by the Federal Republic. Although the PDS is 
the successor to East Germany's communist Socialist Unity 
Party of Germany (Sozialistische Einheitspartei Deutsch- 
lands — SED), it does not recommend that the East German 
regime be restored. Rather, it demands that eastern German 
interests be given greater respect by western Germans, who are 
often seen as arrogant and overbearing by eastern Germans. 
The PDS has thirty seats in the Bundestag and is represented in 
the parliaments of the eastern Lander, but is not a partner in 
any coalition. Because the PDS owes its success to the some- 
times legitimate anger of easterners at how they have fared in a 
united Germany, observers believe that the influence of the 
PDS will wane as these Lander become more integrated into 
united Germany. 

In addition to the above parties, several small right-wing par- 
ties are politically active. None have representatives in the 
Bundestag. The Republikaner, which at about 25,000 members 
is the largest of these parties, has representatives in the Baden- 
Wurttemberg parliament after winning 11 percent of the vote 
in 1992 and 9 percent of the vote in elections there in March 
1996. The campaigns of these right-wing parties are based 
mainly on a fervid nationalism and a dislike of Germany's for- 
eign residents. They stop short of clearly espousing Hitlerian 
doctrines, however, because doing so would mean their being 
banned and their leaders possibly being imprisoned. 

In addition to parties of the extreme right, authorities esti- 
mate that a few thousand violent right-wing extremists are 
active within Germany. Most are disaffected young males with 
few job prospects. Although comparatively few in number in a 
country of 80 million, they have received international atten- 
tion when they have attacked or killed foreign workers living in 
Germany or vandalized Jewish cemeteries or synagogues. The 
world's alarm at such occurrences is easily understandable, 
given Germany's history in the first half of the twentieth cen- 
tury. Yet few observers believe that these extreme right-wing 


elements pose a threat to German democracy or have any 
chance of gaining political influence, let alone coming to 

Germans of the late twentieth century differ greatly from 
those of its first half. The extreme nationalism of the interwar 
period finds little support in the Germany of the 1990s, for 
example. Unlike Germany's failure to achieve victory in World 
War I, which to many Germans of the interwar period 
appeared to have been caused by the treachery of Socialist pol- 
iticians rather than by military defeat, Germany's uncondi- 
tional surrender in 1945 was obviously unavoidable given the 
military situation at the war's end. Moreover, because Hitler 
clearly started the war, Germany is judged, to some extent at 
least, to have deserved its terrible consequences. Thus, in con- 
trast to Germans of the interwar period, few postwar Germans 
have demanded revenge for Germany's sufferings or advocated 
the seizure of lost territory. This absence of an aggressive 
nationalism can be seen in the foreign policy of the Federal 
Republic. Unlike the diplomacy of the empire and the Hitler 
regime, this foreign policy has always had as its first principle 
multilateralism, a principle realized through Germany's active 
membership in a great variety of international organizations. 

Germans have also become convinced democrats. They 
understand and appreciate the workings of parliamentary 
democracy with its loyal opposition, concessions, and the 
peaceful passing of power from one government to another; 
they know the importance of an independent judiciary in pro- 
tecting individual rights; and they value a free and powerful 
press. Under a democratic system of government, West Ger- 
mans have experienced the most successful period of German 
history, and, whatever the system's failings, they are unwilling 
to reject it for panaceas of earlier eras. Eastern Germans are 
now learning Western democratic values after decades of polit- 
ical repression. Having experienced a multitude of political 
and economic disasters under totalitarian regimes of the right 
and the left, Germans have matured and become political 
adults no longer susceptible to the Utopian promises of dema- 

Germany does face some serious challenges in the second 
half of the 1990s and in the new century. The most immediate 
challenge is to fully integrate eastern Germany and its inhabit- 
ants into the advanced social market economy and society of 
western Germany. 


As of mid-1996, much had already been done to foster the 
formation of a strong eastern economy and to bring its compo- 
nents up to global standards. In the 1990-95 period, more than 
US$650 billion had been transferred from western Germany to 
eastern Germany. This enormous financial infusion has mark- 
edly improved eastern living standards, and specialists believe 
that by the late 1990s, the east's infrastructure will be the most 
advanced in Europe. Unemployment in eastern Germany has 
consistently remained at about 15 percent, however, about one- 
third above the national level, despite eastern growth rates 
about three times higher than those in western Germany. Many 
of the older jobless are not likely to find employment compara- 
ble to what they had under the communist system. Yet, many 
eastern Germans have fared well in the new economy and have 
adapted well to its demands. 

Achieving complete social unification is expected to take a 
generation or two. Decades of life in diverse societies have cre- 
ated two peoples with different attitudes. Easterners are gener- 
ally less ambitious and concerned with their careers than their 
western counterparts. Their more relaxed work ethic some- 
times raises the ire of western Germans. Many easterners also 
take offense at what has seemed to them arrogant or patroniz- 
ing attitudes of westerners. The "implosion" of East Germany 
in 1990 prevented a slower, more nuanced introduction of 
Western institutions and habits of thought to the east that 
would have resulted in fewer bruised feelings. Polls of recent 
years have found a growing convergence of beliefs and opin- 
ions between the two peoples, however, a trend almost certain 
to continue. 

The most serious problem confronting Germany in the long 
term is one faced by all advanced, high-wage industrial coun- 
tries — how to meet the challenges posed by an increasingly glo- 
balized economy in which highly skilled workers of lesser 
developed countries are available at one-tenth the wages of 
wealthy countries. For Germany these countries are not located 
only in Asia, but next door in the former Eastern bloc. By the 
1990s, German wages were among the world's highest, some 50 
percent higher than those of the United States, for example. 
Germany's extensive social safety net is a principal reason for 
its high wage cost, yet no political party can expect to signifi- 
cantly cut into social programs and retain the favor of voters. 

In addition to high wages, the German economy faces struc- 
tural problems because the areas in which it has long been 


strongest — the chemical industry and machine production, for 
example — are not areas in which most future economic growth 
will occur. Having been so successful in their traditional fields 
of expertise, German businessmen are somewhat conservative, 
not given to risky entrepreneurship, and have not invested in 
new areas such as computers and biotechnology. Economists 
see little reason to believe that Germany can overtake the lead- 
ers in these fields, most notably the United States and Japan. 

Germany also faces serious demographic problems. Popula- 
tion growth in recent decades has been slow; in many years, the 
number of Germans has actually declined because the birth 
rate has been so low. Given this long-standing trend, specialists 
wonder how Germans will continue to maintain their generous 
pension system, an unfunded system that operates on the pay- 
as-you-go principle, according to which retirees are supported 
by today's workers. If present trends continue, by 2030 the ratio 
of retirees to workers will be one to one. 

An obvious solution to this problem is to import workers. 
However, because Germans do not regard their country as a 
nation of immigrants, importing workers is not currently seen 
as a politically acceptable solution. As of the mid-1990s, Ger- 
many had about 7 million foreign residents, including 2 mil- 
lion Muslims, and more foreign workers are not wanted. 
Germany has not yet successfully integrated the foreigners 
already on its soil: archaic immigration laws make it difficult to 
became a German citizen, and xenophobic attitudes of many 
Germans often make foreign residents, even those born and 
raised in the country and speaking perfect German, feel 
unwanted. In time, demographic realities may cause Germans 
to view more favorably the permanent presence of a substantial 
non-German population and lead them to adopt more liberal 
notions of citizenship. 

Unification and the ending of the Cold War have meant that 
Germany must adjust itself to a new international environ- 
ment. The disastrous failures of German foreign policy in the 
first half of the twentieth century have caused Germans to 
approach this challenge warily. Until the demise of the Soviet 
Union, Germans could enjoy the certainties of the Cold War, 
both they and their neighbors secure in the knowledge that the 
superpowers would contain any possible German aggression. 

Throughout the postwar era, West Germany was a model cit- 
izen of the community of nations, content to be the most 
devoted participant in the movement toward Europe's eco- 


nomic and social unification. West German politicians shared 
the fears of their foreign neighbors of a resurgent, aggressive 
Germany and sought to ensure their country's containment by 
embedding it in international organizations. In the mid-1950s, 
for example, West Germany rearmed, but as a member of the 
North Atlantic Treaty Organization (NATO — see Glossary) . 

Since the end of the Cold War, however, united Germany has 
occupied an exposed position in Central Europe, with settled, 
secure neighbors in the west and unpredictable and insecure 
neighbors to the east. Because of this exposure, German policy 
makers wish to extend the European Union (EU — see Glos- 
sary) and NATO eastward, at a minimum bringing Poland, the 
Czech Republic, and Hungary into both organizations. In the 
German view, these countries could serve as a buffer between 
Germany and uncertain developments in Russia and other 
members of the former Soviet Union. At the same time as this 
so-called widening of West European institutions is being 
undertaken, Germany is working for their deepening by press- 
ing for increased European unity. As of mid-1996, Helmut Kohl 
remained the continent's most important advocate of realizing 
a common European currency through the European Mone- 
tary Union (EMU — see Glossary) by the turn of the century. 
However unrealistic this timetable may prove to be, in the post- 
war era Germany has steadfastly worked to realize German 
writer Thomas Mann's ideal of a Europeanized Germany and 
rejected his nightmare of a Germanized Europe. 

June 19, 1996 Eric Solsten 


Chapter 1. Historical Setting: Early History 

to 1945 

Martin Luther, 1483-1346, the main figure of the Protestant Reformation 

PEOPLE HAVE DWELLED for thousands of years in the terri- 
tory now occupied by the Federal Republic of Germany. The 
first significant written account of this area's inhabitants is Ger- 
mania, written about A.D. 98 by the Roman historian Tacitus. 
The Germanic tribes he describes are believed to have come 
from Scandinavia to Germany about 100 B.C., perhaps induced 
to migrate by overpopulation. The Germanic tribes living to 
the west of the Rhine River and south of the Main River were 
soon subdued by the Romans and incorporated into the 
Roman Empire. Tribes living to the east and north of these riv- 
ers remained free but had more or less friendly relations with 
the Romans for several centuries. Beginning in the fourth cen- 
tury A.D., new westward migrations of eastern peoples caused 
the Germanic tribes to move into the Roman Empire, which by 
the late fifth century ceased to exist. 

One of the largest Germanic tribes, the Franks, came to con- 
trol the territory that was to become France and much of what 
is now western Germany and Italy. In A.D. 800 their ruler, 
Charlemagne, was crowned in Rome by the pope as emperor of 
all of this territory. Because of its vastness, Charlemagne's 
empire split into three kingdoms within two generations, the 
inhabitants of the West Frankish Kingdom speaking an early 
form of French and those in the East Frankish Kingdom speak- 
ing an early form of German. The tribes of the eastern king- 
dom — Franconians, Saxons, Bavarians, Swabians, and several 
others — were ruled by descendants of Charlemagne until 911, 
when they elected a Franconian, Conrad I, to be their king. 
Some historians regard Conrad's election as the beginning of 
what can properly be considered German history. 

German kings soon added the Middle Kingdom to their 
realm and adjudged themselves rulers of what would later be 
called the Holy Roman Empire. In 962 Otto I became the first 
of the German kings crowned emperor in Rome. By the middle 
of the next century, the German lands ruled by the emperors 
were the richest and most politically powerful part of Europe. 
German princes stopped the westward advances of the Magyar 
tribe, and Germans began moving eastward to begin a long 
process of colonization. During the next few centuries, how- 
ever, the great expense of the wars to maintain the empire 
against its enemies, chiefly other German princes and the 


Germany: A Country Study 

wealthy and powerful papacy and its allies, depleted Germany's 
wealth and slowed its development. Unlike France or England, 
where a central royal power was slowly established over 
regional princes, Germany remained divided into a multitude 
of smaller entities often warring with one another or in combi- 
nations against the emperors. None of the local princes, or any 
of the emperors, were strong enough to control Germany for a 
sustained period. 

Germany's so-called particularism, that is, the existence 
within it of many states of various sizes and kinds, such as prin- 
cipalities, electorates, ecclesiastical territories, and free cities, 
became characteristic by the early Middle Ages and persisted 
until 1871, when the country was finally united. This disunity 
was exacerbated by the Protestant Reformation of the sixteenth 
century, which ended Germany's religious unity by converting 
many Germans to Lutheranism and Calvinism. For several cen- 
turies, adherents to these two varieties of Protestantism viewed 
each other with as much hostility and suspicion as they did 
Roman Catholics. For their part, Catholics frequently resorted 
to force to defend themselves against Protestants or to convert 
them. As a result, Germans were divided not only by territory 
but also by religion. 

The terrible destruction of the Thirty Years' War of 1618-48, 
a war partially religious in nature, reduced German particular- 
ism, as did the reforms enacted during the age of enlightened 
absolutism (1648-1789) and later the growth of nationalism 
and industrialism in the nineteenth century. In 1815 the Con- 
gress of Vienna stipulated that the several hundred states exist- 
ing in Germany before the French Revolution be replaced with 
thirty-eight states, some of them quite small. In subsequent 
decades, the two largest of these states, Austria and Prussia, 
vied for primacy in a Germany that was gradually unifying 
under a variety of social and economic pressures. The politi- 
cian responsible for German unification was Otto von Bis- 
marck, whose brilliant diplomacy and ruthless practice of 
statecraft secured Prussian hegemony in a united Germany in 
1871. The new state, proclaimed the German Empire, did not 
include Austria and its extensive empire of many non-German 
territories and peoples. 

Imperial Germany prospered. Its economy grew rapidly, and 
by the turn of the century it rivaled Britain's in size. Although 
the empire's constitution did not provide for a political system 
in which the government was responsible to parliament, politi- 


Historical Setting: Early History to 1945 

cal parties were founded that represented the main social 
groups. Roman Catholic and socialist parties contended with 
conservative and progressive parties and with a conservative 
monarchy to determine how Germany should be governed. 

After Bismarck's dismissal in 1890 by the young emperor Wil- 
helm II, Germany stepped up its competition with other Euro- 
pean states for colonies and for what it considered its proper 
place among the great states. An aggressive program of military 
expansion instilled fear of Germany in its neighbors. Several 
decades of military and colonial competition and a number of 
diplomatic crises made for a tense international atmosphere by 
1914. In the early summer of that year, Germany's rulers acted 
on the belief that their country's survival depended on a suc- 
cessful war against Russia and France. German strategists felt 
that a war against these countries had to be waged by 1916 if it 
were to be won because after that year Russian and French mil- 
itary reforms would be complete, making German victory 
doubtful. This logic led Germany to get drawn into a war 
between its ally Austria-Hungary and Russia. Within weeks, a 
complicated system of alliances escalated that regional conflict 
into World War I, which ended with Germany's defeat in 
November 1918. 

The Weimar Republic, established at war's end, was the first 
attempt to institute parliamentary democracy in Germany. The 
republic never enjoyed the wholehearted support of many Ger- 
mans, however, and from the start it was under savage attack 
from elements of the left and, more important, from the right. 
Moreover, it was burdened during its fifteen-year existence with 
serious economic problems. During the second half of the 
1920s, when foreign loans fed German prosperity, parliamen- 
tary politics functioned better, yet many of the established 
elites remained hostile to it. With the onset of the Great 
Depression, parliamentary politics became impossible, and the 
government ruled by decree. Economic crisis favored extremist 
politicians, and Adolf Hitler's National Socialist German Work- 
ers' Party became the strongest party after the summer elec- 
tions of 1932. In January 1933, the republic's elected president, 
Paul von Hindenburg, the World War I army commander, 
named a government headed by Hitler. 

Within a few months, Hitler accomplished the "legal revolu- 
tion" that removed his opponents. By 1935 his regime had 
transformed Germany into a totalitarian state. Hitler achieved 
notable economic and diplomatic successes during the first five 


Germany: A Country Study 

years of his rule. However, in September 1939 he made a fatal 
gamble by invading Poland and starting World War II. The 
eventual defeat of Hitler's Third Reich in 1945 occurred only 
after the loss of tens of millions of lives, many from military 
causes, many from sickness and starvation, and many from 
what has come to be called the Holocaust. 

Early History 

The Germanic tribes, which probably originated from a mix- 
ture of peoples along the Baltic Sea coast, inhabited the north- 
ern part of the European continent by about 500 B.C. By 100 
B.C., they had advanced into the central and southern areas of 
present-day Germany. At that time, there were three major 
tribal groups: the eastern Germanic peoples lived along the 
Oder and Vistula rivers; the northern Germanic peoples inhab- 
ited the southern part of present-day Scandinavia; and the 
western Germanic peoples inhabited the extreme south of Jut- 
land and the area between the North Sea and the Elbe, Rhine, 
and Main rivers. The Rhine provided a temporary boundary 
between Germanic and Roman territory after the defeat of the 
Suevian tribe by Julius Caesar about 70 B.C. The threatening 
presence of warlike tribes beyond the Rhine prompted the 
Romans to pursue a campaign of expansion into Germanic ter- 
ritory. However, the defeat of the provincial governor Varus by 
Arminius at the Battle of the Teutoburg Forest in A.D. 9 halted 
Roman expansion; Arminius had learned the enemy's strate- 
gies during his military training in the Roman armies. This bat- 
tle brought about the liberation of the greater part of Germany 
from Roman domination. The Rhine River was once again the 
boundary line until the Romans reoccupied territory on its 
eastern bank and built the Limes, a fortification 300 kilometers 
long, in the first century A.D. 

The second through the sixth centuries was a period of 
change and destruction in which eastern and western Ger- 
manic tribes left their native lands and settled in newly 
acquired territories. This period of Germanic history, which 
later supplied material for heroic epics, included the downfall 
of the Roman Empire and resulted in a considerable expan- 
sion of habitable area for the Germanic peoples. However, with 
the exception of those kingdoms established by Franks and 
Anglo-Saxons, Germanic kingdoms founded in such other 
parts of Europe as Italy and Spain were of relatively short dura- 
tion because they were assimilated by the native populations. 


Historical Setting: Early History to 1945 

The conquest of Roman Gaul by Frankish tribes in the late fifth 
century became a milestone of European history; it was the 
Franks who were to become the founders of a civilized German 

Medieval Germany 

The Merovingian Dynasty, ca. 500-751 

In Gaul a fusion of Roman and Germanic societies occurred. 
Clovis, a Salian Frank belonging to a family supposedly 
descended from a mythical hero named Merovech, became the 
absolute ruler of a Germanic kingdom of mixed Roman-Ger- 
manic population in 486. He consolidated his rule with victo- 
ries over the Gallo-Romans and all the Frankish tribes, and his 
successors made other Germanic tribes subjects of the Merov- 
ingian Dynasty. The remaining 250 years of the dynasty, how- 
ever, were marked by internecine struggles and a gradual 
decline. During the period of Merovingian rule, the Franks 
reluctantly began to adopt Christianity following the baptism of 
Clovis, an event that inaugurated the alliance between the 
Frankish kingdom and the Roman Catholic Church. The most 
notable of the missionaries responsible for Christianizing the 
tribes living in Germany was Saint Boniface (ca. 675-754), an 
English missionary who is considered the founder of German 

The Carolingian Dynasty, 752-911 

Charlemagne inherited the Frankish crown in 768. During 
his reign (768-814), he subdued Bavaria, conquered Lom- 
bardy and Saxony, and established his authority in central Italy. 
By the end of the eighth century, his kingdom, later to become 
known as the First Reich (empire in German), included 
present-day France, the Netherlands, Belgium, and Luxem- 
bourg, as well as a narrow strip of northern Spain, much of 
Germany and Austria, and much of the northern half of Italy. 
Charlemagne, founder of an empire that was Roman, Chris- 
tian, and Germanic, was crowned emperor in Rome by the 
pope in 800. 

The Carolingian Empire was based on an alliance between 
the emperor, who was a temporal ruler supported by a military 
retinue, and the pope of the Roman Catholic Church, who 
granted spiritual sanction to the imperial mission. Charle- 
magne and his son Louis I (r. 814-40) established centralized 


Germany: A Country Study 

authority, appointed imperial counts as administrators, and 
developed a hierarchical feudal structure headed by the 
emperor. Reliant on personal leadership rather than the 
Roman concept of legalistic government, Charlemagne's 
empire lasted less than a century. 

A period of warfare followed the death of Louis. The Treaty 
of Verdun (843) restored peace and divided the empire among 
three sons, geographically and politically delineating the 
approximate future territories of Germany, France, and the 
area between them, known as the Middle Kingdom (see fig. 2). 
The eastern Carolingian kings ruled the East Frankish King- 
dom, what is now Germany and Austria; the western Caroling- 
ian kings ruled the West Frankish Kingdom, what became 
France. The imperial title, however, came to depend increas- 
ingly on rule over the Middle Kingdom. By this time, in addi- 
tion to a geographical and political delineation, a cultural and 
linguistic split had occurred. The eastern Frankish tribes still 
spoke Germanic dialects; the language of the western Frankish 
tribes, under the influence of Gallo-Latin, had developed into 
Old French. Because of these linguistic differences, the Treaty 
of Verdun had to be written in two languages. 

Not only had Charlemagne's empire been divided into three 
kingdoms, but the East Frankish Kingdom was being weakened 
by the rise of regional duchies, the so-called stem duchies of 
Franconia, Saxony, Bavaria, Swabia, and Lorraine, which 
acquired the trappings of petty kingdoms. The fragmentation 
in the east marked the beginning of German particularism, in 
which territorial rulers promoted their own interests and 
autonomy without regard to the kingdom as a whole. The 
duchies were strengthened when the Carolingian line died out 
in 911; subsequent kings would have no direct blood link to the 
throne with which to legitimate their claims to power against 
the territorial dukes. 

The Saxon Dynasty, 919-1024 

Because the dukes of the East Frankish Kingdom had wea- 
ried of being ruled by a foreign king, they elected a German to 
serve as their king once the Carolingian line expired. The elec- 
tion of Conrad I (r. 911-18), Duke of Franconia, as the first 
German king has been marked by some historians as the begin- 
ning of German history. Conrad's successor, Henry I (r. 919- 
36), Duke of Saxony, was powerful enough to designate his son 
Otto I (r. 936-73) as his successor. Otto was so able a ruler that 


Historical Setting: Early History to 1945 

he came to be known as Otto the Great. He overpowered other 
territorial dukes who rebelled against his rule and reversed the 
particularist trend for a time. But he failed to establish the 
principle of hereditary succession, and the German dukes con- 
tinued to elect one of their number as king. But through mili- 
tary successes and alliances with the church, which had 
extensive properties and military forces of its own, Otto 
expanded the crown lands, thus laying the foundation of 
monarchical power. Henry, Otto, and the later Saxon kings 
also encouraged eastward expansion and colonization, thereby 
extending German rule to parts of the Slavic territories of 
Poland and Bohemia. The Magyars' westward expansion was 
halted by Otto in 955 at the Battle of Lechfeld in southern Ger- 

In 962 Otto, who had also gained control of the Middle 
Kingdom, was formally crowned king of the Romans. The pos- 
sessor of this title would, in time, be known as the Holy Roman 
Emperor. The coronation came to be seen as the founding of 
the Holy Roman Empire, an institution that lasted until 1806 
and profoundly influenced the course of German history. The 
coronation of Otto was a moment of glory for the German 
monarchy, but its long-term consequences were not beneficial 
because as German kings sought to exercise the offices of the 
empire they became involved in Italian affairs, often to such an 
extent that they neglected the governing of Germany. Because 
German kings were so often in Italy, the German nobility 
became stronger. In addition, the presence of German kings in 
Italy as emperors soon caused them to come into conflict with 
the papacy, which did not hesitate to seek allies in Italy or Ger- 
many to limit imperial power. A last problem was that the suc- 
cession to the German throne was often uncertain or was hotly 
contested because it was not inheritable, but could only be 
attained through election by the German dukes. This circum- 
stance made the formation of an orderly or stable central gov- 
ernment nearly impossible. In the opinion of some historians, 
Otto's triumph in Rome in 962 ultimately was disastrous for 
Germany because it delayed German unification by centuries. 

The Salian Dynasty, 1024-1125 

After the death of the last Saxon king in 1024, the crown 
passed to the Salians, a Frankish tribe. The four Salian kings — 
Conrad II, Henry III, Henry IV, and Henry V — who ruled Ger- 
many as kings from 1024 to 1125, established their monarchy 


Germany: A Country Study 

Source: Based on information from Geoffrey Barraclough, The Origins of Modern Ger- 
many, Oxford, 1949, 12. 

Figure 2. The Carolingian Empire Divided by the Treaty of Verdun, 
A.D. 843 

as a major European power. Their main accomplishment was 
the development of a permanent administrative system based 
on a class of public officials answerable to the crown. 

A principal reason for the success of the early Salians was 
their alliance with the church, a policy begun by Otto I, which 
gave them the material support they needed to subdue rebel- 
lious dukes. In time, however, the church came to regret this 
close relationship. The relationship broke down in 1075 during 
what came to be known as the Investiture Contest, a struggle in 
which the reformist pope, Gregory VII, demanded that Henry 
IV (r. 1056-1106) renounce his rights over the German 
church. The pope also attacked the concept of monarchy by 
divine right and gained the support of significant elements of 
the German nobility interested in limiting imperial absolutism. 
More important, the pope forbade church officials under pain 
of excommunication to support Henry as they had so freely 


Historical Setting: Early History to 1945 

done in the past. In the end, Henry journeyed to Canossa in 
northern Italy in 1077 to do penance and to receive absolution 
from the pope. However, he resumed the practice of lay investi- 
ture (appointment of religious officials by civil authorities) and 
arranged the election of an antipope. 

The German monarch's struggle with the papacy resulted in 
a war that ravaged German lands from 1077 until the Concor- 
dat of Worms in 1122. This agreement stipulated that the pope 
was to appoint high church officials but gave the German king 
the right to veto the papal choices. Imperial control of Italy was 
lost for a time, and the imperial crown became dependent on 
the political support of competing aristocratic factions. Feudal- 
ism also became more widespread as freemen sought protec- 
tion by swearing allegiance to a lord. These powerful local 
rulers, having thereby acquired extensive territories and large 
military retinues, took over administration within their territo- 
ries and organized it around an increasing number of castles. 
The most powerful of these local rulers came to be called 
princes rather than dukes. 

According to the laws of the German feudal system, the king 
had no claims on the vassals of the other princes, only on those 
living within his family's territory. Lacking the support of the 
formerly independent vassals and weakened by the increasing 
hostility of the church, the monarchy lost its preeminence. 
Thus, the Investiture Contest strengthened local power in Ger- 
many in contrast to what was happening in France and 
England, where the growth of a centralized royal power was 
under way. 

The Investiture Contest had an additional effect. The long 
struggle between emperor and pope hurt Germany's intellec- 
tual life — in this period largely confined to monasteries — and 
Germany no longer led or even kept pace with developments 
occurring in France and Italy. For instance, no universities 
were founded in Germany until the fourteenth century. 

The Hohenstaufen Dynasty, 1138-1254 

Following the death of Henry V (r. 1106-25), the last of the 
Salian kings, the dukes refused to elect his nephew because 
they feared that he might restore royal power. Instead, they 
elected a noble connected to the Saxon noble family Welf 
(often written as Guelf). This choice inflamed the Hohen- 
staufen family of Swabia, which also had a claim to the throne. 
Although a Hohenstaufen became king in 1138, the dynastic 


Germany: A Country Study 

feud with the Welfs continued. The feud became international 
in nature when the Welfs sided with the papacy and its allies, 
most notably the cities of northern Italy, against the imperial 
ambitions of the Hohenstaufen Dynasty. 

The second of the Hohenstaufen rulers, Frederick I (r. 
1152-90), also known as Frederick Barbarossa because of his 
red beard, struggled throughout his reign to restore the power 
and prestige of the German monarchy, but he had little suc- 
cess. Because the German dukes had grown stronger both dur- 
ing and after the Investiture Contest and because royal access 
to the resources of the church in Germany was much reduced, 
Frederick was forced to go to Italy to find the finances needed 
to restore the king's power in Germany. He was soon crowned 
emperor in Italy, but decades of warfare on the peninsula 
yielded scant results. The papacy and the prosperous city-states 
of northern Italy were traditional enemies, but the fear of 
imperial domination caused them to join ranks to fight Freder- 
ick. Under the skilled leadership of Pope Alexander III, the 
alliance suffered many defeats but ultimately was able to deny 
the emperor a complete victory in Italy. Frederick returned to 
Germany old and embittered. He had vanquished one notable 
opponent and member of the Welf family, Saxony's Henry the 
Lion, but his hopes of restoring the power and prestige of his 
family and the monarchy seemed unlikely to be met by the end 
of his life. 

During Frederick's long stays in Italy, the German princes 
became stronger and began a successful colonization of Slavic 
lands. Offers of reduced taxes and manorial duties enticed 
many Germans to settle in the east as the area's original inhab- 
itants were killed or driven away. Because of this colonization, 
the empire increased in size and came to include Pomerania, 
Silesia, Bohemia, and Moravia. A quickening economic life in 
Germany increased the number of towns and gave them 
greater importance. It was also during this period that castles 
and courts replaced monasteries as centers of culture. Growing 
out of this courtly culture, German medieval literature reached 
its peak in lyrical love poetry, the Minnesang, and in narrative 
epic poems such as Tristan, Parzival, and the Nibelungenlied. 

Frederick died in 1190 while on a crusade and was suc- 
ceeded by his son, Henry VI (r. 1190-97). Elected king even 
before his father's death, Henry went to Rome to be crowned 
emperor. A death in his wife's family gave him possession of Sic- 
ily, a source of vast wealth. Henry failed to make royal and 


Historical Setting: Early History to 1945 

imperial succession hereditary, but in 1196 he succeeded in 
gaining a pledge that his infant son Frederick would receive 
the German crown. Faced with difficulties in Italy and confi- 
dent that he would realize his wishes in Germany at a later 
date, Henry returned to the south, where it appeared he might 
unify the peninsula under the Hohenstaufen name. After a 
series of military victories, however, he died of natural causes in 
Sicily in 1197. 

Because the election of the three-year-old Frederick to be 
German king appeared likely to make orderly rule difficult, the 
boy's uncle, Philip, was chosen to serve in his place. Other fac- 
tions elected a Welf candidate, Otto IV, as counterking, and a 
long civil war began. Philip was murdered by Otto IV in 1208. 
Otto IV in turn was killed by the French at the Battle of Bou- 
vines in 1214. Frederick returned to Germany in 1212 from Sic- 
ily, where he had grown up, and became king in 1215. As 
Frederick II (r. 1215-50), he spent little time in Germany 
because his main concerns lay in Italy. Frederick made signifi- 
cant concessions to the German nobles, such as those put forth 
in an imperial statute of 1232, which made princes virtually 
independent rulers within their territories. The clergy also 
became more powerful. Although Frederick was one of the 
most energetic, imaginative, and capable rulers of the Middle 
Ages, he did nothing to draw the disparate forces in Germany 
together. His legacy was thus that local rulers had more author- 
ity after his reign than before it. 

By the time of Frederick's death in 1250, there was little cen- 
tralized power in Germany. The Great Interregnum (1256-73), 
a period of anarchy in which there was no emperor and Ger- 
man princes vied for individual advantage, followed the death 
of Frederick's son Conrad IV in 1254. In this short period, the 
German nobility managed to strip many powers away from the 
already diminished monarchy. Rather than establish sovereign 
states, however, many nobles tended to look after their families. 
Their many heirs created more and smaller estates. A largely 
free class of officials also formed, many of whom eventually 
acquired hereditary rights to administrative and legal offices. 
These trends compounded political fragmentation within Ger- 

Despite the political chaos of the Hohenstaufen period, the 
population grew from an estimated 8 million in 1200 to about 
14 million in 1300, and the number of towns increased tenfold. 
The most heavily urbanized areas of Germany were located in 


Germany: A Country Study 

the south and the west. Towns often developed a degree of 
independence, but many were subordinate to local rulers or 
the emperor. Colonization of the east also continued in the 
thirteenth century, most notably through the efforts of the 
Knights of the Teutonic Order, a society of soldier-monks. Ger- 
man merchants also began trading extensively on the Baltic. 

The Empire under the Early Habsburgs 

The Great Interregnum ended in 1273 with the election of 
Rudolf of Habsburg as king-emperor. After the interregnum 
period, Germany's emperors came from three powerful dynas- 
tic houses: Luxemburg (in Bohemia), Wittelsbach (in Bavaria), 
and Habsburg (in Austria). These families alternated on the 
imperial throne until the crown returned in the mid-fifteenth 
century to the Habsburgs, who retained it with only one short 
break until the dissolution of the Holy Roman Empire in 1806. 

The Golden Bull of 1356, an edict promulgated by Emperor 
Charles IV (r. 1355-78) of the Luxemburg family, provided the 
basic constitution of the empire up to its dissolution. It formal- 
ized the practice of having seven electors — the archbishops of 
the cities of Trier, Cologne, and Mainz, and the rulers of the 
Palatinate, Saxony, Brandenburg, and Bohemia — choose the 
emperor, and it represented a further political consolidation of 
the principalities. The Golden Bull ended the long-standing 
attempt of various emperors to unite Germany under a heredi- 
tary monarchy. Henceforth, the emperor shared power with 
other great nobles like himself and was regarded as merely the 
first among equals. Without the cooperation of the other 
princes, he could not rule. 

The princes were not absolute rulers either. They had made 
so many concessions to other secular and ecclesiastical powers 
in their struggle against the emperor that many smaller princi- 
palities, ecclesiastical states, and towns had retained a degree of 
independence. Some of the smaller noble holdings were so 
poor that they had to resort to outright extortion of travelers 
and merchants to sustain themselves, with the result that jour- 
neying through Germany could be perilous in the late Middle 
Ages. All of Germany was under the nominal control of the 
emperor, but because his power was so weak or uncertain, local 
authorities had to maintain order — yet another indication of 
Germany's political fragmentation. 

Despite the lack of a strong central authority, Germany pros- 
pered during the fourteenth and fifteenth centuries. Its popu- 


Historical Setting: Early History to 1945 

lation increased from about 14 million in 1300 to about 16 
million in 1500, even though the Black Death killed as much as 
one-third of the population in the mid-fourteenth century. 

Located in the center of Europe, Germany was active in 
international trade. Rivers flowing to the north and the east 
and the Alpine passes made Germany a natural conduit convey- 
ing goods from the Mediterranean to northern Europe. Ger- 
many became a noted manufacturing center. Trade and 
manufacturing led to the growth of towns, and in 1500 an esti- 
mated 10 percent of the population lived in urban areas. Many 
towns became wealthy and were governed by a sophisticated 
and self-confident merchant oligarchy. Dozens of towns in 
northern Germany joined together to form the Hanseatic 
League, a trading federation that managed shipping and trade 
on the Baltic and in many inland areas, even into Bohemia and 
Hungary. The Hanseatic League had commercial offices in 
such widely dispersed towns as London, Bergen (in present-day 
Norway), and Novgorod (in present-day Russia). The league 
was at one time so powerful that it successfully waged war 
against the king of Denmark. In southern Germany, towns 
banded together on occasion to protect their interests against 
encroachments by either imperial or local powers. Although 
these urban confederations were not always strong enough to 
defeat their opponents, they sometimes succeeded in helping 
their members to avoid complete subjugation. In what was 
eventually to become Switzerland, one confederation of towns 
had sufficient military might to win virtual independence from 
the Holy Roman Empire in 1499. 

The Knights of the Teutonic Order continued their settle- 
ment of the east until their dissolution early in the sixteenth 
century, in spite of a serious defeat at the hands of the Poles at 
the Battle of Tannenberg in 1410. The lands that came under 
the control of this monastic military, whose members were 
pledged to chastity and to the conquest and conversion of hea- 
thens, included territory that one day would become eastern 
Prussia and would be inhabited by Germans until 1945. Ger- 
man settlement in areas south of the territories controlled by 
the Knights of the Teutonic Order also continued, but gener- 
ally at the behest of eastern rulers who valued the skills of Ger- 
man peasant-farmers. These new settlers were part of a long 
process of peaceful German immigration to the east that lasted 
for centuries, with Germans moving into all of eastern Europe 
and even deep into Russia. 


Germany: A Country Study 

Intellectual growth accompanied German expansion. Sev- 
eral universities were founded, and Germany came into 
increased contact with the humanists active elsewhere in 
Europe. The invention of movable type in the middle of the fif- 
teenth century in Germany also contributed to a more lively 
intellectual climate. Religious ferment was common, most 
notably the heretical movement engendered by the teachings 
of Jan Hus (ca. 1372-1415) in Bohemia. Hus eventually was 
executed, but the dissatisfaction he felt toward the established 
church was shared by many others throughout German-speak- 
ing lands, as could be seen in the frequent occurrences of pop- 
ular, mystical religious revivalism after his death. 

The Protestant Reformation 

On the eve of the Protestant Reformation, the institutions of 
the Holy Roman Empire were widely thought to be in need of 
improvement. The Habsburg emperors Frederick III (r. 1440- 
93) and his son Maximilian I (r. 1493-1519) both cooperated 
with individual local rulers to enact changes. However, the 
imperial and local parties had different aims, the former wish- 
ing to strengthen the empire, the latter aiming to secure 
greater independence by formalizing their rights and ensuring 
regular procedures for the conduct of public business. In 1489 
the procedures of the imperial diet, the Reichstag, in which 
representatives of all states within the empire met, were reorga- 
nized. One of the reforms allowed participation in the diet by 
representatives of the towns. In 1495 Maximilian declared an 
empirewide peace and made arrangements to reduce the law- 
lessness and violence that often marked relations among local 

Maximilian's reforms were not enough to cure the ills of the 
empire, and relations between it and the princes and ecclesias- 
tical states often were tense. Disputes frequently involved com- 
plicated constellations of powers with occasional interference 
from abroad, most notably France. Charles V (r. 1519-56) was 
elected emperor in 1519 only after he paid large bribes to the 
seven electors and agreed to many restrictions on his powers, 
restrictions he often later ignored (see fig. 3). 

A changing economy also made for discontent among those 
unable to profit from new conditions. Some of the empire's 
inhabitants had become quite rich, most notably the Fugger 
family of Augsburg, whose members had replaced the bankers 
of northern Italy as Europe's leading financiers. The Fuggers 




he states of 
nan Empire 





100 Miles 

Historical Setting: Early History to 1945 

had come to manage the financial affairs of the Habsburg 
Dynasty, which, in combination with increased trade between 
south and north, made Germany Europe's financial center for 
a few decades. However, other groups in Germany were experi- 
encing hardship. A burgeoning rural population found it diffi- 
cult to get enough to eat, and many peasants went to the towns 
to seek a living. Municipal officials responded by seeking to bar 
rural newcomers. Within towns that were not prospering, rela- 
tions between the classes became more tense as social mobility 
was reduced by a declining economy. 

Martin Luther 

On the eve of All Saints' Day in 1517, Martin Luther, a pro- 
fessor of theology at Wittenberg University in Saxony, posted 
ninety-five theses on a church door. Luther's primary concern 
was the sale of indulgences — papal grants of reduced punish- 
ment in the afterlife, including releases from purgatory. First 
written in Latin, the theses were soon translated into German 
and widely distributed. Summoned by church authorities to 
explain his writings, Luther became embroiled in further con- 
troversy and in 1520 wrote his three most famous tracts, in 
which he attacked the papacy and exposed church corruption, 
acknowledged the validity of only two of the seven sacraments, 
and argued for the supremacy of faith over good works. In 
1521 Luther was summoned to appear before Emperor Charles 
V at the Diet of Worms. Refusing to recant his writings, he was 
banned under the Edict of Worms. Secreted away by the ruler 
of Saxony, Frederick the Wise, Luther retreated to the castle of 
Wartburg, where he worked on a translation of the New Testa- 
ment and wrote numerous religious tracts. 

Luther's disagreements with the doctrines of the Roman 
Catholic Church set off a chain of events that within a few 
decades destroyed Germany's religious unity. Although one of 
the most influential figures in German history, Luther was only 
one of many who were critical of the Roman Catholic Church. 
However, because of the power of his ideas and the enormous 
influence of his writings, it is he who is regarded as the initiator 
of the Protestant Reformation. Luther quickly acquired a large 
following among those disgusted by rampant church corrup- 
tion and unfulfilled by mechanistic religious services. Many 
warmed to his contention that religion must be simplified into 
a close relationship of human beings with God without the 



Historical Setting: Early History to 1945 

had come to manage the financial affairs of the Habsburg 
Dynasty, which, in combination with increased trade between 
south and north, made Germany Europe's financial center for 
a few decades. However, other groups in Germany were experi- 
encing hardship. A burgeoning rural population found it diffi- 
cult to get enough to eat, and many peasants went to the towns 
to seek a living. Municipal officials responded by seeking to bar 
rural newcomers. Within towns that were not prospering, rela- 
tions between the classes became more tense as social mobility 
was reduced by a declining economy. 

Martin Luther 

On the eve of All Saints' Day in 1517, Martin Luther, a pro- 
fessor of theology at Wittenberg University in Saxony, posted 
ninety-five theses on a church door. Luther's primary concern 
was the sale of indulgences — papal grants of reduced punish- 
ment in the afterlife, including releases from purgatory. First 
written in Latin, the theses were soon translated into German 
and widely distributed. Summoned by church authorities to 
explain his writings, Luther became embroiled in further con- 
troversy and in 1520 wrote his three most famous tracts, in 
which he attacked the papacy and exposed church corruption, 
acknowledged the validity of only two of the seven sacraments, 
and argued for the supremacy of faith over good works. In 
1521 Luther was summoned to appear before Emperor Charles 
V at the Diet of Worms. Refusing to recant his writings, he was 
banned under the Edict of Worms. Secreted away by the ruler 
of Saxony, Frederick the Wise, Luther retreated to the castle of 
Wartburg, where he worked on a translation of the New Testa- 
ment and wrote numerous religious tracts. 

Luther's disagreements with the doctrines of the Roman 
Catholic Church set off a chain of events that within a few 
decades destroyed Germany's religious unity. Although one of 
the most influential figures in German history, Luther was only 
one of many who were critical of the Roman Catholic Church. 
However, because of the power of his ideas and the enormous 
influence of his writings, it is he who is regarded as the initiator 
of the Protestant Reformation. Luther quickly acquired a large 
following among those disgusted by rampant church corrup- 
tion and unfulfilled by mechanistic religious services. Many 
warmed to his contention that religion must be simplified into 
a close relationship of human beings with God without the 


Germany: A Country Study 

extensive mediation of the Roman Catholic Church and its 
accretion of tradition. 

Luther magnified the inherent potency of his ideas by articu- 
lating them in a language that was without rival in clarity and 
force. He strove to make the Scriptures accessible to ordinary 
worshipers by translating them into vernacular German. This 
he did with such genius that the German dialect he used 
became the written language of all of Germany. Without 
Luther's translation of the Bible, Germany might have come to 
use a number of mutually incomprehensible languages, as was 
the case in the northwestern part of the Holy Roman Empire, 
where local dialects evolved into what is now modern Dutch. 
Luther also wrote hymns that are still sung in Christian reli- 
gious services all over the world. 

A less exalted reason for the wide distribution of Luther's 
doctrines was the development of printing with movable type. 
The Reformation created a demand for all kinds of religious 
writings. The readership was so great that the number of books 
printed in Germany increased from about 150 in 1518 to 
nearly 1,000 six years later. 

Luther's ideas soon coalesced into a body of doctrines called 
Lutheranism. Powerful supporters such as princes and free cit- 
ies accepted Lutheranism for many reasons, some because they 
sincerely supported reform, others out of narrow self-interest. 
In some areas, a jurisdiction would adopt Lutheranism because 
a large neighboring state had done so. In other areas, rulers 
accepted it because they sought to retain control over their 
subjects who had embraced it earlier. Nearly all the imperial 
cities became Lutheran, despite the fact that the emperor, to 
whom they were subordinate, was hostile to the movement. 
Historians have found no single convincing explanation of why 
one area became Lutheran and another did not, because so 
many social, economic, and religious factors were involved. 

Given the revolutionary nature of Lutheranism and the eco- 
nomic and political tensions of the period, it is not surprising 
that the Reformation soon became marked by violence and 
extremism. The Knights' War of 1522-23, in which members of 
the lower nobility rebelled against the authorities in southwest- 
ern Germany, was quickly crushed. Some of the rampaging 
knights were ardent supporters of Luther. The Peasants' War of 
1524-25 was more serious, involving as many as 300,000 peas- 
ants in southwestern and central Germany. Influenced some- 
what by the new religious ideas but responding mostly to 


Historical Setting: Early History to 1945 

changing economic conditions, the peasants' rebellion spread 
quickly, but without coordination. It also received support 
from some dissatisfied city dwellers and from some noblemen 
of arms who led its ragged armies. Although the peasants' 
rebellion was the largest uprising in German history, it was 
quickly suppressed, with about 100,000 casualties. In the 1530s, 
the Anabaptists, a radical Christian sect, seized several towns, 
their objective being to construct a just society. They were like- 
wise brutally suppressed by the authorities. 

Luther opposed the peasants' cause and wrote an impas- 
sioned tract demanding their quick suppression. However radi- 
cal his religious views, Luther was a social and political 
conservative. He believed that the end of the world was immi- 
nent and regarded practical affairs as having little importance 
compared with the effort to win eternal salvation. Therefore, 
he counseled obedience to worldly authorities if they allowed 
freedom of worship. Lutheranism thus became a means of 
upholding the worldly status quo and the leaders who adopted 
the new faith. In contrast to England, where Protestantism 
retained a significant radical social element, German Protes- 
tantism became an integral part of the state. Some historians 
maintain that this integration of state and church has deprived 
Germany of a deeply rooted tradition of political dissent as 
found in Britain and the United States. 

Resistance to Lutheranism 

Although Lutheranism had powerful supporters, its survival 
was by no means certain. Its main opponent was the Habsburg 
emperor Charles V, who had inherited Spain, the Netherlands, 
southern Italy, Sicily, and the Austrian lands as patrimony and 
who hoped to restore the unity of the German Empire by keep- 
ing it Roman Catholic. Charles had been out of Germany 
between 1521 and 1530, and when he returned he found that 
the new religion had won too many adherents to be easily 
uprooted. In addition, he could not devote himself single- 
mindedly to combating it but also had to struggle with power- 
ful external enemies. One was Francis I (r. 1515-47) of France, 
who attacked the empire from the west, having resolved to 
destroy the power of the Habsburgs. Another threat was posed 
by the Turks, who were attacking the empire from the east. 
Even the papacy at times conspired against its coreligionist 
because it feared Charles was becoming too powerful. 


Germany: A Country Study 

Within Germany, forces were also arrayed against Charles. In 
1531 Protestant leaders created the League of Schmalkalden to 
oppose him. By 1545 northeastern and northwestern Germany 
and large parts of southern Germany had become Protestant. 
Despite the significant victory over the Protestants at the Battle 
of Muhlberg in 1547, Charles still was not powerful enough to 
impose his will on the German princes. 

The Peace of Augsburg 

By the early 1550s, it was apparent that a negotiated settle- 
ment was necessary. In 1555 the Peace of Augsburg was 
signed. The settlement, which represented a victory for the 
princes, granted recognition to both Lutheranism and Roman 
Catholicism in Germany, and each ruler gained the right to 
decide the religion to be practiced within his state. Subjects not 
of this faith could move to another state with their property, 
and disputes between the religions were to be settled in court. 

The Protestant Reformation strengthened the long-standing 
trend toward particularism in Germany. German leaders, 
whether Protestant or Catholic, became yet more powerful at 
the expense of the central governing institution, the empire. 
Protestant leaders gained by receiving lands that formerly 
belonged to the Roman Catholic Church, although not to as 
great an extent as, for example, would occur in England. Each 
prince also became the head of the established church within 
his territory. Catholic leaders benefited because the Roman 
Catholic Church, in order to help them withstand Protestant- 
ism, gave them greater access to church resources within their 
territories. Germany was also less united than before because 
Germans were no longer of one faith, a situation officially rec- 
ognized by the Peace of Augsburg. The agreement did not 
bring sectarian peace, however, because the religious question 
in Germany had not yet been settled fully. 

The Thirty Years' War, 1 61 8-48 

Germany enjoyed a time of relative quiet between the Peace 
of Augsburg, signed in 1555, and the outbreak of the Thirty 
Years' War in 1618. The empire functioned in a more regular 
way than previously, and its federal nature was more evident 
than in the past. The Reichstag met frequently to deal with 
public matters, and the emperors Ferdinand I (r. 1556-64) and 
Maximilian II (r. 1564-76) were cautious rulers concerned 


Historical Setting: Early History to 1945 

mostly with strengthening their family's hold on Austria and 
adjacent areas. Rudolf II (r. 1576-1612) was an indolent and 
capricious ruler who generally followed his advisers' counsel. 
As a result, some German states were able to expand their terri- 
tories by annexing smaller neighbors in the absence of an 
engaged and attentive emperor. Local rivalries engendered 
tensions that often were based on religious affiliation. 

The Counter-Reformation and Religious Tensions 

The Peace of Augsburg brought peace but did not settle the 
religious disagreements in Germany. For one thing, its signato- 
ries did not recognize Calvinism, a relatively stringent form of 
Protestantism that was gaining prominence around the time 
the Augsburg treaty was signed, in what has been called the 
Second Reformation. Adherents to both Calvinism and Luthe- 
ranism worked to spread their influence and gain converts in 
the face of the Counter-Reformation, the attempt of the 
Roman Catholic Church to regroup and reverse the spread of 
Protestantism. Followers of all three religions were at times suc- 
cessful, but only at the expense of the others. 

Fear of religious subversion caused rulers to monitor the 
conduct of their subjects more closely. Attempting to help the 
modern reader understand the intensity and pervasiveness of 
this fear, Mary Fulbrook, a noted British historian of Germany, 
has likened it to the anxiety prevailing in the first years of the 
Cold War. An example of the social paranoia engendered by 
the religious tensions of the period is Protestant Germany's 
refusal until 1700 to accept the Gregorian calendar introduced 
by the papacy in 1582 because the reform entailed a one-time 
loss of the days between October 5 and 14. Many Protestants 
suspected that Roman Catholics were attempting somehow to 
steal this time for themselves. 

By the first decades of the seventeenth century, religious 
controversy had become so obstructive that at times the Reichs- 
tag could not conduct business. In 1608, for example, Calvin- 
ists walked out of the body, preventing the levying of a tax to 
fight a war against the Turks. In the same year, the Evangelical 
Union was established by a few states and cities of the empire to 
defend the Protestant cause. In 1609 a number of Roman Cath- 
olic states countered by forming the Catholic League. 
Although both bodies were less concerned with a sectarian war 
than with the specific aims of their member states, their forma- 


Germany: A Country Study 

tion was an indication of how easily disputes could acquire a 
religious aspect. 

Military Campaigns 

The Thirty Years' War resulted from a local rebellion, but the 
admixture of religion transformed it into a European conflict 
that lasted for more than a generation and devastated Ger- 
many. In 1618 Bohemian nobles opposed the decision of 
Emperor Matthias (r. 1608-19) to designate his Catholic cousin 
Ferdinand king of Bohemia. Instead, the nobles elected Fred- 
erick of the Palatinate, a German Calvinist, to be their king. In 
1620, in an attempt to wrest control from the nobles, imperial 
armies and the Catholic League under General Johann von 
Tilly defeated the Protestant Bohemians at the Battle of White 
Mountain near Prague. The Protestant princes, alarmed by the 
strength of the Catholic League and the possibility of Roman 
Catholic supremacy in Europe, decided to renew their struggle 
against Emperor Matthias. They were aided by France, which, 
although Roman Catholic, was opposed to the increasing 
power of the Habsburgs, the dynastic family to which Matthias 
and Ferdinand belonged. Despite French aid, by the late 1620s 
imperial armies of Emperor Ferdinand II (r. 1619-37) and the 
Catholic League, under the supreme command of General 
Albrecht von Wallenstein, had defeated the Protestants and 
secured a foothold in northern Germany. 

In his time of triumph, Ferdinand overreached himself by 
publishing in 1629 the Edict of Restitution, which required 
that all properties of the Roman Catholic Church taken since 
1552 be returned to their original owners. The edict renewed 
Protestant resistance. Catholic powers also began to oppose 
Ferdinand because they feared he was becoming too powerful. 
Invading armies from Sweden, secretly supported by Catholic 
France, marched deep into Germany, winning numerous victo- 
ries. The Catholic general Tilly and Sweden's Protestant king, 
Gustavus Adolphus, were killed in separate battles. Wallenstein 
was assassinated on Emperor Ferdinand's orders because he 
feared his general was becoming too powerful. After the tri- 
umph of the Spanish army over Swedish forces at the Battle of 
Nordlingen in 1634, a truce was arranged between the 
emperor and some of the German princes under the Treaty of 
Prague. France then invaded Germany, not for religious rea- 
sons but because the House of Bourbon, the dynastic family of 
several French and Spanish monarchs, wished to ensure that 


Historical Setting: Early History to 1945 

the House of Habsburg did not become too powerful. This 
invasion is illustrative of the French axiom that Germany must 
always remain divided into small, easily manipulated states. 
(Indeed, preventing a united Germany remained an objective 
of French foreign policy even late in the twentieth century.) 
Because of French participation, the war continued until the 
Peace of Westphalia was signed in 1648. 

The Peace of Westphalia 

The Peace of Westphalia largely settled German affairs for 
the next century and a half. It ended religious conflicts 
between the states and included official recognition of Calvin- 
ism. Its signatories altered the boundaries of the empire by rec- 
ognizing that Switzerland and the Netherlands had become 
sovereign states outside the empire. Portions of Alsace and Lor- 
raine went to France. Sweden received some territory in north- 
ern Germany, which in the long run it could not retain. 
Brandenburg became stronger, as did Saxony and Bavaria. In 
addition, states within the empire acquired greater indepen- 
dence with the right to have their own foreign policies and 
form alliances, even with states outside the empire. As a result 
of these changes, the Holy Roman Empire lost much of what 
remained of its power and would never again be a significant 
actor on the international stage. The Habsburgs would con- 
tinue to be crowned emperors, but their strength would derive 
from their own holdings, not from leadership of the empire. 
Germany was less united in 1648 than in 1618, and German 
particularism had been strengthened once again. 

The Thirty Years' War had a devastating effect on the Ger- 
man people. Historians have usually estimated that between 
one-fourth and one-third of the population perished from 
direct military causes or from illness and starvation related to 
the war. Some regions were affected much more than others. 
For example, an estimated three-quarters of Wurttemberg's 
population died between 1634 and 1639. Overall losses were 
serious enough that historians believe that it took a century 
after the Thirty Years' War for Germany's population to reach 
the level of 1618. 

Germany's economy was also severely disrupted by the rav- 
ages of the Thirty Years' War. The war exacerbated the eco- 
nomic decline that had begun in the second half of the 
sixteenth century as the European economy shifted westward 
to the Atlantic states — Spain, France, England, and the Low 


Germany: A Country Study 

Countries. The shift in trade meant that Germany was no 
longer located at the center of European commerce but on its 
fringes. The thriving economies of many German towns in the 
late Middle Ages and first half of the sixteenth century gradu- 
ally dried up, and Germany as a whole entered a long period of 
economic stagnation that ended only in the second half of the 
nineteenth century. 

The Age of Enlightened Absolutism, 1648-1 789 

Although the Holy Roman Empire no longer had a signifi- 
cant role in European politics after the Thirty Years' War, it 
remained important in Germany, providing a framework for 
the many German states' and cities' conduct of their public 
affairs. The Reichstag, which remained in session at Regens- 
burg from 1663 until the empire's dissolution in 1806, pro- 
vided a forum for the settlement of disputes. On occasion, 
votes were taken to remove incompetent or tyrannical rulers of 
member states. The empire's most important service was that it 
provided a measure of security to Germany's many small states 
and free cities, without which some would have been swallowed 
up by larger neighbors. Because of its weakened condition, the 
empire could no longer dominate Germany, even when 
headed by ambitious and capable men such as Charles VI (r. 
1711-40). During the 1720s, he attempted unsuccessfully to 
breathe new life into the empire. Later emperors returned to 
the traditional Habsburg practice of using the imperial throne 
to benefit their own dynastic holdings. 

For nearly a century after the Peace of Westphalia, the main 
danger to German states came from abroad. France was the 
chief threat, seizing parts of southwestern Germany in the late 
1600s, among them the city of Strasbourg in 1681. French 
troops also fought on German soil during the War of the Span- 
ish Succession (1701-14). In addition to these military actions, 
France formed alliances with some German states, most signifi- 
cantly with Bavaria, which sought support against neighboring 
Austria. The Ottoman Empire also posed a threat. In 1683 its 
forces besieged Vienna. The Germans ultimately were success- 
ful against the Ottoman Empire, and after the Treaty of Passa- 
rowitz of 1 71 8, the Turks were no longer a danger. 

Austria and Prussia 

The most important German power after the Peace of West- 


Historical Setting: Early History to 1945 

phalia was Austria, followed by a few other states with much 
smaller populations, most notably Brandenburg, Saxony, and 
Bavaria. Austria retained its preeminence until the second half 
of the nineteenth century, but in the eighteenth century Bran- 
denburg had become a serious rival, annexing valuable Aus- 
trian territory. The rivalry came to form the so-called dualism 
of the empire, that is, the presence in it of two powerful states, 
neither of which was strong enough to dominate the empire 
and for that reason sought the support of smaller states. The 
smaller states worked to derive their own advantages from Ger- 
man dualism, none being willing to cede sovereignty to either 
Austria or Prussia. 

In 1648 Brandenburg was a small state in northern Ger- 
many. It had been ruled by the Hohenzollern Dynasty since the 
late fifteenth century and consisted of the core region and its 
capital, Berlin: eastern Pomerania; an area around Magdeburg; 
the former holdings of the Knights of the Teutonic Order in 
eastern Prussia; and some smaller holdings in western Ger- 
many. Brandenburg became known as Prussia in 1701 when its 
ruler crowned himself King Frederick I of Prussia. Prussia 
acquired the rest of Pomerania after defeating Sweden in the 
Great Northern War (1700-21). Prussia's increase in size and 
influence may be attributed to a succession of capable leaders, 
all of whom enjoyed long reigns. The first was Frederick Will- 
iam (r. 1640-88), known as the Great Elector. He increased his 
family's power by granting favors to the nobility, weakening the 
independence of the towns, and maintaining a professional 
standing army. His son Frederick I (r. 1688-1713) established 
Prussia as a kingdom. Frederick further strengthened the army, 
but not nearly as much as his son Frederick William I (r. 1713- 
40), who also modernized the kingdom's bureaucracy. Freder- 
ick II (r. 1740-86), known to posterity as Frederick the Great, 
continued along the same lines as his father but showed much 
greater imagination and ruthlessness, transforming his small 
kingdom into one of the great powers of Europe. 

In 1740 Frederick seized Silesia, a wealthy province that 
belonged to the Habsburgs and had a population of about 1 
million inhabitants. Maria Theresa (r. 1740-80), the new Habs- 
burg empress, was unable to regain possession of Silesia, which 
remained under Prussian control at the end of the War of the 
Austrian Succession (1740-48). Frederick retained Silesia even 
after facing a coalition of France, Austria, and Russia during 
the Seven Years' War (1756-63). Frederick expanded Prussian 


Germany: A Country Study 

territory still further in 1772, when, with his erstwhile enemies 
Russia and Austria, he took part in the First Partition of 
Poland. This last seizure was highly beneficial to Frederick 
because it linked eastern Prussia with much of his kingdom's 
western holdings. 

Although Prussia and Austria were rivals, they had some 
important characteristics in common. Neither state was popu- 
lated by a single people, but by numerous peoples speaking dif- 
ferent languages and belonging to different religions. Neither 
state was located entirely within the empire. Both had sizable 
territories to the east of the empire, and it was there that they 
hoped mainly to expand. Both states were governed by enlight- 
ened monarchs, who, having only to cajole the nobility with 
occasional concessions, saw government as for the people but 
not by the people. Hence, both states were governed by the 
most efficient methods known to the eighteenth century, and 
both were fairly tolerant according to the standards of the time. 
Prussia accepted many Protestants expelled from other states, 
most notably the Huguenots who fled France after the Edict of 
Nantes in 1685. Austria became one of the first states to allow 
Jews to settle where they liked within its boundaries and to 
practice the professions of their choice. 

The Smaller States 

By the eighteenth century, none of the other states of the 
empire were strong enough to have territorial ambitions to 
match those of Prussia and Austria. Some of the larger states, 
such as Saxony, Bavaria, and Wurttemberg, also maintained 
standing armies, but their smaller size compelled them to seek 
allies, some from outside the empire. With the exception of the 
free cities and ecclesiastical states, smaller states, like Austria 
and Prussia, were governed by a hereditary monarch who ruled 
either with the consent or help of the nobility and with the 
help of an increasingly well-trained bureaucracy. Only a few 
states, such as Wurttemberg, could boast of an active democ- 
racy of the kind evolving in Britain and France. Except in a few 
free cities, such as Frankfurt am Main and Hamburg, which 
were active in international trade, Germany's commercial class 
was neither strong nor self-confident. Farmers in western Ger- 
many were largely free; those in the east were often serfs. How- 
ever, whether in the east or the west, most who worked the land 
lived at the subsistence level. 


Frederick the Great, king of 
Prussia, 1740-86 
Courtesy German 
Information Center, New York 

Despite its lack of popular democracy, Germany was gener- 
ally well governed. The state bureaucracies gained in power 
and expertise, and efficiency and probity were esteemed. Dur- 
ing the eighteenth century, the principles of the Enlighten- 
ment came to be widely disseminated and applied. Although 
there were no political challenges to enlightened absolutism, 
as was the case in France, all phenomena, including religion, 
were subject to critical, reasoned examination to determine 
their rationality. In this more tolerant environment, differing 
religious views could still create social friction, but ways were 
found for the empire's three main religions — Roman Catholi- 
cism, Lutheranism, and Calvinism — to coexist in most states. 
The expulsion of about 20,000 Protestants from the ecclesiasti- 
cal state of Salzburg during 1731-32 was viewed by the edu- 
cated public at the time as a harking back to less enlightened 

Several new universities were founded, some soon consid- 
ered among Europe's best. An increasingly literate public made 
possible a jump in the number of journals and newspapers. At 
the end of the seventeenth century, most books printed in Ger- 
many were in Latin. By the end of the next century, all but 5 
percent were in German. The eighteenth century also saw a 
refinement of the German language and a flowering of Ger- 
man literature with the appearance of such figures as Gotthold 


Germany: A Country Study 

Lessing, Johann Wolfgang von Goethe, and Friedrich Schiller. 
German music also reached great heights with the Bach family, 
George Frederick Handel, Joseph Haydn, and Wolfgang Ama- 
deus Mozart. 

The French Revolution and Germany 

The French Revolution, which erupted in 1789 with the 
storming of the Bastille in Paris, at first gained the enthusiastic 
approval of some German intellectuals, who welcomed the 
proclamation of a constitution and a bill of rights. Within a few 
years, most of this support had dissipated, replaced by fear of a 
newly aggressive French nationalism and horror at the execu- 
tion of the revolution's opponents. In 1792 French troops 
invaded Germany and were at first pushed back by imperial 
forces. But at the Battle of Valmy in late 1792, the French army, 
a revolutionary citizens' army fighting on its own soil, defeated 
the professional imperial army. By 1794 France had secured 
control of the Rhineland, which it was to occupy for twenty 

During the Rhineland occupation, France followed its tradi- 
tional policy of keeping Austria and Prussia apart and manipu- 
lating the smaller German states. In observance of the Treaty 
of Basel of 1795, Prussian and German forces north of the 
Main River ceased efforts against the French. Austria endured 
repeated defeats at the hands of the French, most notably at 
the Battle of Austerlitz in 1805. At this battle, Russians fought 
alongside Austrians against the French, who were aided by 
forces from several south German states, including Bavaria, 
Baden, and Wurttemberg. 

Prussia reentered the war against France in 1806, but its 
forces were badly beaten at the Battle of Jena that same year. 
Prussia was abandoned by its ally Russia and lost territory as a 
result of the Treaty of Tilsit in 1807. These national humilia- 
tions motivated the Prussians to undertake a serious program 
of social and military reform. The most noted of the reform- 
ers — Karl vom Stein, Karl August von Hardenberg, Wilhelm 
von Humboldt, and Gerhard von Scharnhorst, along with 
many others — improved the country's laws, education, admin- 
istration, and military organization. Scharnhorst, responsible 
for military reforms, emphasized the importance to the army 
of moral incentives, personal courage, and individual responsi- 
bility. He also introduced the principle of competition and 
abandoned the privileges accorded to nobility within the offi- 


Historical Setting: Early History to 1945 

cer corps. A revitalized Prussia joined with Austria and Russia 
to defeat Napoleon at the Battle of Leipzig in late 1813 and 
drove him out of Germany. Prussian forces under General Geb- 
hard von Blucher were essential to the final victory over Napo- 
leon at the Battle of Waterloo in 1815. 

Despite Napoleon's defeat, some of the changes he had 
brought to Germany during the French occupation were 
retained. Public administration was improved, feudalism was 
weakened, the power of the trade guilds was reduced, and the 
Napoleonic Code replaced traditional legal codes in many 
areas. The new legal code was popular and remained in effect 
in the Rhineland until 1900. As a result of these reforms, some 
areas of Germany were better prepared for the coming of 
industrialization in the nineteenth century. 

French occupation authorities also allowed many smaller 
states, ecclesiastical entities, and free cities to be incorporated 
into their larger neighbors. Approximately 300 states had 
existed within the Holy Roman Empire in 1789; only about 
forty remained by 1814. The empire ceased to exist in 1806 
when Francis II of Austria gave up his imperial title. In its place, 
Napoleon had created the Confederation of the Rhine, made 
up of the states of western and southern Germany, under 
French direction. Austria and Prussia were not members. The 
confederation was to provide Napoleon with troops for his mil- 
itary campaigns. After his defeat, the confederation was dis- 

The German Confederation, 1815-66 

The Congress of Vienna (1814-15), convened after Napo- 
leon's defeat, sought to restore order to a Europe disrupted by 
revolutionary and imperial France. Its members' objective was 
a constellation of states and a balance of power that would 
ensure peace and stability after a quarter-century of revolution 
and war. In addition to the delegates of many small states, the 
congress included representatives of five large European states: 
Austria, Prussia, Russia, Britain, and France. After months of 
deliberations, the congress established an international politi- 
cal order that was to endure for nearly 100 years and that 
brought Europe a measure of peace. 

The congress made no effort to restore the Holy Roman 
Empire and its 300-odd states. Instead, it accepted the disap- 
pearance of many small states that had occurred since 1789 
and created the German Confederation. The confederation 


Germany: A Country Study 

consisted of thirty-eight sovereign states and four free cities 
and included the five large kingdoms of Austria, Prussia, Sax- 
ony, Bavaria, and Wurttemberg (see fig. 4). The confederation 
met at a diet in Frankfurt, with an Austrian always serving as 

Prince Clemens von Metternich, who directed Austria's for- 
eign policy from 1809 until 1848, was the dominant political 
figure within the confederation. He waged a decades-long cam- 
paign to prevent the spread of revolution in Europe by seeking 
to restore much of the political and social order that had 
existed before the French Revolution. Metternich's Carlsbad 
Decrees of 1819 established a pervasive system of press censor- 
ship and regulation of the universities that dampened German 
intellectual life and hindered the publication of writings advo- 
cating the principles of liberalism. In the 1820s, he engineered 
the formation of the Holy Alliance of the monarchs of Austria, 
Prussia, and Russia to quash political, social, and economic 
developments within Central and Eastern Europe thought to 
threaten political stability. 

Economic and Political Trends Toward Unification 

It was not possible for Metternich and his allies to suppress 
completely the desire for liberal reforms, including the estab- 
lishment of constitutional parliamentary government, eco- 
nomic freedom, and civil liberties. Some of these reforms had 
already been under discussion during the eighteenth-century 
Enlightenment, and awareness of their desirability had spread 
during the Napoleonic era. In addition, the economic reforms 
introduced into the Rhineland by France had taken hold. The 
business class that formed after 1815 pressed for abolition of 
restrictive trade practices favored by traditional handicraft 
guilds. Businessmen also sought a common currency and sys- 
tem of measurements for Germany, as well as a reduction of 
the numerous tolls that made road and river travel expensive 
and slow. 

During the 1820s, significant progress was made in reducing 
customs duties among German states. At Prussian instigation, 
the Zollverein (Customs Union) began to form, and by the 
mid-1 830s it included all the most important German states 
except Austria. Prussia saw to it that its chief rival within Ger- 
many was excluded from the union. Vienna, for its part, did 
not realize at this early point the political and economic signifi- 
cance of intra-German trade. 


International boundary 

State boundary 

Boundary of German 
Confederation, 1815 

Boundary of North German 
Confederation, 1866 

Boundary of German 
Empire, 1871 

Prussia in 1815 

\. ■ ■'. ] Territory acquired by 
Prussia, 1815-66 

I | Imperial territory of 

Alsace-Lorraine, 1871 

50 100 Kilometers 

I 1 — i — 1 1 

50 100 Miles 

^ London, 1978, 216. 

Historical Setting: Early History to 1945 

Many of Germany's liberal intelligentsia — lower government 
officials, men of letters, professors, and lawyers — who pushed 
for representative government and greater political freedom 
were also interested in some form of German unity. They 
argued that liberal political reforms could only be enacted in a 
larger political entity. Germany's small, traditional states 
offered little scope for political reform. 

Among those groups desiring reform, there was, ironically, 
little unity. Many businessmen were interested only in reforms 
that would facilitate commerce, and they gave little thought to 
politics. Political liberals were split into a number of camps. 
Some wished for a greater degree of political representation, 
but, given a widespread fear of what the masses might do if they 
had access to power, these liberals were content to have aristo- 
crats as leaders. Others desired a democratic constitution, but 
with a hereditary king as ruler. A minority of liberals were 
ardent democrats who desired to establish a republic with par- 
liamentary democracy and universal suffrage. 

The ideal of a united Germany had been awakened within 
liberal groups by the writings of scholars and literary figures 
such as Johann Gottfried Herder (1744-1803) and by the 
achievements of French nationalism after the revolution. 
France's easy victories over Germany's small states made the 
union of a people with a common language and historical 
memory desirable for practical reasons alone. Others were 
impressed by the political and commercial accomplishments of 
Britain, which made those of the small German states seem 
insignificant. Some writers warmed to romantic evocations of 
Germany's glory during the Middle Ages. 

Many members of Germany's aristocratic ruling class were 
opposed to national unity because they feared it would mean 
the disappearance of their small states into a large Germany. 
Metternich opposed a united Germany because the Habsburg 
Empire did not embrace a single people speaking one lan- 
guage, but many peoples speaking different languages. The 
empire would not easily fit into a united Germany. He desired 
instead the continued existence of the loosely organized Ger- 
man Confederation with its forty-odd members, none equal to 
Austria in strength. Prussia's kings and its conservative elite 
sometimes objected to Austria's primacy in the confederation, 
but they had little desire for German unification, which they 
regarded as a potential threat to Prussia's existence. 


Source: Based on information from Geoffrey Barraclough. ed., The Times Alias of World History London, 1978, 216. 

Figure l. The German Struggle for Unification, 1815-71 

Historical Setting: Early History to 1 945 

Many of Germany's liberal intelligentsia — lower government 
officials, men of letters, professors, and lawyers — who pushed 
for representative government and greater political freedom 
were also interested in some form of German unity. They 
argued that liberal political reforms could only be enacted in a 
larger political entity. Germany's small, traditional states 
offered little scope for political reform. 

Among those groups desiring reform, there was, ironically, 
little unity. Many businessmen were interested only in reforms 
that would facilitate commerce, and they gave little thought to 
politics. Political liberals were split into a number of camps. 
Some wished for a greater degree of political representation, 
but, given a widespread fear of what the masses might do if they 
had access to power, these liberals were content to have aristo- 
crats as leaders. Others desired a democratic constitution, but 
with a hereditary king as ruler. A minority of liberals were 
ardent democrats who desired to establish a republic with par- 
liamentary democracy and universal suffrage. 

The ideal of a united Germany had been awakened within 
liberal groups by the writings of scholars and literary figures 
such as Johann Gottfried Herder (1744-1803) and by the 
achievements of French nationalism after the revolution. 
France's easy victories over Germany's small states made the 
union of a people with a common language and historical 
memory desirable for practical reasons alone. Others were 
impressed by the political and commercial accomplishments of 
Britain, which made those of the small German states seem 
insignificant. Some writers warmed to romantic evocations of 
Germany's glory during the Middle Ages. 

Many members of Germany's aristocratic ruling class were 
opposed to national unity because they feared it would mean 
the disappearance of their small states into a large Germany. 
Metternich opposed a united Germany because the Habsburg 
Empire did not embrace a single people speaking one lan- 
guage, but many peoples speaking different languages. The 
empire would not easily fit into a united Germany. He desired 
instead the continued existence of the loosely organized Ger- 
man Confederation with its forty-odd members, none equal to 
Austria in strength. Prussia's kings and its conservative elite 
sometimes objected to Austria's primacy in the confederation, 
but they had little desire for German unification, which they 
regarded as a potential threat to Prussia's existence. 


Germany: A Country Study 

Germany's lower classes — farmers, artisans, and factory 
workers — were not included in the discussions about political 
and economic reform. Germany's farmers had been freed to 
some degree from many obligations and dues owed to the 
landowning aristocracy, but they were often desperately poor, 
earning barely enough to survive. Farmers west of the Elbe 
River usually had properties too small to yield any kind of pros- 
perity. Farmers east of the Elbe often were landless laborers 
hired to work on large estates. Artisans, that is, skilled workers 
in handicrafts and trades belonging to the traditional guilds, 
saw their economic position worsen as a result of the industrial- 
ization that had begun to appear in Germany after 1815. The 
guilds attempted to stop factory construction and unrestricted 
commerce, but strong economic trends ran counter to their 
wishes. Factory workers, in contrast, were doing well compared 
with these other groups and were generally content with their 
lot when the economy as a whole prospered. 

The Revolutions of 1 848 

Europe endured hard times during much of the 1840s. A 
series of bad harvests culminating in the potato blight of 1845- 
46 brought widespread misery and some starvation. An eco- 
nomic depression added to the hardship, spreading discontent 
among the poor and the middle class alike. A popular uprising 
in Paris in February 1848 turned into a revolution, forcing the 
French king Louis Philippe to flee to Britain. 

The success of the revolution sparked revolts elsewhere in 
Europe. Numerous German cities were shaken by uprisings in 
which crowds consisting mainly of the urban poor, but also of 
students and members of the liberal middle class, stormed 
their rulers' palaces and demanded fundamental reform. Ber- 
lin and Vienna were especially hard hit by what came to be 
called the revolutions of 1848. The rulers of both cities, like 
rulers elsewhere, quickly acceded to the demands of their 
rebellious subjects and promised constitutions and representa- 
tive government. Conservative governments fell, and Metter- 
nich fled to Britain. Liberals called for a national convention to 
draft a constitution for all of Germany. The National Assembly, 
consisting of about 800 delegates from throughout Germany, 
met in a church in Frankfurt, the Paulskirche, from May 1848 
to March 1849 for this purpose. 


Historical Setting: Early History to 1945 

The Restoration 

Within just a few months, liberal hopes for a reformed Ger- 
many were disappointed. Conservative forces saw that the lib- 
eral movement was divided into a number of camps having 
sharply different aims. Furthermore, the liberals had little sup- 
port left among the lower classes, who had supported them in 
the first weeks of the revolution by constructing barricades and 
massing before their rulers' palaces. Few liberals desired popu- 
lar democracy or were willing to enact radical economic 
reforms that would help farmers and artisans. As a result of this 
timidity, the masses deserted the liberals. Thus, conservatives 
were able to win sizable elements of these groups to their side 
by promising to address their concerns. Factory workers had 
largely withheld support from the liberal cause because they 
earned relatively good wages compared with farmers and arti- 

Once the conservatives regrouped and launched their suc- 
cessful counterattack across Germany, many of the reforms 
promised in March 1848 were forgotten. The National Assem- 
bly published the constitution it had drafted during months of 
hard debate. It proposed the unification of Germany as a feder- 
ation with a hereditary emperor and a parliament with dele- 
gates elected directly. The constitution resolved the dispute 
between supporters of "Little Germany," that is, a united Ger- 
many that would exclude Austria and the Habsburg Empire, 
and those supporting "Large Germany," which would include 
both. The constitution advocated the latter. 

The Prussian king, Friedrich Wilhelm IV (r. 1840-58), was 
elected united Germany's first emperor. He refused the crown, 
stating that he could be elected only by other kings. At that 
point, the assembly disbanded. A few subsequent rebellions by 
democratic liberals drew some popular support in 1849, but 
they were easily crushed and their leaders executed or impris- 
oned. Some of these ardent democrats fled to the United 
States. Among them was Carl Schurz, who later fought at the 
Battle of Gettysburg as a Union officer, served one term as a 
United States senator from Missouri, and was appointed secre- 
tary of the interior by United States president Rutherford B. 

The German Confederation was reestablished, and conser- 
vatives held the reins of power even more tightly than before. 
The failure of the 1848 revolutions also meant that Germany 
was not united as many had hoped. However, some of the liber- 


Germany: A Country Study 

als' more practical proposals came to fruition later in the 1850s 
and 1860s when it was realized that they were essential to eco- 
nomic efficiency. Many commercial restrictions were abolished. 
The guilds, with their desire to turn back the clock and restore 
preindustrial conditions, were defeated, and impediments to 
the free use of capital were reduced. The "hungry forties" gave 
way to the prosperity of the 1850s as the German economy 
modernized and laid the foundations for spectacular growth 
later in the century. 

Bismarck and Unification 

Liberal hopes for German unification were not met during 
the politically turbulent 1848-49 period. A Prussian plan for a 
smaller union was dropped in late 1850 after Austria threat- 
ened Prussia with war. Despite this setback, desire for some 
kind of German unity, either with or without Austria, grew dur- 
ing the 1850s and 1860s. It was no longer a notion cherished by 
a few, but had proponents in all social classes. An indication of 
this wider range of support was the change of mind about Ger- 
man nationalism experienced by an obscure Prussian diplo- 
mat, Otto von Bismarck. He had been an adamant opponent of 
German nationalism in the late 1840s. During the 1850s, how- 
ever, Bismarck had concluded that Prussia would have to har- 
ness German nationalism for its own purposes if it were to 
thrive. He believed too that Prussia's well-being depended on 
wresting primacy in Germany from its traditional enemy, Aus- 

In 1862 King Wilhelm I of Prussia (r. 1858-88) chose Bis- 
marck to serve as his minister president. Descended from the 
Junker, Prussia's aristocratic landowning class, Bismarck hated 
parliamentary democracy and championed the dominance of 
the monarchy and aristocracy. However, gifted at judging polit- 
ical forces and sizing up a situation, Bismarck contended that 
conservatives would have to come to terms with other social 
groups if they were to continue to direct Prussian affairs. The 
king had summoned Bismarck to direct Prussia's government 
in the face of the Prussian parliament's refusal to pass a budget 
because it disagreed with army reforms desired by the king and 
his military advisers. Although he could not secure parlia- 
ment's consent to the government's budget, Bismarck was a tac- 
tician skilled and ruthless enough to govern without parlia- 
ment's consent from 1862 to 1866. 


Otto von Bismarck, 1815- 
98, united Germany under a 
Prussian emperor. 
Courtesy German 
Information Center, New York 

As an ardent and aggressive Prussian nationalist, Bismarck 
had long been an opponent of Austria because both states 
sought primacy within the same area — Germany. Austria had 
been weakened by reverses abroad, including the loss of terri- 
tory in Italy, and by the 1860s, because of clumsy diplomacy, 
had no foreign allies outside Germany. Bismarck used a diplo- 
matic dispute to provoke Austria to declare war on Prussia in 
1866. Against expectations, Prussia quickly won the Seven 
Weeks' War (also known as the Austro-Prussian War) against 
Austria and its south German allies. Bismarck imposed a 
lenient peace on Austria because he recognized that Prussia 
might later need the Austrians as allies. But he dealt harshly 
with the other German states that had resisted Prussia and 
expanded Prussian territory by annexing Hanover, Schleswig- 
Holstein, some smaller states, and the city of Frankfurt. The 
German Confederation was replaced by the North German 
Confederation and was furnished with both a constitution and 
a parliament. Austria was excluded from Germany. South Ger- 
man states outside the confederation — Baden, Wurttemberg, 
and Bavaria — were tied to Prussia by military alliances. 

Bismarck's military and political successes were remarkable, 
but the first had been achieved at considerable risk, and the 
second were by no means complete. Luck had played a part in 
the decisive victory at the Battle of Koniggratz (Hradec Kralove 


Germany: A Country Study 

in the present-day Czech Republic); otherwise, the war might 
have lasted much longer than it did. None of the larger Ger- 
man states had supported either Prussia's war or the formation 
of the North German Confederation led by Prussia. The states 
that formed what is often called the Third Germany, that is, 
Germany exclusive of Austria and Prussia, did not desire to 
come under the control of either of those states. None of them 
wished to be pulled into a war that showed little likelihood of 
benefiting any of them. In the Seven Weeks' War, the support 
they gave Austria had been lukewarm. 

In 1870 Bismarck engineered another war, this time against 
France. The conflict would become known to history as the 
Franco-Prussian War. Nationalistic fervor was ignited by the 
promised annexation of Lorraine and Alsace, which had 
belonged to the Holy Roman Empire and had been seized by 
France in the seventeenth century. With this goal in sight, the 
south German states eagerly joined in the war against the coun- 
try that had come to be seen as Germany's traditional enemy. 
Bismarck's major war aim — the voluntary entry of the south 
German states into a constitutional German nation-state — 
occurred during the patriotic frenzy generated by stunning 
military victories against French forces in the fall of 1870. 
Months before a peace treaty was signed with France in May 
1871, a united Germany was established as the German 
Empire, and the Prussian king, Wilhelm I, was crowned its 
emperor in the Hall of Mirrors at Versailles. 

Imperial Germany 

The German Empire — often called the Second Reich to dis- 
tinguish it from the First Reich, established by Charlemagne in 
800 — was based on two compromises. The first was between the 
king of Prussia and the rulers of the other German states, who 
agreed to accept him as the kaiser (emperor) of a united Ger- 
many, provided they could continue to rule their states largely 
as they had in the past. The second was the agreement among 
many segments of German society to accept a unified Germany 
based on a constitution that combined a powerful authoritar- 
ian monarchy with a weak representative body, the Reichstag, 
elected by universal male suffrage. No one was completely satis- 
fied with the bargain. The kaiser had to contend with a parlia- 
ment elected by the people in a secret vote. The people were 
represented in a parliament having limited control over the 


Historical Setting: Early History to 1945 

As had been the tradition in Prussia, the kaiser controlled 
foreign policy and the army through his handpicked ministers, 
who formed the government and prepared legislation. The 
government was headed by a chancellor, also selected by the 
kaiser, who served in this post at the kaiser's pleasure and could 
be dismissed by him at any time. The Bundesrat (Federal 
Council) represented Germany's princes. About one-third of 
its seats were held by Prussians. Conceived as an upper house 
to the Reichstag, the Bundesrat, like the Reichstag, was 
required to vote on legislation drawn up by the government 
before it became law. The Reichstag had no power to draft leg- 
islation. In addition, the government's actions were not subject 
to the Reichstag's approval, and the government was not drawn 
from the Reichstag, as is ordinarily the case in parliamentary 

The government needed the approval of the Bundesrat and 
the Reichstag to enact legislative proposals, and the kaiser and 
his chancellor had many means of securing this approval. Con- 
servative in nature, the Bundesrat was usually docile and 
needed little wooing. Compliant in the early years of the 
empire, the Reichstag, by contrast, became less so with time. 
The easiest means of controlling the Reichstag was to threaten 
it with new elections in the hope of getting a legislative body 
more attuned to the intentions of the government. During 
elections the government campaigned for the parties it 
favored, sometimes cynically conjuring up fears of national 
catastrophe if particular parties won many seats. The govern- 
ment also bargained with parties, granting them what they 
sought in exchange for votes. A last means of taming the Reich- 
stag was to spread rumors of a possible coup d'etat by the army 
and the repeal of the constitution and universal suffrage. This 
technique was used repeatedly in imperial Germany and could 
even frighten the conservative Bundesrat. However little many 
of the Reichstag members might like the empire's political 
order, the prospect of naked despotism pleased them even less. 

Although the Reichstag did not wield real power, elections to 
it were hotly contested, and Bismarck and later chancellors and 
governments were concerned with their outcome. As more- 
democratic parties came to dominate in the Reichstag, govern- 
ing became more difficult for the kaiser and his officials. Dur- 
ing the later decades of the reign of Wilhelm II (r. 1888-1918), 
the empire's governing system experienced such difficulties 
that some conservatives advocated scrapping it, and democrats 


Germany: A Country Study 

argued for a new, truly parliamentary system. A fear of these 
drastic choices and their possible effects caused Germany to 
muddle through with the existing system until the disaster of 
World War I culminated in that system's abolition. 

Political Parties 

Six major political parties were active in imperial Germany: 
the Conservative Party, the Free Conservative Party, the 
National Liberal Party, the Progressive Party, the Center Party, 
and the Social Democratic Party of Germany (Sozial- 
demokratische Partei Deutschlands — SPD). Only the SPD sur- 
vived both the empire and the Weimar Republic (1918-33) 
and came to play a vital role in the Federal Republic. Even 
though the German Empire lacked a genuinely democratic sys- 
tem, the six main parties accurately reflected the interests and 
hopes of most of its people. 

The most right-wing of the six parties was the Conservative 
Party, which represented Prussian nationalism, aristocracy, and 
landed property. Many of its members remained opposed to 
German unification because they feared Prussia's gradual 
absorption by the empire. The Conservatives also detested the 
Reichstag because it was elected by universal suffrage. The Free 
Conservative Party represented industrialists and large com- 
mercial interests. The views of this party most closely matched 
those of Bismarck. Its members supported unification because 
they saw it as unavoidable. The National Liberal Party was com- 
posed of liberals who had accepted Germany's lack of full 
democracy because they valued national unity more. They con- 
tinued to favor a laissez-faire economic policy and seculariza- 
tion. In time, National Liberals became some of the strongest 
supporters of the acquisition of colonies and a substantial naval 
buildup, both key issues in the 1880s and 1890s. 

Unlike the members of the National Liberal Party, members 
of the Progressive Party remained faithful to all the principles 
of European liberalism and championed the extension of par- 
liament's powers. This party was in the forefront of those 
opposed to the authoritarian rule of Bismarck and his succes- 
sors. The Center Party was Germany's Roman Catholic party 
and had strong support in southern Germany, the Rhineland, 
and in parts of Prussia with significant Polish populations. It 
was conservative regarding monarchical authority but progres- 
sive in matters of social reform. Bismarck's brutal campaign 
against the Roman Catholic Church in the 1870s — the Kul- 


Historical Setting: Early History to 1945 

turkampf (cultural struggle), an attempt to reduce the 
church's power over education and its role in many other areas 
of German society — turned the Center Party against him. By 
the late 1870s, Bismarck had to concede victory to the party, 
which had become stronger through its resistance to the gov- 
ernment's persecution. The party remained important during 
the Weimar Republic and was the forerunner of the Federal 
Republic's moderate conservative parties, the Christian Demo- 
cratic Union (Christlich Demokratische Union — CDU) and 
the Christian Social Union (Christlich-Soziale Union — CSU). 

The Marxist SPD was founded in Gotha in 1875, a fusion of 
Ferdinand Lassalle's General German Workers' Association 
(formed in 1863), which advocated state socialism, and the 
Social Democratic Labor Party (formed in 1869), headed by 
August Bebel and Wilhelm Liebknecht, which aspired to estab- 
lish a classless communist society. The SPD advocated a mix- 
ture of revolution and quiet work within the parliamentary 
system. The clearest statement of this impossible combination 
was the Erfurt Program of 1891. The former method fright- 
ened nearly all Germans to the party's right, while the latter 
would build the SPD into the largest party in the Reichstag 
after the elections of 1912. 

Once Bismarck gave up his campaign against Germany's 
Roman Catholics, whom he had seen for a time as a Vatican- 
controlled threat to the stability of the empire, he attacked the 
SPD with a series of antisocialist laws beginning in 1878. A posi- 
tive aspect of Bismarck's campaign to contain the SPD was a 
number of laws passed in the 1880s establishing national health 
insurance and old-age pensions. Bismarck's hope was that if 
workers were protected by the government, they would come 
to support it and see no need for revolution. Bismarck's antiso- 
cialist campaign, which continued until his dismissal in 1890 by 
Wilhelm II, severely restricted the activities of the SPD. Ironi- 
cally, the laws may have inadvertently benefited the SPD by 
forcing it to work within legal channels. As a result of its sus- 
tained activity within the political system, the SPD became a 
cautious, pragmatic party, which, despite its fiery Marxist rheto- 
ric, won increasing numbers of seats in the Reichstag and 
achieved some improvements in working and living conditions 
for Germany's working class. 

The Economy and Population Growth 

Germany experienced an economic boom immediately after 


Germany: A Country Study 

unification. For the first time, the country was a single eco- 
nomic entity, and old impediments to internal trade were 
lifted. The federal chancellery published a new commercial 
code and established a uniform currency. The indemnity that 
France had to pay Germany after losing the 1870-71 war pro- 
vided capital for railroad construction and building projects. A 
speculative boom resulted, characterized by large-scale forma- 
tion of joint-stock companies and unscrupulous investment 
practices. This period of intense financial speculation and con- 
struction, called by Germans the Grunderzeit (founders' time), 
ended with the stock market crash of 1873. 

Despite the crash and several subsequent periods of eco- 
nomic depression, Germany's economy grew rapidly. By 1900 it 
rivaled the more-established British economy as the world's 
largest. German coal production, about one-third of Britain's 
in 1880, increased sixfold by 1913, almost equaling British 
yields that year. German steel production increased more than 
tenfold in the same period, surpassing British production by 

Industrialization began later in Germany than in Britain, 
and the German economy was not a significant part of the 
world economy until late in the nineteenth century Germany's 
industrialization started with the building of railroads in the 
1840s and 1850s and the subsequent development of coal min- 
ing and iron and steel production, activities that made up what 
is called the First Industrial Revolution. In Germany, the Sec- 
ond Industrial Revolution, that is, the growth of chemical and 
electrical industries, followed the enormous expansion of coal 
and steel production so closely that the country can be said to 
have experienced the two revolutions almost simultaneously. 
Germany took an early lead in the chemical and electrical 
industries. Its chemists became renowned for their discoveries, 
and by 1914 the country was producing half the world's electri- 
cal equipment. As a result of these developments, Germany 
became the continent's industrial giant. 

Germany's population also expanded rapidly, growing from 
41.0 million in 1871 to 49.7 million in 1891 and 65.3 million in 
1911. The expanding and industrializing economy changed 
the way this rapidly expanding population earned its liveli- 
hood. In 1871 about 49 percent of the workforce was engaged 
in agriculture; by 1907 only 35 percent was. In the same period, 
industry's share of the rapidly growing workforce rose from 31 
percent to 40 percent. Urban birth rates were often the coun- 


Historical Setting: Early History to 1945 

try's highest, but there was much migration from rural areas to 
urban areas, where most industry was located. Berlin, by far the 
country's largest city and a major industrial center, grew from 
almost 1 million inhabitants in 1875 to 2 million in 1910. Many 
smaller cities, especially those in areas with much industry — 
such as the Ruhr region, the upper Rhine Valley, the Neckar 
Valley, and Saxony — tripled or quadrupled in size during this 

The Tariff Agreement of 1 879 and Its Social Consequences 

The crash of 1873 and the subsequent depression began the 
gradual dissolution of Bismarck's alliance with the National 
Liberals that had begun after his triumphs of 1866. In the late 
1870s, Bismarck began negotiations with the economically pro- 
tectionist Conservative Party and Center Party toward the for- 
mation of a new government coalition. Conservative electoral 
gains and National Liberal losses in 1879 brought a conserva- 
tive coalition to power. Bismarck then abandoned his former 
allies in the National Liberal Party and put in place a system of 
tariffs that benefited the landed gentry of eastern Prussia — 
threatened by imports of cheaper grains from Russia and the 
United States — and industrialists who were afraid to compete 
with cheaper foreign manufactured goods and who believed 
they needed more time to establish themselves. 

Bismarck's alliance with the Prussian landowning class and 
powerful industrialists and the parties representing their inter- 
ests had profound social effects. From that point on, conserva- 
tive groups had the upper hand in German society. The 
German middle class began to imitate its conservative social 
superiors rather than attempt to impose its own liberal, middle- 
class values on Germany. The prestige of the military became 
so great that many middle-class males sought to enhance their 
social standing by becoming officers in the reserves. The mid- 
dle classes also became more susceptible to the nationalistic 
clamor for colonies and "a place in the sun" that was to become 
ever more virulent in the next few decades. 

Bismarck's Foreign Policy 

Bismarck sincerely regarded the new German Empire as 
"satiated," that is, having no desire to expand further and 
hence posing no threat to its neighbors. The chancellor held 
that the country had to adjust to its new circumstances and that 
this would take decades. For this reason, he sought to convince 


Germany: A Country Study 

the other European states of Germany's desire to live in peace, 
hoping thereby to secure Germany against attack. He aimed to 
arrange this security through a system of alliances. Believing 
that France would remain Germany's enemy because of the 
annexation of Alsace-Lorraine, an action he had opposed 
because of the enmity it would cause, he turned to other states. 

Bismarck arranged an alliance with Austria-Hungary in 1879 
and one with Italy in 1882. His triumph, however, was a secret 
alliance he formed by means of the Reinsurance Treaty with 
Russia in 1887, although its terms violated the spirit of the 
treaty with Austria-Hungary. However much these agreements 
contributed to German security, Bismarck's plunge into the 
European scramble for overseas colonies ultimately weakened 
it by awakening British fears about Germany's long-term geo- 
political aims. Subsequent feelers he put out with a view to 
establishing an understanding with Britain were rebuffed. In 
1890 Bismarck was dismissed by young Kaiser Wilhelm over a 
dispute about antisocialist legislation. 

Foreign Policy in the Wilhelmine Era 

Foreign policy in the Wilhelmine Era (1890-1914) turned 
away from Bismarck's cautious diplomacy of the 1871-90 
period. It was also marked by a shrill aggressiveness. Brusque, 
clumsy diplomacy was backed by increased armaments produc- 
tion, most notably the creation of a large fleet of battleships 
capable of challenging the British navy. This new bellicosity 
alarmed the rest of Europe, and by about 1907 German policy 
makers had succeeded in creating Bismarck's nightmare: a Ger- 
many "encircled" by an alliance of hostile neighbors — in this 
case Russia, France, and Britain — in an alliance called the Tri- 
ple Entente. 

The first brick to fall out of Bismarck's carefully crafted edi- 
fice was Germany's Reinsurance Treaty with Russia. Harmed by 
Prussian trade policies, Russia did not renew the treaty and 
instead turned to France for economic assistance and military 
security. The two countries formally allied in early 1893. Britain 
joined them in 1907, even though France and Britain had 
nearly gone to war over a colonial dispute in 1898. Britain's 
main reason for abandoning its usual posture as an aloof 
observer of developments on the continent was Germany's 
plan to build a fleet of sixty battleships of the formidable 
Dreadnought class. 


Historical Setting: Early History to 1945 

The German naval expansion program had many domestic 
supporters. The kaiser deeply admired the navy of his grand- 
mother, Queen Victoria of Britain, and wanted one as large for 
himself. Powerful lobbying groups in Germany desired a large 
navy to give Germany a worldwide role and to protect a grow- 
ing German colonial empire in Africa and the Pacific. Industry 
wanted large government contracts. Some political parties pro- 
moted naval expansion and an aggressive foreign policy to win 
votes from a nervous electorate they kept worked up with jingo- 
istic rhetoric. 

The chief figure in promoting the naval buildup was Admi- 
ral Alfred von Tirpitz, who is considered the founder of the 
modern German navy. Tirpitz was an effective spokesman for 
the program and had the ear of the kaiser and his advisers. In 
1898, after the Reichstag passed the first Naval Bill, Anglo-Ger- 
man relations deteriorated. The Supplementary Naval Act of 
1900 further strained relations with Britain, as did a proposed 
Berlin-Baghdad railroad through the Ottoman Empire, a 
project that threatened British as well as Russian interests in 
the Balkans. Two crises over Morocco, in 1905 and 1911, drove 
France and Britain closer together and made for a tense inter- 
national atmosphere. The great powers remained neutral dur- 
ing the Balkan Wars (1912-13), a nationalist rebellion against 
Ottoman rule, but European tensions were increased still fur- 
ther, and the expectation that there would eventually be war on 
the continent became more certain. 

The assassination of Archduke Franz Ferdinand in Sarajevo 
on June 28, 1914, set off a series of diplomatic and military 
decisions that would end peace in Europe. The kaiser gave a so- 
called blank check to his ally, Austria-Hungary, saying that Ger- 
many would support any Habsburg measure taken against Ser- 
bia, which had backed the assassination. Austria-Hungary's 
ultimatum to Serbia in late July was so harsh that war became 
inevitable. Within days, a set of interlocking alliances had 
Europe's great powers embroiled in what would become World 
War I. 

World War I 

Germany's leadership had hoped for a limited war between 
Austria-Hungary and Serbia. But because Russian forces had 
been mobilized in support of Serbia, the German leadership 
made the decision to support its ally. The Schlieffen Plan, 
based on the assumption that Germany would face a two-front 


Germany: A Country Study 

war because of a French-Russian alliance, required a rapid inva- 
sion through neutral Belgium to ensure the quick defeat of 
France. Once the western front was secure, the bulk of German 
forces could attack and defeat Russia, which would not yet be 
completely ready for war because it would mobilize its gigantic 
forces slowly. 

Despite initial successes, Germany's strategy failed, and its 
troops became tied down in trench warfare in France. For the 
next four years, there would be little progress in the west, 
where advances were usually measured in meters rather than in 
kilometers. Under the command of Paul von Hindenburg and 
Erich Ludendorff, the army scored a number of significant vic- 
tories against Russia. But it was only in early 1918 that Russia 
was defeated. Even after this victory in the east, however, Ger- 
many remained mired in a long war for which it had not pre- 

Germany's war aims were annexationist in nature and fore- 
saw an enlarged Germany, with Belgium and Poland as vassal 
states and with colonies in Africa. In its first years, there was 
widespread support for the war. Even the SPD supported it, 
considering it a defensive effort and voting in favor of war cred- 
its. By 1916, however, opposition to the war had mounted 
within the general population, which had to endure many 
hardships, including food shortages. A growing number of 
Reichstag deputies came to demand a peace without annex- 
ations. Frustrated in its quest for peace, in April 1917 a seg- 
ment of the SPD broke with the party and formed the 
Independent Social Democratic Party of Germany. In July the 
Reichstag passed a resolution calling for a peace without 
annexations. In its wake, Chancellor Theobald von Bethmann 
Hollweg was forced to resign, and Hindenburg and Luden- 
dorff came to exercise a control over Germany until late 1918 
that amounted to a virtual military dictatorship. 

Military leaders refused a moderate peace because they were 
convinced until very late in the war that victory ultimately 
would be theirs. Another reason for their insistence on a settle- 
ment that fulfilled expansionist aims was that the government 
had not financed the war with higher taxes but with bonds. 
Taxes had been seen as unnecessary because it was expected 
that the government would redeem these bonds after the war 
with payments from Germany's vanquished enemies. Thus, 
only an expansionist victory would keep the state solvent and 
save millions of German bondholders from financial ruin. 


Historical Setting: Early History to 1945 

After the Bolshevik Revolution of November 1917, Russia 
and Germany began peace negotiations. In March 1918, the 
two countries signed the Treaty of Brest-Litovsk. The defeat of 
Russia enabled Germany to transfer troops from the eastern to 
the western front. Two large offensives in the west were met by 
an Allied counteroffensive that began in July. German troops 
were pressed back, and it became evident to many officers that 
Germany could not win the war. In September Ludendorff rec- 
ommended that Germany sue for peace. In October extensive 
reforms democratized the Reichstag and gave Germany a con- 
stitutional monarchy. A coalition of progressive forces was 
formed, headed by SPD politician Friedrich Ebert. The mili- 
tary allowed the birth of a democratic parliament because it 
did not want to be held responsible for the inevitable armistice 
that would end the war on terms highly unfavorable to Ger- 
many. Instead, the civilian government that signed the truce 
was to take the blame for the nation's defeat. 

The political reforms of October were overshadowed by a 
popular uprising that began on November 3 when sailors in 
Kiel mutinied. They refused to go out on what they considered 
a suicide mission against British naval forces. The revolt grew 
quickly and within a week appeared to be burgeoning into a 
revolution that could well overthrow the established social 
order. On November 9, the kaiser was forced to abdicate, and 
the SPD proclaimed a republic. A provisional government 
headed by Ebert promised elections for a national assembly to 
draft a new constitution. In an attempt to control the popular 
uprising, Ebert agreed to back the army if it would suppress the 
revolt. On November 11, the government signed the armistice 
that ended the war. Germany's loses included about 1.6 million 
dead and more than 4 million wounded. 

Signed in June 1919, the Treaty of Versailles limited Ger- 
many to an army of 100,000 soldiers. The treaty also stipulated 
that the Rhineland be demilitarized and occupied by the west- 
ern Allies for fifteen years and that Germany surrender Alsace- 
Lorraine, northern Schleswig-Holstein, a portion of western 
Prussia that became known as the Polish Corridor because it 
gave Poland access to the Baltic, and all overseas colonies. Also, 
an Allied Reparations Commission was established and 
charged with setting the amount of war-damage payments that 
would be demanded of Germany. The treaty also included the 
"war guilt clause," ascribing responsibility for World War I to 
Germany and Austria-Hungary. 


Germany: A Country Study 

The Weimar Republic, 1918-33 

The Weimar Constitution 

The Weimar Republic, proclaimed on November 9, 1918, 
was born in the throes of military defeat and social revolution. 
In January 1919, a National Assembly was elected to draft a 
constitution. The government, composed of members from 
the assembly, came to be called the Weimar coalition and 
included the SPD; the German Democratic Party (Deutsche 
Demokratische Partei — DDP), a descendant of the Progressive 
Party of the prewar period; and the Center Party. The percent- 
age of the vote gained by this coalition of parties in favor of the 
republic (76.2 percent, with 38 percent for the SPD alone) sug- 
gested broad popular support for the republic. The antirepub- 
lican, conservative German National People's Party 
(Deutschnationale Volkspartei — DNVP) and the German Peo- 
ple's Party (Deutsche Volkspartei — DVP) received a combined 
total of 10.3 percent of the vote. The Independent Social Dem- 
ocratic Party of Germany, which had split from the SPD during 
the war, won 8 percent of the vote. In February the assembly 
elected Friedrich Ebert as the republic's first president. 

In mid-1919 the assembly ratified the constitution of the new 
Weimar Republic, so named because its constitution was 
drafted in the small city where the poets Goethe and Schiller 
had lived. The constitution established a federal republic con- 
sisting of nineteen states (Lander, sing., Land) (see fig. 5). The 
republic's government was a mixed strong president and parlia- 
mentary system, with the president seen by many as a sort of 
substitute kaiser. The president was elected by popular direct 
ballot to a seven-year term and could be reelected. He 
appointed the chancellor and, pursuant to the chancellor's 
nominations, also appointed the cabinet ministers. However, 
the cabinet had to reflect the party composition of the Reichs- 
tag and was also responsible to this body. Election to the 
Reichstag was by secret ballot and popular vote. Suffrage was 
universal. Thus, Germany had a truly democratic parliamen- 
tary system. However, the president had the right to dismiss the 
cabinet, dissolve the Reichstag, and veto legislation. The legis- 
lative powers of the Reichstag were further weakened by the 
provision for presidential recourse to popular plebiscite. Arti- 
cle 48, the so-called emergency clause, accorded the president 
the right to allow the cabinet to govern without the consent of 


Historical Setting: Early History to 1945 

parliament whenever it was deemed essential to maintaining 
public order. 

Problems of Parliamentary Politics 

The Weimar Republic was beset with serious problems from 
the outset that led many Germans either to withhold support 
from the new parliamentary democracy or to seek actively to 
destroy it. The extreme left and much of the right provided the 
republic's most vitriolic opponents. Its supporters included the 
bulk of the left, represented by the SPD, and the moderate 
right, made up of the Center Party and the DDP. However, at 
key times these supporters failed to behave responsibly because 
of political inexperience, narrow self-interest, or unrealistic 
party programs. 

The most serious obstacle the new republic faced was the 
refusal of many Germans to accept its legitimacy. The extreme 
left regarded it as an instrument of the propertied to prevent 
revolution, recalling Ebert's agreement with the military in 
November 1918 that resulted in the army's bloody suppression 
of the left-wing revolts of late 1918 and early 1919. In the face 
of this SPD-military alliance, elements of the left considered 
the SPD as great a barrier to their goals as the conservatives. 
Represented by the Communist Party of Germany (Kommunis- 
tische Partei Deutschlands — KPD), the extreme left felt such 
an enduring hostility to the Weimar Republic that at times it 
cooperated with the extreme right in efforts to destroy the 

The right posed a graver threat to the Weimar Republic than 
did the extreme left because it enjoyed the support of most of 
Germany's establishment: the military, the financial elites, the 
state bureaucracy, the educational system, and much of the 
press. Unlike political parties in well-established democracies, 
the right-wing parties in the Reichstag could not be considered 
a loyal opposition because their ultimate aim was to abolish the 
new system of government. The right opposed democracy and 
desired to establish a conservative authoritarian regime. The 
right styled those who were party to the armistice and to the 
Treaty of Versailles as "November criminals" because of Ger- 
many's loss of territory and sovereignty and the burden of 
enormous war reparations. The increasing acceptance by many 
of the "stab in the back" legend, which attributed Germany's 
defeat in World War I to the treachery of the SPD and others 
on the left rather than to the military might of the Allies, inten- 



Historical Setting: Early History to 1945 

parliament whenever it was deemed essential to maintaining 
public order. 

Problems of Parliamentary Politics 

The Weimar Republic was beset with serious problems from 
the outset that led many Germans either to withhold support 
from the new parliamentary democracy or to seek actively to 
destroy it. The extreme left and much of the right provided the 
republic's most vitriolic opponents. Its supporters included the 
bulk of the left, represented by the SPD, and the moderate 
right, made up of the Center Party and the DDP. However, at 
key times these supporters failed to behave responsibly because 
of political inexperience, narrow self-interest, or unrealistic 
party programs. 

The most serious obstacle the new republic faced was the 
refusal of many Germans to accept its legitimacy. The extreme 
left regarded it as an instrument of the propertied to prevent 
revolution, recalling Ebert's agreement with the military in 
November 1918 that resulted in the army's bloody suppression 
of the left-wing revolts of late 1918 and early 1919. In the face 
of this SPD-military alliance, elements of the left considered 
the SPD as great a barrier to their goals as the conservatives. 
Represented by the Communist Party of Germany (Kommunis- 
tische Partei Deutschlands — KPD), the extreme left felt such 
an enduring hostility to the Weimar Republic that at times it 
cooperated with the extreme right in efforts to destroy the 

The right posed a graver threat to the Weimar Republic than 
did the extreme left because it enjoyed the support of most of 
Germany's establishment: the military, the financial elites, the 
state bureaucracy, the educational system, and much of the 
press. Unlike political parties in well-established democracies, 
the right-wing parties in the Reichstag could not be considered 
a loyal opposition because their ultimate aim was to abolish the 
new system of government. The right opposed democracy and 
desired to establish a conservative authoritarian regime. The 
right styled those who were party to the armistice and to the 
Treaty of Versailles as "November criminals" because of Ger- 
many's loss of territory and sovereignty and the burden of 
enormous war reparations. The increasing acceptance by many 
of the "stab in the back" legend, which attributed Germany's 
defeat in World War I to the treachery of the SPD and others 
on the left rather than to the military might of the Allies, inten- 


Germany: A Country Study 

sified the hatred many rightists felt toward the republic. Like 
some on the extreme left, many on the right used violence, 
either petty and random or large-scale and concerted, to attain 
their ends. Throughout the short life of the Weimar Republic, 
various political groups maintained gangs of youths organized 
into paramilitary forces. 

In addition to venomous political opposition, the republic 
had to contend with a weak economy plagued by high rates of 
inflation and unemployment. Inflation was fueled partly by the 
enormous wartime debts the imperial government had con- 
tracted rather than raise taxes to finance the war. Even more 
inflationary were the enormous war reparations demanded by 
the Allies, which made economic recovery seem impossible to 
many objective expert observers. Inflation ruined many mid- 
dle-class Germans, who saw their savings and pensions wiped 
out. Unemployment also remained epidemic throughout the 
1920s, hurting millions of wage earners and their families. 
Their economic misery made these groups susceptible to the 
claims of extremist political parties. 

The pervasive social and political discontent growing out of 
Germans' grievances, justified or not, soon had consequences. 
A right-wing coup d'etat in March 1920, the Kapp Putsch — 
named for its leader, Wolfgang Kapp — failed only because of a 
general strike. The military had refused to intervene, although 
it did brutally suppress some Communist-inspired uprisings 
shortly thereafter. The establishment's tacit support of unlawful 
right-wing actions such as the Kapp Putsch and violent repres- 
sion of the left endured to the end of the Weimar Republic. 
This support could also be seen in the sentences meted out by 
the courts to perpetrators of political violence. Right-wing ter- 
rorists usually received mild or negligible sentences, while 
those on the left were dealt with severely, even though left-wing 
violence was but a fraction of that committed by the right. 

Dissatisfaction with the republic was also evident in the June 
1920 elections, in which the Weimar coalition lost its majority. 
A combined total vote of 28.9 percent for the DNVP, a descen- 
dant of the prewar Conservatives, and the DVP, composed 
mainly of National Liberals, reflected German middle-class dis- 
illusionment with democracy. Both parties wished to abolish 
the Weimar constitution. SPD strength fell to 21. V percent, as 
some workers defected to the extreme left. The Independent 
Social Democratic Party of Germany, formed during the war, 
effectively ceased to exist as some members joined the KPD, 


Historical Setting: Early History to 1945 

formed in December 1918, and the remainder reunited with 
the SPD. 

The Weimar coalition never regained its majority. Because 
no party ever gained as much as 50 percent of the vote, unsta- 
ble coalition governments became the rule in the 1920s, and by 
the end of the decade more than a dozen governments had 
been formed, none capable of unified action on major prob- 
lems. The SPD and the Center Party often could agree on ques- 
tions of foreign policy, such as compliance with the provisions 
of the Treaty of Versailles, but split on domestic issues. Con- 
versely, the Center Party agreed with parties to its right on 
domestic issues but split with them on foreign policy. Thus, 
minority governments were formed that often showed little 
internal coherence during their brief lives. 

The year 1923 was one of crisis for the republic. In January 
French and Belgian troops occupied the highly industrialized 
Ruhr area because of German defaults on reparations pay- 
ments. The Weimar government responded by calling upon 
the Ruhr population to stop all industrial activity. The govern- 
ment also began printing money at such a rate that it soon 
became virtually worthless; by the fall of 1923, wheelbarrows 
were needed to carry enough currency for simple purchases as 
inflation reached rates beyond comprehension. In 1914 US$1 
had equaled 4 marks. By mid-1920, US$1 was worth 40 marks, 
by early 1922 about 200 marks, a year later 18,000 marks, and 
by November 1923 4.2 trillion marks. In addition, the country 
was racked by strikes, paramilitary street violence, and rumors 
of planned uprisings by both the left and the right. In August, 
in the midst of this chaos, President Ebert asked Gustav Strese- 
mann, head of the DVP, to form a new government to resolve 
the crisis. 

The Stresemann Era 

Stresemann was a Vernunftrepublikaner, that is, someone who 
supported the Weimar Republic because it seemed the best 
course of action rather than from a firm commitment to parlia- 
mentary democracy. During the war, Stresemann had sup- 
ported imperial aims and desired extensive annexation of 
foreign territory. After the war, he remained a monarchist and 
founded the DVP to oppose the republic. In early 1920, he 
wished for the success of the Kapp Putsch. However, shocked 
by the assassinations of several prominent politicians, he had 
gradually come to believe that the effective functioning of the 


Germany: A Country Study 

Weimar Republic was the best safeguard against violent 
regimes of either the left or the right. He also became con- 
vinced that Germany's economic problems and differences 
with other countries could best be resolved through negotiated 

Chancellor only from August to November 1923, Strese- 
mann headed the "great coalition, 11 an alliance that included 
the SPD, the Center Party, the DDP, and the DVP. In this brief 
period, he ended passive resistance in the Ruhr area and intro- 
duced measures to bring the currency situation under control. 
Because of the failure of several coup attempts — including one 
by Adolf Hitler in Munich — and a general quieting of the 
atmosphere after these problems had been solved, the Weimar 
Republic was granted a period of relative tranquillity that lasted 
until the end of the decade. Overriding issues were by no 
means settled, but, for a few years, the republic functioned 
more like an established democracy. 

After his resignation from the chancellorship because of 
opposition from the right and left, Stresemann served as Ger- 
man foreign minister until his death in 1929. A brilliant negoti- 
ator and a shrewd diplomat, Stresemann arranged a 
rapprochement with the Allies. Reparations payments were 
made easier by the Reichstag's acceptance in mid-1924 of the 
Dawes Plan, which had been devised by an American banker, 
Charles G. Dawes, to effect significant reductions in payments 
until 1929. That year, only months before his death, Strese- 
mann negotiated a further reduction as part of the Young Plan, 
also named for an American banker, Owen D. Young. The 
Dawes Plan had also provided for the withdrawal of French and 
Belgian troops from the Ruhr district, which was completed in 
1925. In addition, beginning in the mid-1920s, loans from the 
United States stimulated the German economy, instigating a 
period of growth that lasted until 1930. 

The Locarno treaties, signed in 1925 by Germany and the 
Allies, were the centerpiece of Stresemann's attempt at rap- 
prochement with the West. A prerequisite to Germany's admis- 
sion to the League of Nations in 1926, the treaties formalized 
German acceptance of the demilitarization of the Rhineland 
and guaranteed the western frontier as defined by the Treaty of 
Versailles. Both Britain and Germany preferred to leave the 
question of the eastern frontier open. In 1926 the German and 
Soviet governments signed the Treaty of Berlin, which pledged 


Historical Setting: Early History to 1945 

Germany and the Soviet Union to neutrality in the event of an 
attack on either country by foreign powers. 

The Locarno treaties, the Treaty of Berlin, and Germany's 
membership in the League of Nations were successes that 
earned Stresemann world renown. Within Germany, however, 
these achievements were condemned by many on the right 
who charged that these agreements implied German recogni- 
tion of the validity of the Treaty of Versailles. To them, Strese- 
mann's diplomacy, as able as Bismarck's in the opinion of some 
historians, was tantamount to treachery because Germany was 
honor bound to take by force that which the rightists felt was 
owed it. Because of these opinions and continued dissatisfac- 
tion on the right with the political system established by the 
Weimar Constitution, the Center Party and the parties to its 
right became more right-wing during the latter 1920s, as did 
even Stresemann's own party, the DVP. 

Hitler and the Rise of National Socialism 

Adolf Hitler was born in the Austrian border town of 
Braunau am Inn in 1889. When he was seventeen, he was 
refused admission to the Vienna Art Academy, having been 
found insufficiently talented. He remained in Vienna, however, 
where he led a bohemian existence, acquiring an ideology 
based on belief in a German master race that was threatened by 
an international Jewish conspiracy responsible for many of the 
world's problems. Hitler remained in Vienna until 1913, when 
he moved to Munich. After serving with bravery in the German 
army during World War I, he joined the right-wing Bavarian 
German Workers' Party in 1919. The following year, the party 
changed its name to the National Socialist German Workers' 
Party (National-Sozialistische Deutsche Arbeiterpartei — 
NSDAP). Its members were known as Nazis, a term derived 
from the German pronunciation of "National." In 1921 Hitler 
assumed leadership of the NSDAP. 

As leader of the NSDAP, Hitler reorganized the party and 
encouraged the assimilation of other radical right-wing groups. 
Gangs of unemployed demobilized soldiers were gathered 
under the command of a former army officer, Ernst Rohm, to 
form the Storm Troops (Sturmabteilung — SA), Hitler's private 
army. Under Hitler's leadership, the NSDAP joined with others 
on the right in denouncing the Weimar Republic and the 
"November criminals" who had signed the Treaty of Versailles. 
The postwar economic slump won the party a following among 


Germany: A Country Study 

unemployed ex-soldiers, the lower middle class, and small 
farmers; in 1923 membership totaled about 55,000. General 
Ludendorff supported the former corporal in the Beer Hall 
Putsch of November 1923 in Munich, an attempt to overthrow 
the Bavarian government. The putsch failed, and Hitler 
received a light sentence of five years, of which he served less 
than one. Incarcerated in relative comfort, he wrote Mein 
Kampf (My Struggle), in which he set out his long-term political 

After the failure of the putsch, Hitler turned to "legal revolu- 
tion" as the means to power and chose two parallel paths to 
take the Nazis to that goal. First, the NSDAP would employ pro- 
paganda to create a national mass party capable of coming to 
power through electoral successes. Second, the party would 
develop a bureaucratic structure and prepare itself to assume 
roles in government. Beginning in the mid-1920s, Nazi groups 
sprang up in other parts of Germany. In 1927 the NSDAP orga- 
nized the first Nuremberg party congress, a mass political rally. 
By 1928 party membership exceeded 100,000; the Nazis, how- 
ever, polled only 2.6 percent of the vote in the Reichstag elec- 
tions in May. 

A mere splinter party in 1928, the NSDAP became better 
known the following year when it formed an alliance with the 
DNVP to launch a plebiscite against the Young Plan on the 
issue of reparations. The DNVP's leader, Alfred Hugenberg, 
owner of a large newspaper chain, considered Hitler's spell- 
binding oratory a useful means of attracting votes. The DNVP- 
NSDAP union brought the NSDAP within the framework of a 
socially influential coalition of the antirepublican right. As a 
result, Hitler's party acquired respectability and access to 
wealthy contributors. 

Had it not been for the economic collapse that began with 
the Wall Street stock market crash of October 1929, Hitler 
probably would not have come to power. The Great Depression 
hit Germany hard because the German economy's well-being 
depended on short-term loans from the United States. Once 
these loans were recalled, Germany was devastated. Unemploy- 
ment went from 8.5 percent in 1929 to 14 percent in 1930, to 
21.9 percent in 1931, and, at its peak, to 29.9 percent in 1932. 
Compounding the effects of the Depression were the drastic 
economic measures taken by Center Party politician Heinrich 
Bruning, who served as chancellor from March 1930 until the 
end of May 1932. Bruning's budget cuts were designed to cause 


Historical Setting: Early History to 1945 

so much misery that the Allies would excuse Germany from 
making any further reparations payments. In this at least, Brun- 
ing succeeded. United States president Herbert Hoover 
declared a "reparations moratorium" in 1932. In the mean- 
time, the Depression deepened, and social discontent intensi- 
fied to the point that Germany seemed on the verge of civil 

In times of desperation, voters are ready for extreme solu- 
tions, and the NSDAP exploited the situation. Skilled Nazi pro- 
pagandist Joseph Goebbels launched an intensive media 
campaign that ceaselessly expounded a few simple notions 
until even the dullest voter knew Hitler's basic program. The 
party's program was broad and general enough to appeal to 
many unemployed people, farmers, white-collar workers, mem- 
bers of the middle class who had been hurt by the Depression 
or had lost status since the end of World War I, and young peo- 
ple eager to dedicate themselves to nationalist ideals. If voters 
were not drawn to some aspects of the party platform, they 
might agree with others. Like other right-wing groups, the 
party blamed the Treaty of Versailles and reparations for the 
developing crisis. Nazi propaganda attacked the Weimar politi- 
cal system, the "November criminals," Marxists, international- 
ists, and Jews. Besides promising a solution to the economic 
crisis, the NSDAP offered the German people a sense of 
national pride and the promise of restored order. 

Three elections — in September 1930, in July 1932, and in 
November 1932 — were held between the onset of the Depres- 
sion and Hitler's appointment as chancellor in January 1933. 
The vote shares of the SPD and the Center Party fluctuated 
somewhat yet remained much as they had been in 1928, when 
the SPD held a large plurality of 153 seats in the Reichstag and 
the Center Party held sixty-one, third after the DNVP's seventy- 
three seats. The shares of the parties of the extreme left and 
extreme right, the KPD and the NSDAP, respectively, increased 
dramatically in this period, KPD holdings almost doubling 
from fifty-four in 1928 to 100 in November 1932. The NSDAP's 
success was even greater. Beginning with twelve seats in 1928, 
the Nazis increased their delegation seats nearly tenfold, to 107 
seats in 1930. They doubled their holdings to 230 in the sum- 
mer of 1932. This made the NSDAP the largest party in the 
Reichstag, far surpassing the SPD with its 133 seats. The gains 
of the NSDAP came at the expense of the other right-wing par- 


Germany: A Country Study 

Chancellor Bruning was unable to secure parliamentary 
majorities for his austerity policy, so he ruled by decree, a right 
given him by President Hindenburg. Head of the German 
army during World War I, Hindenburg had been elected presi- 
dent in 1925. Ruling without parliament was a major step in 
moving away from parliamentary democracy and had the 
approval of many on the right. Many historians see this devel- 
opment as part of a strategic plan formulated at the time by 
elements of the conservative establishment to abolish the 
republic and replace it with an authoritarian regime. 

By late May 1932, Hindenburg had found Bruning insuffi- 
ciently pliable and named a more conservative politician, Franz 
von Papen, as his successor. After the mid-1932 elections that 
made the NSDAP Germany's largest party, Papen sought to har- 
ness Hitler for the purposes of traditional conservatives by 
offering him the post of vice chancellor in a new cabinet. Hit- 
ler refused this offer, demanding the chancellorship instead. 

General Kurt von Schleicher, a master intriguer and a leader 
of the conservative campaign to abolish the republic, con- 
vinced Hindenburg to dismiss Papen. Schleicher formed a new 
government in December but lost Hindenburg's support 
within a month. On January 30, 1933, Papen again put 
together a cabinet, this time with Hitler as chancellor. Papen 
and other conservatives thought they could tame Hitler by 
tying him down with the responsibilities of government and 
transferring to themselves his tremendous popularity with a 
large portion of the electorate. But they proved no match for 
his ruthlessness and his genius at knowing how — and when — to 
seize power. Within two months, Hitler had dictatorial control 
over Germany. 

The Third Reich, 1933-45 

The Consolidation of Power 

Hitler rapidly transformed the Weimar Republic into a dicta- 
torship. The National Socialists accomplished their "revolu- 
tion" within months, using a combination of legal procedure, 
persuasion, and terror. Because the parties forming the cabinet 
did not have a parliamentary majority, Hindenburg called for 
the dissolution of the Reichstag and set March 5, 1933, as the 
date for new elections. A week before election day, the Reichs- 
tag building was destroyed by fire. The Nazis blamed the fire 
on the Communists, and on February 28 the president, invok- 


Historical Setting: Early History to 1945 

ing Article 48 of the constitution, signed a decree that granted 
the Nazis the right to quash the political opposition. Autho- 
rized by the decree, the SA arrested or intimidated Socialists 
and Communists. 

The election of March 5 was the last held in Germany until 
after World War II. Although opposition parties were severely 
harassed, the NSDAP won only 43.9 percent of the vote. None- 
theless, with the help of political allies, Hitler presented the 
Reichstag with the proposal for an Enabling Act that, if passed 
by a two-thirds majority, would allow him to govern without 
parliament for four years. On March 23, the proposal was 
passed with the support of the Center Party and others. All 
Communists and some Social Democrats were prevented from 

Hitler used the Enabling Act to implement Gleichschaltung 
(synchronization), that is, the policy of subordinating all insti- 
tutions and organizations to Nazi control. First, left-wing politi- 
cal parties were banned; then, in July 1933, Germany was 
declared a one-party state. The civil service and judiciary were 
purged of "non-Aryans" (Jews) and leftists. Local and state gov- 
ernments were reorganized and staffed with Nazis. Trade 
unions were dissolved and replaced with Nazi organizations. 
Even the NSDAP was purged of its social-revolutionary wing, 
the SA. The enormous and unruly SA was brought under con- 
trol by a massacre of its leadership at the end of June 1934 in 
the "night of the long knives." Other opponents were also 
killed during this purge, among them Schleicher. After Hin- 
denburg's death in early August 1934, Hitler combined the 
offices of the president and the chancellor. With the SA tamed, 
Hitler assured the army that he regarded it as Germany's mili- 
tary force, and the soldiers swore an oath of personal alle- 
giance to Hitler, pledging unconditional obedience. Heinrich 
Himmler's Guard Detachment (Schutz-Staffel — SS) replaced 
the SA as Hitler's private army. 

Once the regime was established, terror was the principal 
means used to maintain its control of Germany. Police arrests, 
which had focused originally on Communists and Socialists, 
were extended to other groups, most particularly to Jews. This 
systematic use of terror was highly effective in silencing resis- 
tance. Some enemies of the regime fled abroad. However, all 
but a tiny minority of those opposed to Hitler resigned them- 
selves to suppressing their opinions in public and hoping for 
the regime's eventual demise. 


Germany: A Country Study 

Like its secular institutions, Germany's churches were sub- 
jected to Nazi pressure. They resisted incorporation into the 
regime and retained a substantial degree of independence. 
This situation was tolerated by the regime, provided that the 
churches did not interfere with its efforts to control public life. 
When the churches were outraged by such Nazi practices as 
euthanasia, they protested. The regime responded by more 
carefully concealing such medical procedures. Otherwise, with 
the exception of a few brave isolated clergymen, the churches 
rarely spoke out against the regime. The regime's chief vic- 
tims — -Jews, Communists, Socialists, labor leaders, and writ- 
ers — generally had not been close to the churches, and their 
persecution was witnessed in silence. 

Joseph Goebbels, the minister of propaganda, contributed 
to the regime's consolidation with the establishment of the 
Reich Cultural Chamber, which extended Gleichschaltung to the 
educational system, the radio, and the cultural institutions. 
However, an elaborate system of censorship was not considered 
necessary to control the press. Non-Nazi party newspapers had 
already been suppressed. The editors of the remaining newspa- 
pers soon were able to figure out what was deemed suitable for 
public consumption. Goebbels also took an interest in Ger- 
many's substantial film industry, pressuring it to make pleasant, 
amusing films that would distract the German public in its lei- 
sure hours. 

The regime soon achieved its desired consolidation. Many 
Germans supported it, some out of opportunism, some 
because they liked certain aspects of it such as full employ- 
ment, which was quickly achieved. The regime also brought 
social order, something many Germans welcomed after fifteen 
years of political and economic chaos. Many were won over by 
Hitler's diplomatic successes, which began soon after he came 
to power and continued through the 1930s and which seemed 
to restore Germany to what they saw as its rightful place in the 
international community. 

Foreign Policy 

Once his regime was consolidated, Hitler took little interest 
in domestic policy, his sole concern being that Germany 
become sufficiently strong to realize his long-term geopolitical 
goal of creating a German empire that would dominate west- 
ern Europe and extend deep into Russia. In a first step toward 
this goal, he made a de facto revision to the Treaty of Versailles 


Historical Setting: Early History to 1945 

by ceasing to heed its restrictions on German rearmament. 
Soon after becoming chancellor, Hitler ordered that rearma- 
ment, secretly under way since the early 1920s, be stepped up. 
Later in 1933, he withdrew Germany from the League of 
Nations to reduce possible foreign control over Germany. In 
1935 he announced that Germany had begun rearmament, 
would greatly increase the size of its army, and had established 
an air force. Italy, France, and Britain protested these actions 
but did nothing further, and Hitler soon signed an agreement 
with Britain permitting Germany to maintain a navy one-third 
the size of the British fleet. In 1936 Hitler remilitarized the 
Rhineland, in violation of various treaties. There was no for- 
eign opposition. 

In 1936 Germany began closer relations with fascist Italy, a 
pariah state because of its invasion of Ethiopia the year before. 
The two antidemocratic states joined together to assist General 
Francisco Franco in overthrowing Spain's republican govern- 
ment during the Spanish Civil War (1936-39). In November 
1936, Germany and Italy formed the Berlin-Rome Axis. That 
same year, Germany, Italy, and Japan signed the Anti-Comin- 
tern Pact, the three signatories pledging to defend each other 
against the Soviet Union and international communism. 

It was also in 1936 that Hitler informed the regime's top offi- 
cials that Germany must be ready for war by 1940. In response, 
the Four-Year Plan was established. Developed under the direc- 
tion of Hermann Goering, it set forth production quotas and 
market guidelines. Efforts to regiment the economy were not 
without conflict. Some of the economic elite desired that Ger- 
many be integrated into the world's economy. Others advo- 
cated autarchy, that is, firmly basing the German economy in 
Central Europe and securing its raw materials through barter 

In the end, no clear decision on the management of the Ger- 
man economy was made. Large weapons contracts with indus- 
trial firms soon had the economy running at top speed, and 
full employment was reached by 1937. Wages did not increase 
much for ordinary workers, but job security after years of eco- 
nomic depression was much appreciated. The rearmament 
program was not placed on a sound financial footing, however. 
Taxes were not increased to pay for it because the regime 
feared that this would dissatisfy workers. Instead, the regime 
tapped the country's foreign reserves, which were largely 
exhausted by 1939. The regime also shunned a rigorous orga- 


Germany: A Country Study 

nization of rearmament because it feared the social tensions 
this might engender. The production of consumer goods was 
not curtailed either, again based on the belief that the morale 
of the population had to remain high if Germany were to 
become strong. In addition, because Hitler expected that the 
wars waged in pursuit of his foreign policy goals would be 
short, he judged great supplies of weapons to be unnecessary. 
Thus, when war began in September 1939 with the invasion of 
Poland, Germany had a broad and impressive range of weap- 
ons, but not much in the way of replacements. As in World War 
I, the regime expected that the defeated would pay for Ger- 
many's expansion. 

Through 1937 Hitler's foreign policy had the approval of tra- 
ditional conservatives. However, because many of them were 
skeptical about his long-range goals, Hitler replaced a number 
of high military officers and diplomats with more pliable subor- 
dinates. In March 1938, the German army was permitted to 
occupy Austria by that country's browbeaten political leader- 
ship. The annexation (Anschluss) of Austria was welcomed by 
most Austrians, who wished to become part of a greater Ger- 
many, something forbidden by the Treaty of Versailles. In Sep- 
tember 1938, British prime minister Neville Chamberlain 
consented to Hitler's desire to take possession of the Sudeten- 
land, an area in Czechoslovakia bordering Germany that was 
inhabited by about 3 million Germans. In March 1939, Ger- 
many occupied the Czech-populated western provinces of 
Bohemia and Moravia, and Slovakia was made a German pup- 
pet state. 

Immediately after the German occupation of Bohemia and 
Moravia, Britain and France finally became convinced of Hit- 
ler's expansionist objectives and announced their intention to 
defend the sovereignty of Poland. Because Hitler had con- 
cluded that he could not hope for British neutrality in the com- 
ing war, he formed a formal military alliance with Italy — the 
Pact of Steel. In August he signed a nonaggression pact with 
the Soviet Union, thus apparently freeing Germany from 
repeating the two-front war it had fought in World War I. 

The Outbreak of World War II 

On September 1, 1939, German troops invaded Poland. 
Britain and France declared war on Germany two days later. By 
the end of the month, Hitler's armies had overrun western 
Poland. Soviet armies occupied eastern Poland, and the two 


Historical Setting: Early History to 1945 

countries subsequently formally divided Poland between them. 
In April 1940, German forces conquered Denmark and Nor- 
way, and in May they struck at the Netherlands, Belgium, Lux- 
embourg, and France. French and British troops offered 
ineffective resistance against the lightning-like strikes, or blitz- 
krieg, of German tanks and airplanes. A large part of the 
French army surrendered, and some 300,000 British and 
French soldiers were trapped at Dunkirk on the coast of north- 
ern France. However, because Hitler, for a combination of 
political and military reasons, had halted the advance of his 
armored divisions, the British were able to rescue the men at 
Dunkirk. France, however, surrendered in June. 

For Hitler the war in the west was a sideshow, a prelude to 
the building of an empire in eastern Europe and the Soviet 
Union. Hitler had hoped that Britain would stay out of the war. 
In his vision of the near future, he foresaw the two countries 
sharing the world between them — Britain would keep its over- 
seas empire, and Germany would construct a new one to its 
east. When approached with the suggestion of a separate 
peace, British prime minister Winston Churchill rejected the 
offer and rallied his people to fight on. The Third Reich experi- 
enced its first military defeat in the Battle of Britain, in which 
the Royal Air Force, during the summer and fall of 1940, pre- 
vented the German air force from gaining the air superiority 
necessary for an invasion of Britain. Consequently, Hitler post- 
poned the invasion. 

Hitler concluded by June 1941 that Britain's continuing 
resistance was not a serious impediment to his main geopoliti- 
cal goal of creating an empire extending east from Germany 
deep into the Soviet Union. On June 22, 1941, negating their 
1939 nonaggression pact, Germany invaded the Soviet Union. 
Eagerness to realize his long-held dream caused Hitler to gam- 
ble everything on a quick military campaign. He had antici- 
pated victory within three months, but effective Soviet 
resistance and the early onset of winter stopped German 
advances. A counteroffensive, launched in early 1942, drove 
the Germans back from Moscow. In the summer of 1942, Hitler 
shifted the attack to the south of the Soviet Union and began a 
large offensive to secure the Caucasian oil fields. By September 
1942, the Axis controlled an area extending from northern 
Norway to North Africa and from France to Stalingrad. 

Japan's attack on the United States naval base at Pearl Har- 
bor on December 7, 1941, brought the United States into the 


Germany: A Country Study 

war. In support of Germany's fellow Axis power, Hitler immedi- 
ately declared war on the United States. But with the United 
States involvement, a coalition now existed that, with its vast 
human and material resources, was almost certain to defeat the 
Third Reich. To ensure that the alliance not break apart as had 
happened in 1918 when Russia signed a truce with Germany, 
the Allies swore to fight Germany until an unconditional sur- 
render was secured. Another reason the Allies wanted the com- 
plete military defeat of Germany was that they wished to 
preclude any possibility of German politicians claiming that "a 
stab in the back" had caused Germany's undoing, as they had 
done after World War I. 

The military turning point of the war in Europe came with 
the Soviet victory at Stalingrad in the winter of 1942-43; some 
300,000 of Germany's finest troops were either killed or cap- 
tured. By May 1943, Allied armies had driven the Axis forces 
out of Africa and had landed in Italy. Also of great importance, 
by 1943 the United States and British navies had succeeded in 
substantially reducing the German submarine threat to ship- 
ping. This cleared the way for the movement of arms and 
troops to Britain in preparation for a cross-channel invasion of 

Total Mobilization, Resistance, and the Holocaust 

Once it became clear that the war would not be a short one, 
Germany's industry was reorganized for a total mobilization. 
Between February 1942 and July 1944, armaments production 
increased threefold despite intense Allied bombing raids. 
Much of the labor for this increase came from the employment 
of some 7 million foreigners, taken from their homelands and 
forced to work under terrible conditions. Also contributing to 
the Nazi war effort was the systematic requisitioning of raw 
materials and food from occupied territories. As a result, Ger- 
mans remained fairly well fed for most of the war, in contrast to 
the hunger endured during World War I. 

Despite their comparative physical well-being until late in 
the war, it gradually became clear to many Germans that the 
regime's series of military triumphs had come to an end. Even 
the most intense, mendacious propaganda could not conceal 
that Germany's forces were being beaten back. Sharing this 
growing awareness that defeat was likely, a group of military 
officers decided to assassinate Hitler. Although elements of the 
military had long opposed him, no one had acted to this point. 


View of Berlin, 1945 
Courtesy German Information Center, New York 

During 1943 and 1944, the conspirators, who included many 
high-ranking officers and numerous prominent civilians, 
worked out elaborate plans for seizing power after the dicta- 
tor's death. On June 20, 1944, the conspirators ignited a bomb 
that would probably have killed Hitler except for a stroke of 
bad luck — the misplacement of the device under a conference 
room table. The regime struck back and after months of repris- 
als had killed several thousand people, among them one field 
marshal and twenty-two generals. Several earlier attempts on 
Hitler's life had also failed. Because of these failures, it would 
be up to the Allies to remove Hitler and his regime from power. 

Anti-Semitism was one of the Third Reich's most faithfully 
executed policies. Hitler saw the Jews' existence as inimical to 
the well-being of the German race. In his youth in Vienna, he 
had come to believe in a social Darwinist, life-or-death struggle 
of the races, with that between the German race and the Jews 


Germany: A Country Study 

being the most savage. Because of his adherence to these racist 
notions, he dreamed of creating a German empire completely 
free of Jews, believing that if the Jewish "bacillus" were permit- 
ted to remain within the Teutonic empire, the empire would 
become corrupted and fail. 

Upon taking power, the Nazis began immediately to rid Ger- 
many of its Jewish citizens. In the Aryan Paragraph of 1933, the 
regime decreed that Jews could not hold civil service positions. 
The Nuremberg Laws of 1935 deprived Jews of the right to citi- 
zenship and restricted relationships between "Aryans" (racially 
pure Germans) and Jews. After the Kristallnacht (Crystal 
Night) of November 9, 1938, an organized act of violence per- 
petrated by Nazis against Jews in all parts of Germany, the per- 
secution of Jews entered a new phase. Random acts of violence, 
by then commonplace, were replaced by the systematic isola- 
tion of the Jewish population in Germany, which had num- 
bered about 600,000 in the early 1930s. 

Until 1941 there had been plans to "cleanse" Germany of 
Jews by gathering them together and expelling them from the 
Reich. One plan had as its goal the transfer of Germany's Jews 
to Madagascar. A contingent of Jews had even been moved to 
southern France in preparation. However, wartime conditions 
and the presence of millions of Jews in Poland, the Soviet 
Union, and other occupied areas in Eastern Europe gradually 
led to the adoption of another plan: the systematic extermina- 
tion of all Jews who came under German control. Techniques 
that had been developed for the regime's euthanasia program 
came to be used against Jews. Discussions in January 1942 at 
the Wannsee Conference on the outskirts of Berlin led to the 
improved organization and coordination of the program of 

Killing came to be done in an efficient, factorylike fashion in 
large extermination camps run by Himmler's Special Duty Sec- 
tion (Sonderdienst — SD). The tempo of the mass murder of 
Jewish men, women, and children was accelerated toward the 
end of the war. Hitler's preoccupation with the "final solution" 
was so great that the transport of Jews was at times given prefer- 
ence over the transport of war materiel. Authorities generally 
agree that about 6 million European Jews died in the Holo- 
caust. A large number (about 4.5 million) of those killed came 
from Poland and the Soviet Union; about 125,000 German 
Jews were murdered. 


Historical Setting: Early History to 1945 


In June 1944, American, British, and Canadian forces 
invaded France, driving the Germans back and liberating Paris 
by August. A German counteroffensive in the Ardennes began 
in late December was beaten back after heavy fighting in what 
became known as the Battle of the Bulge. Soviet troops, mean- 
while, advanced from the east. Western forces reached the 
Rhine River in March 1945; simultaneously, Soviet armies over- 
ran most of Czechoslovakia and pressed on toward Berlin. 
Although faced with certain defeat, Hitler insisted that every 
German city, every village, and "every square meter" be 
defended or left behind as "scorched earth." The Western 
Allies and the Soviet forces made their first contact, in Saxony, 
on April 27. Three days later, Hitler committed suicide in a 
Berlin bunker. Berlin fell to the Soviet forces on May 2; on May 
7, the Third Reich surrendered unconditionally. It is estimated 
that about 55 million people died in the European theater dur- 
ing World War II. About 8 million of these dead were German. 

* * * 

A good introduction to German history is Mary Fulbrook's A 
Concise History of Germany, which not only presents the most 
important events but also examines various interpretations of 
them. The book closes with a bibliography of recent scholar- 
ship. Geoffrey Barraclough's The Origins of Modern Germany is a 
classic study of the German Middle Ages. Early Modern Germany, 
1477-1806 by Michael Hughes is a good introduction to this 
period. C.V. Wedgwood's classic, The Thirty Years' War, is 
engrossing reading and is widely available. A more recent treat- 
ment of the war is found in The Thirty Years' War, a well-inte- 
grated collection of articles about the conflict by noted 
specialists edited by Geoffrey Parker. 

James J. Sheehan's subtle and learned German History, 1770- 
1866 is the standard work in English on the period. Theodore 
S. Hamerow's Restoration, Revolution, Reaction, concise and beau- 
tifully written, deals with the main political, economic, and 
social trends between 1815 and 1871. Gordon A. Craig's Ger- 
many, 1866-1945, a survey of these years by the English-speak- 
ing world's dean of German studies, can be found in many 
libraries. Volker Rolf Berghahn's Imperial Germany, 1871-1914 
provides a sophisticated analysis of Germany between unifica- 


Germany: A Country Study 

tion and the outbreak of World War I. James Joll's brief The Ori- 
gins of the First World War examines interpretations of why this 
war occurred. The German Dictatorship by Karl Dietrich Bracher 
is an excellent treatment of the ideological sources of national 
socialism and provides an analytical history of Hitler's regime. 
Donald Cameron Watt's magisterial How War Came examines 
the diplomatic maneuvering leading up to World War II. Ger- 
hard L. Weinberg's A World at Arms is an authoritative and com- 
prehensive survey of the war. (For further information and 
complete citations, see Bibliography.) 


Chapter 2. Historical Setting: 1945 to 1990 

Half-timbered houses of the seventeenth century in Frankfurt am Main 

came after forty-five years of division that had begun with the 
partition of Germany into four occupation zones following its 
defeat in 1945 by the Four Powers — the United States, Britain, 
France, and the Soviet Union. Once a powerful nation, Ger- 
many lay vanquished at the end of World War II. The war's 
human cost had been staggering. Millions of Germans had 
died or had suffered terribly during the conflict, both in com- 
bat and on the home front. Intensive Allied bombing raids, 
invasions, and subsequent social upheaval had forced millions 
of Germans from their homes. Not since the ravages of the 
Thirty Years' War had Germans experienced such misery. 
Beyond the physical destruction, Germans had been con- 
fronted with the moral devastation of defeat. 

Germans refer to the immediate aftermath of the war as the 
Stunde Null (Zero Hour), the point in time when Germany 
ceased to exist as a state and the rebuilding of the country 
would begin. At first, Germany was administered by the Four 
Powers, each with its own occupation zone. In time, Germans 
themselves began to play a role in the governing of these zones. 
Political parties were formed, and, within months of the war's 
end, the first elections were held. Although most people were 
concerned with mere physical survival, much was accom- 
plished in rebuilding cities, fashioning a new economy, and 
integrating the millions of refugees from the eastern areas of 
Germany that had been lost after the war. 

Overshadowing these events within Germany, however, was 
the gradual emergence of the Cold War during the second half 
of the 1940s. By the decade's end, the two superpowers — the 
United States and the Soviet Union — had faced off in an 
increasingly ideological confrontation. The Iron Curtain 
between them cut Germany in two. Although the Allies' origi- 
nal plans envisioned that Germany would remain a single state, 
Western and Eastern concepts of political, social, and eco- 
nomic organization gradually led the three Western zones to 
join together, becoming separate from the Soviet zone and ulti- 
mately leading to the formation in 1949 of two German states. 
The three Western occupation zones became the Federal 
Republic of Germany (FRG, or West Germany), and the Soviet 


Germany: A Country Study 

zone became the German Democratic Republic (GDR, or East 
Germany) . 

During the next four decades, the two states led separate 
existences. West Germany joined the Western community of 
nations, while East Germany became the westernmost part of 
the Soviet empire. The two German states, with a common lan- 
guage and history, were separated by the mutual suspicion and 
hostility of the superpowers. In the mid-1950s, both German 
states rearmed. The FRG's armed forces, the Bundeswehr, 
became a vital part of the North Atlantic Treaty Organization 
(NATO). The GDR's National People's Army (Nationale Volks- 
armee — NVA) became a key component of the Warsaw Pact. 
The construction of the Berlin Wall in 1961 by the GDR fur- 
ther divided the two states. 

In West Germany, by the early 1950s a system of parliamen- 
tary democracy with free and contending political parties was 
firmly established. The Christian Democratic Union (Christ- 
lich Demokratische Union — CDU), along Avith its sister party, 
the Christian Social Union (Christlich-Soziale Union — CSU), 
led the coalitions that governed West Germany at the national 
level for two decades until late 1969. In that year, the Social 
Democratic Party of Germany (Sozialdemokratische Partei 
Deutschlands — SPD) formed the first of a series of coalition 
governments with the Free Democratic Party (Freie 
Demokratische Partei — FDP) that governed the country until 
1982. Late that year, the SPD was ousted from power when the 
CDU/CSU and the FDP formed a new coalition government. 
These parties ruled for the rest of the 1980s. As successful, how- 
ever, as West Germany's adoption of democratic politics had 
been after 1945, the country's economic recovery was so strong 
that it was commonly referred to as the "economic miracle " 
(Wirtschaftswunder) . By the 1960s, West Germany was among 
the world's wealthiest countries, and by the 1990s, Germany's 
economy and central bank played the leading role in Europe's 

East Germany was not so fortunate. A socialist dictatorship 
was put in place and carefully watched by its Soviet masters. As 
in the Soviet Union, political opposition was suppressed, the 
press censored, and the economy owned and controlled by the 
state. East Germany's economy performed modestly when com- 
pared with that of West Germany, but of all the socialist econo- 
mies it was the most successful. Unlike West Germany, East 
Germany was not freely supported by its citizens. Indeed, force 


Historical Setting: 1945 to 1990 

was needed to keep East Germans from fleeing to the West. 
Although some consolidation of the GDR was assured by the 
construction of the Berlin Wall, the GDR remained an artificial 
entity maintained by Soviet military power. Once this support 
was withdrawn, the GDR collapsed. 

During the four decades of division, relations between the 
two German states were reserved and sometimes hostile. 
Despite their common language and history, the citizens of the 
two states had limited direct contact with one another. At 
times, during the 1960s, for example, contact was reduced to a 
minimum. During the 1970s, however, the two peoples began 
to mix more freely as their governments negotiated treaties 
that made relations between the two states more open. During 
the 1980s, although relations continued to improve and con- 
tacts between the two peoples became more frequent, persons 
attempting to flee from East Germany still died along its mined 
borders, GDR officials continued to harass and arrest dissi- 
dents, and the Socialist Unity Party of Germany (Sozialistische 
Einheitspartei Deutschlands — SED) rigidly controlled political 

A key reason for the collapse of the GDR was the poor per- 
formance of its state-owned and centrally directed economy. 
The efforts of Soviet president Mikhail Gorbachev, beginning 
in the mid-1980s, to liberalize the Soviet Union and reform its 
economy were met with hostility by the GDR's top leadership. 
Word of these measures nevertheless reached East German 
grassroots opposition groups. Encouraged by the waves of 
reform in the Soviet Union and in neighboring socialist states, 
opposition in the East German population grew and became 
more and more vocal, despite increased state repression. By 
the second half of 1989, the East German opposition consisted 
of a number of groups with a variety of aims and was strong 
enough to stage large demonstrations. 

The massive flow of East Germans to the West through 
neighboring socialist countries in the summer and fall of 1989, 
particularly through Hungary, was telling evidence that the 
GDR did not have the support of its citizens. Public opposition 
to the regime became ever more open and demanding. In late 
1989, confronted with crushing economic problems, unable to 
control the borders of neighboring states, and told by the 
Soviet leadership not to expect outside help in quelling domes- 
tic protest, the GDR leadership resigned in the face of massive 
and constantly growing public demonstrations. After elections 


Germany: A Country Study 

in the spring of 1990, the critics of the SED regime took over 
the government. On October 3, 1990, the GDR ceased to exist, 
and its territory and people were joined to the FRG. The divi- 
sion of Germany that had lasted decades was ended. 

Postwar Occupation and Division 

On May 8, 1945, the unconditional surrender of the German 
armed forces (Wehrmacht) was signed by Field Marshal Wil- 
helm Keitel in Berlin, ending World War II for Germany. The 
German people were suddenly confronted by a situation never 
before experienced in their history: the entire German terri- 
tory was occupied by foreign armies, cities and infrastructure 
were largely reduced to rubble, the country was flooded with 
millions of refugees from the east, and large portions of the 
population were suffering from hunger and the loss of their 
homes. The nation-state founded by Otto von Bismarck in 1871 
lay in ruins. 

The Establishment of Occupation Zones 

The total breakdown of civil administration throughout the 
country required immediate measures to ensure the rebuilding 
of civil authority. After deposing Admiral Karl Donitz, Hitler's 
successor as head of state, and his government, the Allies 
issued a unilateral declaration on June 5, 1945, that pro- 
claimed their supreme authority over German territory, short 
of annexation. The Allies would govern Germany through four 
occupation zones, one for each of the Four Powers — the 
United States, Britain, France, and the Soviet Union. 

The establishment of zones of occupation had been decided 
at a series of conferences. At the conference in Casablanca, 
held in January 1943, British prime minister Winston 
Churchill's proposal to invade the Balkans and East-Central 
Europe via Greece was rejected. This decision opened the road 
for Soviet occupation of eastern Germany. At the Tehran Con- 
ference in late 1943, the western border of postwar Poland and 
the division of Germany were among the topics discussed. As a 
result of the conference, a commission began to work out 
detailed plans for the occupation and administration of Ger- 
many after the war. At the Yalta Conference in February 1945, 
participants decided that in addition to United States, British, 
and Soviet occupation zones in Germany, the French were also 


Historical Setting: 1945 to 1990 

to have an occupation zone, carved out of the United States 
and British zones. 

The relative harmony that had prevailed among the United 
States, Britain, and the Soviet Union began to show strains at 
the Potsdam Conference, held from July 17 to August 2, 1945. 
In most instances, Soviet leader Joseph Stalin was successful in 
getting the settlements he desired. One of his most far-reach- 
ing victories was securing the conference's approval of his deci- 
sion to compensate Poland for the loss of territory in the east 
to the Soviet Union by awarding it administrative control over 
parts of Germany. Pending the negotiation of a peace treaty 
with Germany, Poland was to administer the German provinces 
of Pomerania, Silesia, and the southern portion of East Prussia. 
The forcible "transfer" to the west of Germans living in these 
provinces was likewise approved. 

The movement westward of Germans living east of a line 
formed by the Oder and western Neisse rivers resulted in the 
death or disappearance of approximately 2 million Germans, 
while an estimated 12 million Germans lost their homes. The 
presence of these millions of refugees in what remained Ger- 
man territory in the west was a severe hardship for the local 
populations and the occupation authorities. 

The conferees at Potsdam also decided that each occupying 
power was to receive reparations in the form of goods and 
industrial equipment in compensation for its losses during the 
war. Because most German industry lay outside its zone, it was 
agreed that the Soviet Union was to take industrial plants from 
the other zones and in exchange supply them with agricultural 
products. The Allies, remembering the political costs of finan- 
cial reparations after World War I, had decided that repara- 
tions consisting of payments in kind were less likely to imperil 
the peace after World War II. 

The final document of the Potsdam Conference, the Pots- 
dam Accord, also included provisions for demilitarizing and 
denazifying Germany and for restructuring German political 
life on democratic principles. German economic unity was to 
be preserved. 

The boundaries of the four occupation zones established at 
Yalta generally followed the borders of the former German fed- 
eral states (Lander, sing., Land). Only Prussia constituted an 
exception: it was dissolved altogether, and its territory was 
absorbed by the remaining German Lander in northern and 
northwestern Germany. Prussia's former capital, Berlin, dif- 


Germany: A Country Study 

fered from the rest of Germany in that it was occupied by all 
four Allies — and thus had so-called Four Power status. The 
occupation zone of the United States consisted of the Land of 
Hesse, the northern half of the present-day Land of 
Baden-Wurttemberg, Bavaria, and the southern part of Greater 
Berlin. The British zone consisted of the Lander of 
Schleswig-Holstein, Lower Saxony, North Rhine-Westphalia, 
and the western sector of Greater Berlin. The French were 
apportioned the Lander of Rhineland-Palatinate, the Saar- 
land — which later received a special status — the southern half 
of Baden-Wurttemberg, and the northern sector of Greater 
Berlin. The Soviet Union controlled the Lander of Mecklen- 
burg, Brandenburg, Saxony, Saxony-Anhalt, Thuringia, and 
the eastern sector of Greater Berlin, which constituted almost 
half the total area of the city. 

The zones were governed by the Allied Control Council 
(ACC), consisting of the four supreme commanders of the 
Allied Forces. The ACC's decisions were to be unanimous. If 
agreement could not be reached, the commanders would 
forego unified actions, and each would confine his attention to 
his own zone, where he had supreme authority. Indeed, the 
ACC had no executive authority of its own, but rather had to 
rely on the cooperation of each military governor to imple- 
ment its decisions in his occupation zone. Given the immense 
problems involved in establishing a provisional administration, 
unanimity was often lacking, and occupation policies soon var- 

The French, for instance, vetoed the establishment of a cen- 
tral German administration, a decision that furthered the 
country's eventual division. Because they had not participated 
in the Potsdam Conference, the French did not feel bound to 
the conference's decision that the country would remain an 
economic unit. Instead, the French sought to extract as much 
as they could from Germany and even annexed the Saar area 
for a time. 

The Soviet occupiers likewise sought to recover as much as 
possible from Germany as compensation for the losses their 
country had sustained during the war. Unlike the French, how- 
ever, they sought to influence Germany as a whole and hoped 
to hold an expanded area of influence. In their own zone, the 
Soviet authorities quickly moved toward establishing a socialist 
society like their own. 


Historical Setting: 1945 to 1990 

The United States had the greatest interest in denazification 
and in the establishment of a liberal democratic system. Early 
plans, such as the Morgenthau Plan to keep Germans poor by 
basing their economy on agriculture, were dropped as the 
Soviet Union came to be seen as a threat and Germany as a 
potential ally. 

Britain had the least ambitious plans for its zone. However, 
British authorities soon realized that unless Germany became 
economically self-sufficient, British taxpayers would bear the 
expense of feeding its population. To facilitate German eco- 
nomic self-sufficiency, United States and British occupation 
policies soon merged, and by the beginning of 1947 their zones 
had been joined into one economic area — the Bizone. 

The Nuremberg Trials and Denazification 

The Allies agreed that Germany should never again have the 
opportunity to destroy European peace as it had in the two 
world wars. A principal aim of the Allies was to prevent the 
resurgence of a powerful and aggressive Germany. As a first 
step toward demilitarizing, denazifying, and democratizing 
Germany, the Allies established an international military tribu- 
nal in August 1945 to jointly try individuals considered respon- 
sible for the outbreak of the war and for crimes committed by 
the Hitler regime (see The Third Reich, 1933-45, ch. 1). 
Nuremberg, the city where the most elaborate political rallies 
of the Hitler regime had been staged, was chosen as the loca- 
tion for the trials, which began in November 1945. 

On trial were twenty-two men seen as principally responsible 
for the National Socialist regime, its administration, and the 
direction of the German armed forces, the Wehrmacht. 
Among the defendants accused of conspiracy, crimes against 
peace, crimes against humanity, and war crimes were Hermann 
Goering, Wilhelm Keitel, Joachim von Ribbentrop, Rudolf 
Hess, and Albert Speer. Although many Germans considered 
the accusation of conspiracy to be on questionable legal 
grounds, the accusers were successful in unveiling the back- 
ground of developments that had led to the outbreak of World 
War II, as well as the extent of the atrocities committed in the 
name of the Hitler regime. Twelve of the accused were sen- 
tenced to death, seven received prison sentences, and three 
were acquitted. 

The trials received wide publicity in Germany and through- 
out the world. Although many Germans maintained that it 


Germany: A Country Study 

would have been better if the defendants had faced a German 
tribunal rather than one imposed by the war's foreign victors, 
they agreed that the trials made public much information 
about the mass murders and other crimes that otherwise might 
not have come to light. The German people and the rest of the 
world reacted with horror and dismay to the revelations. The 
trials of these more prominent figures of the Hitler regime 
were followed by the trials of thousands of lesser offenders. 

The Allies did not seek merely to punish the leadership of 
the National Socialist regime, but to purge all elements of 
national socialism from public life. One phase of the denazifi- 
cation process dealt with lower-level personnel connected with 
the Nazi regime. Their pasts were reviewed to determine if the 
parts they had played in the regime were sufficiently grievous 
to warrant their exclusion from roles in a new Germany's poli- 
tics or government. Germans with experience in government 
and not involved in the Nazi regime were needed to cooperate 
with occupation authorities in the administration of the zones. 

The process of denazification was carried out diversely in the 
various zones. The most elaborate procedures were instituted 
in the United States zone, where investigated individuals were 
required to complete highly detailed questionnaires concern- 
ing their personal histories and to appear at hearings before 
panels of German adjudicators. In the British and French 
zones, denazification was pursued with less vigor because the 
authorities thought it more important to reestablish a function- 
ing bureaucracy in their sectors. 

Denazification was most rigorous in the Soviet sector. Civil 
servants, teachers, and legal officials with significant Nazi pasts 
were thoroughly purged. Denazification was also used as an 
instrument for seizing the resources of the so-called "class 
enemy": former Nazis who owned factories or estates were 
denounced and their property confiscated. After participating 
in the social transformation, some former Nazis were par- 
doned and even gained high positions within the new commu- 
nist ruling class. 

The denazification process mandated that simpler cases 
involving lesser offenders be tried before more complicated 
cases involving officials higher up in the Nazi regime. With 
time, however, prosecution became less severe, and the United 
States came to be more concerned with the Cold War. When 
denazification ended in March 1948, the more serious cases 


Historical Setting: 1945 to 1990 

had not yet been tried. As a result, numerous former Nazi func- 
tionaries escaped justice, much to the regret of many Germans. 

Political Parties and Democratization 

The reintroduction of democratic political parties in Ger- 
many was one of the primary concerns of the Allies during the 
final phase of the war. The Soviet authorities were the first to 
reestablish political parties in their zone. They ordered the for- 
mation of political parties on June 10, 1945, well before such a 
directive was issued in the Western zones. In addition to seek- 
ing to control their own zone, they hoped to influence the 
emerging political constellations in the Western zones by the 
early mobilization of a strong leftist movement. 

On June 11, the Communist Party of Germany (Kommunis- 
tische Partei Deutschlands — KPD) was reestablished in the 
Soviet zone under a German leadership that, for the most part, 
had lived for years in Moscow. Wilhelm Pieck was its chairman. 
Shortly thereafter, the Social Democratic Party of Germany 
(Sozialdemokratische Partei Deutschlands — SPD) was also 
reconstituted, under the leadership of Otto Grotewohl. When 
it became obvious that the SPD would emerge as the most pop- 
ular leftist party in the Soviet zone, the Soviet authorities 
forced the merger of the KPD and the SPD in April 1946 and 
subsequently, from this merger, the formation of the Socialist 
Unity Party of Germany (Sozialistische Einheitspartei Deutsch- 
lands — SED). The Communists clearly had the upper hand in 
SED leadership. Vigorous resistance to the merger of the two 
leftist parties came from Social Democrats in the Western 
zones, led by Kurt Schumacher, a veteran Social Democratic 
politician and member of the Reichstag during the Weimar 
Republic and a political prisoner during the Third Reich. As a 
result of this principled opposition to Communist control, the 
rebuilding of the SPD in the Western zones took a separate 

The SED sought to retain the image of a political force open 
to the masses, and it governed through the active participation 
of its members. It also competed with other parties in regional 
elections. After the Land elections of October 1946 in which 
the SED failed to obtain an absolute majority, the party 
resorted to different tactics in order to secure its grip on the 
electorate. SED leaders created an Anti-Fascist Bloc consisting 
of all political parties that was to guarantee the introduction of 
an antifascist and democratic order in the Soviet zone. From 


Germany: A Country Study 

the very beginning, the SED could veto any proposal from any 
other bloc party not in accordance with its ideals for a socialist 
society. As a result, the two other political parties authorized in 
the Soviet zone were purged of their leadership, and their 
party programs were realigned in support of SEE) goals. The 
two other parties were the Christian Democratic Union (Christ- 
lich Demokratische Union — CDU), which represented middle- 
class interests, and the Liberal Democratic Party of Germany 
(Liberal-Demokratische Partei Deutschlands — LDPD), which 
represented the liberal political tradition that dated back to 
the late 1840s. 

Two additional bloc parties were established in 1948 in the 
Soviet zone to represent groups still without a specific political 
party. The Democratic Peasants' Party of Germany 
(Demokratische Bauernpartei Deutschlands — DBD) was 
formed to prepare farmers for the planned land reform, which 
would involve extensive nationalizations. The second party, the 
National Democratic Party of Germany (National- 
Demokratische Partei Deutschlands — NDPD), was to work at 
reintegrating into a socialist society approximately 2 million 
people of right-wing views. The group included veterans and a 
relatively large number of former members of the National 
Socialist German Workers' Party (National-Sozialistiche 
Deutsche Arbeiterpartei — NSDAP), Adolf Hitler's party. 

The Social Democratic Party that operated in the Western 
zones was, in contrast to the Eastern SPD, markedly anticom- 
munist (see Social Democratic Party of Germany, ch. 7). This 
attitude reflected a continuation of its bitter hostility to the 
Communists during the Weimar Republic. The reestablished 
party, headed by Kurt Schumacher and, after his death, by 
Erich Ollenhauer, could look back on a distinguished history 
of creating better living conditions for the working class within 
the context of parliamentary democracy. Although anticom- 
munist, the SPD's leadership still regarded the party as Marxist 
and remained committed to working for a socialist economy. 
As such, the SPD envisioned a neutral socialist Germany 
located between the capitalist economies of the West and the 
Soviet dictatorship of the East. The SPD was able to build on its 
extensive working-class membership, which predated Hitler's 
seizure of power in 1933. 

For the conservative forces, the political beginning after 
1945 appeared more difficult because of past fragmentation on 
regional and denominational lines. The persecution and sup- 


Historical Setting: 1945 to 1990 

pression suffered during the Third Reich by conservative Cath- 
olics and Protestants alike gave rise to a unified Christian 
conservative party, which would represent all who opposed 
communism and socialism and who held traditional Christian 
middle-class values. At first, several regional political organiza- 
tions formed in Berlin, Cologne, and Frankfurt am Main. On 
December 16, 1945, it was agreed that their collective designa- 
tion should be called the Christian Democratic Union (Christ- 
lich Demokratische Union — CDU) (see Christian Democratic 
Union/Christian Social Union, ch. 7). 

During the initial phase of development, members of the 
Christian labor unions strongly influenced the program of the 
conservative movement. Although they did not dispute the 
concept of private ownership of property, they advocated state 
control for many principal industries. During the 1950s, a 
market-oriented policy that was combined with a strong social 
component came to dominate the party. 

The Bavarian Christian conservative organization, the Chris- 
tian Social Union (Christlich-Soziale Union — CSU), founded 
in October 1946, remained a separate party organization and 
kept its name even after the foundation of the FRG. It followed 
a more pronounced conservative ideological party line than 
the CDU. 

Even more difficult than the political unification of Chris- 
tian conservatives was the consolidation of the liberal move- 
ment in postwar Germany. Traditionally, the liberals had been 
divided into a conservative national liberal wing and a more 
leftist-oriented liberal movement. There was also a reservoir of 
voters who understood themselves to be truly liberal in that 
they did not commit themselves to any ideology. Common to 
all of the party groupings, however, was the rejection of a 
planned economy. A number of independent liberal party 
groups existed for a time in southwestern Germany and in 
Hesse, Hamburg, and Berlin. In November 1948, most of them 
united in the Free Democratic Party (Freie Demokratische 
Partei — FDP), whose main figure, Theodor Heuss, became the 
first federal president of the FRG (see table 2, Appendix; Free 
Democratic Party, ch. 7). 

The Creation of the Bizone 

By early 1946, the Western Allies — the United States and 
Britain in particular — had become convinced that Soviet 
expansionism had to be contained. The Soviet Union's seizure 


Germany: A Country Study 

of Polish territory and the drawing of the Oder-Neisse border 
(which gave formerly German territory to Poland), its antidem- 
ocratic actions in other countries occupied by Soviet forces, 
and its policies toward areas such as Greece and Turkey per- 
suaded Western leaders that the Soviet Union was aiming for 
communist domination of Europe. Churchill's use of the 
expression "Iron Curtain" to describe the Soviet cordoning off 
of a sphere of influence in Europe illustrated a basic change in 
attitude toward Soviet intentions on the part of Western lead- 
ers. As a result of this change, Germany came to be seen more 
as a potential ally than as a defeated enemy. 

The change in attitude led United States officials to take a 
more active role in Germany. A notable early example of this 
policy change was a speech given in Stuttgart in September 
1946 by the United States secretary of state, James F. Byrnes, 
proposing the transfer of administrative functions from the 
existing military governments to a single civilian German 
administration. Byrnes stated that the United States had not 
defeated the Nazi dictatorship to keep Germans suppressed 
but instead wanted them to become a free, self-governing, and 
prosperous people. The speech was the first significant indica- 
tion that Germany was not to remain an outcast but was, 
according to Byrnes, to have "an honorable place among the 
free and peace-loving nations of the world." 

Neither the Soviet Union nor France desired a revitalized 
Germany, but after intensive negotiations, a unified economic 
zone, the Bizone, consisting of the United States and British 
zones, was proclaimed on January 1, 1947. After a difficult 
beginning, the Bizone proved itself a success, and its popula- 
tion of 40 million began to benefit from an improving econ- 
omy. Only in the spring of 1949, after a period of sustained 
economic growth, did the French occupation zone join the 
Bizone, creating the Trizone. 

In mid-1947 the European Recovery Program, or Marshall 
Plan as it is more widely known, was announced. The plan's 
aim was to stimulate the economies on the continent through 
the infusion of large-scale credits for the promotion of trade 
between Europe and the United States. The United States stip- 
ulated only that Europe's economy was to be united and that 
Europeans were to participate actively in the administration of 
the program. The Soviet Union suspected that the proposal 
was a means to prevent it from harvesting the fruits of the vic- 
tory over fascism. Deeming the proposal a direct affront to its 


Historical Setting: 1945 to 1990 

communist ideology by "American economic imperialism," the 
Soviet Union promptly rejected participation in the program, 
as did the East European states, obviously acting on Soviet 

To fulfill the precondition of economic cooperation in 
Europe, sixteen Western countries joined the Organisation for 
European Economic Co-operation (OEEC — see Glossary) in 
early 1948. In April 1948, the United States Congress approved 
the Foreign Assistance Act, which arranged the provision of 
aid. Shortly thereafter, industrial products, consumer goods, 
credits, and outright monetary gifts started to flow into the 
impoverished economies of Western Europe. Cities, industries, 
and infrastructure destroyed during the war were rapidly 
rebuilt, and the economies of the war-torn countries began to 
recover. In the Western zones, aid from the Marshall Plan laid 
the foundations for the West German "economic miracle" of 
the 1950s. 

A functioning currency system was also needed for a growing 
economy. The war economy of the National Socialist govern- 
ment had created an oversupply of currency not matched by a 
supply of goods. To combat the resulting black-market econ- 
omy, especially noticeable in large cities, and to aid economic 
recovery in western Germany, a central bank was founded and 
a currency reform was proclaimed on June 19, 1948. The 
reform introduced the deutsche mark. In exchange for sixty 
reichsmarks, each citizen received DM40 (for value of the 
deutsche mark — see Glossary). Additionally, controls over 
prices and basic supplies were lifted by authorities, thus 
abruptly wiping out the black market. 

The swift action of the Western powers took the Soviet 
authorities by surprise, and they quickly implemented a sepa- 
rate currency reform for their zone and all of Berlin. The West- 
ern powers, however, had already ordered the distribution of 
deutsche marks in their sectors of the city. This measure, which 
for the Soviet Union represented the culmination of the West- 
ern policy to undermine Soviet efforts to build a socialist soci- 
ety in its zone, produced a sudden dramatic reaction, the 
Soviet blockade of Berlin. 

On June 24, 1948, Soviet troops blocked all road and rail 
connections to West Berlin. Within a few days, shipping on the 
Spree and Havel rivers was halted; electric power, which had 
been supplied to West Berlin by plants in the Soviet zone, was 
cut off; and supplies of fresh food from the surrounding coun- 


Germany: A Country Study 

tryside were suddenly unavailable. The Four Power status of 
Berlin, agreed upon by the Allied victors, had not included any 
provisions regarding traffic by land to and from Berlin through 
the Soviet zone. It had, however, established three air corridors 
from the Western zones to the city. 

The three Western powers acted swiftly: an airlift of unprece- 
dented dimensions was organized to supply the 2.5 million 
inhabitants of the Western sectors of Berlin with what they 
needed to survive. The United States military governor in Ger- 
many, General Lucius D. Clay, successfully coordinated the air- 
lift, which deployed 230 United States and 150 British 
airplanes. Up to 10,000 tons of supplies were flown in daily, 
including coal and other heating fuels for the winter. Alto- 
gether, about 275,000 flights succeeded in keeping West Berlin- 
ers alive for nearly a year. 

The Soviet Union had not expected such Western resolve. 
Failing in its attempt to starve the Western Allies out of Berlin, 
it lifted the blockade on May 12, 1949. The Western Allies, led 
by the United States, had stood their ground without provok- 
ing armed conflict. Although the blockade had ended, its 
effects on Berlin were lasting. By June 16, 1948, realizing that it 
would not achieve its goal of a socialist Germany, the Soviet 
Union withdrew from the ACC, prompting the Western Allies 
to create a separate administration for their sectors. At the end 
of 1948, two municipal administrations existed, and Berlin had 
become a divided city. A more significant effect was perhaps 
that, in Western eyes, Berlin was no longer seen as the capital 
of Hitler's Germany but rather as a symbol of freedom and the 
struggle to preserve Western civic values. 

The Birth of the Federal Republic of Germany 

Participants at the Potsdam Conference had agreed that the 
foreign ministers of the four victorious powers should meet to 
implement and monitor the conference's decisions about post- 
war Europe. During their fifth meeting, held in London in late 
1947, prospects for concluding a peace treaty with Germany 
were examined. Following lengthy discussions on the question 
of reparations, the conference ended without any concrete 

The tense atmosphere during the talks and the uncoopera- 
tive attitude of the Soviet participants convinced the Western 
Allies of the necessity of a common political order for the three 
Western zones. At the request of France, the Western Allies 


Historical Setting: 1945 to 1990 

were joined by Belgium, the Netherlands, and Luxembourg at 
the subsequent Six Power Conference in London, which met in 
two sessions in the spring of 1948. 

The recommendations of this conference were contained in 
the so-called Frankfurt Documents, which the military gover- 
nors of the Western zones issued to German political leaders, 
the minister presidents of the Western Lander on July 1, 1948. 
The documents called for convening a national convention to 
draft a constitution for a German state formed from the West- 
ern occupation zones. The documents also contained the 
announcement of an Occupation Statute, which was to define 
the position of the occupation powers vis-a-vis the new state. 

The minister presidents initially objected to the creation of a 
separate political entity in the west because they feared such an 
entity would cement the division of Germany. Gradually, how- 
ever, it became apparent that the division of the country was 
already a fact. To emphasize the provisional nature of the docu- 
ment they were to draft, the minister presidents rejected the 
designation "constitution" and agreed on the term "Basic Law" 
(Grundgesetz). Final approval of the Basic Law, whose articles 
were to be worked out by a parliamentary council, was to be 
given by a vote of the Land diets, and not by referendum, as 
suggested in the Frankfurt Documents. Once the Allies had 
accepted these and other modifications, a constitutional con- 
vention was called to draft the Basic Law. 

The convention met in August 1948 in Bavaria at Herrenchi- 
emsee. After completing its work, the Parliamentary Council, 
consisting of sixty-five delegates from the respective Land diets 
and chaired by leading CDU politician Konrad Adenauer, met 
in Bonn in the fall of 1948 to work out the final details of the 
document. After months of debate, the final text of the Basic 
Law was approved by a vote of fifty-three to twelve on May 8, 
1949. The new law was ratified by all Land diets, with the excep- 
tion of the Bavarian parliament, which objected to the empha- 
sis on a strong central authority for the new state. After 
approval by the Western military governors, the Basic Law was 
promulgated on May 23, 1949. A new state, the Federal Repub- 
lic of Germany (FRG, or West Germany), had come into exist- 
ence (see fig. 6). 

The members of the Parliamentary Council that fashioned 
the articles of the Basic Law were fully aware of the constitu- 
tional deficiencies that had brought down the Weimar Repub- 
lic. They sought, therefore, to approve a law that would make it 


Germany: A Country Study 

Figure 6. Germany, 1949-90 

impossible to circumvent democratic procedures, as had 
occurred in the past. The powers of the lower house, the 
Bundestag, and the federal chancellor were enhanced consid- 
erably at the expense of the federal president, who was reduced 
to a figurehead (see Government Institutions, ch. 7). Prime 
consideration was given to the basic rights and the dignity of 
the individual. The significance of the Lander was enhanced by 
their direct influence on legislation through representation in 


Historical Setting: 1945 to 1990 

the upper house, the Bundesrat. The Basic Law also safe- 
guarded parliamentary government by protecting the federal 
chancellor from being forced from power through a simple 
vote of no-confidence. Instead, a constructive vote of no-confi- 
dence was required, that is, the vote's sponsors were required 
to name a replacement able to win the necessary parliamentary 
support. The Basic Law also supported the principle of a free 
market, as well as a strong social security system. In summary, 
the new Basic Law showed striking similarities to the constitu- 
tion of the United States. To underscore its provisional charac- 
ter, Article 146 of the Basic Law stated that the document was 
to be replaced as soon as all German people were free to deter- 
mine their own future. 

According to the Basic Law, the Federal Constitutional 
Court could ban a political party that aimed at obstructing or 
abolishing the system of democracy. The activities of a number 
of openly antidemocratic parties during the Weimar Republic 
had inspired the authors of the Basic Law to include this strong 
provision. In 1952 the Socialist Reich Party (Sozialistische 
Reichspartei — SRP), a successor to the NSDAP, became the 
first party to be banned. The SRP had maintained that the 
Third Reich still existed legally, and it had denied the legiti- 
macy of the FRG as a state. A few years later, the KPD was also 
suspended. Although the KPD was at first represented in all 
Land parliaments, it gradually lost support. After 1951 the lead- 
ership of the KPD began to pursue an openly revolutionary 
course and advocated the overthrow of the government. After 
five years of deliberations, the Federal Constitutional Court 
declared the KPD unconstitutional. 

The Birth of the German Democratic Republic 

As with the birth of the FRG, the formation of a separate 
nation-state in the Soviet zone also took only a few years. In late 
1947, the SED convened the "German People's Congress for 
Unity and a Just Peace" in Berlin. To demonstrate the SED's 
claim of responsibility for the political future of all Germans, 
representatives from the Western zones were invited. The con- 
gress demanded the negotiation of a peace treaty for the whole 
of Germany and the establishment of a German central gov- 
ernment. An SED-controlled organization was founded to win 
support for the realization of these demands in all occupation 


Germany: A Country Study 

The Second People's Congress, held in March 1948, pro- 
posed a referendum on German unity, rejected the Marshall 
Plan, and recognized the Oder-Neisse border, which separated 
the Soviet zone from territory that was administered by Poland 
but that had once been part of Germany Thereafter, few West- 
ern politicians had any doubts about the goals of the 
SED-sponsored congress. The congress elected a People's 
Council and created a constitutional committee to draft a con- 
stitution for a "German Democratic Republic," which was to 
apply to all of postwar Germany. The constitutional committee 
submitted the new constitution to the People's Council, and it 
was approved on March 19, 1949. 

The Third People's Congress, its membership chosen by the 
SED, met in May 1949, just after the ending of the Berlin block- 
ade. Apparently reacting to current events in the Western 
zones, where the Basic Law establishing the West German gov- 
ernment in Bonn had just been approved, the congress 
approved the draft constitution of the German Democratic 
Republic (GDR, or East Germany). 

A new People's Council, elected during the Third People's 
Congress, was convened for the first time on October 7, 1949, 
and the constitution of the GDR went into effect the same day. 
The Soviet military administration was dissolved, and its admin- 
istrative functions were transferred to East German authorities. 
The People's Council was renamed and began its work as the 
Volkskammer (People's Chamber), the parliament of the GDR. 
A second parliamentary chamber, the Landerkammer (Provin- 
cial Chamber), consisting of thirty-four deputies, was consti- 
tuted by the five Land diets on October 11, 1949. Wilhelm 
Pieck became the first president of the GDR on the same day, 
and the newly formed cabinet, under the leadership of Otto 
Grotewohl, was installed on October 12, 1949. 

According to the first constitution of the GDR, its citizens 
enjoyed certain basic rights, even the right to strike. In reality, 
however, there was little freedom. According to the constitu- 
tion, both the Council of State (Staatsrat) and the Council of 
Ministers (Ministerrat) were elected by and responsible to the 
Volkskammer. All parties and mass organizations represented 
in this body were united in the National Front, under the ideo- 
logical leadership of the SED. The Volkskammer was a mere 
forum for speeches and mock debates. In reality, all policy mat- 
ters were decided by the Politburo of the SED, on which most 


Historical Setting: 1945 to 1990 

important functionaries of the Council of State and the Coun- 
cil of Ministers had a seat. 

The party structure of the SED had been reorganized in the 
image of the Communist Party of the Soviet Union even before 
the foundation of the GDR, and the system of nomenklatura 
(see Glossary), with its strict system of ideological education 
and selection of candidates for all functions in party and state, 
was introduced. Within a few months, East Germany became a 
model for all other satellites of the Soviet Union. 

West Germany and the Community of Nations 

At the end of World War II, Germany was a defeated nation 
occupied by foreign powers. It had lost its national sovereignty, 
and the world saw it as a pariah, guilty of crimes without paral- 
lel in history. In addition to rebuilding their shattered country 
in a physical sense, most leading German politicians saw their 
main goals in the coming decades as restoring their country's 
reputation, regaining its sovereignty, and becoming once again 
a member in good standing in the community of nations. 

The figure who dominated West Germany's politics in its 
first two decades was Konrad Adenauer, a politician totally 
committed to restoring his country to an honored place 
among nations. He saw little likelihood that the Soviet occupa- 
tion of East Germany would soon end; hence, he sought to 
build a strong West Germany firmly attached to the Western 
community of parliamentary democracies. As president of the 
Parliamentary Council, Adenauer had played a leading role in 
the process of finalizing and passing the Basic Law in 1949. 

Even before he participated in fashioning the country's con- 
stitution, Adenauer had had a long and eventful political 
career. Born in 1876 in Cologne, he studied law and economics 
and became active in local politics. As a member of the Catho- 
lic-based Center Party, he became the mayor of his home town 
in 1917. The National Socialists deposed him in 1933, and, 
after the attempt on Hitler's life on July 20, 1944, he was 
arrested and imprisoned for four months. After the war, the 
United States reinstalled him as mayor of Cologne. The British 
military authorities, however, fired him from this position 
because of alleged incompetence. In March 1946, Adenauer 
became chairman of the CDU in the British occupation zone 
and, after having shown extraordinary leadership in the delib- 
erations on the Basic Law, became the first chancellor of the 
newly formed state (see table 3, Appendix). 


Germany: A Country Study 

One of Adenauer's main goals was regaining his country's 
sovereignty. Although the Basic Law gave full legislative, execu- 
tive, and judicial powers to the new FRG and its Lander, certain 
powers were reserved for the occupying authorities. The Occu- 
pation Statute, drawn up in April 1949 by the foreign ministers 
of the Four Powers, gave the occupation authorities the right to 
supervise the new state's foreign policy, trade, and civil avia- 
tion, as well as the right, under special circumstances, to 
assume complete control over their own occupation zones. 

By means of another statute, the Ruhr Statute, likewise con- 
cluded in April 1949, the administration of the resources and 
industrial potential of the Ruhr area was also kept under for- 
eign control. In the past, the area had been a key element in 
the building of Germany's military machine. France, in particu- 
lar, sought safeguards against future threats to its national secu- 
rity by arranging the creation of the International Authority for 
the Ruhr, which, under the direction of France, Belgium, the 
Netherlands, and Luxembourg, controlled the distribution of 
the area's resources. 

Although the Ruhr Statute was designed to prevent Ger- 
many from ever again becoming a threat to its neighbors, it 
later served as the first instrument of economic cooperation 
for the region. In conformity with the Petersberg Agreement of 
November 1949 with the Western Allies, the FRG became a 
member of the International Authority for the Ruhr and was 
granted the right to establish consular relations with foreign 
countries. Furthermore, the dismantling of German industrial 
plants in the Ruhr area was largely stopped, and Germany was 
allowed to again build merchant ships. The winning of these 
important concessions was Adenauer's first major success as 

In the spring of 1950, French foreign minister Robert Schu- 
man recommended the creation of the European Coal and 
Steel Community (ECSC) to revive European economic coop- 
eration and prevent future conflict between France and Ger- 
many. According to Schuman's plan, countries willing to place 
their coal and steel industries under an independent authority 
could join. 

Once again, Adenauer seized the opportunity to further 
integrate West Germany into Western Europe. Against the 
SPD's strong opposition, the FRG entered into negotiations 
with France, Belgium, the Netherlands, Luxembourg, and Italy 
on the formation of the ECSC. Negotiations were successfully 


Historical Setting: 1945 to 1990 

concluded in June 1952. The ECSC superseded the Interna- 
tional Authority for the Ruhr and laid the foundations of the 
future European Community (EC — see Glossary; see European 
Union, ch. 8). Adenauer's conciliatory but resolute foreign pol- 
icy also secured the admission in 1951 of the FRG into the 
Council of Europe, a body established in May 1949 to promote 
European ideals and principles. 

Another important step for the FRG on its path toward reen- 
try into the community of nations was Adenauer's unwavering 
position on restitution to the victims of Nazi crimes. Of particu- 
lar significance was the normalization of relations with Israel 
and with the Jewish people in general. Although the terrible 
atrocities that had occurred during the war could not be 
undone, material restitution could at least improve the lot of 
the survivors. In 1952 a reparations agreement with Israel was 
arranged that called for the payment of DM3 billion to the Jew- 
ish state over the next twelve years. Additional agreements with 
Jewish organizations provided for restitution to Jewish victims 
throughout the world. Through such actions, the FRG sought 
to meet its obligations as the legal successor to the German 
Reich, a position it had accepted since the FRG's founding. 

Rearmament and the European Defense Community 

The outbreak of the Korean War in 1950 convinced Western 
leaders of the growing threat of international communism. 
The United States began to encourage the Europeans — the 
FRG in particular — to contribute to their own defense. For 
Germany, five years after having lost the most devastating of all 
wars, this meant forming an army, a step unthinkable for many 
Germans. Germany's rearmament was also anathema to some 
of its neighbors, especially France. As the Korean War contin- 
ued, however, opposition to rearmament lessened within the 
FRG, and China's entry in the war caused France to revise its 
negative position toward German rearmament. 

To contain a newly armed Germany, French officials pro- 
posed the creation of the European Defense Community 
(EDC) under the aegis of the North Atlantic Treaty Organiza- 
tion (NATO). Adenauer quickly agreed to join the EDC 
because he saw membership as likely to increase his country's 
sovereignty. The treaties establishing the EDC were signed in 
May 1952 in Bonn by the Western Allies and the FRG. 
Although the Bundestag ratified the treaties, the EDC was ulti- 
mately blocked by France's parliament, the National Assembly, 


Germany: A Country Study 

because it opposed putting French troops under foreign com- 
mand. The French veto meant that a new formula was needed 
to allay French fears of a strong Germany. 

The negotiations surrounding the planned rearmament of 
the FRG and the creation of the EDC provoked a Soviet coun- 
termeasure. After a second East German proposal for talks on a 
possible unification of the two Germanys failed because of the 
FRG's demands for free elections in the GDR, the Soviet Union 
put forth a new proposal to the Western Allies in March 1952. 
The Soviet Union would agree to German unification if the 
Oder-Neisse border were recognized as final and if a unified 
Germany were to remain neutral. If the proposal were 
accepted, Allied troops would leave Germany within one year, 
and the country would obtain its full sovereignty. 

Although the offer was directed to the Western Allies, its 
content was aimed directly at the West German public and 
aroused lively discussion about the country's future. Adenauer 
was convinced, however, that even if the Soviet proposal were 
serious, an acceptance of the plan would mean Germany's 
exclusion from the community of Western democracies and an 
uncertain future. Together with the Western Allies, which did 
not wish to act without his consent, Adenauer continued to 
demand free elections supervised by the United Nations (UN) 
in all of Germany as a precondition for negotiations. The 
Soviet Union declined and abandoned its proposal. Adenauer 
was harshly criticized by the opposition for not having seized 
this opportunity for unification. As his impressive victory in the 
Bundestag elections of 1953 clearly demonstrated, however, 
Adenauer had acted according to the wishes of the overwhelm- 
ing majority of West Germans (see table 4, Appendix). 

Adenauer's decision to turn down the Soviet proposal was 
convincing evidence that the FRG intended to remain firmly 
anchored in the Western defense community. After plans for 
the EDC had failed because of the French veto, negotiations 
were successfully concluded on the Treaties of Paris in May 
1954, which ended the Occupation Statute and made the FRG 
a member of the Western European Union (WEU — see Glos- 
sary) and of NATO (see The North Atlantic Treaty Organiza- 
tion; Western European Union, ch. 8). On May 5, 1955, the 
FRG declared its sovereignty as a country and, as a new mem- 
ber of NATO, undertook to contribute to the organization's 
defense effort by building up its own armed forces, the 
Bundeswehr (see Creation of the Bundeswehr, ch. 9). 


Historical Setting: 1945 to 1990 

The FRG contributed to NATO's defense effort by building 
up the Bundeswehr, an undertaking that met with considerable 
opposition within the population. For many, the memories of 
the war were still too vivid. To avoid separating the army from 
the country's civilian and political life, as was the case during 
the Weimar Republic, laws were passed that guaranteed civilian 
control over the armed forces and gave the individual soldier a 
new status. Members of the conscription army were to be "citi- 
zens in uniform" and were encouraged to take an active part in 
democratic politics. Although West Germans generally 
remained less than enthusiastic about their new army, the 
majority accepted the responsibility of sharing the burden of 
defense with the United States and the other members of 

By 1955 the Soviet Union had abandoned efforts to secure a 
neutralized Germany, having become convinced of the FRG's 
firm position within the Western Alliance. Following the Four 
Power Conference in Geneva in July 1955, Chancellor Ade- 
nauer accepted an invitation to visit Moscow, seeking to open 
new lines of communication with the East without compromis- 
ing the FRG's firm commitment to the West. In Moscow in Sep- 
tember, he arranged for the release of 10,000 German war 
prisoners. In addition, without having recognized the division 
of Germany or the Oder-Neisse line as permanent, West Ger- 
man negotiators also established diplomatic relations with the 
Soviet Union. 

The Soviet Union had recognized the GDR as a state in 
1954, and the two countries maintained diplomatic relations 
with one another. The FRG had not, however, recognized the 
GDR. And to dissuade other countries from recognizing East 
Germany, Adenauer's foreign policy adviser, Walter Hallstein, 
proposed that the FRG break diplomatic relations with any 
country that recognized the GDR. The proposal was based on 
the FRG's claim, as a democratic state, to be the only legitimate 
representative of the German people. The Hallstein Doctrine 
was adopted as a principle of West German foreign policy in 
September 1955 and remained in effect until the late 1960s. 

Another important development in the FRG's relations with 
its neighbors was that the Saarland rejoined the FRG in 1957. 
After World War II, France had attempted to separate this 
region economically and politically from the rest of Germany. 
In 1947 the Saarland received its own constitution and was vir- 
tually autonomous. During negotiations leading to the Treaties 


Germany: A Country Study 

of Paris, the FRG and France agreed, in the Saar Statute, that 
the Saarland should become a territory under the control of 
the Council of Europe. However, in the referendum of Octo- 
ber 1955, which was supposed to confirm the Saar Statute, 
Saarland voters rejected the statute by a two-thirds majority, an 
indication that they wished their region to become part of the 
FRG. On January 1, 1957, the Saarland became a West German 

In addition to his success in building a close and firm rela- 
tionship with the United States, another of Adenauer's great 
foreign policy achievements was reconciliation with France, 
with which Germany had been locked in rivalry and conflict for 
centuries. In spite of remaining disagreements on the areas of 
European integration and NATO, a basis for the development 
of more normal relations between their two countries was 
forged upon a good personal understanding between Ade- 
nauer and French president Charles de Gaulle, who had 
assumed the French presidency in 1958. 

The German-French Friendship Treaty (Elysee Treaty), 
which went into effect in January 1963, called for regular con- 
sultations between the two governments, semiannual meetings 
of the chiefs of state, and a youth exchange program. The 
treaty was seen by many as a positive step in the history of a dif- 
ficult relationship between the two countries. Of greater 
importance to the majority of West Germans, however, was the 
country's relationship with the United States and its secure 
place within the Western defense community. 

Social Market Economy 

Germany's economic growth during the first decades after 
the war at times overshadowed its marked success at joining the 
international community. In 1945 the country's economy was 
shattered. A good part of what survived was later dismantled 
and carried off by the victorious Allies. Within Germany there 
was much argument about how to rebuild the economy and 
what its nature should be. Socialist politicians argued for a cen- 
tral distribution system, extensive state controls, and the 
nationalization of banks and industry. Their main opponent 
was Ludwig Erhard, a liberal economist appointed to head the 
office of economic affairs in the Bizone, who later became min- 
ister for economics and ultimately FRG chancellor (1963-66), 
succeeding Adenauer. 


Historical Setting: 1945 to 1990 

Erhard's concept of a socially responsive market economy 
based on free trade and private enterprise, aided by the infu- 
sion of capital through the Marshall Plan, proved to be the 
ideal basis for the strong recovery of the West German econ- 
omy, culminating in the economic miracle ( Wirtschaftswunder) 
of the 1950s (see The Social Market Economy, ch. 5). In some 
areas, for instance in housing and in agriculture, prevailing cir- 
cumstances required the introduction of price controls and 
subsidies. Controls to prevent the formation of cartels and to 
foster monetary stability also remained the state's responsibil- 
ity. The state likewise furthered the accumulation of private 
capital and protected ordinary citizens by establishing a gener- 
ous system of social services that included statutory health, 
unemployment, and pension insurance programs. 

West Germany's economy functioned very well for several 
decades, and the country became one of the world's wealthiest 
(see The Economic Miracle and Beyond, ch. 5). Thanks to the 
strong social welfare component and the system of codetermi- 
nation, which gave workers in factories some say about their 
management, West German industry enjoyed a long period of 
labor peace. The export-oriented economy received another 
boost with the creation of the European Economic Community 
(EEC — see Glossary) by the Treaty of Rome in March 1957. 
West Germany was one of the EEC's founding members. 

Ludwig Erhard and the Grand Coalition 

Konrad Adenauer assumed the chancellorship of the newly 
founded FRG in 1949, at the age of seventy-three. From the 
beginning, his primary foreign policy goals had been the 
achievement of German reunification through a policy of 
strength, the building of strong relations with the United 
States, and reconciliation with France. 

Until the elections of 1961, Adenauer had enjoyed the sup- 
port of a healthy CDU/CSU majority in the Bundestag. Various 
domestic issues and very likely also the Berlin crisis, however, 
reduced the CDU/CSU's strength in the Bundestag and forced 
the formation of a coalition government with the FDP. The 
work of this government was impeded by differences of opin- 
ion from the outset. Following the resignation of FDP cabinet 
members in protest over a controversy surrounding the arrest 
of Rudolf Augstein, editor of the newsmagazine Der Spiegel, for 
allegedly having reported classified material concerning NATO 
exercises, the working climate of the coalition deteriorated. 


Germany: A Country Study 

Forced to accept the resignation of his powerful minister of 
defense, Franz Josef Strauss, who had had Augstein arrested, 
and facing an erosion of support within the CDU, Adenauer 
resigned on October 15, 1963. 

Ludwig Erhard succeeded Adenauer as chancellor. Under 
Erhard's leadership, the CDU/CSU-FDP coalition remained in 
power until 1966. Erhard's more liberal economic policy 
toward the East European states that maintained diplomatic 
relations with East Germany made maintaining the Hallstein 
Doctrine difficult. In addition, his position of favoring close 
coordination of German foreign policy with the United States 
was resisted by the "Gaullists," even those in his own party, who 
favored a continuation of Adenauer's close relations with 

The CDU/CSU did well in the elections of 1965, but rela- 
tions with the FDP had deteriorated. A recession and a budget 
crisis caused the FDP to drop out of the coalition. Erhard ruled 
with a minority government for a short time, but after the 
opposition's significant gains in several Land elections, his 
party formed a new coalition government with the SPD. Erhard 
resigned as chancellor in November 1966, less successful in 
that position than he had been as the "father of the economic 

When the CDU/CSU entered into a coalition with the SPD 
in December 1966, West Germany was experiencing unprece- 
dented economic troubles. High unemployment, a relatively 
high budget deficit, and an unexpected rise in support for 
right-wing groups, such as the National Democratic Party of 
Germany (Nationaldemokratische Partei Deutschlands — 
NPD), brought West Germany's largest parties together to 
form what was called the Grand Coalition. Kurt Georg 
Kiesinger (CDU), who had served as minister president of 
Baden-Wurttemberg, was appointed chancellor; Willy Brandt 
(SPD), the governing mayor of Berlin, became vice chancellor 
and minister of foreign affairs; and Karl Schiller (SPD) was 
appointed minister for economics. Considered by many as 
"unnatural" because the coalition partners came from opposite 
ends of the political spectrum, the coalition was seen as a tem- 
porary solution needed to gain the cooperation of the trade 
unions and stabilize the economy. 

The Ulbricht Era, 1949-71 

Soviet dictator Stalin died in March 1953. In large portions 


Konrad Adenauer, federal 
chancellor, 1949-63 
Ludwig Erhard, federal 
chancellor, 1963-66 
Kurt Georg Kiesinger, federal 
chancellor, 1966-69 
Courtesy German 
Information Center, New York 

Germany: A Country Study 

of the East German population, particularly among workers 
suffering under the high production quotas set by the SED, Sta- 
lin's death gave rise to hopes for an improvement in living con- 
ditions and for an easing of political terror. In an attempt to 
stave off increasing unrest among the population as living stan- 
dards were worsening and production quotas were being 
raised, the East German leadership, headed by General Secre- 
tary Walter Ulbricht, announced new economic policies that 
would end price hikes and increase the availability of consumer 
goods. Ulbricht refused, however, to lower production goals for 
industry and construction, which had been increased by 10 
percent on May 28, 1953. 

On the new parade grounds at East Berlin's Stalin Allee, a 
symbol of communist pride, enraged workers assembled in pro- 
test on June 16. The following day, demonstrations were held 
in most industrial cities of the GDR. Demands were made for 
comprehensive economic reforms and political changes, 
including Ulbricht's resignation and free elections. Over- 
whelmed by such widespread opposition to their policies, the 
East German authorities were unable to quell the protests. 
Soviet military units stationed in East Germany were called in 
and, with the help of East German police units, suppressed the 
unrest within two days. Order was restored at a cost of an esti- 
mated several dozen deaths and 1,000 arrests. Ulbricht, the fig- 
ure largely responsible for the causes of the demonstrations, 
had triumphed, but the uprising demonstrated the frailty of 
the East German regime and signaled the East German popula- 
tion's "will to freedom." 

Born in Leipzig in 1893, Ulbricht had served on the Western 
Front in World War I and had joined the KPD in 1919. He 
advanced quickly in the party hierarchy, becoming Reichstag 
deputy in 1928. After Hitler's seizure of power, Ulbricht went 
into exile. From 1937 to 1945, he worked for the party in Mos- 
cow. After the war, he returned to Berlin to build up the KPD 
under the protection of the Soviet Union. By 1950 he was 
chairman of the SED and through a variety of positions ruled 
the East German state with an iron fist for the next two decades 
by successfully eliminating every potential competitor within 
the SED leadership. 

Consolidation of the New State 

The most important instrument employed by East German 
authorities to guarantee their absolute rule was the State Secu- 


Historical Setting: 1945 to 1990 

rity Service (Staatssicherheitsdienst, commonly referred to as 
the Stasi). Founded in early 1950 as the secret service branch 
of the Ministry for State Security (Ministerium fur Staatssicher- 
heit — MfS), the Stasi came to exercise almost complete control 
over the population of the GDR. During the first five years of its 
existence, Stasi personnel were trained by Soviet instructors. In 
addition to its surveillance of the East German population — 
which was carried out with sinister thoroughness up until the 
final days of the GDR — the Stasi conducted extensive espio- 
nage activities in the West, particularly in the FRG. 

Aside from its approximately 100,000 full-time employees, 
the Stasi could also rely on the assistance of nearly 2 million 
civilian spies, or so-called informal employees (Informelle Mitar- 
beiter — IM), who reported regularly from domestic listening 
posts or from abroad. Experts agree that before its dissolution 
in 1990, the Stasi had developed the most perfect spying system 
ever devised to watch over its own citizens. It had truly realized 
the idea of the "glass-citizen," whose every activity was known to 
and controlled by the state. In Stasi headquarters in East Ber- 
lin, detailed information on individual citizens was collected in 
huge archives, which survived, largely intact, the downfall of 
the East German state. 

An equally important role in building a permanent power 
base for the SED was played by mass organizations. One of the 
most important was the Free German Youth (Freie Deutsche 
Jugend — FDJ), founded in March 1946, in which young people 
between the ages of fourteen and twenty-five were to be indoc- 
trinated as members of a new socialist society. Together with its 
suborganization for youngsters from six to fourteen years of 
age, the Young Pioneers — later called the Pioneer Organiza- 
tion "Ernst Thalmann," in memory of the chief of the KPD dur- 
ing the Weimar Republic, who was killed in a concentration 
camp — the FDJ soon became an effective instrument for influ- 
encing the coming generations. An important part of its influ- 
ence was that membership in the FDJ soon determined access 
to institutions of higher learning, recreation and sports facili- 
ties, and ultimately career opportunities. 

Another important mass organization was the Free German 
Trade Union Federation (Freier Deutscher Gewerkschafts- 
bund — FDGB), which attempted to motivate the workforce to 
achieve production goals and also provided members with 
opportunities for inexpensive vacations at FDGB-owned sea- 


Germany: A Country Study 

shore resorts. Similarly, the interests of women were served by 
the Democratic Women's Federation of Germany. 

By the end of 1947, all facets of society were organized in 
associations and groupings under the control of the SED. The 
GDR authorities also sought to deprive potential enemies 
within the state of the traditions and institutions upon which 
the state and society had been founded. A primary target for 
complete transformation was the court system. Judges and 
attorneys soon came to be used as mere instruments to carry 
out Marxist-Leninist goals. The legality of actions was deter- 
mined by the political leadership. 

The SED also declared the traditional administrative division 
of East Germany into five Lander an obstacle to "efficient" gov- 
ernance. The five Lander, all grown out of long historical tradi- 
tions, were abolished and fourteen administrative districts 
established. This measure gave the central government in East 
Berlin much greater control over the activities in these dis- 
tricts, which were now much smaller, and, equally important, 
allowed it to break with another aspect of Germany's despised 
bourgeois history. 

Planned Economy 

In the GDR, as in the other new "people's republics," the 
authorities' goal of abolishing private property and every trace 
of capitalism was to be implemented in several steps. By taking 
possession of all resources, as well as of the means of produc- 
tion and distribution, the socialist state hoped to be able to 
compete successfully with the capitalist West and finally dem- 
onstrate the superiority of the socialist system. 

Patterned on the Soviet model, the East German economy 
was transformed into a state-controlled, centrally planned pro- 
duction and distribution system by 1948. Beginning in 1945, 
large tracts of real estate and factories were taken over by the 
state under reform programs for agriculture and industry. 
After the foundation of the GDR, these reforms were pursued 
with vigor. In 1949 the new state became a member of the 
Council for Mutual Economic Assistance (Comecon), which 
included all other Soviet satellite states and had been created 
in order to coordinate economic planning in socialist states 

The concept of multiyear plans was introduced with the First 
Five-Year Plan of 1951. It was intended to make up war losses 
and also make possible reparations payments to the Soviet 


Historical Setting: 1945 to 1990 

Union. For this purpose, heavy industry was built up on a large 
scale. Production goals could not be reached, however, because 
of a chronic shortage of raw materials. The manufacture of 
consumer products was neglected completely. 

The Second Five-Year Plan, started in 1956, aimed to com- 
plete the nationalization of all industrial concerns and the col- 
lectivization of agricultural enterprises. By the early 1960s, 
Kombinate (collective farms) accounted for about 90 percent of 
all farm production. Private farmers who resisted collectiviza- 
tion were arrested. 

When production began to decline in the early 1960s, the 
SED introduced the so-called New Economic System of decen- 
tralized planning, which delegated some production decisions 
previously the prerogative of the central planning authorities 
to the Association of Publicly Owned Enterprises (Vereinigung 
Volkseigener Betriebe — WB). The WB was to foster special- 
ized production within individual branches of industry, includ- 
ing the previously neglected production of consumer goods. 
Production declined even further, however, and it became 
increasingly evident to many East Germans that their "planned 
economy" had lost the economic battle with the capitalist West. 

The Warsaw Pact and the National People's Army 

The Warsaw Pact, which included the Soviet Union and all 
its satellite states in Eastern Europe, was created on May 14, 
1955, just days after the FRG joined NATO. Like NATO, its 
Western counterpart, the Warsaw Pact guaranteed mutual mili- 
tary assistance to its members in the event of an attack and 
coordination of all member forces in a unified command. The 
existence of this command, which was situated in Moscow, 
allowed the Soviet Union to station troops on its allies' territo- 
ries. Each member state was also obligated to establish its own 
armed forces. In the GDR, the People's Police (Volkspolizei, or 
Vopo) had created paramilitary units in 1952. The Soviet 
Union had unofficially helped form East German naval and air 
force units beginning in 1950. 

On March 1, 1956, the National People's Army (Nationale 
Volksarmee — NVA) was officially created by transferring the 
existing paramilitary units of the People's Police to the NVA. 
The new army was officially under the leadership of the SED 
and under the direction of the newly created Ministry for 
National Defense. Initially, the NVA was to be staffed by volun- 
teers only, but in 1962, when recruitment presented increasing 


Germany: A Country Study 

difficulties for the SED and its support organizations, conscrip- 
tion was introduced. Before the construction of the Berlin 
Wall, conscription had been seen as impossible to enforce. 

As early as the 1950s, the NVA became the most effective and 
best-equipped fighting force in the Warsaw Pact aside from the 
Soviet army. By the early 1980s, the NVA had an active strength 
of 167,000, of which approximately 60,000 were professional 
soldiers; there were approximately 3 million reservists. Most 
weapons were of Soviet origin. 

The Berlin Wall 

Besides its increasing economic difficulties, by the end of the 
1950s the GDR encountered another problem that began to 
threaten its existence: large numbers of people were leaving 
East Germany for the West. Nearly half of those who fled the 
GDR were under twenty-five years of age. Although crossing 
the border between the two German states had become dan- 
gerous after new security measures were introduced in the 
early 1950s and severe penalties for the crime of "flight from 
the republic" (Republikflucht) were introduced by GDR authori- 
ties in 1957, a relatively safe escape route remained via West 
Berlin, which could be reached from East Berlin using the city's 
public transportation network. Once in West Berlin, refugees 
were registered and then transported to the FRG by air. 

Alarmed by the continuous population drain, the East Ger- 
man Politburo ordered the erection of a wall along the border 
between West Berlin and East Berlin. On Sunday morning, 
August 13, 1961, workers began building a three-meter-high 
concrete wall along the border of the Soviet sector of the city. 
Within a few hours, public transportation lines were cut, and 
West Berlin was sealed off from East Germany. Chancellor Ade- 
nauer and West Berlin's governing mayor, Willy Brandt, sought 
to calm the outraged West Berliners. The Western Allies did 
not react with force because they were unwilling to endanger 
world peace. Up to that date, nearly 3.5 million had left the 
GDR for West Germany. After the building of the wall, the 
stream of refugees decreased to a mere trickle. 

Despite the construction of the Berlin Wall, many East Ger- 
mans still tried to escape. Several hundred of those attempting 
to leave the GDR were killed; others were captured, perhaps 
after being wounded by automatic guns or mines along the 
border, and sentenced to long prison terms. With the sealing 


Historical Setting: 1945 to 1990 

off of East Berlin, the East German regime had solved the refu- 
gee situation. 

The "Socialist State of the German Nation" 

The building of the Wall effectively halted large-scale emi- 
gration from the GDR. Although the SED failed to gain the 
active support of the majority of the population, young people, 
especially, began to tolerate the regime, at least passively. In the 
absence of any alternatives, they fulfilled their routine duties in 
youth organizations, schools, and workplaces. By the 
mid-1960s, the regime could afford to lessen internal pressures 
on its citizens, who, encouraged by increased production of 
consumer goods, had largely given up their open resentment 
against the SED and had turned their attention to improving 
their standard of living. 

Ulbricht's state visit to Egypt in 1965 ended the GDR's politi- 
cal isolation. A previously unknown pride in East German 
achievements and a feeling of distinct GDR identity began to 
develop, first among ruling party functionaries and then gradu- 
ally among segments of the population. In 1967 the GDR lead- 
ership, encouraged by these developments, attempted to gain 
official recognition of its autonomy from the FRG. When the 
FRG refused to grant recognition, the GDR government pro- 
claimed a separate GDR citizenship and introduced a visa 
requirement for West Germans traveling to West Berlin and to 
the GDR. With these measures, the GDR began to practice a 
policy of new assertiveness and ideological delimitation 
(Abgrenzung) in response to the FRG's policy of recognizing 
only one German citizenship. 

Membership in the UN was a primary foreign policy goal of 
the GDR in the late 1960s. A veto by the Western powers in the 
UN Security Council blocked the GDR's bid, however. The 
GDR did gain admission to the International Olympic Commit- 
tee, which permitted East German athletes to participate in the 
Olympic games as a separate team. For the GDR, however, the 
ultimate breakthrough in the area of foreign policy — a treaty 
with the FRG — came only after international political tensions 
began to ease under the new spirit of detente. 

Following the conclusion of the Treaty of Moscow between 
the FRG and the Soviet Union in January 1970, a new era of 
communication began between the two German states that cul- 
minated in the signing of the Basic Treaty in December 1972. 
The next year, both states became members of the UN, and 


Germany: A Country Study 

most countries came to recognize the GDR. Permanent diplo- 
matic representations, in lieu of embassies, were established, 
respectively, by the FRG in East Berlin and by the GDR in 
Bonn, demonstrating the new climate of mutual respect and 
cooperation between the two German states. 

In this new setting, there was no longer room for Walter 
Ulbricht, who had maintained a policy of confrontation with 
the West for many years. The Soviet Union, which had demon- 
strated considerably more flexibility than the GDR leadership 
during its negotiations with the FRG, was also irritated by the 
failure of Ulbricht's economic program and by his attempts to 
demonstrate ideological independence by adhering to conser- 
vative Marxist principles. In 1971 the Soviet authorities 
ordered that Ulbricht be relieved of power. His replacement 
was Erich Honecker, who, as secretary of the Central Commit- 
tee of the SED for security matters, had been directly responsi- 
ble for the building of the Berlin Wall. 

The Social Democratic-Free Democratic Coalition, 

In the West German Bundestag elections of September 1969, 
the CDU/CSU remained the largest political group, holding 
eighteen more seats than the SPD. With the help of the FDP, 
which had earlier supported the candidacy of the SPD minister 
of justice Gustav Heinemann for the federal presidency, Willy 
Brandt was able to form an SPD-FDP coalition government, 
with himself as federal chancellor. The SPD-FDP coalition 
lasted until late 1982 and was noted for its accomplishments in 
the area of foreign policy. The formation of this new coalition 
forced the CDU/CSU into opposition for the first time in the 
history of West Germany. 

Willy Brandt 

Willy Brandt became the first democratically elected Social 
Democrat to hold the chancellorship. Born in Lubeck in 1913, 
Brandt first joined the SPD in 1930 and later joined a smaller 
leftist grouping, the Socialist Workers Party (Sozialistiche 
Arbeiterpartei — SAP). After Hitler came to power, Brandt emi- 
grated to Norway, where he became a citizen and worked as a 
journalist. After Germany occupied Norway in 1940, he fled to 
Sweden. Brandt returned to Germany after the war as a news 
correspondent and later as a Norwegian diplomat in Berlin. 


Historical Setting: 1945 to 1990 

After he had again assumed German citizenship, Brandt 
rejoined the SPD in 1947. He became mayor of Berlin in 1957 
and was the SPD candidate for the chancellorship in 1961. In 
the late 1950s, Brandt was a principal architect of the SPD's 
rejection of its Marxist past and adoption of the Bad Godes- 
burg Program, in which the party accepted the free-market 
principle. The triumph of the CDU/CSU in the 1957 national 
elections and widespread and increasing prosperity made such 
a step necessary if the SPD were to win the electorate's favor. In 
1964 Brandt became the chairman of the SPD. From 1966 to 
1969, he served as minister for foreign affairs and vice chancel- 
lor in the Grand Coalition. 

When Brandt became chancellor in 1969, he proposed a 
new policy toward the communist states of Eastern Europe; this 
policy later became known as Ostpolitik (policy toward the 
East). In recognition of his efforts toward detente in Europe, 
he received the Nobel Prize for Peace in 1971. In the early 
1970s, Brandt also engineered a package of treaties that nor- 
malized the FRG's relations with the Soviet Union and with 
Poland, the GDR, and other Soviet-bloc nations. He success- 
fully withstood a vote of no-confidence in the Bundestag in 
April 1972 and won the Bundestag elections in November 1972 
with an impressive relative majority of nearly 45 percent. 
Brandt resigned in May 1974, shocked by the discovery that 
one of his personal assistants, Gunter Guillaume, was a spy for 
the GDR. 

In domestic policy, Brandt and his FDP coalition partners 
initiated legal reforms, including the passage of more liberal 
laws regarding divorce and abortion, the latter reform generat- 
ing intense public discussion. Education reforms calling for 
new types of schools and for overhauling administration of the 
universities were only partially carried out. Brandt and his coa- 
lition partners were more successful in realizing their foreign 
policy goals than in achieving their domestic aims. 


West Germany's relations with the East European states had 
virtually stagnated since the establishment of the Hallstein Doc- 
trine in the mid-1950s. In 1970, in an attempt to lessen tensions 
in Europe, Brandt and his FDP minister for foreign affairs, 
Walter Scheel, agreed to negotiate with the communist bloc. 
For the first time since 1948, the top politicians of the FRG and 
the GDR held talks, with Brandt and the East German prime 


Germany: A Country Study 

minister, Willi Stoph, meeting in Erfurt in East Germany and 
Kassel in West Germany. Although the talks produced no con- 
crete results because Brandt refused to recognize the GDR as a 
sovereign state, communication lines were reopened. 

After coordinating policy goals with the United States, the 
FRG also entered negotiations with the Soviet Union on a 
treaty normalizing relations, in which both countries 
renounced the use of force. The FRG agreed to make no terri- 
torial claims, and it recognized de facto the Oder-Neisse bor- 
der and the border between the FRG and the GDR. FRG 
negotiators, however, insisted that such agreements did not 
alter the West German position on future reunification of the 
country and that the responsibilities of the Four Powers in Ger- 
many remained unchanged by the treaty. They also linked the 
signing of the treaty to a Soviet promise to open talks on nor- 
malizing the Berlin situation. After the Soviet Union had 
agreed to these conditions, the Treaty of Moscow was signed in 
August 1970. The agreement opened the road to negotiations 
with other countries of the Soviet bloc. 

In December 1970, after ten months of complicated negotia- 
tions, the FRG and Poland signed the Treaty of Warsaw. The 
treaty contained essentially the same points as the Treaty of 
Moscow on the question of Poland's western border, the renun- 
ciation of territorial claims by the FRG, and the ongoing 
responsibilities of the Four Powers. In return, Poland agreed to 
allow ethnic Germans still in Poland to emigrate to the FRG. 
During the subsequent debates on the ratification of the two 
treaties, the CDU/CSU and part of the FDP made their con- 
sent contingent on the formulation of a strong statement by 
the Bundestag underscoring Germany's right to reunification 
in self-determination and of the Allies' responsibilities for Ger- 
many and Berlin. 

Concurrent with the negotiations on the treaties of Moscow 
and Warsaw, the Four Powers undertook to end disagreement 
about the status of Berlin in talks that ultimately led to the Four 
Power Agreement (also known as the Quadripartite Agree- 
ment) of September 1971. The talks, which began in March 
1970, got off to a difficult stari because the Western Allies and 
the Soviet Union were deeply divided over their basic interpre- 
tation of the "status of Berlin." After they "agreed to disagree" 
on this point, progress was finally made, and all sides con- 
curred that the status quo of Berlin should not be changed uni- 


Willy Brandt, federal 
chancellor, 1969-74 
Courtesy German 
Information Center, New York 

Helmut Schmidt, federal 
chancellor, 1974-82 
Courtesy German 
Information Center, New York 

The Soviet Union made two very important concessions: 
traffic to and from West Berlin would be unimpeded in the 
future, and the existing ties of West Berlin to the FRG were 
given de facto recognition. Soviet officials, however, insisted 
that West Berlin was not to be considered a territory belonging 
to the FRG and therefore was not to be governed by it. Further- 
more, the Soviet Union made the conclusion of the agreement 
among the Four Powers contingent on the signing of the 
Treaty of Moscow between the FRG and the Soviet Union, 
which was still under negotiation. They thereby established the 
same linkage that the FRG had demanded, but in reverse. 

The Four Power Agreement charged the governments of 
West Berlin and the GDR with negotiating an accord that 
would regulate access to and from West Berlin from the FRG 
and secure the right of West Berliners to visit East Berlin and 
the GDR. The Transit Agreement of May 1972 arranged these 
matters and also secured the rights of GDR citizens to visit the 
FRG, but only in cases of family emergency. 


Germany: A Country Study 

Following the negotiations on traffic between the FRG and 
the GDR, both sides recognized the feasibility of arriving at a 
more comprehensive treaty between the two German states. 
Talks began in August 1972 and culminated in December 1972 
with the signing of the Basic Treaty. In the treaty, both states 
committed themselves to developing normal relations on the 
basis of equality, guaranteeing their mutual territorial integrity 
as well as the border between them, and recognizing each 
other's independence and sovereignty. They also agreed to the 
exchange of "permanent missions" in Bonn and East Berlin to 
further relations. 

After the bitterly contested approval of the Basic Treaty by 
the SPD-FDP-controlled Bundestag in May 1973, a political 
decision that the CDU/CSU had warned against for decades 
became a reality: West Germany's de facto recognition of East 
Germany as a separate state. To many conservatives, the Basic 
Treaty represented the failure of the Hallstein Doctrine and a 
final blow to the possibility of Germany's reunification. Bavaria 
filed a suit in the Federal Constitutional Court in Karlsruhe to 
prevent the treaty's implementation, but the court held the 
treaty to be compatible with the provisions of the Basic Law. As 
a result of the treaty, the FRG and the GDR became members 
of the UN in June 1973. 

Among the states to the east, Czechoslovakia remained the 
only neighbor with which West Germany had not yet normal- 
ized diplomatic relations. Negotiations with this country 
proved to be considerably more difficult than those with the 
Soviet Union or Poland. The main obstacle was a difference in 
interpreting the Munich Agreement of September 1938. On 
the one hand, the FRG maintained that the accord itself had to 
be considered legally valid but that the occupation of Czecho- 
slovakia in March 1939 had voided its provisions. Czechoslova- 
kia, on the other hand, insisted that the accord be considered 
void from the very beginning. Both sides finally agreed that the 
accord was to be considered void, but that all legal proceedings 
in the occupied territory between 1938 and 1945 were to be 
upheld. Once this basic understanding had been reached, the 
treaty with Czechoslovakia, known as the Treaty of Prague, sim- 
ilar in content to the Treaty of Warsaw, was signed in December 
1973, and diplomatic relations were established. Shortly there- 
after, West Germany exchanged ambassadors with Hungary 
and Bulgaria. 


Historical Setting: 1945 to 1990 

Helmut Schmidt 

Following Brandt's resignation in May 1974, the SPD-FDP 
coalition partners unanimously agreed that Minister of Finance 
Helmut Schmidt should head the new government. At fifty-five, 
Schmidt became the youngest chancellor of the FRG. Born in 
Hamburg in 1918, he served as an officer in World War II. 
After the war, he joined the SPD and served in Hamburg's 
municipal government, where he acquired a national reputa- 
tion as a top-notch manager because of his competence in deal- 
ing with a severe flood in 1962. He was the SPD faction leader 
in the Bundestag and minister of defense in the first SPD-FDP 
cabinet. Schmidt gradually became recognized at home and 
abroad as a pragmatic politician and an expert in economic 
and defense matters. His first cabinet included the FDP's 
Hans-Dietrich Genscher as minister of foreign affairs. 
Genscher replaced Walter Scheel, who had been elected fed- 
eral president in 1974. 

Schmidt was confronted with a number of serious problems. 
The economic turbulence caused by the oil crisis of 1973 had 
affected the FRG, and a ban on the use of automobiles on Sun- 
days had been introduced to preserve scarce fuel reserves. Per- 
haps as a result of the crisis, Germans began to recognize 
limitations to economic growth and simultaneously to become 
aware of ecological dangers to the environment inherent in 
their lifestyle. As a result, environmental movements sprang up 
throughout the FRG. 

Worries about the environment and about long-term eco- 
nomic growth became widespread in the next few years, and 
the almost limitless optimism of the postwar period began to 
give way to a mood of uncertainty about the future. Unemploy- 
ment was also on the rise, and labor unions, traditionally reli- 
able allies of the SPD, began to depart from their position of 
solidarity with the SPD-FDP government. In this increasingly 
difficult economic and political environment, Schmidt tried to 
steer a steady course, one often too conservative for his party 
and from which necessary support was at times lacking. 

The Student Movement and Terrorism 

In addition to troubling economic and environmental prob- 
lems for which no easy solutions were available, West Germany 
and its politicians had to contend with two new sources of 
social unrest: the student movement of the late 1960s and early 


Germany: A Country Study 

1970s, and left-wing terrorism, which originated in the late 
1960s, but which had its greatest impact in the 1970s. 

Inspired by the student movement in the United States and 
by the international movement opposing the war in Vietnam, 
as well as by rising opposition to the traditional administration 
of German universities, students organized protest movements 
at a number of German universities in the late 1960s. Sit-ins, 
disruption of lectures, and attacks against buildings housing 
major publishing companies, such as the Axel Springer Group, 
were staged by a minority of student groups, primarily those 
with Marxist ties. Protesters claimed that an "extra-parliamen- 
tary opposition" was needed to ensure representation of the 
people in a state that was governed largely by two major parties. 
The student protest movement had little support among the 
population, however, and was finally absorbed by the estab- 
lished parties. 

Terrorism was also a concern during this period (see Dissi- 
dence and Terrorist Activity, ch. 9). A few radical student ele- 
ments sought to realize their aims through political terrorism. 
Small groups launched violent attacks against "symbols of capi- 
talism." They fire-bombed department stores in several cities, 
broke into police stations, robbed banks, and attacked United 
States military installations. 

One terrorist group, notorious for its brutality, became 
known as the Baader-Meinhof Gang, named after its leaders, 
Andreas Baader and Ulrike Meinhof. Calling themselves the 
Red Army Faction (Rote Armee Fraktion — RAF), their aim was 
to assassinate the "levers of the imperialist power structure," 
thereby provoking the state to abandon lawful methods of 
fighting terrorism. The arrest and imprisonment in 1972 of the 
main RAF leaders led to an intensification of terrorist acts by 
the group, which culminated in 1977 in the kidnapping of 
Hanns-Martin Schleyer, the president of the Federation of Ger- 
man Employers' Associations (Bundesvereinigung der 
Deutschen Arbeitgeberverbande — BDA) and in the hijacking 
six weeks later of a Lufthansa passenger airplane to Mogadishu, 

The aim of both these terrorist actions was the release of 
Baader and the other RAF prisoners. In a spectacular rescue 
action, the Lufthansa airplane was stormed by a special unit of 
the West German Federal Border Force, ending a five-day odys- 
sey through the Middle East. Failing in their coup, Baader and 
three other RAF leaders committed suicide in their prison 


Historical Setting: 1945 to 1990 

cells, and Schleyer was subsequently murdered by his kidnap- 
pers. The police had been successful in discovering hideouts, 
strategy papers, and caches of weapons, however, which led to 
the severe weakening of the organization of the RAF. 

Nevertheless, supported by various international terrorist 
groups, including the GDR's Stasi, the RAF maintained a small 
network committed to assassinating prominent public figures. 
In 1989 they were responsible for the murder of Alfred Herr- 
hausen, a top executive of the Deutsche Bank in Frankfurt, and 
in 1991 for the murder of Detlev Karsten Rohwedder, president 
of the Treuhandanstalt, the agency that managed the privatiza- 
tion of property in the former GDR (see Unification and Its 
Aftermath, ch. 5). 

The Greens 

In the aftermath of the oil crisis of 1973, regional political 
groups concerned with environmental issues began to put up 
candidates in communal and regional elections. In 1980 a 
number of ecological groups, alternative action movements, 
and various women's rights organizations banded together on 
the national level to form the political party that came to be 
called the Greens (Die Grunen). 

Although the political views of the various groups in the new 
party were widely diverse, all agreed that the continuous expan- 
sion of the economy was detrimental to the environment and 
that disarmament was imperative if mankind were to survive. 
The Greens' support for radical peace movements and their 
demand that the FRG withdraw from NATO prevented many 
West Germans from taking the Greens seriously as a political 
force. In the Bundestag elections of 1980, they could muster 
only 1.5 percent of the vote, not enough to win any parliamen- 
tary seats. In the 1983 elections, however, they broke the 5 per- 
cent barrier and won twenty-seven seats in the Bundestag. 

Differing ideological orientations within the Greens soon 
began to undermine the party's effectiveness in the political 
process. Two different factions emerged: the dogmatic funda- 
mentalists (Fundis), who were unwilling to make any compro- 
mises on policy in order to win political allies; and the realists 
(Realos), who were ready to enter into a coalition with the SPD 
on the communal and Land level in order to put environmen- 
talist ideas into practice. 

Another cause of disagreement within the party organiza- 
tion of the Greens was the principle of rotation of seats in the 


Germany: A Country Study 

Bundestag and in Land diets. This policy required deputies to 
give up their seats after only half a term so that other Green 
candidates would have an opportunity to participate in the 
political process. As a result, experienced representatives who 
understood the workings of parliament were forced to relin- 
quish their seats and were relegated to subordinate work in the 
party. Such unrealistic policies persuaded numerous talented 
Green politicians to withdraw from active politics, or to leave 
the party altogether. In 1984 a party leadership consisting only 
of women was elected, giving the Greens an image of practicing 
reverse discrimination. 

Although the Realos among the Greens subsequently partici- 
pated in Land governments as cabinet members, the party 
remained on the periphery of politics during the remainder of 
the 1980s (see The Greens, ch. 7). Nevertheless, the Greens 
positively influenced the views of the traditional political par- 
ties concerning the ecology and the preservation of natural 

The Christian Democratic/Christian Socialist-Free 
Democratic Coalition, 1983- 

The SPD-FDP coalition formed in 1969 became increasingly 
strained in the early 1980s, leading to concerns among the FDP 
leadership about its stability. The SPD had become deeply 
divided because many of its members found Chancellor 
Schmidt's policies too conservative. Particularly troublesome 
was his position on NATO's Dual-Track Decision, which 
required the stationing of new missiles in West Germany if 
Soviet missiles were not withdrawn. FDP chairman Genscher 
feared that Schmidt would lose the backing of the SPD as its 
left wing became more influential. As a result of these fears, 
Genscher began to urge a change in the political constellation 
governing West Germany and the formation of a coalition with 
the CDU/CSU. 

The SPD-FDP coalition broke apart in September 1982 when 
the FDP minister of economics, Otto Lambsdorff, advocated 
cutting social welfare expenditures. Schmidt countered by 
threatening to fire Lambsdorff. The threat prompted the resig- 
nation of all FDP cabinet members. Schmidt presided over a 
minority government for a few days until the FDP, together 
with the CDU/CSU, raised a constructive vote of no-confi- 
dence against the government. Schmidt lost the vote, and Hel- 


Historical Setting: 1945 to 1990 

mut Kohl, head of the CDU, formed a new coalition 
government composed of the CDU, its sister party the CSU, 
and the FDR Kohl himself became chancellor on October 1, 

Born in 1930 in Ludwigshafen in the heavily Roman Catho- 
lic and conservative Rhineland-Palatinate, Kohl was a founding 
member and leader of the CDU youth organization in his 
hometown. He served as minister president of the 
Rhineland-Palatinate from 1969 to 1976, and in the 1976 
national elections he ran unsuccessfully against SPD candidate 
Chancellor Schmidt for the office of chancellor. 

In the 1980 national elections, Franz Josef Strauss was the 
CDU/CSU candidate for chancellor. Strauss, Bavaria's minister 
president and head of the CSU, was one of Germany's most 
influential and colorful politicians. He believed the CDU/CSU 
could come to power in Bonn without the help of the FDP. 
After Strauss lost the elections and Schmidt remained chancel- 
lor, however, Kohl began to steer toward an eventual coalition 
with the FDP because he did not think that conservatives could 
win an absolute majority at the national level. 

New elections for the Bundestag were held in 1983, several 
months after Kohl had assumed the chancellorship. The results 
gave Kohl's government a clear majority and confirmed him as 
chancellor. Throughout his career, Kohl demonstrated a strong 
determination, extraordinary political skills, and a keen sense 
for the political will of the German people. His key role in the 
German reunification process has deservedly earned him a 
position of distinction in German history. 

In the first half of the 1980s, West German politics were 
dominated by the heated discussion of NATO's Dual-Track 
Decision. The peace movement mounted numerous demon- 
strations to protest the possible stationing of United States mis- 
siles in West Germany should the Soviet Union not remove its 
newly stationed SS-20 missiles from Eastern Europe. 

In the mid-1970s, the Soviet Union had decided to modern- 
ize its intermediate-range missile arsenal by the introduction 
and stationing of the advanced ground-based SS-20 systems. 
With a range of approximately 5,000 kilometers, the SS-20 was 
capable of delivering a 150-kiloton nuclear warhead within a 
target radius of 400 meters — a capability that could not be 
matched by any NATO weapon. It was clear that the missile's 
target area was Central Europe. Chancellor Schmidt had been 
among the first to warn of the danger posed by this new Soviet 


Germany: A Country Study 

weapon system. The United States reacted quickly by develop- 
ing two new weapon systems — the Pershing II inter- 
mediate-range rocket and the cruise missile. Although the Per- 
shing II possessed a considerably shorter range and a much 
smaller warhead than the SS-20, it was capable of hitting its 
potential target with almost absolute accuracy. 

At the NATO conference of foreign and defense ministers 
held in December 1979, officials decided to deploy 108 Persh- 
ing II rockets and 464 cruise missiles in Europe by the end of 
1983. They also agreed to enter negotiations as soon as possible 
with the Soviet Union on the stationing of medium-range mis- 
siles in Europe. If Soviet missiles were withdrawn from Central 
Europe, United States missiles would not be positioned in West 
Germany. The United States-Soviet Union talks began in 
Geneva in November 1981 and continued for two years, but 
without achieving results. 

NATO's Dual-Track Decision met with mounting opposition 
from the West German and European peace movement, and 
numerous rallies were held in the early 1980s. In the fall of 
1983, protest demonstrations throughout the FRG were aimed 
at influencing the imminent decision of the Bundestag on 
deployment. Demonstrators feared that if missiles were sta- 
tioned on German soil, the German population would be 
wiped out in the event of a possible nuclear exchange, while 
the Soviet Union would remain unaffected. With time, how- 
ever, the peace movement became increasingly divided, and 
after 1983 it began to have less influence on public opinion. 
Most West Germans saw the Soviet Union as responsible for the 
escalation of the arms race by their deployment of the SS-20 
and, in addition, mistrusted the Soviet Union's apparently 
keen interest in the peace movement in Western Europe. 

Chancellor Kohl and his new government were determined 
to stand by West Germany's commitment to its NATO partners. 
After a lengthy debate in the Bundestag, the CDU/CSU-FDP 
majority coalition voted for deployment, with the SPD and the 
Greens opposing. Stationing of the missiles began immediately, 
and the Soviet Union withdrew from the Geneva negotiations. 
By the mid-1980s, as international tensions began to ease, pub- 
lic attention turned to new prospects for detente between West 
and East. 

The Honecker Era, 1971-89 

Ulbricht's successor in East Germany was Erich Honecker. 


Historical Setting: 1945 to 1990 

Born in 1913 in the Saarland, Honecker joined the Communist 
Party of Germany (Kommunistische Partei Deutschlands — 
KPD) in 1929. As a full-time functionary of the party, he contin- 
ued his work in the underground movement after Hitler came 
to power in 1933 and until arrested by the Nazis in 1935. 
Imprisoned until the end of World War II, Honecker resumed 
his career in 1945 as a leading KPD functionary, becoming 
Ulbricht's assistant on the latter's return to Germany from the 
Soviet Union in 1945. From 1946 to 1955, Honecker served as 
chairman of the youth organization, the Free German Youth 
(Freie Deutsche Jugend — FDJ). He became a member of the 
SED Politburo in 1958. As secretary for security matters of the 
SED Central Committee, Honecker was directly responsible for 
the building of the Berlin Wall in 1961. When Ulbricht was 
removed from power in 1971, Honecker succeeded him in his 
party functions and became chief of the SED. Honecker was 
head of state of the GDR from 1976 until his resignation in 
1989. After his fall from power, Honecker found refuge in the 
Embassy of Chile in Moscow until his extradition to Berlin in 
1992, where he was brought to trial. He was released from cus- 
tody in 1993 for health reasons and went to Chile, where he 
died in 1994. Although less rigid than Ulbricht, as evidenced by 
his willingness to sign agreements with the West that opened 
the GDR somewhat and made the lives of its citizens easier, 
Honecker remained a convinced communist until his death. 

The Conference on Security and Cooperation in Europe 

Keen to gain international recognition of its sphere of inter- 
est and believing that such recognition would solidify its grip 
on its East European satellite states, the Soviet Union, begin- 
ning in the early 1970s, sponsored an initiative calling for the 
convening of a Conference on Security and Cooperation in 
Europe (CSCE — see Glossary). For the West, such meetings 
meant the possibility of tying the Soviet Union and its satellites 
to an international security system, thereby lessening tensions, 
furthering economic cooperation, and obtaining humanitarian 
improvements for the people of Eastern Europe. The first of 
the series of conferences opened in July 1973 in Helsinki and 
was attended by the foreign ministers of the thirty-five member 
states. At the conference's final meeting in 1975, the heads of 
state of all member countries were in attendance for the sign- 
ing of the Final Act, or the Helsinki Accords. 


Germany: A Country Study 

As subsequent CSCE conferences showed, Soviet officials 
had totally underestimated the effect of the provisions for the 
exchange of information, which allowed for the unscrambled 
reception of Western media broadcasts within the geographic 
area of the Warsaw Pact countries. East Germans benefited 
especially from access to West German radio and television pro- 
grams, which furnished previously unobtainable news about 
world events. Television viewers in the East also became aware 
of an obviously far superior standard of living in the West and 
developed a new awareness of the deficiencies of the commu- 
nist regime, an awareness that fifteen years later led to the 
events that brought down that regime. 

The New East German Constitution and the Question of 

Although the GDR had finally achieved its goal of interna- 
tional recognition with the signing of the Basic Treaty in 
December 1972, renewed concerns about the stability and 
identity of the GDR as a second German state drove the SED 
Politburo toward a policy of reaffirming the socialist nature of 
the state. As early as 1971, Honecker had launched a campaign 
to foster a socialist identity among East Germans and to 
counter West German emphasis on the historical unity of the 
German nation. In 1974 the GDR constitution was even 
amended to increase a sense of separate development. All ref- 
erences in the document to the "German nation" and to Ger- 
man national heritage were deleted. 

The SED had long revised German history to make it con- 
form to socialist purposes. Symbols of Prussian heritage in Ber- 
lin, such as the equestrian statue of Prussian king Frederick the 
Great, had been removed. And in 1950, Ulbricht had ordered 
the 500-year-old palace of the Hohenzollern Dynasty demol- 
ished because it was a symbol of "feudal repression." 

Just as the SED was striving to develop a separate GDR con- 
sciousness and loyalty, however, the new access to Western 
media, arranged by the CSCE process and formalized in the 
Helsinki Accords of 1975, was engendering a growing enthusi- 
asm among East Germans for West Germany's Ostpolitik. 
Honecker sought to counter this development by devising a 
new formula: "citizenship, GDR; nationality, German." After 
the SED's Ninth Party Congress in May 1976, Honecker went 
one step further: figures of Prussian history, such as the 
reformers Karl vom Stein, Karl August von Hardenberg, Ger- 


Historical Setting: 1945 to 1990 

hard von Scharnhorst, and the founder of Berlin Univer- 
sity, Wilhelm von Humboldt, were rehabilitated and claimed as 
historical ancestors of the GDR. Frederick the Great and Otto 
von Bismarck were also restored to prominence. Even Martin 
Luther was judged a worthy historical figure who needed to be 
understood within the context of his times. 

These concessions did not alter the regime's harsh policy 
toward dissidents, however. Primary targets were artists and 
writers who advocated reforms and democratization, including 
Wolf Biermann, a poet-singer popular among East German 
youth who was expelled from the GDR in 1976. A wave of per- 
secution of other dissident intellectuals followed. Some were 
imprisoned; others were deported to West Germany. Nonethe- 
less, political statements by East German intellectuals, some 
going so far as to advocate reunification, continued to appear 
anonymously in the West German press. 

Relations Between the Two Germanys 

Although Honecker pursued a tough policy against internal 
dissidents and carefully guarded the GDR's unique identity as 
the state in which the old Marxist dream of socialism had 
become a reality, he was keenly aware of the necessity for com- 
munication and reasonable working relations with the FRG. 
His dream of being received at the White House as a guest of 
state by United States president Ronald Reagan was never real- 
ized, but Honecker opened more lines of communication to 
Western politicians than had his predecessors. 

As a consequence of the Helsinki Accords, the reception of 
Western news media broadcasts was tacitly allowed in the GDR. 
In the early 1980s, it also became possible for citizens of the 
GDR who were not yet pensioners to visit relatives in the West 
in cases involving urgent family matters. Under a new regula- 
tion, refugees who had gone to the West before 1981 and had 
therefore automatically lost their GDR citizenship could now 
enter the GDR with their West German passport. These mea- 
sures benefited East Germans and, together with access to 
Western television, helped to create a new relaxed atmosphere 
in the GDR. 

On the economic side, the GDR fully utilized the advantages 
of the Interzone Trading Agreement, which allowed special 
consideration for the export of goods from the GDR to the 
FRG and other EC member states, as well as the import of vital 
industrial products from the West. Diplomatic relations with 


Germany: A Country Study 

the EC were established in 1988, a reversal of the former policy 
that saw the organization as a threat to the GDR's sovereignty. 
The annual Leipzig Industrial Fair also provided a convenient 
forum for meeting Western politicians and industrialists. 

The severe shortage of Western currency in the GDR, one of 
the key concerns of the SED leadership, was alleviated by 
agreements with the FRG that tripled the bulk contributions to 
the East German postal administration by the FRG. Similar 
agreements, financially advantageous to the GDR, improved 
the highway links to West Berlin. More significant, however, was 
the granting of bank credits amounting to DM2 billion to the 
GDR during 1983 and 1984. The CSU leader and minister pres- 
ident of Bavaria, Franz Josef Strauss, was the principal negotia- 
tor of these credit agreements. 

At first, the credits appeared to yield positive results along 
the inner-German border, where mines and automatic guns, 
which had so long posed a deadly threat to East Germans 
attempting to flee to the FRG, were dismantled. Later, however, 
it became clear that these devices had been replaced by nearly 
impenetrable electronic warning systems and with trained dogs 
at certain sectors along the border. The order to shoot at refu- 
gees was not rescinded but remained in effect almost until the 
end of the GDR regime. Also remaining in effect were strict 
controls for West German citizens at GDR border crossings and 
on transit routes to and from West Berlin, although there were 
no further reports of people being abused at border check- 

However much relations improved between the two states in 
some areas, the stance of the SED leadership toward the FRG's 
NATO membership remained hostile. Harsh attacks in the East 
German press labeling the FRG as an "American missile 
launcher" became more frequent during the debates on the 
stationing of Pershing II and cruise missiles. On occasion, high- 
level official visits were canceled to signal the GDR's opposition 
to Western military policies. The FRG responded in kind. For 
example, Federal President Karl Carstens (1979-84) did not 
attend as planned the East German celebrations on the occa- 
sion of the 500th anniversary of the birth of Martin Luther in 

In October 1987, when the two superpowers were striving for 
detente and disarmament and the relations between the two 
Germanys were cordial, Honecker visited Bonn as the GDR 
head of state. The visit, postponed several times, was in 


Federal Chancellor Helmut Kohl ( 1982- ), right, at a meeting 
in Bonn in 1987 with Erich Honecker, leader of East Germany, 


Courtesy German Information Center, New York 

response to Chancellor Schmidt's visit to East Germany in 
1981. Honecker was in the West German capital for an "official 
working meeting." He signed agreements for cooperation in 
the areas of science and technology, as well as environmental 
protection. Honecker's statement that the border dividing the 
two Germanys would one day be seen as a line "connecting" the 
two states, similar to the border between the GDR and Poland, 
attracted thoughtful public attention in the West. Honecker 
was cordially received by members of the government, in the 
words of Federal President Richard von Weizsacker (1984-94), 
as a "German among Germans." However, at various stages of 
the visit — which subsequently took him to several federal states, 
including his native Saarland — large numbers of demonstra- 
tors chanted, "The wall must go." 


Germany: A Country Study 

The East German media coverage of the visit provided the 
opportunity for Chancellor Kohl to speak to "all the people in 
Germany" and to call for the breaking down of barriers "in 
accordance with the wishes of the German people." Although 
the visit yielded no immediate concrete results and Honecker's 
hopes of increased political recognition for the GDR were not 
realized, a dialogue had begun that could make the division of 
Germany more bearable for the people involved. As of late 
1987, however, there was still little hope of overcoming the divi- 
sion itself. 

The Peace Movement and Internal Resistance 

The GDR leadership welcomed protests against weapons 
and war as long as they occurred in the FRG. However, when a 
small group of East German pacifists advocating the conversion 
of "swords into plowshares" demonstrated in 1981 against the 
presence of Soviet missiles on GDR soil, as well as against the 
destruction of the environment by the dumping of industrial 
waste and the use of nuclear power generally, they were 
arrested, prosecuted, and in some cases expelled from the 
GDR. Church organizations in the GDR — considered subver- 
sive by their mere existence — and individual pastors who pro- 
tected and defended demonstrators at risk to their own safety 
became targets of increased surveillance by the Stasi, as did 
individual churchgoers, who by 1988 were frequently arrested 
and interrogated. 

The mounting nervousness of the GDR leadership became 
evident in June 1987 when large crowds of East Berlin youth 
gathered on their side of the Wall, along with young people 
from all over the GDR, to hear two rock concerts being held in 
West Berlin near the Reichstag building. When the crowd 
broke into frenzied cries for freedom and unification, police 
cleared the area, arresting and forcibly removing Western news 
reporters filming the incident. 

In the local elections of May 17, 1989, the "united list" led by 
the SED received 98.9 percent of the vote, obviously the result 
of massive manipulation, which enraged large segments of the 
population who had previously remained silent. In the next 
months, persistent public complaints against the prevailing liv- 
ing conditions and lack of basic freedoms, voiced by church 
groups and by opposition groups, inspired the population to 
take to the streets in large numbers. The largest of the new 


Historical Setting: 1945 to 1990 

opposition groups was the New Forum, founded in September 
1989 by Barbel Bohley, Jens Reich, and others. 

During the fall of 1989, mass demonstrations of several hun- 
dred thousand people were taking place, first in what soon 
became traditional Monday demonstrations in Leipzig and 
later in Berlin and other large cities. For the first time, GDR 
rulers realized that they were losing control: the demonstra- 
tions were too massive to be quelled by intimidation or even 
mass arrests; and shooting at the demonstrators was out of the 
question because of the sheer size of the crowds and the 
absence of Soviet support for draconian measures. 

Beginning in the summer of 1989, the regime was threat- 
ened by another development. Among the thousands of GDR 
citizens that traveled by car on "vacation" to the socialist 
"brother country" Hungary, some 600 were successful in cross- 
ing illegally into Austria, where they were enthusiastically wel- 
comed before traveling on to the FRG. Others wanting to 
escape the GDR took refuge in the embassies of the FRG in 
Budapest, Prague, and Warsaw. On September 11, Hungary 
legalized travel over the border to Austria for GDR citizens 
heading for the FRG, enabling 15,000 to take this route within 
a few days. Eventually, the GDR leadership was forced to allow 
special trains to carry thousands of GDR refugees who had 
received permission to emigrate to the West after taking sanc- 
tuary in the FRG's embassies in Prague and Warsaw. As the 
trains traveled through the GDR, many more refugees tried to 
climb aboard, so the government refused to further allow such 

The Last Days of East Germany 

In January 1988, Honecker paid a state visit to France. By all 
indications, the long stretch of international isolation 
appeared to have been successfully overcome. The GDR finally 
seemed to be taking its long-sought place among the interna- 
tional community of nations. In the minds of the GDR's 
old-guard communists, the long-awaited international political 
recognition was seen as a favorable omen that seemed to coin- 
cide symbolically with the fortieth anniversary of the East Ger- 
man state. 

In spite of Honecker's declaration as late as January 1989 
that "The Wall will still stand in fifty and also in a hundred 
years," the effects of glasnost and perestroika had begun to be evi- 
dent in the Soviet Union and throughout Eastern Europe. 


Germany: A Country Study 

Although the GDR leadership tried to deny the reality of these 
developments, for most East Germans the reforms of Soviet 
leader Gorbachev were symbols of a new era that would inevita- 
bly also reach the GDR. The GDR leadership's frantic attempts 
to block the news coming out of the Soviet Union by prevent- 
ing the distribution of Russian newsmagazines only strength- 
ened growing protest within the population. 

In Berlin, on October 7, the GDR leadership celebrated the 
fortieth anniversary of the foundation of the East German 
state. In his address, Honecker sharply condemned the FRG 
for interfering in the GDR's internal affairs and for encourag- 
ing protesters. Still convinced of his mission to secure the sur- 
vival of the GDR as a state, he proclaimed: "Socialism will be 
halted in its course neither by ox, nor ass." The prophetic 
retort by Gorbachev, honored guest at the celebrations, as 
quoted to the international press, more accurately reflected 
imminent realities: "He who comes too late will suffer the con- 
sequences of history." 

The consequences of not having held in check the earlier 
large demonstrations against the regime's inflexibility came 
two days later when 70,000 protesters shouting "We are the 
people" demonstrated in Leipzig. When the police took no 
action during these historic hours of October 9, 1989, it 
became clear to everyone that the days of the GDR were num- 
bered. After the crowds in Leipzig reached over 100,000 pro- 
testers on October 16, the Central Committee of the SED — 
previously kept in the background by Honecker and his com- 
rades in the party leadership — took control. Honecker 
resigned from his offices as head of state and party leader on 
October 18. 

Egon Krenz, longtime member of the Politburo and FDJ 
chairman, became Honecker's successor as general secretary of 
the SED. On October 24, Krenz also assumed the chairman- 
ship of the Council of State. On his orders, all police actions 
against demonstrators were discontinued. On November 4, the 
largest demonstration in GDR history took place, with over 1 
million people in East Berlin demanding democracy and free 
elections. Confronted with this wave of popular opposition, the 
GDR government, under Prime Minister Willi Stoph, resigned 
on November 7. The Politburo followed suit on November 8. 
Finally, on the evening of November 9, Politburo member 
Gunter Schabowski announced the opening of the border 
crossings into the FRG. 


East Germans fleeing to West Germany in 1989 
Courtesy German Information Center, New York 

Opening of the Berlin Wall and Unification 

November 9, 1989, will be remembered as one of the great 
moments of German history. On that day, the dreadful Berlin 
Wall, which for twenty-eight years had been the symbol of Ger- 
man division, cutting through the heart of the old capital city, 
was unexpectedly opened by GDR border police. In joyful dis- 
belief, Germans from both sides climbed up on the Wall, which 
had been called "the ugliest edifice in the world." They 
embraced each other and sang and danced in the streets. Some 
began chiseling away chips of the Wall as if to have a personal 
hand in tearing it down, or at least to carry away a piece of Ger- 
man history. East Germans immediately began pouring into 
West Germany. Within a few days, over 1 million persons per 
day had seized the chance to see their western neighbor first- 


Germany: A Country Study 

On November 13, Hans Modrow was elected minister presi- 
dent of the GDR. After Chancellor Kohl had presented his 
Ten-Point Plan for the step-by-step unification of Germany to 
the Bundestag on November 28, the Volkskammer struck the 
leadership role of the SED from the constitution of the GDR 
on December 1 (see Unification, ch. 8). The SED Politburo 
resigned on December 3, and Krenz stepped down as chairman 
of the Council of State on December 6. One day later, the 
Round Table talks started among the SED, the GDR's other 
political parties, and the opposition. On December 22, the 
Brandenburg Gate in Berlin was opened for pedestrian traffic. 

During January 1990, negotiations at the Round Table con- 
tinued. Free elections to the Volkskammer were scheduled for 
March 18. The conservative opposition, under CDU leader- 
ship, waged a joint campaign under the banner of the Alliance 
for Germany, consisting of the CDU, the German Social Union 
(Deutsche Soziale Union — DSU), a sister party of the CSU, and 
the Democratic Awakening (Demokratischer Aufbruch — DA). 
The elections on March 18 produced a clear majority for the 
Alliance for Germany. On April 12, a CDU politician, Lothar 
de Maiziere, was elected the new minister president. 

The unusually poor showing of the SPD in these final East 
German elections may be explained by the party's reluctance to 
support German unification and also by the fact that the public 
was aware of the close contacts that the SPD leadership had 
maintained with the SED over the years. The success of the 
conservative parties was repeated in the communal elections 
on May 6, which were seen as a correction to the manipulated 
vote of the previous year. 

As a precondition for German unity, the Two-Plus-Four Talks 
among the two German governments and the four victorious 
powers of World War II began on May 5. Held in four sessions, 
the last of which was on September 12, the talks culminated in 
the signing of the Treaty on the Final Settlement with Respect 
to Germany (the Two-Plus-Four Treaty). These talks settled 
questions relating to the eastern border of Germany, the 
strength of Germany's military forces, and the schedule of 
Allied troop withdrawal from German soil. 

During a visit to Moscow in early February, Chancellor Kohl 
had received assurances from Gorbachev that the Soviet Union 
would respect the wishes of both Germanys to unite. Kohl real- 
ized that in order to seize this historic opportunity for Ger- 
many, swift action and final determination were crucial. In a 


Historical Setting: 1945 to 1990 

cordial meeting between Gorbachev and Chancellor Kohl on 
July 16, unified Germany's membership in NATO and its full 
sovereignty were conceded by the Soviet president. 

The first concrete step toward unification was the monetary, 
economic, and social union of West Germany and East Ger- 
many on July 1, as had been agreed in May in a treaty between 
the two German states. The monetary union introduced the 
deutsche mark into East Germany. Although there had been 
concern about the GDR's precarious financial situation, the 
full extent of the disastrous consequences of forty years of com- 
munist rule only came to light in the summer of 1990. It was 
soon clear that the first massive aid package for the East Ger- 
man economy, comprising DM115 billion, was just the begin- 
ning of a long and expensive rebuilding of a country reduced 
to shambles by the SEE). 

Divided by futile discussions about the speed of unification, 
the new government coalition in East Berlin had begun to fall 
apart duringjuly 1990, when its SPD members resigned. Per- 
suaded by the mounting economic and social problems that 
unification was necessary, the Volkskammer finally agreed on 
October 3, 1990, as the date of German unification. 

On the occasion of the first free elections in the GDR, Chan- 
cellor Kohl took the opportunity to publicly express his grati- 
tude to the United States, which had been Germany's most 
reliable ally during the process of unification. Once the first 
prerequisite for future unification had been established, 
namely, the willingness of Gorbachev to consider negotiations 
on unification in light of the dramatic events of the fall of 1989, 
the consent of the other victorious powers had to be secured. 

Statements voicing concerns and even fears of a reemer- 
gence of an aggressive unified Germany suddenly appeared in 
the international press and media, as well as in unofficial 
remarks made by political figures throughout Europe. Even the 
FRG's major NATO partners in Europe — Britain and France — 
had become rather comfortable with the prevailing situation, 
that is, being allied with an economically potent, but politically 
weak, semisovereign West Germany. 

Although lip service in support of future unification of Ger- 
many was common in the postwar era, no one dreamed of its 
eventual realization. When the historic constellation allowing 
unification appeared, swift and decisive action on the part of 
Chancellor Kohl and the unwavering, strong support given by 
the United States government for the early completion of the 


Germany: A Country Study 

unification process were key elements in surmounting the last 
hurdles during the final phase of the Two-Plus-Four Talks. 

The unification treaty, consisting of more than 1,000 pages, 
was approved by a large majority in the Bundestag and the 
Volkskammer on September 20, 1990. After this last procedural 
step, nothing stood in the way of formal unification. At mid- 
night on October 3, the German Democratic Republic joined 
the Federal Republic of Germany. Unification celebrations 
were held all over Germany, especially in Berlin, where leading 
political figures from West and East joined the joyful crowds 
who filled the streets between the Reichstag building and Alex- 
anderplatz to watch a fireworks display. Germans celebrated 
unity without a hint of nationalistic pathos, but with dignity 
and in an atmosphere reminiscent of a country fair. Yet the 
world realized that an historic epoch had come to a peaceful 

* * * 

A good starting point for readers seeking to learn more 
about the founding, consolidation, and final reunification of 
the two German states is Germany from Partition to Reunification 
by Henry Ashby Turner, Jr. Another concise and expert 
account is Peter Pulzer's German Politics, 1945-1995. Longer 
accounts by noted historians are Volker Rolf Berghahn's Mod- 
ern Germany, which starts with events at the turn of the century 
and ends in the mid-1980s, and Mary Fulbrook's The Divided 
Nation, which begins with the aftermath of World War I and 
ends with unification. Fulbrook's The Two Germanies, 1945-1990 
is a concise survey of the many ways historians have interpreted 
recent German history. 

Dennis L. Bark and David R. Gress's detailed two-volume A 
History of West Germany is widely available. David Childs's The 
GDR: Moscow's German Ally is a highly readable history of the 
German Democratic Republic. Mary Fulbrook's Anatomy of a 
Dictatorship examines the nature of the East German state and 
how it failed. 

A useful documentation of the postwar years and the ques- 
tion of reunification can be found in The German Question, 
edited by Walther Hubatsch, with Wolfgang Heidelmeyer et al. 
Timothy Garton Ash's In Europe's Name is a searching analysis of 
Ostpolitik, from Adenauer to Kohl. Konrad H. Jarausch pro- 
vides a concise account of the events of 1989 and 1990 in his 


Historical Setting: 1945 to 1990 

scholarly The Rush to German Unity. Stephen F. Szabo's The Diplo- 
macy of German Unification is a good brief account of the inter- 
national aspects of unification. A more detailed treatment of 
this subject is Germany Unified and Europe Transformed by Philip 
Zelikow and Condoleezza Rice. (For further information and 
complete citations, see Bibliography.) 


Chapter 3. The Society and Its Environment 

Cologne Cathedral, begun in 1248, was completed only in 1880. 

1989, was one of the most dramatic events of the post-World 
War II period. In the ensuing months, much more than just the 
graffiti-covered concrete panels of that infamous structure 
came crashing down during carnival-like celebrations. After 
four decades, the division of an entire continent, a nation, and 
a society came to an abrupt end. 

A powerful force setting the revolutionary change in motion 
was a substantial movement of people from the German Demo- 
cratic Republic (GDR, or East Germany) westward. Through- 
out its forty-year history, the GDR had resorted to extreme 
measures to control its borders and halt the exodus of produc- 
tive workers. The most extreme of these measures was the erec- 
tion in 1961 of the Berlin Wall to check the sustained 
movement of East Germans to the Federal Republic of Ger- 
many (FRG, or West Germany), whose booming economy had 
created millions of new jobs. Nearly three decades later, for a 
period of several years beginning in the summer of 1989, the 
appeal of West Germany, even with its economy mired in reces- 
sion, prompted another wave of migration of more than 
700,000 East Germans, most between the ages of eighteen and 

The FRG's absorption of the GDR in 1990 enlarged its area 
by about 30 percent and increased its population about 20 per- 
cent. Integrating this new territory has proven to be a Her- 
culean task. Prior to unification, West Germans enjoyed one of 
the highest standards of living in the world and a per capita 
income exceeding that of the United States. East Germans 
were prosperous by the standards of the communist world but 
had a living standard considerably below that of Western 
Europe. As the costs of unification have accumulated, the time 
when easterners will attain the standard of living of westerners 
has receded further into the future. 

In the early 1990s, the five new eastern states (Lander, sing., 
Land) experienced substantial depopulation as a result of a 
plummeting birth rate and the internal migration of eastern 
Germans to the west. All social groups in the east were affected 
by the hasty merger, but the position of women was even more 
negatively affected. In particular, the rapid privatization of the 
socialist command economy led to much unemployment 


Germany: A Country Study 

among women and the dismantling of an extensive child-care 
system. The east's elderly, who generally had incomes and sav- 
ings much below their counterparts in the western Lander, also 
suffered hardship. 

Unification inevitably revealed a series of unpleasant sur- 
prises about the closed economy and society of what had been 
East Germany. One of the most distressing was the deplorable 
state of the environment. Among the world's most environmen- 
tally conscious peoples, West Germans were shocked by the lev- 
els of ecological damage in the east. Environmental 
degradation, most noticeably badly polluted air and water, was 
perhaps a more important cause of the inequalities in living 
standards between east and west than smaller living quarters 
and lower wages. Surveying the dilapidated infrastructure and 
housing stock, observers dubbed the newly incorporated terri- 
tory "Germany's Appalachia." 

By mid-1995 it appeared that the physical and administrative 
mergers of the two German states would be far easier to accom- 
plish than the social aspect of the union. In the postwar period, 
the two Germanys had assiduously developed two mutually 
exclusive models of society. Thus, the major challenge lay in 
harmonizing and integrating these societies, which were only 
gradually emerging from the long shadows cast by four decades 
of separate development in antagonistic systems. 

Physical Setting 

Roughly the size of Montana and situated even farther 
north, unified Germany has an area of 356,959 square kilome- 
ters. Extending 853 kilometers from its northern border with 
Denmark to the Alps in the south, it is the sixth largest country 
in Europe. At its widest, Germany measures approximately 650 
kilometers from the Belgian-German border in the west to the 
Polish frontier in the east. 

The territory of the former East Germany (divided into five 
new Lander in 1990) accounts for almost one-third of united 
Germany's territory and one-fifth of its population. After a 
close vote, in 1993 the Bundestag, the lower house of Ger- 
many's parliament, voted to transfer the capital from Bonn in 
the west to Berlin, a city-state in the east surrounded by the 
Land of Brandenburg. The relocation process is expected to be 
concluded by about the year 2000, following the transfer of the 
Bundestag, the Bundesrat, the Chancellory, and ten of the 
eighteen federal ministries. 


The Society and Its Environment 


With its irregular, elongated shape, Germany provides an 
excellent example of a recurring sequence of landforms found 
the world over. A plain dotted with lakes, moors, marshes, and 
heaths retreats from the sea and reaches inland, where it 
becomes a landscape of hills crisscrossed by streams, rivers, and 
valleys. These hills lead upward, gradually forming high pla- 
teaus and woodlands and eventually climaxing in spectacular 
mountain ranges. 

As of the mid-1990s, about 37 percent of the country's area 
was arable; 17 percent consisted of meadows and pastures; 30 
percent was forests and woodlands; and 16 percent was devoted 
to other uses. Geographers often divide Germany into four dis- 
tinct topographic regions: the North German Lowland; the 
Central German Uplands; Southern Germany; and the Alpine 
Foreland and the Alps (see fig. 7). 

North German Lowland 

The North German Lowland is a part of the Great European 
Plain that sweeps across Europe from the Pyrenees in France to 
the Ural Mountains in Russia. All of the Lander of Schleswig- 
Holstein, Hamburg, Bremen, Mecklenburg-Western Pomera- 
nia, Brandenburg, Berlin, most of Lower Saxony and Saxony- 
Anhalt, and parts of Saxony and North Rhine-Westphalia are 
located in this region. 

Hills in the lowland only rarely reach 200 meters in height, 
and most of the region is well under 100 meters above sea level. 
The lowlands slope almost imperceptibly toward the sea. The 
North Sea portion of the coastline is devoid of cliffs and has 
wide expanses of sand, marsh, and mud flats (Watten) . The 
mud flats between the Elbe estuary and the Netherlands bor- 
der are believed to have been above sea level during Roman 
history and to have been inundated when the shoreline sank 
during the thirteenth century. In the western area, the former 
line of inshore sand dunes became the East Frisian Islands. The 
mud flats between the islands and the shore are exposed at 
very low tides and are crossed by innumerable channels vary- 
ing in size from those cut by small creeks to those serving as the 
estuaries of the Elbe and Weser rivers. The mud and sand are 
constantly shifting, and all harbor and shipping channels 
require continuing maintenance. 

The offshore islands have maximum elevations of fewer than 
thirty-five meters and have been subject to eroding forces that 


Germany: A Country Study 

have washed away whole sections during severe storms. Shore- 
lines most subject to eroding tides were stabilized during the 
late nineteenth and early twentieth centuries. 

Although the East Frisian Islands are strung along the coast 
in a nearly straight line, the North Frisian Islands are irregu- 
larly shaped and are haphazardly positioned. They were also 
once a part of the mainland, and a large portion of the mud 
flats between the islands and the coast is exposed during low 

The Baltic Sea coast of Schleswig-Holstein differs markedly 
from its North Sea coast. It is indented by a number of small, 
deep fjords with steep banks, which were carved by rivers when 
the land was covered with glacial ice. Farther to the east, the 
Baltic shore is flat and sandy. Rvigen, Germany's largest island, 
lies just offshore of Stralsund. 

Wherever the region's terrain is rolling and drainage is satis- 
factory, the land is highly productive. This is especially true of 
the areas that contain a very fertile siltlike loess soil, better than 
most German soils. Such areas, called Borden (sing., Borde), are 
located along the southern edge of the North German Low- 
land beginning west of the Rhine near the Ruhr Valley and 
extending eastward and into the Leipzig Basin. The Magde- 
burg Borde is the best known of these areas. Other Borden are 
located near Frankfurt am Main, northern Baden-Wurttem- 
berg, and in an area to the north of Ulm and Munich. Because 
the areas with loess soil also have a moderate continental cli- 
mate with a long growing season, they are considered Ger- 
many's breadbasket. 

Central German Uplands 

The Central German Uplands are Germany's portion of the 
Central European Uplands; they extend from the Massif Cen- 
tral in France to Poland and the Czech Republic. Germany's 
uplands are generally moderate in height and seldom reach 
elevations above 1,100 meters. The region encompasses all of 
the Saarland, Hesse, and Thuringia; the north of Rhineland- 
Palatinate; substantial southern portions of North Rhine-West- 
phalia, Lower Saxony, and Saxony-Anhalt; and western parts of 

In the west, the Central German Uplands begin with the 
Rheinish Uplands, a massive rectangular block of slate and 
shale with a gently rolling plateau of about 400 meters in eleva- 
tion and peaks of about 800 to 900 meters. The Rheinish 


The Society and Its Environment 

Uplands are divided by two deep and dramatic river valleys — 
the Moselle and the Rhine. The high hilly area to the south of 
the Moselle is the Hunsruck; the one to its north is the Eifel. 
The Rhine separates these areas from their extensions to the 
east, the Taunus, and, to the north, the Westerwald. To the 
north and east of the Westerwald are further distinct areas of 
the Rheinish Uplands, most notably the small range of hills 
known as the Siebengebirge, across the Rhine from Bonn, and 
the larger hilly regions — the Siegerland, Bergishes Land, 
Sauerland, and the Rothaargebirge. The higher elevations of 
the Rheinish Uplands are heavily forested; lower-lying areas are 
well suited for the growing of grain, fruit, and early potatoes. 

Because of the low elevations of its valleys (200 to 350 
meters), the Uplands of Hesse provide an easily traveled pas- 
sageway through the Central German Uplands. Although not 
as dramatic as the Rhine Valley, for hundreds of years this pas- 
sageway — the so-called Hessian Corridor — has been an impor- 
tant route between the south and the north, with Frankfurt am 
Main at one end and Hanover at the other, and Kassel on the 
Weser River in its center. The headwaters of the Weser have cre- 
ated a number of narrow but fertile valleys. The highlands of 
the Uplands of Hesse are volcanic in origin. The most notable 
of these volcanic highlands are the Rhon (950 meters) and the 
Vogelsburg (774 meters). 

To the north of the Uplands of Hesse lie two low ranges, the 
Teutoburger Wald and the Wiehengebirge, which are the 
northernmost fringes of the Central German Uplands. It is at 
the Porta Westfalica near Minden that the Weser River breaks 
through the latter range to reach the North German Lowland. 

One of the highest points in the Central German Uplands is 
atBrocken (1,142 meters) in the Harz Mountains. This range is 
situated about forty kilometers to the northeast of Gottingen 
and forms the northwestern boundary of the Leipzig Basin, an 
extension of the North German Lowland. The Harz are still 
largely forested at lower levels; barren moors cover higher ele- 
vations. An important center for tourism in the 1990s, the 
range was once an important source for many minerals. 

The Thuringer Wald, located in southwestern Thuringia, is a 
narrow range about 100 kilometers long, with its highest point 
just under 1,000 meters. Running in a northwesterly direction, 
it links the Central German Uplands with the Bohemian Massif 
of the Czech Republic and forms the southwestern boundary 
of the Leipzig Basin. The basin's southeastern boundary is 


The Society and Its Environment 

Uplands are divided by two deep and dramatic river valleys — 
the Moselle and the Rhine. The high hilly area to the south of 
the Moselle is the Hunsrvick; the one to its north is the Eifel. 
The Rhine separates these areas from their extensions to the 
east, the Taunus, and, to the north, the Westerwald. To the 
north and east of the Westerwald are further distinct areas of 
the Rheinish Uplands, most notably the small range of hills 
known as the Siebengebirge, across the Rhine from Bonn, and 
the larger hilly regions — the Siegerland, Bergishes Land, 
Sauerland, and the Rothaargebirge. The higher elevations of 
the Rheinish Uplands are heavily forested; lower-lying areas are 
well suited for the growing of grain, fruit, and early potatoes. 

Because of the low elevations of its valleys (200 to 350 
meters), the Uplands of Hesse provide an easily traveled pas- 
sageway through the Central German Uplands. Although not 
as dramatic as the Rhine Valley, for hundreds of years this pas- 
sageway — the so-called Hessian Corridor — has been an impor- 
tant route between the south and the north, with Frankfurt am 
Main at one end and Hanover at the other, and Kassel on the 
Weser River in its center. The headwaters of the Weser have cre- 
ated a number of narrow but fertile valleys. The highlands of 
the Uplands of Hesse are volcanic in origin. The most notable 
of these volcanic highlands are the Rhon (950 meters) and the 
Vogelsburg (774 meters). 

To the north of the Uplands of Hesse lie two low ranges, the 
Teutoburger Wald and the Wiehengebirge, which are the 
northernmost fringes of the Central German Uplands. It is at 
the Porta Westfalica near Minden that the Weser River breaks 
through the latter range to reach the North German Lowland. 

One of the highest points in the Central German Uplands is 
at Brocken (1,142 meters) in the Harz Mountains. This range is 
situated about forty kilometers to the northeast of Gottingen 
and forms the northwestern boundary of the Leipzig Basin, an 
extension of the North German Lowland. The Harz are still 
largely forested at lower levels; barren moors cover higher ele- 
vations. An important center for tourism in the 1990s, the 
range was once an important source for many minerals. 

The Thuringer Wald, located in southwestern Thuringia, is a 
narrow range about 100 kilometers long, with its highest point 
just under 1,000 meters. Running in a northwesterly direction, 
it links the Central German Uplands with the Bohemian Massif 
of the Czech Republic and forms the southwestern boundary 
of the Leipzig Basin. The basin's southeastern boundary is 


Germany: A Country Study 

formed by the Erzgebirge range, which extends to the north- 
east at a right angle to the Thuringer Wald. Part of the Bohe- 
mian Massif, the Erzgebirge range reaches 1,214 meters at its 
highest point. 

The southeasternmost portion of the Central German 
Uplands consists of the Bohemian Forest and the much smaller 
Bavarian Forest. Both ranges belong to the Bohemian Massif. 
The Bohemian Forest, with heights up to 1,450 meters, forms a 
natural boundary between Germany and the Czech Republic. 

Southern Germany 

Between the Central German Uplands and the Alpine Fore- 
land and the Alps lies the geographical region of Southern 
Germany, which includes most of Baden-Wurttemberg, much 
of northern Bavaria, and portions of Hesse and Rhineland- 
Palatinate. The Main River runs through the northern portion 
of this region. The Upper Rhine River Valley, nearly 300 kilo- 
meters long and about fifty kilometers wide, serves as its west- 
ern boundary. The Rhine's wide river valley here is in sharp 
contrast to its high narrow valley in the Rheinish Uplands. The 
southern boundaries of the region of Southern Germany are 
formed by extensions of the Jura Mountains of France and 
Switzerland. These ranges are separate from those of the Cen- 
tral German Uplands. One of these Jura ranges forms the 
Black Forest, whose highest peak is the Feldberg at 1,493 
meters, and, continuing north, the less elevated Odenwald and 
Spessart hills. Another Jura range forms the Swabian Alb (see 
Glossary) and its continuation, the Franconian Alb. Up to 
1,000 meters in height and approximately forty kilometers 
wide, the two albs form a long arc — 400 kilometers long — from 
the southern end of the Black Forest to near Bayreuth and the 
hills of the Frankenwald region, which is part of the Central 
German Uplands. The Hardt Mountains in Rhineland-Palati- 
nate, located to the west of the Rhine, are also an offshoot of 
the Jura Mountains. 

The landscape of the Southern Germany region is often that 
of scarp and vale, with the eroded sandstone and limestone 
scarps facing to the northwest. The lowland terraces of the 
Rhine, Main, and Neckar river valleys, with their dry and warm 
climate, are suitable for agriculture and are highly productive. 
The loess and loam soils of the Rhine-Main Plain are cultivated 
extensively, and orchards and vineyards flourish. The 
Rhine-Main Plain is densely populated, and Frankfurt am 


The Society and Its Environment 

Main, at its center, serves both as Germany's financial capital 
and as a major European transportation hub. 

Alpine Foreland and the Alps 

The Alpine Foreland makes up most of Bavaria and a good 
part of Baden-Wurttemberg. The foreland is roughly triangular 
in shape, about 400 kilometers long from west to east with a 
maximum width of about 150 kilometers north to south, and is 
bounded by Lake Constance and the Alps to the south, the 
Swabian and Franconian albs to the north, and the Bavarian 
Forest to the east. Elevation within the foreland rises gently 
from about 400 meters near the Danube, which flows along its 
north, to about 750 meters at the beginning of the Alpine foot- 
hills. With the exception of Munich and the small cities of 
Augsburg, Ingolstadt, and Ulm, the foreland is primarily rural. 
Soils are generally poor, with the exception of some areas with 
loess soil, and much of the region is pasture or is sown to hardy 

Germany's portion of the Alps accounts for a very small part 
of the country's area and consists only of a narrow fringe of 
mountains that runs along the country's border with Switzer- 
land and Austria from Lake Constance in the west to Salzburg, 
Austria, in the east. The western section of the German Alps 
are the Algauer Alps, located between Lake Constance and the 
Lech River. The Bavarian Alps, the central section, lie between 
the Lech and Inn rivers and contain Germany's highest peak, 
the Zugspitze (2,963 meters). The Salzburg Alps, which begin 
at the Inn River and encircle Berchtesgaden, make up the east- 
ernmost section of Germany's Alps. 


The greater part of the country drains into the North Sea via 
the Rhine, Ems, Weser, and Elbe rivers, which flow in a north- 
northwest direction. In the east, the Oder River and its tribu- 
tary, the Neisse River, flow northward into the Baltic Sea and 
mark the border with Poland. With the exception of the Lahn 
River, which flows southward before joining the Rhine, most of 
the tributaries of these rivers flow in a west-to-east or east-to- 
west direction. In an exception to the south-north pattern of 
major rivers, the Danube River rises in the Black Forest and 
flows in a southeasterly direction, traversing Bavaria before 
crossing into Austria at Passau on the long journey to the Black 


Germany: A Country Study 

Sea. The Iller, Lech, Isar, and Inn rivers flow from the south 
into the Danube and drain the Alpine Foreland. 

The Rhine, Germany's longest and most important river, 
originates in Switzerland, from where it flows into Lake Con- 
stance (actually a river basin). At the lake's west end, it begins a 
long course (800 kilometers) to the Netherlands, at first mark- 
ing the boundary between Germany and Switzerland and later 
that between Germany and France. Of the Rhine's three most 
important tributaries, the Moselle River drains parts of the 
Rheinish Uplands, the Main drains areas between the Central 
German Uplands and the Franconian Alb, and the Neckar 
River drains the area between the Black Forest and the Swabian 
Alb. Because these rivers keep the Rhine high during the win- 
ter and because melting snow in the Alps keeps it high during 
the spring and summer, the river generally has a high steady 
flow, which accounts for its being the busiest waterway in 


Although located mostly at latitudes north of the United 
States-Canadian border and thus closer to the Arctic Circle 
than to the equator, Germany's climate is moderate and is gen- 
erally without sustained periods of cold or heat. Northwestern 
and coastal Germany have a maritime climate caused by warm 
westerly winds from the North Sea; the climate is characterized 
by warm summers and mild cloudy winters. Farther inland, the 
climate is continental, marked by greater diurnal and seasonal 
variations in temperature, with warmer summers and colder 

In addition to the maritime and continental climates that 
predominate over most of the country, the Alpine regions in 
the extreme south and, to a lesser degree, some areas of the 
Central German Uplands have a so-called mountain climate. 
This climate is characterized by lower temperatures because of 
higher altitudes and greater precipitation caused by air becom- 
ing moisture-laden as it lifts over higher terrain. 

The major air masses contributing to the maritime weather 
are the Icelandic low-pressure system and the Azores high-pres- 
sure system. The Icelandic lows rotate in a counterclockwise 
direction and tend to move to the east and southeast as they 
approach Europe. The Azores highs move eastward and rotate 
in a clockwise direction. Both of these air masses furnish West- 


Bamberg in northern Bavaria 
One of Heidelberg's town gates 
Courtesy Germany Information Center, New York 


Germany: A Country Study 

ern Europe with moisture-laden clouds propelled by westerly 

The northern lowlands frequently experience a situation 
(more often during the winter months) when they are between 
these air masses and are simultaneously influenced by both. At 
such times, winds come from the west and are usually strong. 
When only one of the systems is dominant, it is more often the 
Icelandic low. In spite of their nearly polar origin, Icelandic 
lows are warmed by the Gulf Stream, and areas on the coun- 
try's North Sea coast have midwinter temperatures averaging 
more than 1.6° C. This temperature is more than three degrees 
above the average for the latitude, which is shared by central 
Labrador and some bitterly cold regions in Siberia. 

When continental weather systems originating to the east are 
responsible for the weather, conditions are markedly different. 
In the winter months, these systems have high-pressure air 
masses that bring bright, clear, cold weather. The local people 
describe these air masses as Siberian highs and usually expect 
them to last for about two weeks. An occasional condition 
called John, or warm wind, arises when the center of a low-pres- 
sure system deviates to the south of its usual path and crosses 
the central part of the country. In this atmospheric condition, 
warm tropical air is drawn across the Alps and loses moisture 
on the southern slopes of the mountains. The air warms signif- 
icantly as it compresses during its descent from the northern 
slopes. In the springtime, these winds dissipate the cloud cover 
and melt the snows. Many people respond to the rapid weather 
changes caused by the John with headaches, irritability, and cir- 
culatory problems. 

The yearly mean temperature for the country is about 9° C. 
Other than for variations caused by shelter and elevation, the 
annual mean temperature is fairly constant throughout the 
country. Temperature extremes between night and day and 
summer and winter are considerably less in the north than in 
the south. 

Duringjanuary, the coldest month, the average temperature 
is approximately 1.6°C in the north and about -2°C in the 
south. In July, the warmest month, the situation reverses, and it 
is cooler in the north than in the south. The northern coastal 
region has July temperatures averaging between 16°C and 
18°C; at some locations in the south, the average is 19.4°C or 
slightly higher. 


The Society and Its Environment 

Annual precipitation varies from 2,000 millimeters a year in 
the southern mountains to a low of 400 millimeters in the vicin- 
ity of Mainz. Over most of the country, it averages between 600 
millimeters and 800 millimeters per annum. 

The Environment 

Unification abruptly transformed the Federal Republic 
from a country with a solid, even excellent, environmental 
record to one facing a whole range of ecological disasters — the 
result of the GDR's decades-long abuse of its natural habitat. 
The estimated costs of restoring the environment in the new 
Lander grew as information became available about how much 
damage it had sustained. Expert estimates of from DM130 bil- 
lion to DM220 billion (for value of the deutsche mark — see 
Glossary) in the spring of 1990 had increased to a possible 
DM400 billion two years later. 

The two Germanys differed greatly in their approaches 
toward protecting the environment. Beginning in the late 
1960s, ecological concerns had become increasingly common 
in West Germany, as was repeatedly demonstrated in opinion 
polls. A 1990 poll, for example, found that more than 70 per- 
cent of those West Germans questioned held that environmen- 
tal protection should be the highest priority for the 
government and the economy. 

In East Germany, environmental activism was minimal. For 
decades the GDR had followed standard Soviet practices in 
regard to industrial and urban development, scrimping on or 
avoiding entirely key infrastructure investments such as 
water-treatment facilities and air-pollution abatement. The 
comprehensive and intelligent Socialist Environmental Man- 
agement Act of 1968 was poorly implemented and, more 
important, largely ignored after the late 1970s when East Ger- 
man authorities decided that Western economic growth could 
only be matched by sacrificing the environment. This policy 
was followed throughout the 1980s. 

West German environmental legislation initially lagged 
behind that of East Germany. For the first decades after World 
War II, West Germans were concerned with reconstructing 
their country and its economy. Early efforts to deal with the 
environment met with little interest. The attainment of wide- 
spread prosperity and the coming to maturity of a new genera- 
tion with so-called postmaterialist values led to an interest in 
protecting the environment. The late 1960s and the early 1970s 


Germany: A Country Study 

saw the passage of several dozen laws relating to the environ- 
ment, the most important of which were the Waste Disposal 
Law and the Emission Protection Law, both passed in 1972. In 
1974 the Federal Environmental Agency was established. The 
new legislation established the principles of Germany's envi- 
ronmental policies, still in effect in the mid-1990s: preventing 
pollution by monitoring new products and projects; requiring 
the polluter, rather than society at large, to pay damages; and 
relying on cooperation among government, industry, and soci- 
ety to protect the environment. 

The oil crisis of 1973-74 and the ensuing worldwide reces- 
sion led to a tapering off of environmental activism on the part 
of the West German government and the political parties. 
However, numerous citizens' groups formed and pressed for 
increased environmental protection (see Citizens' Initiative 
Associations, ch. 7). The accident at the Three Mile Island 
nuclear power plant in the United States in 1979 also spurred 
the growth of such groups. Elements of the environmental 
movement formed a political party, the Greens (Die Grunen) 
in 1980, which in 1983 won seats in the Bundestag (see The 
Greens, ch. 7). Of greatest importance were domestic ecologi- 
cal problems such as pollution in the Baltic Sea and the Rhine 
and Main rivers and damage to the country's forests from acid 

During the early 1980s, concerns about the environment 
became widespread in the general population, and all political 
parties were forced to address them. These concerns were 
raised still higher by a series of ecological disasters in 1986: the 
accident at the nuclear plant at Chernobyl in the Soviet Union 
and serious spills of dangerous chemicals into the Rhine at 
Basel in Switzerland. Immediately after the Chernobyl disaster, 
Chancellor Helmut Kohl created the Ministry of the Environ- 
ment, Nature Conservation, and Reactor Safety. 

Stricter environmental controls led to marked improve- 
ments in air quality. Between 1966 and 1988, sulfur dioxide 
emissions in West Germany fell by one-third. Dust levels, which 
stood at 3.2 million tons in 1980, fell to 550,000 tons by the late 
1980s. The quality of river water also improved. The Rhine and 
Main rivers, nearly "biologically dead" in the 1960s, supported 
several species of fish by the early 1990s. The Ruhr River, 
located in the heart of the country's largest manufacturing 
region, became the cleanest "industrial" river in West Germany 


The Society and Its Environment 

after the construction of a series of dams and the reforestation 
of slag heaps and wastelands. 

At unification, the ecological situation in the new Ldnderwas 
quite different. Because 95 percent of industrial wastewater 
had been discharged without treatment and 32 percent of 
households were not connected to sewerage systems, more 
than 40 percent of the rivers of the new Lander and 24 percent 
of their lakes were totally unfit as sources of drinking water; 
only 3 percent of their rivers and 1 percent of their lakes were 
considered ecologically healthy. Some rivers had pollution lev- 
els 200 times higher than that permitted by European Commu- 
nity (EC — see Glossary) environmental standards. The 
widespread use of brown coal had resulted in record emissions 
of sulfur dioxide, which rose by one-fifth between 1980 and 
1988. Moreover, decades of brown coal strip mining had left 
some eastern areas resembling a lunar landscape. Other areas 
had been contaminated by the mining and processing of ura- 
nium, primarily to service the Soviet nuclear sector. 

Although East German per capita waste production had 
been much lower than that of West Germany, the East German 
government had negotiated away this advantage and jeopar- 
dized ecological security in the bargain. In the 1980s, the GDR 
had earned hard currency by importing and carelessly dispos- 
ing of millions of tons of West Germany's trash, exacerbating 
soil degradation and groundwater contamination. Some 60 
percent of industrial waste had been deposited without con- 
trols. Of about 11,000 landfill sites, more than 10,000 were 
uncontrolled. With more than 28,000 potentially hazardous 
sites, the cleanup effort required in the east appears compara- 
ble in scope to the Superfund campaign in the United States. 

The Cold War had also damaged East Germany's environ- 
ment and to a lesser extent that of West Germany. For nearly 
five decades, millions of troops from the East and the West had 
made intensive use of the territory of the two Germanys as mil- 
itary bases and training sites. Cleanup costs were estimated in 
the hundreds of millions of dollars. In recognition of this situa- 
tion, the United States Department of Defense allocated funds 
to repair environmental damage in the Federal Republic. In 
contrast, Soviet and later Russian forces, although they report- 
edly occupied as much as 2.5 percent of East German territory, 
were paid to leave the country and did so without compensat- 
ing Germany for the extreme environmental damage they had 


Germany: A Country Study 

With unification in 1990, the new Lander became subject to 
the environmental laws of the Federal Republic and the EC, 
although both sets of laws were to be applied gradually. Stan- 
dards in some areas, such as emissions control, would not come 
into effect until after 2000. The ecological situation in the new 
Lander soon changed for the better, although much of the 
improvement stemmed less from the imposition of new stan- 
dards than from the closing, for economic reasons, of out- 
moded plants that had caused much pollution. Projects such as 
constructing new air, water, and soil treatment plants and mod- 
ernizing old ones, reducing the amounts of brown coal con- 
sumed, and cleaning up dump sites will gradually undo 
decades of ecological damage. Some environmental policies in 
the new Lander, like those in the old Lander, are preventive in 
nature. Because of the irresponsible practices of the former 
GDR, however, a great number are also restorative. 

Serious environmental problems continue to confront Ger- 
many. Despite the efforts begun in the early 1970s, the "death 
of the forest" (Waldsterben) caused by acid rain continues. In 
1992 about 68 percent of the country's trees had suffered sig- 
nificant ecological damage. Forests in northwestern Germany 
had suffered the least damage from acid rain, those in the 
south and east the most. Chemical emissions from automobiles 
are a serious cause of this problem. Only since 1993, however, 
have new vehicles been required to have catalytic converters. 
Germany's farmers also cause much pollution through inten- 
sive use of fertilizers. Because they are a powerful interest 
group, it has been difficult to pass legislation to regulate their 
farming methods. 

Nuclear power presents a special dilemma for Germany. In 
western Germany, support for that power source, which in the 
mid-1990s supplied about 35 percent of the country's energy 
requirement, has fluctuated depending upon international 
events and crises. As of the mid-1990s, however, there appeared 
little chance that any more nuclear plants would be con- 
structed in the near future. 

Upon unification, the Federal Republic inherited East Ger- 
many's two nuclear power plants, which had been built to 
Soviet specifications. Decommissioning these plants would 
increase reliance on polluting coal-fired power plants. Despite 
this prospect, the likelihood of a Chernobyl-like disaster 
prompted the shutdown of these unsafe nuclear power plants. 
As of 1995, new, more ecologically friendly power plants are 


The Society and Its Environment 

being built in the new Lander to replace nuclear power and 
brown coal-fired plants. 


The population of Germany manifests trends characteristic 
of most advanced industrial countries: lower marriage rates, 
delayed marriage and child-bearing, low fertility rates, small 
household size, high divorce rates, and extended life expect- 
ancy. The population of indigenous Germans has been in 
decline since 1972 in the west and since 1969 in the east 
because the number of births has not kept pace with the num- 
ber of deaths. In 1990 only five of the sixteen Lander registered 
growth in population because of natural increase. 

Household size decreased from 3.0 persons in 1950 to 2.3 in 
1990. Marriage rates have slackened, while divorce rates have 
risen or remained stable at high rates. In the late 1980s, almost 
one-third of all marriages ended in divorce. Infant mortality 
has steadily declined, and life expectancy has risen, albeit more 
slowly in eastern Germany. As in the United States, a greater 
proportion of the population is moving into advanced age. In 
1871 only 4.6 percent of the population was sixty-five years of 
age or older. By 1939 that proportion had risen to 7.8 percent, 
and by 1992 it had risen to about 15 percent. By 2000 it is esti- 
mated that one-quarter of the population will be sixty or older. 

Since the 1950s, the population of Germany has become 
more diverse. Millions of foreigners have migrated to Germany, 
seeking employment, citizenship, or asylum. In contrast to the 
native population, foreigners in Germany tend to have more 
children and larger households. In 1988 their average house- 
hold size was 3.5 persons. Depending upon their origins and 
social status, foreigners in Germany have been integrated into 
society in widely varying degrees. 

Historical Background 

Since the first unification of Germany in 1871 to form the 
German Empire, the population and territorial expanse of 
Germany have fluctuated considerably, chiefly as a result of 
gains and losses in war. At the time of its founding, the empire 
was home to some 41 million people, most of whom lived in vil- 
lages or small towns (see table 5, Appendix). As industrializa- 
tion and urbanization accelerated over the next forty years, the 
population increased significantly to 64.6 million, according to 


Germany: A Country Study 

the 1910 census. About two-thirds of this population lived in 
towns with more than 2,000 inhabitants, and the number of 
large cities had grown from eight in 1871 to eighty-four in 
1910. Stimulating population growth were improvements in 
sanitary and working conditions and in medicine. Another sig- 
nificant source of growth was an influx of immigrants from 
Eastern Europe, who came to Germany to work on farms and 
in mines and factories. This wave of immigrants, the first of sev- 
eral groups that would swell Germany's population in the suc- 
ceeding decades, helped compensate for the millions of 
Germans who left their country in search of a better life, many 
of whom went to the United States. 

At the outbreak of World War I in 1914, the population of 
Germany had reached about 68 million. A major demographic 
catastrophe, the war claimed 2.8 million lives and caused a 
steep decline in the birth rate. In addition, the 1919 Treaty of 
Versailles awarded territories containing approximately 7 mil- 
lion German inhabitants to the victors and to newly indepen- 
dent or reconstituted countries in Eastern Europe. 

In the 1930s, during the regime of Adolf Hitler, a period of 
expansion added both territory and population to the Third 
Reich. Following the annexation of Austria in 1938 and the 
Sudetenland (part of Czechoslovakia) in 1939, German terri- 
tory and population encompassed 586,126 square kilometers 
and 79.7 million people, according to the 1939 census. The 
census found that women still outnumbered men (40.4 million 
to 38.7 million), despite a leveling trend in the interwar 

The carnage of World War II surpassed that of World War I. 
German war losses alone were estimated at 7 million, about 
half of whom died in battle. Ruined, defeated, and divided into 
zones of occupation, a much smaller Germany emerged in 
1945 with a population about the same as in 1910. In the imme- 
diate postwar period, however, more than 12 million persons — 
expelled Germans and displaced persons — immigrated to Ger- 
many or used the country as a transit point en route to other 
destinations, adding to the population. 

By 1950 the newly established Federal Republic of Germany 
had a population of about 50 million, more than 9 million of 
whom were "expellees." The German Democratic Republic had 
about 4 million newcomers and 14 million natives (see table 6, 
Appendix). Most of the expellees came from East Prussia, 
Pomerania, Silesia, and the Sudetenland, all one-time German 


The Society and Its Environment 

territories held by other countries at the end of World War II. 
The majority of the settlers in West Germany remained, found 
work in the rapidly recovering economy, and in time were suc- 
cessfully integrated into the society. Between 1950 and 1989, 
West Germany's population grew from 50 million to 62.1 mil- 
lion. Resettled Germans and refugees from former eastern ter- 
ritories and their families constituted approximately 20 
percent of the country's population. From its earliest years, 
West Germany had become either a temporary or a final desti- 
nation for millions of migrants. Yet despite this influx, the 
country did not develop an identity as a country of immigra- 
tion as did, for example, the United States or Canada. 

The situation in East Germany was much different. From its 
founding in 1949, the GDR struggled to stabilize its population 
and thwart emigration. In the course of its forty-year history, 
almost one-quarter of East Germany's population fled the state 
to settle in West Germany. In the 1950s alone, more than 2 mil- 
lion people moved west, a migration that triggered the 
regime's radical solution in August 1961 — the construction of 
the Berlin Wall (see The Berlin Wall, ch. 2). During most of its 
existence, the only segment of East Germany's population per- 
mitted to leave for West Germany were retirees, whose resettle- 
ment there was unofficially encouraged to reduce the GDR's 
pension payments. As a result, the number of persons sixty 
years of age and older in the GDR fell from 22.1 percent in 
1970 to 18.3 percent in 1985 and made the East German popu- 
lation younger than that of West Germany. 

Deprived of a regular supply of workers by the construction 
of the Berlin Wall, the Federal Republic in the 1960s absorbed 
yet another wave of migrants. Laborers were recruited through 
agreements with seven countries: Italy, Spain, Greece, Turkey, 
Portugal, Tunisia, and Morocco. Between 1955 and 1973, the 
number of foreign workers, called guest workers ( Gastarbeiter) 
to emphasize the intended temporary nature of their con- 
tracts, grew from about 100,000 to about 2.5 million. Originally 
brought in for three-year shifts, most workers — mainly single 
men — remained and made a valuable contribution to the 
booming West German economy. In the early 1970s, however, a 
recession brought on by the international energy crisis slowed 
the West German economy; the importing of workers officially 
came to an end in 1973 (see Immigration, this ch.). 

In the 1980s and early 1990s, the fourth and most controver- 
sial wave of immigrants to West Germany were asylum-seekers 


Germany: A Country Study 

and political refugees — ethnic Germans from Poland, Yugosla- 
via, Czechoslovakia, and territories belonging to the former 
Soviet Union and also East Germans who moved west as the 
GDR collapsed. Many Germans were angered by the financial 
and social costs these immigrants required because they 
believed many asylum-seekers were drawn to Germany more by 
the desire for a better standard of living than by the need to 
escape political oppression. Many ethnic Germans hardly 
seemed German: some did not even speak German. 


Despite the Berlin Wall and the fortified boundary that 
divided them, the two Germanys had many similar demo- 
graphic developments in the postwar period. In the late 1950s 
and especially in the 1960s, both Germanys experienced a 
"baby boom," stimulated by increased economic prosperity and 
a heightened sense of security. During the second half of the 
1960s, East Germany's population grew slightly, an unusual 
occurrence. In West Germany, the absolute peak in births, 1.3 
million, was reached in 1965. In that year, births outnumbered 
deaths by 417,504. 

After the baby boom, both countries experienced periods of 
zero population growth when the annual number of births 
failed to compensate for the annual number of deaths. As of 
1993, with the exclusion of foreigners' births, deaths have out- 
numbered births every year since 1976 in the old Lander. Since 
1986 the same has been true for the new Lander. When the 
West German total fertility rate reached its historic peacetime 
low of fewer than 1.3 children per woman of child-bearing age 
in 1985, popular newsmagazines caused a sensation with cover 
stories that warned of the eventual disappearance of the Ger- 
mans. In the former GDR, a pronatalist policy temporarily had 
modest success in boosting the birth rate in the mid-1970s, but 
the population declined there for two reasons: emigration and 
low fertility. This was especially noticeable after the fall of the 
Berlin Wall in November 1989 when emigration soared. Low 
fertility also continued to be a problem. Between 1989 and 
1991, eastern Germany's total fertility rate fell by 38 percent. In 
1991 the rate was 0.98, well below West Germany's lowest level. 

Although its population was just one-fifth that of West Ger- 
many, until 1986 East Germany officially topped in absolute 
terms West Germany in both the number of births outside mar- 
riage and the number of abortions. This situation was 


The Society and Its Environment 

accounted for in part by a chronic lack of birth control choices 
in the former Soviet bloc and the practice of using abortion as 
a regular means of curbing unwanted pregnancies. In 1988 
one-third of all births in the GDR were to unwed mothers, 
whereas in the FRG only one-tenth were. The trend of 
out-of-wedlock births in the east continued to increase after 
unification. By 1992 nearly 42 percent of the babies born in the 
new Lander were to single mothers, compared with 12 percent 
in the old Lander. 

Until mid-1993, when a more restrictive West German law 
came into effect, the eastern section of Germany recognized 
the right of abortion on demand. The highest rate was reached 
in 1972, when one-third of pregnancies were aborted. By 1989 
the rate had declined, but the probability of an abortion was 
still one in every four pregnancies. In the old Lander, legal 
abortions were restricted to special circumstances based on 
such factors as the physical or mental health of the mother or 
fetus. In 1989 West Germany officially registered 75,297 abor- 
tions, compared with about 74,000 for East Germany. Social, 
cultural, and economic factors accounted for the differences in 
frequency of abortion and extramarital birth rates. 

Following unification, a trend termed demographic paralysis 
was observed in the former East Germany when the number of 
births fell by 50 percent between 1990 and 1993. From 1988 to 
mid-1993, the crude birth rate fell from 12.9 per 1,000 to 5.3 
per 1,000, an abrupt and precipitous decline unmatched in an 
industrial society in peacetime. Especially hard hit by skyrocket- 
ing unemployment and adrift in an alien market economy, 
record numbers of women in the new Lander stopped having 
children. Some reports indicated that by the summer of 1993 
as many as two-thirds of working women in the east had lost 
their jobs since unification. In that same year, the marriage rate 
fell by half. 

Age-Gender Distribution 

In the early 1990s, an age-gender distribution pyramid of 
unified Germany's population displayed at its apex the legacy 
of heavy war casualties: a preponderance of elderly women too 
great to be explained by women's greater longevity. Official sta- 
tistics show that in 1990 there were approximately 2.7 million 
more females than males (41.2 million versus 38.5 million) in 
Germany. In the same year, so many wives had outlived their 
husbands, either because of war deaths or because of the lower 


Germany: A Country Study 

life expectancy of males, that the 4.9 million elderly widows in 
the country accounted for approximately 6 percent of the total 
population. Population specialists have forecast the transfor- 
mation of the pyramid into a mushroom, as the effect of slack- 
ening birth rates pushes the population bulge higher up the 
age categories. In 1990 about 50 percent of the population was 
under thirty-seven years of age (see fig. 8). 

The progressive aging of Germany's population has been 
rapid. In 1970 those aged seventeen or younger made up 27.2 
percent of the population, those aged eighteen to sixty-five 
accounted for 59.1 percent, and those aged sixty-five and older 
were 13.7 percent. By 1990 these shares had changed to 19.2 
percent, 65.8 percent, and 15 percent, respectively. The impli- 
cations of this trend for social welfare and security are a cause 
of concern. In the early 1990s, one pensioner was financed by 
three employees. If present trends continue, forecasts indicate 
that by 2030 as much as 28 percent of Germany's population 
will be elderly, and there will be a 1:1 ratio between pensioners 
and workers. 


In the postwar period, the former GDR developed a compre- 
hensive health care system that made steady advances in reduc- 
ing infant mortality and extending life expectancy for both 
men and women. Early in the postwar period, life expectancy 
in some categories was actually longer for East Germans than 
for West Germans, and infant mortality was lower until 1980. 
However, starting in the mid-1970s, West Germany began to 
register longer life expectancies in every age-group, and after 
1980 the infant mortality rate dropped below that of East Ger- 
many. In 1988 infant mortality in West Germany was 7.6 per 
1,000 live births and 8.1 per 1,000 in East Germany. 

The better health and longevity of West Germans probably 
stemmed from an increased interest in quality of life issues, 
personal health, and the environment. East Germans, in con- 
trast, suffered the ill effects of the Soviet model of a traditional 
rust-belt industrial economy, with minimal concern for work- 
ers' safety and health and wanton disregard of the need to pro- 
tect the environment. Improving environmental conditions 
and a more health-conscious way of living should gradually 
reduce remaining health differences among Germans. In mid- 
1995 unified Germany had an estimated mortality rate of about 
eleven per 1,000, and life expectancy was estimated at 76.6 


The Society and Its Environment 

years (73.5 years for males and 79.9 years for females). The 
major causes of death were the same as those of other 
advanced countries (see Current Health Care Issues and Out- 
look for the Future, ch. 4). 

Population Distribution and Urbanization 

Following unification, the Federal Republic encompassed 
356,958 square kilometers and was one of the largest countries 
in Europe. With about 81.3 million people in mid-1995, it 
ranked second behind Russia in population among the coun- 
tries of Europe. Unification actually reduced the Federal 
Republic's population density, however, because East Germany, 
which had a large rural area, was more sparsely populated. 
With an average of 228 persons per square kilometer in late 
1993, unified Germany ranked third in population density 
among European countries. It ranked behind the Netherlands 
and Belgium, which had 363 and 329 persons per square kilo- 
meter, respectively. 

Germany's population density varies greatly. The most 
densely populated Lander axe Berlin, Hamburg, and Bremen, 
with densities of 3,898, 2,236, and 1,697 persons per square 
kilometer, respectively, at the end of 1992 (see table 7, Appen- 
dix) . The least densely populated are two new Lander, Mecklen- 
burg-Western Pomerania and Brandenburg, both mostly rural 
in character. They had population densities of eighty and 
eighty-six persons per square kilometer, respectively, at the end 
of 1992. Other Lander axe closer to the national average: the 
largest Land, Bavaria, with 167 persons per square kilometer, is 
mostly rural, but its capital is the large city of Munich; Rhine- 
land-Palatinate, with 196 persons per square kilometer, is also 
mostly rural but has numerous heavily populated areas along 
the Rhine; and Saxony, with 252 persons per square kilometer, 
also has a number of heavily populated areas. 

The Land with the most population, one-fifth of the nation's 
total, is North Rhine-Westphalia. With a population density of 
519 persons per square kilometer at the end of 1992, it is the 
most heavily settled of all Lander, with the exception of the 
three city Lander of Bremen, Hamburg, and Berlin. North 
Rhine-Westphalia's density is caused by its many cities; several 
dozen of these cities have populations above 100,000, includ- 
ing five with populations above 500,000. Many of these cities 
are located so close together that they form one of Europe's 


Germany: A Country Study 


85 and over 

4,000 3,000 2,000 1,000 1,000 2,000 3,000 4,000 


Source: Based on information from Federal Republic of Germany, Statistisches 
Bundesamt, Statistisches Jahrbuch 1994 fur die Bundesrepublik Deutschland, 
Wiesbaden, 1994, 66. 

Figure 8. Population by Age and Gender, 1992 

largest urban agglomerations, the Ruhrstadt (Ruhr City), with 
a population of about 5 million. 

The Federal Republic has few very large cities and many 
medium-sized ones, a reflection of the centuries when the 
name Germany designated a geographical area consisting of 
many small and medium-sized states, each with its own capital 
(see table 8, Appendix). Berlin, by far the largest city, with a 
population of 3.5 million at the end of 1993, is certain to grow 
in population as more of the government moves there in the 
second half of the 1990s and as businesses relocate their head- 
quarters to the new capital. Some estimates predict that 
Greater Berlin will have a population of 8 million by early in 
the twenty-first century. 

Berlin already dwarfs the only other cities having more than 
1 million inhabitants: Hamburg with 1.7 million and Munich 
with 1.3 million. Ten cities have populations between 500,000 
and 1 million, seventeen between 250,000 and 500,000, and 


The Society and Its Environment 

fifty-four between 100,000 and 250,000. In the early 1990s, 
about one-third of the population lived in cities with 100,000 
residents or more, one-third in cities and towns with popula- 
tions between 50,000 and 100,000, and one-third in villages 
and small towns. 

Other densely populated areas are located in the southwest. 
They are Greater Stuttgart; the Rhine-Main area with its center 
of Frankfurt am Main; and the Rhine-Neckar region with its 
center in Mannheim. The greater Nuremberg and Hanover 
regions are also significant population centers. The new Lander 
are thinly settled except for Berlin and the regions of Dresden- 
Leipzig and Chemnitz-Zwickau. 

Urban areas in the east are more densely populated than 
those in the west because the GDR saw little of the suburbaniza- 
tion seen in West Germany. As a result, there is a greater con- 
trast between urban and rural areas in the new Lander than in 
the west. West Germany's suburbanization, however, is not 
nearly as extensive as that experienced by the United States 
after the end of World War II. Compared with cities in the 
United States, German cities are fairly compact, and their 
inhabitants can quickly reach small villages and farmlands. 

Germany's population growth has been slow since the late 
1960s. Many regions have shown little or no growth, or have 
even declined in population. The greatest growth has been in 
the south, where the populations of Baden-Wurttemberg and 
Bavaria each increased by well over 1 million between 1970 and 
1993. (Each had also grown by over 1 million in the 1960s.) 
North Rhine-Westphalia, which had grown by 1 million in the 
1960s, added another 750,000 to its population between 1970 
and 1993, a small increase, given a total population of nearly 18 
million at the end of 1993. Bremen, Hamburg, and the Saar- 
land experienced some population loss between 1970 and 
1993. With the exception of united Berlin, all the new Lander 
lost population between the fall of the Berlin Wall and the end 
of 1993. In general, this development reflected long-term 
trends in East Germany, although the rate of decline has been 
higher since unification. 


Immigration has been a primary force shaping demographic 
developments in the two Germanys in the postwar period (see 
Historical Background, this ch.). After the erection of the Ber- 
lin Wall in 1961, the immigration flow, first into West Germany 


Germany: A Country Study 

and later into united Germany, consisted mainly of workers 
from southern Europe. In addition, the immigrants included 
several other groups: a small but steady stream of East German 
immigrants (Ubersiedler) during the 1980s that exploded in size 
in 1990 (389,000) but by 1993 had fallen by more than half 
(172,000) and was somewhat offset by movement from west to 
east (119,000); several million ethnic Germans (Aussiedler) 
from East European countries, especially the former Soviet 
Union; and several million persons seeking asylum from politi- 
cal oppression, most of whom were from East European coun- 

Foreign Residents 

As of early 1994, approximately 6.8 million registered for- 
eigners resided in Germany. Turks made up the largest group 
(1.9 million), followed by immigrants from the former Yugosla- 
via (930,000), Italians (565,000), Greeks (350,000), Poles 
(260,000), and Austrians (185,000). About 25 percent of these 
foreign residents, most of whom were born in Germany, are 
under the age of eighteen. Because of the higher birth rate of 
foreigners, one of every ten births in Germany is to a foreigner. 
However, because recruiting of Gastarbeiter stopped in 1973 at 
the onset of a worldwide recession, most foreign workers are 
middle-aged and have lived in Germany for several decades. 

The foreign population is not distributed evenly. More than 
two-thirds live in the Lander of North Rhine-Westphalia, 
Baden-Wurttemberg, and Bavaria, where in 1990 they made up 
9, 10, and 7 percent of the population, respectively. Foreigners 
live mainly in urban areas; in 1989 approximately 23 percent of 
foreign residents lived in Hamburg and Berlin. Foreigners 
often live in particular areas of large cities. (For example, 
Kreuzberg in Berlin and Kalk in Cologne both have large Turk- 
ish communities.) There are few foreigners in the new Lander. 
Of the roughly 190,000 foreigners living in the former GDR in 
1989 because of work contracts, many have since been repatri- 
ated to Vietnam, Mozambique, Cuba, and other developing 
countries that were friendly to the GDR regime. 

Foreigners began arriving in West Germany in large num- 
bers in the 1960s after the construction of the Berlin Wall 
ended migration from East Germany. Recruited mainly from a 
number of countries in southern Europe, Gastarbeiter were not 
expected to stay beyond the terms of their work permits. How- 
ever, many opted to remain in West Germany and subsequently 


Residential area in Cologne 
Courtesy Eric Solsten 

brought their families there to live. As a result, and owing to 
higher birth rates, the foreign population in Germany has 
increased substantially (see table 9, Appendix). By offering 
financial incentives, West German authorities hoped to encour- 
age some Gastarbeiter to return to their native countries, but rel- 
atively few took advantage of these provisions. A tightening of 
entry restrictions also caused many to remain in Germany 
rather than risk not being readmitted after spending time in 
their home country. 

Although no longer recruited abroad, Germany's foreign 
residents remain vital to the economy, parts of which would 
shut down if they were to depart. They also contribute to the 
country's welfare and social insurance programs by paying 
twice as much in taxes and insurance premiums as they receive 
in benefits. In the long term, their presence may be seen as 
vital because they have a positive birth rate. The birth rate 


Germany: A Country Study 

among native Germans is so low that some studies have esti- 
mated that Germany will require approximately 200,000 immi- 
grants a year to maintain its population into the next century 
and support its array of social welfare benefits. 

Most Germans do not see their country as a land of immigra- 
tion like the United States or Canada, and no demographic or 
social issue has generated greater controversy than the pres- 
ence of foreigners in the Federal Republic. In an opinion poll 
taken in 1982, two-thirds of West Germans said that there were 
too many foreigners in Germany, and one-half thought that 
foreigners should be sent back to their countries of origin. In 
1992 another poll found that the "foreigner problem" ranked 
as the most serious issue for western Germans and was third in 
importance for eastern Germans. 

According to the foreigners law that went into effect in mid- 
1993, foreigners living in Germany for fifteen years may 
become German citizens if they have no criminal record and 
renounce their original citizenship. Young foreigners who have 
resided eight years in Germany may become citizens if they 
have attended German schools for six years and apply for citi- 
zenship between the ages of sixteen and twenty-three. Usually, 
however, German citizenship depends not on where one is 
born (ius solis) but on the nationality of the father or, since 
1974, on the mother (ius sanguinis). Thus, to many, German 
citizenship depends on being born German and cannot right- 
fully be acquired through a legal process. This notion makes it 
practically impossible for naturalized citizens or their children 
to be considered German. Some reformers advocate eliminat- 
ing the concept of German blood in the 1913 law regulating 
citizenship, but the issue is an emotional one, and such a 
change has little popular support. 

Ethnic Germans 

Ethnic Germans have immigrated to Germany since the end 
of World War II. At first, these immigrants were Germans who 
had resided in areas that had formerly been German territory. 
Later, the offspring of German settlers who in previous centu- 
ries had settled in areas of Eastern Europe and Russia came to 
be regarded as ethnic Germans and as such had the right to 
German citizenship according to Article 116 of the Basic Law. 
Because they became citizens immediately upon arrival in Ger- 
many, ethnic Germans received much financial and social assis- 
tance to ease their integration into society. Housing, vocational 


The Society and Its Environment 

training, and many other types of assistance, even language 
training — because many did not know the language of their 
forebears — were liberally provided. 

With the gradual opening of the Soviet empire in the 1980s, 
the numbers of ethnic Germans coming to West Germany 
swelled. In the mid-1980s, about 40,000 came each year. In 
1987 the number doubled and in 1988 doubled again. In 1990 
nearly 400,000 ethnic Germans came to the Federal Republic. 
In the 1991-93 period, about 400,000 ethnic Germans settled 
in Germany. Since January 1993, immigration of ethnic Ger- 
mans has been limited to 220,000 per year. 

Because this influx could no longer be managed, especially 
because of the vast expense of unification, restrictions on the 
right of ethnic Germans to return to Germany became effec- 
tive in January 1991. Under the new restrictions, once in Ger- 
many ethnic Germans are assigned to certain areas. If they 
leave these areas, they lose many of their benefits and are 
treated as if they were foreigners. The government has also 
established programs to encourage the estimated several mil- 
lion ethnic Germans who still live in the former Soviet Union 
and Eastern Europe to remain there. Although ethnic Ger- 
mans are entitled to German citizenship by virtue of their 
bloodlines, to many Germans they do not seem German, and 
their social integration has frequently been difficult. 


To atone for the crimes of the Third Reich, Article 16/2 of 
West Germany's Basic Law offers liberal asylum rights to those 
suffering political persecution. Until the 1980s, relatively few 
refugees took advantage of this provision. But in the second 
half of the decade, a new class of "jet-age refugees" began to 
make its way to Europe and especially to West Germany, which 
accepted more than any other West European country. In the 
mid-1980s, many refugees came from Iran and Lebanon. By 
1991 most refugees originated in regions of war-torn former 
Yugoslavia, Romania, or Turkey. From 1986 to 1989, about 
380,000 refugees sought asylum inWest Germany. By compari- 
son, in the 1990-92 period, nearly 900,000 people sought ref- 
uge in a united Germany. 

Although only about 5 percent of requests for asylum are 
approved, slow processing and appeals mean that many refu- 
gees remain in Germany for years. Because financial aid is also 
provided for the refugees' living expenses, their presence has 


Germany: A Country Study 

become a burden on federal and local government. The result- 
ing social tensions made imperative an amendment to the con- 
stitutional provision regarding asylum. After heated debate, in 
1993 the Bundestag passed legislation that amended the Basic 
Law and tightened restrictions on granting asylum. One impor- 
tant change is that asylum-seekers are no longer to be admitted 
into Germany if they have applied from a third country. In 
addition, more funds are to be allotted to processing applica- 
tions, so that asylum-seekers remain in Germany for shorter 

Ethnic Minorities 

In the early 1990s, there were between 50,000 and 60,000 
Gypsies in Germany. They were divided into two groups: the 
Sinti, who have lived for hundreds of years in Germany and 
who have largely adopted conventional modes of living and 
employment; and the Roma, many of whom fled Romania fol- 
lowing the 1989 revolution that toppled the Nicolae Ceausescu 
regime. The lifestyle and work habits of the mobile Roma clash 
with those of most Germans. As a result, in 1992 the German 
government signed an agreement with Romania providing for 
the repatriation of thousands of Roma in exchange for cash 
payments to be used for housing and job training. 

Several other minority groups, officially recognized and 
their languages protected, also live in Germany. For more than 
1,000 years, the Sorbs, a Slavic nationality, have lived as an eth- 
nic minority in Brandenburg and Saxony. As of 1993, there 
were about 120,000 Sorbs in Germany. In addition, about 
60,000 Danish speakers live in Schleswig-Holstein, a reminder 
of the area's Danish past; and about 12,000 speakers of the Fri- 
sian language live on the Frisian Islands and on the northwest- 
ern coast. 

Germany once had a prosperous and largely assimilated Jew- 
ish population of about 600,000. In the 1930s and 1940s, most 
German Jews were exiled, were imprisoned, or perished in 
Nazi death camps (see Total Mobilization, Resistance, and the 
Holocaust, ch. 1). By the early 1990s, Germany's Jewish com- 
munity was only about 40,000. Its numbers were growing, how- 
ever, as the result of the immigration of some Israelis and 
Russian Jews. One of the most eloquent spokespersons for the 
rights of minorities and a tireless advocate for greater tolerance 
is the community's leader, Ignaz Bubnis. 


Turkish restaurant in Berlin 
Courtesy German Information 
Center, New York 
Italian grocery store in Cologne 
Courtesy Eric Solsten 


Germany: A Country Study 

Women in Society 

For centuries, a woman's role in German society was 
summed up and circumscribed by the three "K" words: Kinder 
(children), Kirche (church), and Kuche (kitchen). Throughout 
the twentieth century, however, women have gradually won vic- 
tories in their quest for equal rights. In 1919 they received the 
right to vote. Profound changes also were wrought by World 
War II. During the war, women assumed positions traditionally 
held by men. After the war, the so-called Trummerfrauen 
(women of the rubble) tended the wounded, buried the dead, 
salvaged belongings, and began the arduous task of rebuilding 
war-torn Germany by simply clearing away the rubble. 

In West Germany, the Basic Law of 1949 declared that men 
and women were equal, but it was not until 1957 that the civil 
code was amended to conform with this statement. Even in the 
early 1950s, women could be dismissed from the civil service 
when they married. After World War II, despite the severe 
shortage of young men that made marriage impossible for 
many women, traditional marriage once again became society's 
ideal. Employment and social welfare programs remained 
predicated on the male breadwinner model. West Germany 
turned to millions of migrants or immigrants — including large 
numbers of GDR refugees — to satisfy its booming economy's 
labor requirements. Women became homemakers and moth- 
ers again and largely withdrew from employment outside the 

In the east, however, women remained in the workforce. The 
Soviet-style system mandated women's participation in the 
economy, and the government implemented this key objective 
by opening up educational and vocational opportunities to 
women. As early as 1950, marriage and family laws also had 
been rewritten to accommodate working mothers. Abortion 
was legalized and funded by the state in the first trimester of 
pregnancy. An extensive system of social supports, such as a 
highly developed day-care network for children, was also put in 
place to permit women to be both mothers and workers. Eman- 
cipated "from above" for economic and ideological reasons, 
women in the east entered institutes of higher learning and the 
labor force in record numbers while still maintaining the 
household. East Germany had to rely on women because of its 
declining population; the situation was made more critical by 
the fact that most of those fleeing to West Germany were men. 


The Society and Its Environment 

Because of these developments, about 90 percent of East 
German women worked outside the home. They made up 
about half the membership in the two most important mass 
organizations of the former GDR — the Free German Trade 
Union Federation (Freier Deutscher Gewerkschaftsbund — 
FDGB) and the Free German Youth (Freie Deutsche Jugend — 
FDJ). In 1988 slightly more than one-third of the membership 
of the ruling Socialist Unity Party of Germany (Sozialistische 
Einheitspartei Deutschlands — SED) consisted of women. In 
contrast, only about 4.4 percent of West German women were 
members of a political party. 

After several decades of conforming to traditional social pat- 
terns, West German women began to demand changes. Follow- 
ing patterns in Europe and the United States, emancipation in 
the Federal Republic originated "from below," with women 
themselves. In the 1970s, the women's movement gathered 
momentum, having emerged as an outgrowth of student pro- 
tests in the late 1960s (see Citizens' Initiative Associations, ch. 
7). Rallying around the causes of equal rights (including the 
right to abortion, which was somewhat restricted in West Ger- 
many), the movement succeeded in having legislation passed 
in 1977 that granted a woman equal rights in marriage. A 
woman could work outside the home and file for divorce with- 
out her husband's permission. Divorce was permitted when the 
marriage partners could no longer be reconciled. 

Women also made gains in education in both Germanys. By 
the mid-1960s, East German women accounted for about half 
of all secondary school graduates who had prepared to study at 
institutes of higher learning in the GDR; by the 1975-76 aca- 
demic year, they were in the majority (53 percent). To assist 
women in completing their studies, an extensive support sys- 
tem, including supplementary payments and child care, was 
provided. Expanded educational opportunities for West Ger- 
man women were slower in coming and never equaled the lev- 
els reached in the east. Only in the early 1980s did West 
German women qualify for admission to universities in the 
same numbers as men. Although fewer than that number pur- 
sued college and university studies, between 1970 and 1989 the 
percentage of female students increased from 31 percent to 41 
percent. Two factors were believed to be responsible for the 
discrepancy between eastern and western rates of attendance 
at institutes of higher learning: West German women had a 
stronger orientation toward traditional familial relations; and 


Germany: A Country Study 

they had dimmer prospects for admission to particular aca- 
demic departments and for professional employment after 

Despite significant gains, discrimination remains in united 
Germany. Income inequalities persist: a woman's wages and sal- 
aries range between 65 percent and 78 percent of a man's for 
many positions. In most fields, women do not hold key posi- 
tions. Generally, the higher the position, the more powerful is 
male dominance. For example, women are heavily represented 
in the traditional care-giving fields of health and education, 
but even in such fields there is a wide disparity between the 
number of females working in hospitals (75 percent of total 
staff) and schools (more than 50 percent) and the number of 
female physicians (4 percent) and principals (20 percent in the 
west and 32 percent in the east). In the late 1980s, only 5 per- 
cent of university professors in West Germany were women. 

Although substantial barriers to equality of the sexes in Ger- 
many remain as a result of a persistently patriarchal family 
structure and work environment, women have managed to 
gain isolated high-profile victories. A separate national office 
for women's affairs was created in West Germany in 1980, and 
similar agencies have been established in most Lander in united 
Germany. Since the mid-1980s, offices responsible for working 
toward women's equality have been active, first in West Ger- 
many and after unification in the new Lander. The Equality 
Offices ( Gleichstellungstellen) have as one of their tasks ensuring 
that women occupy a more equitable share of positions in the 
public sector. 

Some women have succeeded in reaching positions of 
power. One of the most successful women in politics in the 
1990s is Rita Sussmuth, president of the Bundestag. In the field 
of industry, Birgit Breuel assumed the leadership, following the 
assassination of Detlev Rohwedder in April 1991, of the Treu- 
handanstalt (Trust Agency), the powerful agency charged with 
privatizing the former East German economy. Other influen- 
tial and prominent German women in the mid-1990s are Mar- 
ion von Donhoff, coeditor of Die Zeit, and Elizabeth 
Noelle-Neumann, director of the Allensbach Public Opinion 
Institute. Yet despite this progress, a 1991 article in an influen- 
tial weekly magazine made it clear how far women must go to 
achieve equality. The magazine's list of the 100 most powerful 
people in Germany included only four women. 


The Society and Its Environment 

Almost all segments of eastern German society encountered 
tremendous difficulty in the unification process, but women 
suffered the most. Some reports indicated that two-thirds of 
working women in the new Lander were unemployed, and 
many more were turned into part-time workers as a result of 
privatization, downsizing of firms, and elimination of support 
services such as day-care and after-school centers. To improve 
their prospects for employment, some women in eastern Ger- 
many reportedly were resorting to sterilization, one of the fac- 
tors contributing to the steep decline in births from twelve per 
1,000 in 1989 to 5.3 per 1,000 in 1993. 

Among the issues that demonstrated differences between 
women of the old and new Lander, one of the most contentious 
was abortion. In 1991 there were about 125,000 registered 
abortions performed in Germany, about 50,000 of which were 
in the east. Although the number of registered abortions in 
both parts of Germany had been declining in recent years, the 
actual number of abortions was estimated at about 250,000. For 
a time following unification, the restrictive western and permis- 
sive eastern legislation on abortion continued in force. In June 
1992, however, the Bundestag voted to ease abortion restric- 
tions and to permit the procedure during the first twelve weeks 
of pregnancy with compulsory counseling. Resorting to what 
had been a successful policy in the early 1970s, those opposed 
to the new law, including Chancellor Helmut Kohl, appealed to 
the Federal Constitutional Court in Karlsruhe to nullify the 
new law. Just before it was scheduled to take effect, the law was 
blocked when the court issued an injunction. Subsequently, a 
new restrictive law came to apply in all of Germany (see Politi- 
cal Developments since Unification, ch. 7). 

Marriage and Family 

Like most other advanced countries in the postwar era, Ger- 
many recorded fewer marriages, more divorces, and smaller 
families. In 1960 there were 690,000 marriages, compared with 
516,000 in 1990. The total for 1993 amounted to only 442,000, 
but most of this decline was caused by a drop of than more 50 
percent in the number of marriages in the new Lander between 
1990 and 1993. Until 1990 the decline in marriages in East Ger- 
many had been appreciably greater than in West Germany 
(from 215,000 in 1950 to 137,000 in 1989, compared with 
536,000 and 399,000 in the same years in West Germany), but 
not nearly as steep in the 1990-93 period. Just as the dramatic 


Germany: A Country Study 

social changes brought to the new Lander by unification 
affected birth rates there, so they also affected marriages rates. 

Another difference in marriage practices between the two 
Germanys had been that easterners marrying for the first time 
did so at an earlier age than westerners. Easterners did so, it is 
believed, because of their desire to have children and hence 
qualify for low-cost child care and housing benefits. Following 
unification this difference remained. In 1992 the average age 
at first marriage was 29.0 for men and 26.5 for women in the 
old Lander, compared with 2V. 1 for men and 25.1 for women in 
the new Lander. Since the mid-1970s, the average age at which 
people marry has slowly risen for both genders in both parts of 

As the number of marriages declined, the frequency of 
divorce increased in both states. Between 1960 and 1990, the 
number of divorces in West Germany more than doubled, 
increasing from 49,000 to 123,000 and yielding a divorce rate 
of about 30 percent. Divorce was always more common in East 
Germany than it was in West Germany. The number of divorces 
roughly doubled between 1960 and 1988, going from 25,000 to 
49,000. In 1986 there was a record divorce rate of 46 percent. 
Although home to only 20 percent of the total population, the 
new Lander accounted for 29 percent of all divorces in 1990. 
After unification, however, the incidence of divorce decreased 
greatly in the east, perhaps in response to the overall uncer- 
tainty and insecurity of future prospects for single mothers in 
unified Germany. In 1992 the number of divorces in the new 
Lander amounted to only 10,000. In 1993, however, this num- 
ber rose to 18,000, an increase of 78 percent. 

Despite the increasing likelihood of divorce, in 1990 about 
89 percent of all families consisted of married couples, and 
about 70 percent of those of marriage age were married. In 
both east and west, however, the failure of these families to pro- 
duce the necessary number of children for population replace- 
ment was striking. Of the 15 million married couples in the 
former West Germany, about 57 percent had children. Forty- 
seven percent of couples with children had one child, 38 per- 
cent had two children, and 13 percent had three or more chil- 
dren. In 1950 the average number of persons in German 
households was 3.0. By 1990 this figure had declined to 2.3. In 
1991 four-person households accounted for 13 percent of the 
total number of households, three-person households for 16 
percent, two-person households for 31 percent, and 


The Society and Its Environment 

single-person households for 35 percent. In the early 1990s, 
only foreign families were regularly having two or more chil- 
dren, with the Turkish subgroup being the largest in terms of 
family size. 

Like West Germany, East Germany had provided legislative 
protection for the family and married couples, together with 
generous maternity leave and pay provisions. In the east, how- 
ever, it was assumed that the mother would rejoin the work- 
force soon after maternity leave, and an elaborate child-care 
system was put in place. Virtually all women could obtain excel- 
lent care for their children if they wished. In the west, many 
mothers gave up their careers or interrupted them for long 
periods following the birth of a child because child care was 
generally unavailable. As a result, in 1990 women of 
child-bearing age in the east had more children (1.67) than 
women in the west (1.42). Supported by the state, eastern 
women had long been accustomed to balancing child-rearing 
and a profession. After unification, however, the new Lander 
experienced a precipitous decline in births because of high 
unemployment, especially among women (see Fertility, this 

By the mid-1990s, the newest trend in household formation 
was what became known as nonmarital living partnerships. 
Between 1972 and 1990, the number of such households 
increased sevenfold, to 963,000, or 2-7 percent of all house- 
holds. Almost 90 percent of these were childless households. 
Most young people were opting to live together before decid- 
ing to marry. This factor pushed the average age at marriage 

Another sign of the movement away from the traditional 
concept of family and of the manifestation of sexual freedom 
was the rising number of out-of-wedlock births. In the late 
1980s, about one in ten West German and three in ten East 
German births were to unmarried women. 

In the postwar period, it became clear that marriage had lost 
its former position as the only legitimate locus for sexual activ- 
ity. In the early 1990s, polls indicated that 60 percent of Ger- 
man sixteen-year-olds were sexually active, compared with 15 
percent in the 1950s. 

In the past, when regional differences were acute, conven- 
tion held that marriages between a Prussian and a Bavarian, 
between a Catholic and a Protestant, and definitely between a 
Christian and a Jew were "mixed" marriages. In modern Ger- 


Germany: A Country Study 

many, only unions between Germans and foreigners are con- 
sidered mixed. Of 516,000 marriages in 1990, about 6 percent 
were between Germans and foreigners. Most often German 
women married Americans, Italians, Turks, and Yugoslavs, and 
German men married Yugoslavs, Poles, Filipinos, and Austri- 
ans. In 1974 legislation was passed conferring automatic citi- 
zenship on children born of these unions. 


There is a wide range of housing stock in Germany, from 
mansions and country estates for the wealthy, to tents and wel- 
fare hotels for the needy and homeless. Most Germans live in 
self-contained apartments or in single-family houses. 
Single-story and two-story townhouse-like dwellings character- 
ize the tidy neighborhoods of small towns and medium-sized 
cities, and high-rise apartment buildings are common in larger 
cities. In many communities, merchants, tradespeople, and 
shopkeepers continue to live above their stores, and clustered 
farmhouses still form the nucleus of many villages. 

After World War II, West Germany faced a severe housing 
shortage. Not only had the war destroyed much of the housing, 
but the millions of refugees from the east had to find new 
accommodations. According to one estimate, there were 10 
million dwellings for 17 million households. The housing 
shortage often forced several families to share a single dwell- 
ing. In the 1950s and 1960s, a tremendous surge in construc- 
tion, supported heavily by the government, resulted in the 
construction of as many as 700,000 dwellings in a single year. 
Gradually, the housing crisis eased. The problems that per- 
sisted generally involved a shortage of affordable housing in 
urban areas. Housing conditions in East Germany also 
improved greatly. However, much of the housing was badly 
designed and poorly constructed, and even at the state's 
demise in 1990, the overall housing supply was inadequate. 

Unification revealed significant differences in the quality, 
variety, and size of dwellings in the two Germanys. In West Ger- 
many, about 70 percent of the housing stock had been built 
after 1948, with 95 percent of the dwellings having their own 
bathrooms and 75 percent having central heating. In East Ger- 
many, 55 percent of the housing stock had been built before 
1948, with only 75 percent of the dwellings having bathrooms 
and only 47 percent having central heating. In addition, much 
of the housing in East Germany was in poor condition because 


The Society and Its Environment 

the authorities had maintained rents at such low levels that 
funds were not available for essential repairs. 

In 1992 united Germany had approximately 34.5 million 
dwellings with 149 million rooms, for a total of 2.8 billion 
square meters of living space. Dwellings in the west were larger 
than those in the east. In 1992 dwellings in the old Lander had 
an average floor space of 82. 7 square meters for an average of 
35.1 square meters per person, compared with 64.5 square 
meters and an average of 29.0 square meters per person in the 
new Lander. 

The federal government has responded with special mea- 
sures to rectify housing problems in the new Lander, launching 
an ambitious program to upgrade and expand housing. By 
1993 about 1.1 million units had been modernized. Specialists 
have estimated that bringing housing in the east up to western 
standards will require the construction of 140,000 new dwell- 
ings a year until 2005. 

Unification also revealed significant differences with respect 
to home ownership. In the early 1990s, approximately 40 per- 
cent of residents owned their dwellings in the old Lander, com- 
pared with 25 percent in the new Lander. 

Prior to unification, a housing shortage had developed in 
West Germany because of increased immigration and the rising 
number of single householders. The arrival of several million 
refugees, ethnic Germans, and eastern Germans coincided 
with a steep drop in the availability of inexpensive housing. 
Despite the construction of as many as 400,000 new dwellings 
each year, as of 1993 the need for housing outpaced the supply. 
A housing shortage exists because the country's 35 million 
households exceed the number of dwellings by about 500,000. 

The housing shortage and a lack of available land for build- 
ing in densely populated areas have driven up real estate 
prices. In 1992 a single-family free-standing house with 125 
square meters of floor space cost DM300,000 in Dresden, 
DM450,000 in Hamburg, DM590,000 in Frankfurt am Main, 
DM800,000 in Berlin, and DM910,000 in Munich. In western 
Germany, the average price of building land was DM129 per 
square meter, compared with DM32 per square meter in the 

Because decent housing is seen as a basic right in Germany, 
the government provides financial aid to households devoting 
too great a share of their income to housing costs. The aid can 
subsidize their rents or help pay mortgages. In the early 1990s, 


Germany: A Country Study 

some 3 million households received this type of aid. Despite 
these programs, however, homelessness remains a problem. In 
the early 1990s, some specialists estimated the number of 
homeless at between 800,000 and 1 million, while others 
believed it to be as low as 150,000. The homeless receive aid 
from government and charitable organizations, which provide 
an array of social services and shelters (see Provisions of the 
Social Welfare System, ch. 4). 


Roman Catholicism, one of Germany's two principal reli- 
gions, traces its origins there to the eighth-century missionary 
work of Saint Boniface (see Medieval Germany, ch. 1). In the 
next centuries, Roman Catholicism made more converts and 
spread eastward. In the twelfth and thirteenth centuries, the 
Knights of the Teutonic Order spread German and Roman 
Catholic influence by force of arms along the southern Baltic 
Coast and into Russia. In 1517, however, Martin Luther chal- 
lenged papal authority and what he saw as the commercializa- 
tion of his faith. In the process, Luther changed the course of 
European and world history and established the second major 
faith in Germany — Protestantism (see The Protestant Reforma- 
tion, ch. 1). 

Religious differences played a decisive role in the Thirty 
Years' War (see The Thirty Years* War, 1618-48, ch. 1). An 
enduring legacy of the Protestant Reformation and this con- 
flict was the division of Germany into fairly distinct regions of 
religious practice. Roman Catholicism remained the preemi- 
nent faith in the southern and western German states, while 
Protestantism became firmly established in the northeastern 
and central regions. Pockets of Roman Catholicism existed in 
Oldenburg in the north and in areas of Hesse. Protestant con- 
gregations could be found in north Baden and northeastern 

The unification of Germany in 1871 under Prussian leader- 
ship led to the strengthening of Protestantism (see Bismarck 
and Unification, ch. 1). Otto von Bismarck sought to weaken 
Roman Catholic influence through an anti-Roman Catholic 
campaign, the Kulturkampf, in the early 1870s. The Jesuit 
order was prohibited in Germany, and its members were 
expelled from the country. In Prussia the "Falk laws," named 
for Adalbert Falk, Bismarck's minister of culture, mandated 
German citizenship and attendance at German universities for 


The Society and Its Environment 

clergymen, state inspection of schools, and state confirmation 
of parish and episcopal appointments. Although relations 
between the Roman Catholic Church and the state were subse- 
quently improved through negotiations with the Vatican, the 
Kulturkampf engendered in Roman Catholics a deep distrust 
of the empire and enmity toward Prussia. 

Prior to World War II, about two-thirds of the German popu- 
lation was Protestant and the remainder Roman Catholic. 
Bavaria was a Roman Catholic stronghold. Roman Catholics 
were also well represented in the populations of 
Baden-Wurttemberg, the Saarland, and in much of the Rhine- 
land. Elsewhere in Germany, especially in the north and north- 
east, Protestants were in the majority 

During the Hitler regime, except for individual acts of resis- 
tance, the established churches were unable or unwilling to 
mount a serious challenge to the supremacy of the state (see 
The Third Reich, 1933-45, ch. 1). A Nazi, Ludwig Muller, was 
installed as the Lutheran bishop in Berlin. Although raised a 
Roman Catholic, Hitler respected only the power and organiza- 
tion of the Roman Catholic Church, not its tenets. In July 1933, 
shortly after coming to power, the Nazis scored their first diplo- 
matic success by concluding a concordat with the Vatican, regu- 
lating church-state relations. In return for keeping the right to 
maintain denominational schools nationwide, the Vatican 
assured the Nazis that Roman Catholic clergy would refrain 
from political activity, that the government would have a say in 
the choice of bishops, and that changes in diocesan boundaries 
would be subject to government approval. However, the Nazis 
soon violated the concordat's terms, and by the late 1930s 
almost all denominational schools had been abolished. 

Toward the end of 1933, an opposition group under the 
leadership of Lutheran pastors Martin Niemoller and Dietrich 
Bonhoeffer formed the "Confessing Church." The members of 
this church opposed the takeover of the Lutheran Church by 
the Nazis. Many of its members were eventually arrested, and 
some were executed — among them, Bonhoeffer — by the end 
of World War II. 

Postwar Christianity 

The postwar division of Germany left roughly equal numbers 
of Roman Catholics and Protestants in West Germany. East 
Germany had five times as many Protestants as Roman Catho- 
lics. There the authorities waged a persistent and largely suc- 


Germany: A Country Study 

cessful campaign to minimize the influence and authority of 
the Protestant and Roman Catholic churches. 

In the Federal Republic, freedom of religion is guaranteed 
by Article 4 of the Basic Law, and the churches enjoy a special 
legal status as corporate bodies. In theory, there is constitu- 
tional separation of church and state, but church financing 
complicates this separation. To support churches and their 
work, most Germans in the old Lander pay a voluntary church 
tax, amounting to an 8 or 9 percent surcharge on income tax 
paid. Living in a society known for consensus and conformity, 
few West Germans formally withdrew from the established 
churches before the 1980s and hence continued to pay the tax. 

Beginning in the 1980s, negative attitudes toward the tax 
and the churches become more common, and people began 
leaving the churches in significant numbers. Between 1980 and 
1992, about 1.0 million Roman Catholics and 1.2 million Prot- 
estants gave up their church memberships. A faltering econ- 
omy and increased taxes caused many to withdraw for financial 
reasons. In a 1992 poll, approximately 42 percent of those que- 
ried stated that the church tax was "much too high"; 64 percent 
favored abolishing the tax and supporting the churches 
through voluntary contributions. Fourteen percent of those 
Roman Catholics and Protestants polled stated that they were 
likely to withdraw or definitely would withdraw from their 

In a society increasingly materialist and secular, the spiritual 
and moral positions of the churches became irrelevant to 
many. Among the younger generation seeking autonomy and 
self-fulfillment, allegiance was no longer simply surrendered 
without question to institutions of authority. Attendance at ser- 
vices dropped off significantly, and the institution of the 
church quietly disappeared from the lives of many Germans. 

In East Germany, although the constitution theoretically 
provided for freedom of religion, the Marxist-Leninist state 
placed formidable obstacles before those seeking to exercise 
that basic right. Enormous pressure was exerted on citizens to 
renounce religion. East Germans who practiced their religion 
were denied educational and professional opportunities, for 
example. Consequently, at unification the majority of East Ger- 
mans were either not baptized or had left their church. 

In the 1990s, polls in the new Lander revealed that more 
than 70 percent of East Germans did not believe in God. Young 
people were even less religious. Some polls found that only 16 


The Society and Its Environment 

percent of East German schoolchildren believed in God. An 
entire generation had been raised without the religious rituals 
that traditionally had marked life's milestones. Secular rituals 
had been substituted. For example, the Jugendweihe (youth ded- 
ication) gradually supplanted the Christian practice of confir- 

After unification in 1990, there were nominally 30.2 million 
Protestants and 26.7 million Roman Catholics in united Ger- 
many. Roman Catholics and Protestants combined amounted 
to about 76 percent of the German population and 71 percent 
of the country's total population. 

Although less extreme than in the past, attitudes toward reli- 
gion continue to polarize German society. In the 1990s, espe- 
cially in the western Lander, attitudinal differences separate 
many younger Germans with humanistic values (concern for 
the environment, the rights of women and minorities, and 
peace and disarmament issues) from an older generation who 
hold traditional religious values. Many others of the postwar 
generations have accepted the values of popular culture and 
consumerism and have left the churches because they no 
longer seem significant. Millions of Germans of all ages, how- 
ever, continue to profess a religion for a variety of reasons, 
among them strong religious beliefs, social pressure to con- 
form, preservation of educational and employment opportuni- 
ties, support for essential church social-welfare activities, and 
(in the western Lander) the enduring appeal of Christian ritu- 
als surrounding baptism, marriage, and burial. 

As of 1995, it was difficult to determine to what extent Ger- 
mans in the new Lander would return to religion. In the early 
1990s, popular magazines featured stories about the "heatheni- 
zation" of Germany. Although such a provocative characteriza- 
tion of trends seems exaggerated, the incorporation of the 
former East Germany did dilute religious influence in united 
Germany. Conversely, however, the opening of eastern Ger- 
many gave missionaries from the old Lander and from around 
the world the chance to rekindle religious fervor. In the old 
Lander, the churches have continued their vitally important 
work of operating an extensive network of hospitals, nursing 
homes, and other social institutions. The need for such ser- 
vices and facilities is greatest in the five new Lander, and the 
churches quickly stepped in to help. 


Germany: A Country Study 

Roman Catholicism 

With about 28.2 million members, the Roman Catholic 
Church in unified Germany is organized into five archdioceses, 
eighteen dioceses, three diocesan offices, and one apostolic 
administration. Two of the archdioceses are based in Bavaria 
(Munich/Freising and Bamberg) and two in North Rhine- 
Westphalia (Cologne and Paderborn). More than 57 percent 
of all German Roman Catholics live in these two Lander. 
Another 28 percent live in the three Lander of Baden-Wurttem- 
berg, Hesse, and Rhineland-Palatinate. Only about 900 of the 
church's 13,000 parishes and other pastoral centers are located 
in the new Lander. The number of Roman Catholics in East 
Germany declined from 2 million shortly after the war to 
800,000 by 1992. Serving these Roman Catholics are two dio- 
ceses, one in Brandenburg (Berlin) and the other in Saxony 

Between 1970 and 1989, the number of Roman Catholics 
attending Sunday mass in West Germany declined from 37 per- 
cent to 23 percent. Between 1970 and 1990, the number of 
annual baptisms fell from about 370,000 to around 300,000. 
Approximately 470,000 Roman Catholics officially left the 
church between 1985 and 1990. In the same period, about 
25,000 returned to the church, and another 25,000 converted 
to other religions. 

Despite the diminishing numbers of Roman Catholics, the 
church tax enables the Roman Catholic Church to remain 
strong financially. In 1992 the church's share of tax revenues 
amounted to approximately DM8.5 billion. An additional DM8 
billion was received in the form of government subsidies, ser- 
vice payments, property, and contributions. Much of this sup- 
port is returned to society through an extensive network of 
church-operated kindergartens, senior citizen centers, and hos- 
pitals. The main Roman Catholic charitable organization is the 
Deutscher Caritasverband, which had about 400,000 employees 
in 1992. 

As the FRG has become an increasingly secular society, the 
centuries-old traditional authority of the Roman Catholic 
Church in matters of morality has declined, especially among 
German youth. Many German Roman Catholics routinely 
ignore the church and in particular the pope's positions on 
such key issues as birth control, premarital sex, divorce, and 
abortion. For years the number of ordinations in Germany has 
declined. To address this issue, most German Catholics favor 


The Society and Its Environment 

permitting priests to marry, and many support the ordination 
of women. 

Periodically, independent reformist clergymen challenge 
the church hierarchy and doctrine. Often they do so with the 
support of many German Catholics. In the 1970s, Hans Kiing, a 
theologian at Tubingen University, used his position and cha- 
risma to criticize the idea of papal infallibility and other dog- 
mas. In the early 1990s, major differences of opinion between 
the laity and church authorities were revealed by a clash 
between a reform-minded priest and the archbishop in Pader- 
born, the most conservative German diocese. For beliefs 
deemed contrary to Vatican policies and dogma, Father Eugen 
Drewermann was defrocked by Archbishop Johannes Degen- 
hardt. In the tradition of Luther, Drewermann continued to 
express his unorthodox views outside the church — at universi- 
ties and in the media, including talk shows. A 1992 survey indi- 
cated that among all Germans, Drewermann was more popular 
than Pope John Paul II. 


In the mid-1990s, most of the country's roughly 30 million 
Protestants were organized into twenty-four member churches 
of the Evangelical Church in Germany (Evangelische Kirche in 
Deutschland — EKD), headquartered in Hanover. Later in the 
decade, the church's headquarters is scheduled to relocate to 
Berlin. The mainline Protestant churches belong to one of 
three groups: Lutheran (ten); Reformed, or Calvinist (two); 
and United, or Lutheran-Calvinist (twelve). The largest num- 
ber of congregations is in Saxony, Berlin, Brandenburg, Lower 
Saxony, Bavaria, Thuringia, and Baden-Wurttemberg. Protes- 
tant clergy are permitted to marry, and women are actively 
engaged in the ministry. One of the most prominent women in 
the EKD and in Germany in the mid-1990s was Maria Jepsen, 
bishop of Hamburg. 

In the early 1990s, about 5 percent of German Protestants 
attended weekly services. Annual baptisms declined from 
about 346,000 in 1970 to around 257,000 in 1990. Of the 
257,000 baptisms in 1990, only about 12 percent took place in 
the former East Germany. Out of 219,000 confirmations in 
1990, about 10 percent involved East German youth. Like their 
Roman Catholic counterparts, Protestant churches are well 
supported by taxes and contributions. The EKD also runs 
numerous hospitals and other social institutions and is a vitally 


Germany: A Country Study 

important member of the country's system of social welfare. 
The main Protestant charitable organization is the Diakon- 
isches Werk; it has about 350,000 employees. 

In East Germany, Protestant churches became a focal point 
of opposition during the 1980s. This was possible because of an 
agreement with the authorities in 1978 that granted the 
churches a degree of independence. Opposition groups, com- 
posed of believers and nonbelievers alike, subsequently were 
able to meet at the churches, where they discussed peace issues 
and how East Germany could be reformed. In 1989 these 
churches, in particular those in Leipzig, became staging points 
for the massive demonstrations that led to the collapse of the 
communist regime (see The Peace Movement and Internal 
Resistance, ch. 2). 

Free Churches 

The free churches in Germany include about a dozen affili- 
ated but independent churches and congregations that 
emerged from Protestant renewal movements, primarily in the 
nineteenth century. Some free churches practice baptism, and 
others accept a simple public declaration of faith. Prominent 
among the former are Baptists and Methodists, who set up reli- 
gious communities in Germany in 1834 and 1849, respectively. 
Methodism was brought to Germany by immigrants returning 
from the United States. Since 1854 a third group, the Free 
Evangelical Congregations, has practiced baptism of believers, 
without making it a precondition for membership in the con- 

Although the various free churches follow different prac- 
tices, they differ from the two main religions in Germany in 
that they are independent of the state. The free churches, see- 
ing themselves as "free churches in a free country," seek no spe- 
cial treatment from the state and are funded almost exclusively 
by members' voluntary contributions. 

The emergence of these independent churches was accom- 
panied by their persecution and denunciation as sects. For this 
reason, overcoming prejudice has been a long and arduous 
process. After World War II, the free churches were cofounders 
of the Study Group of Christian Churches in West Germany 
and West Berlin. They used this organization as a forum for fra- 
ternal interaction with other churches. 

The tenets of the free churches stress the importance of the 
New Testament, freely expressed belief in Jesus Christ and a life 


The Society and Its Environment 

of service devoted to him, personal piety, and the sanctity of 
human life. Conscientious objection to military service is a part 
of the teachings of some free churches. Many free churches 
emphasize the autonomy of the local parish and prefer to be 
called a community rather than a church. 

Since 1926 the original members of the Free Churches in 
Germany have cooperated with one another through the Meet- 
ing of Evangelical Free Churches. These churches are the Asso- 
ciation of Evangelical Free Church Congregations, the 
Association of Free Evangelical Congregations, and the Evan- 
gelical Methodist Church. Five additional churches have guest 
membership status: the Christian Study Group Mulheim/Ruhr, 
the Sacred Army in Germany, the European-Festland Fraternal 
Uniate, the Church of the Nazarene, and the Association of 
German Mennonite Communities. These eight free churches 
have a combined membership of approximately 195,000, orga- 
nized in about 1,500 parishes or communities. Almost all these 
churches are legal corporate bodies. 

In recent years, the free churches' interaction and coopera- 
tion with the established Protestant churches have intensified. 
A few such activities include missionary work, Bible groups, 
and humanitarian efforts such as "Bread for the World." 

Orthodox Churches 

Eastern Orthodox Christianity in Germany derives mainly 
from the hundreds of thousands of Serbs who came to the 
country in the 1960s and 1970s as Gastarbeiter. The breakup of 
the former Yugoslavia in the early 1990s caused thousands 
more Serbs to come to Germany. Many of the Slavs from other 
East European countries also belong to the Eastern Orthodox 
Church. Germany's large Greek population belongs mostly to 
the Greek Orthodox Church. 


When Hitler came to power in 1933, approximately 600,000 
Jews lived in Germany, some of whom were among the most 
prominent members of society. Over the next twelve years, 
most fled or were murdered, along with millions of East Euro- 
pean Jews, Slavs, and other nationalities. As of January 1992, 
seventy-six Jewish congregations and Land associations had 
about 34,000 members, with the largest communities located in 
Berlin and Frankfurt am Main. In the late 1980s and early 
1990s, several thousand Soviet Jews of German ancestry took 


Germany: A Country Study 

advantage of liberalized Soviet emigration policies and Ger- 
man naturalization laws and resettled in the Federal Republic. 
However, since unification in 1990 and the outbreak of radical 
right-wing violence, some in the Jewish community, remember- 
ing similar events in the 1930s, have left. Although most hate- 
crimes and violence have been aimed at foreign workers and 
asylum-seekers, there have been scattered incidents of attacks 
on Jewish synagogues and memorials. 


Following the influx of foreign laborers in the 1960s and 
early 1970s, Islam established a religious presence in Germany, 
making it the religion with the country's third largest member- 
ship. As of 1994, approximately 2 million Muslims resided in 
Germany. Most of the Muslims are either Turkish, Kurdish, Ira- 
nian, or Palestinian. Additional Muslims have entered the 
country as refugees, fleeing the ethnic and religious conflict in 
the former Yugoslavia. 

Social Structure and Social Mobility 

Despite continuing although lessening differences in living 
standards between the old and new Lander, in the mid-1990s 
German social structure consists mainly of a large, prosperous 
central stratum containing about 60 percent of the population. 
This stratum includes mid-level civil servants, most salaried 
employees, skilled blue-collar workers, and a shrinking pool of 
farmers. A smaller wealthier group consisting of an upper-mid- 
dle class and an upper class offsets the poverty experienced by 
a poor lower class. Hence in terms of social indicators such as 
education, average income, and property ownership, Germany 
ranks among the world's leading countries. In terms of income, 
for example, in 1991 the average German family had a net 
monthly income of DM4,905, second highest among members 
of the EC. 

Social Structure 

Most of the workforce is employed in the services sector. 
West Germany completed the transition from an industrial 
economy to one dominated by the services sector in the 1970s, 
and by the late 1980s this sector employed two-thirds of the 
workforce. In contrast, when the Berlin Wall fell, East Germany 
still had not made this transition. Because more of the work- 


Turks praying at a mosque in Berlin 
A hospital operated by the Evangelical Church 
Courtesy German Information Center, New York 


Germany: A Country Study 

force was engaged in industry and agriculture than in the ser- 
vices sector, its socioeconomic structure resembled that of West 
Germany in 1965. 

Rainer Geissler, a German sociologist, has examined his 
country's social structure in light of the economic changes that 
have taken place in the postwar era. Because of the growth of 
the services sector and the doubling of state employees since 
1950, he has discarded earlier divisions of German society into 
an elite class, middle class, and worker class, with a small ser- 
vices class consisting of employees of all levels. He has replaced 
this division with a more nuanced model that better reflects 
these postwar changes. As the economy of the new Lander is 
incorporated into the western economy, its much simpler 
social structure (elite, self-employed, salaried employees, and 
workers) will come to resemble that of the old Lander. 

According to Geissler, at the end of the 1980s West Ger- 
many's largest group (28 percent of the population) was an 
educated salaried middle class, employed either in the services 
sector or in the manufacturing sector as educated, white-collar 
employees. Some members of this group earned very high sala- 
ries; others earned skilled blue-collar wages. This professional 
class has expanded at the expense of the old middle class, 
which amounted to only 7 percent of the population at the end 
of the 1980s. A less educated segment of the services sector, or 
white-collar employee sector, amounted to 9 percent of the 
population. Geissler divided the working class into three 
groups: an elite of the best-trained and best-paid workers (12 
percent); skilled workers (18 percent), about 5 percent of 
whom are foreigners; and unskilled workers (15 percent), 
about 25 percent of whom are foreigners. A portion of this last 
group live below the poverty line. Farmers and their families 
make up 6 percent of the population. At the top of his model 
of the social structure, Geissler posits an elite of less than 1 per- 

The Elite 

During the centuries when Germany was a collection of 
medium-and small-sized states, wealth and power were concen- 
trated in the hands of the nobility, landed gentry, and wealthy 
merchants in the cities. With the collapse of the German 
Empire in 1918, the nobility and landed gentry suffered a 
major setback, but they still retained much power and influ- 
ence. During the interwar years, however, much political power 


The Society and Its Environment 

devolved to representatives of other classes. A vivid illustration 
of the transfer of power was former army corporal Adolf Hit- 
ler's assumption of the German presidency following the death 
of General Paul von Hindenburg in 1934. 

The old propertied and monied elites suffered an additional 
loss of power after World War II. In the new worker-dominated 
GDR, they saw their property confiscated and their power evap- 
orate. West German society was transformed by the rapidly 
expanding social market economy and the migration of mil- 
lions of displaced persons from the east, many of whom were 
well educated and capable. Some of the old elite and their off- 
spring retained positions of influence (most notably in the mil- 
itary and the diplomatic corps), but to an extent greater than 
ever before, the elite class became open to society as a whole. 

According to Geissler, Germany's elite numbers just a few 
thousand, less than 1 percent of the population, but its influ- 
ence far outweighs its numbers. The elite consists of persons 
occupying key positions in such social sectors as business, poli- 
tics, labor unions, the civil service, the media, and the 
churches. Membership in the elite is based on performance 
and is rarely inherited. For this reason, Germany's elite is plu- 
ralist in nature because members of lower social strata can 
enter it by rising to the top of a social sector. The openness of 
elite positions varies. Sons of workers routinely come to hold 
high positions in labor unions or in the SPD, but rarely in 
banking or the diplomatic corps. A vital criterion for advance- 
ment is a university degree, most notably a law degree, because 
about one-third of Germany's elite consists of lawyers. 

Entry into East Germany's elite was determined almost 
exclusively by ideological considerations. Small and 
entrenched, the East German elite has been characterized as 
monopolistic, in contrast to that of the West German elite, 
where numerous groups shared or competed for power. Most 
of the GDR elite has lost power since the fall of the Berlin Wall. 
As a result, a new elite similar to the pluralistic elite of the old 
Lander \s forming in the new Lander. 

The Self-Employed 

The self-employed provide a service on their own or are the 
owners of firms that provide a service or a product. In West 
Germany in 1989, the self-employed constituted 8.8 percent of 
the workforce, compared with 16.0 percent in 1950; their 
decline was even steeper in East Germany, from 20.4 to 2.2 per- 


Germany: A Country Study 

cent over the same period. The self-employed are a heteroge- 
neous group, encompassing shipping magnates and 
seamstresses and artists and gas station owners. As a result, the 
earnings of the group's members vary considerably — some 
members are wealthy, most rank in the upper middle or middle 
class in terms of income and social prestige, and some (about 7 
percent of this group) are poor. Excluding farmers, annual 
household income of the self-employed in the old Lander in 
1991 amounted to about DM150,000, almost triple the average 
household income. 

As property owners and food producers, farmers are a small 
but significant part of the self-employed. In both Germanys, 
the number of farmers fell dramatically in the postwar era: in 
the west, from 5 million (or 10 percent of the population) in 
1950 to 864,000 (or 1.4 percent) in 1989; in the east, from 
740,000 in 1951 to only 3,000 in the early 1990s. 

A typical agricultural enterprise in the old Lander is a small- 
or medium-sized farm worked by the owner, assisted by one or 
two family members. Some farmers are wealthy, while others 
only earn a bare subsistence. Farmers' average household 
income is lower than that of most other self-employed but is 
about 25 percent higher than the national average. 

Salaried Employees 

The number of salaried employees grew greatly in the post- 
war era in West Germany, from 16 percent of the workforce in 
1950, to 33 percent in 1974, and to 42 percent in 1989. Salaried 
employees work in three main areas: commercial, technical, 
and administrative. In 1989, 68 percent of salaried employees 
worked in the services sector and 32 percent in industry. 

Geissler divides salaried employees (including civil servants) 
into two groups: a lower group that performs simple routine 
tasks (hairdressers, salesclerks, bus drivers, and low-level civil 
servants such as letter carriers) and that in 1989 accounted for 
9 percent of West Germany's population; and an upper group 
with advanced education and responsibility, often unsuper- 
vised, that performs complex tasks (accountants, teachers, law- 
yers, and engineers) and that accounted for 28 percent of the 
population. The jobs of the upper group often involve much 
stress, and half its members have complained of it, compared 
with less than one-fourth of skilled workers. 

In 1988 the households of salaried employees in West Ger- 
many earned on the whole 36 percent more than workers' 


The Society and Its Environment 

households. Studies have found that despite their modest 
social prestige and income, only 13 percent of the lower group 
of salaried employees regard themselves as workers. Salaried 
employees as a whole see themselves as belonging to the mid- 
dle class. According to various studies cited by Geissler, the 
social animosity that prevailed between salaried employees and 
workers in the first half of the twentieth century has evolved 
into a more subtle sense of belonging to different groups. This 
feeling of distinctness is most strongly felt by salaried employ- 
ees far removed from the workbench, for example, those in 

Generally speaking, salaried employees tend to believe that 
they must look out for themselves on an individual basis, rather 
than collectively, as is more common among workers. The 
higher salaried employees rise in their profession, the more 
likely this is to be the case. In consequence, a smaller portion 
of salaried employees are members of labor unions than are 

Civil Servants 

Civil servants (Beamteri) have a long tradition in Germany. 
Their number more than doubled between 1950 and 1989, 
from 790,000 to 1.8 million in West Germany, where they 
accounted for 6.6 percent of the workforce. Because teachers 
and professors are civil servants in Germany, much of this 
increase came from the expansion of education in the postwar 
era. Only about one-third of those working for the state are 
regarded as civil servants. The remainder are either hourly or 
salaried employees without the special status and rights of civil 
servants. In 1989 civil servants and government employees 
accounted for 16.6 percent of the workforce. 

Civil servants have complete job security, generous pensions, 
and higher net incomes than salaried employees. In return for 
these advantages, civil servants are to serve the state loyally and 
carry out their duties in a nonpartisan way. This does not, how- 
ever, prevent civil servants from being active in politics and 
even being elected to public office. 


Although West Germany became primarily a services-sector 
economy in the 1970s, blue-collar workers remain a vitally 
important segment of the workforce, even though they are out- 
numbered by salaried employees. At the end of the 1980s, 


Germany: A Country Study 

workers accounted for two-fifths of the workforce in West Ger- 
many, a drop from three-fifths in 1900 and slightly more than 
one-half in 1960. The social market economy and powerful 
trade unions greatly improved workers' working conditions, job 
security, and living standards in the postwar era. Between 1970 
and 1989, for example, their average net earnings increased 41 
percent in real terms, more than any other group except for 
the self-employed (not including farmers) and pensioners. In 
the 1980s, about 43 percent of skilled workers and 29 percent 
of unskilled or partially trained workers lived in their own 
houses or apartments; automobile ownership and lengthy vaca- 
tions (often abroad) had become the rule. 

As a result of these changes, German workers no longer live 
separately from the rest of society as was the case in the nine- 
teenth century and for much of the twentieth century. The 
gradual, so-called deproletarianization has caused some sociol- 
ogists to maintain that it is no longer accurate to speak of Ger- 
man workers as a separate social group. Geissler is aware of the 
much-improved living standards of the workers and the grad- 
ual disappearance of a proletarian lifestyle, but he maintains 
that workers still constitute a distinct group because their earn- 
ings are lower than average, their work is physically demanding 
and closely supervised, and their children's opportunities for 
social advancement are not as good as those of most other 
groups. In addition, most workers still regard themselves as 
members of the working class, although a growing percentage 
see themselves as middle class. 

According to Geissler, the working class is composed of three 
distinct subgroups: elite, skilled, and unskilled or partially 
trained workers. In the mid-1980s, about 12 percent of the pop- 
ulation lived in the households of the worker elite, 19 percent 
in those of skilled workers, and 16 percent in those of the 

The worker elite, which is composed of supervisors and 
highly trained personnel, enjoys better pay than the other 
groups. Its work is less physically demanding and resembles 
that of salaried employees. Only one-third of the sons of the 
worker elite remain workers, and about one-half of the group 
see themselves as members of the middle class. 

Skilled workers have completed a set course of vocational 
training. This group has expanded in recent decades and in 
the early 1990s outnumbered the unskilled, which even as late 
as 1970 accounted for 57 percent of workers. 


The Society and Its Environment 

Unskilled workers perform the poorest paid and dirtiest 
tasks. Foreigners account for about 25 percent of this group 
and German women for about 38 percent. A portion of this 
group lives below the poverty line. In addition to their other 
burdens, the unskilled are most likely to become unemployed 
and involved in criminal activity. 

The Poor 

As a large, urbanized, industrial country with a diverse popu- 
lation, Germany has a portion of its population living in pov- 
erty. The European Union (EU — see Glossary) classifies as 
poor those households that have less than half the average net 
income. According to this definition, in 1992 approximately 
7.5 percent of the population in the old Lander and 14.8 per- 
cent in the new Lander were poor. The number of poor has 
been growing since 1970, when the number of those receiving 
social assistance reached its lowest point of 750,000. In the 
early 1990s, one study estimated that in 1992 there were 4.6 
million recipients of various kinds of social assistance, nearly 
700,000 of whom lived in the new Lander. Households with 
three or more children and single parents were the most likely 
recipients of social assistance. 

Social Mobility 

Upward social mobility, or the ability or chance of offspring 
to improve their social position relative to that of their parents, 
expanded in both Germanys during the postwar era. The 
growth of the services sector was the primary cause of this 
expansion. The large, well-trained workforce required by this 
sector was supplied by a greatly expanded education system. As 
a result, many Germans received a better education than had 
their parents. 

The postwar era saw the formation of a large, newly edu- 
cated middle class, which grew at the expense of the small tra- 
ditional middle class, many of whose members were merchants 
and the owners of small firms. Joining this older middle class 
was difficult because membership required capital, property, 
and other kinds of assets. For this reason, it was a relatively 
closed class, and its members were usually the offspring of 
existing members. By contrast, joining the new professional 
middle class depended on academic training, something 
readily available in postwar West Germany, where education 
was inexpensive and financial aid was easily obtainable. 


Germany: A Country Study 

One study measuring social mobility in the postwar decades 
used a six-level model to track Germans born between 1930 
and 1949. It found that 20 percent had moved up to the next 
higher level, 10 percent had moved up two levels, and 2 per- 
cent had moved up three levels. Some downward mobility was 
recorded as well. For example, 1 percent had dropped three 

Opportunities for upward social mobility varied, however, 
according to one's place in society. Blue-collar workers, for 
example, did not show as much social mobility as other classes, 
although their mobility increased somewhat in the late postwar 
decades. A commonly used index to measure social mobility is 
the percentage of sons remaining within the social stratum or 
milieu of their fathers. West German studies have shown that in 
1970 only 5 percent of blue-collar workers' sons managed to 
move up into better paying, higher status professions in the ser- 
vices sector. By 1979 the percentage had more than doubled to 
11 percent. The percentage of sons of lower-level salaried and 
public-sector employees moving into elevated professional 
positions had increased from 12 to 22 percent in the same 

Another study examined the likelihood of different groups 
securing a position in the two top levels of the services sector. 
The first and upper level accounts for about 10 percent of total 
employment and consists of positions in medicine, law, higher 
education, upper levels of administration, and the like. The 
second and lower level accounts for about 15 percent of 
employment and consists of positions in teaching, mid-level 
management, retailing, computers, and the like. The study 
found that about two-thirds of those employed in the top level 
and nearly three-fifths of those in the second level are the off- 
spring of persons employed in these levels. Only about 20 per- 
cent of the sons of workers are employed in these levels. Access 
to the top level is very restricted, with 4 percent of the sons of 
skilled workers and 2 percent of the sons of unskilled workers 
employed there. Almost no farmers' sons move into the top lev- 

Geissler has found three occupational categories particularly 
conducive to upward mobility: the self-employed, the nonman- 
ual service providers, and the worker elite. Self-recruitment in 
the three categories is relatively low. Geissler holds that this 
indicates that the offspring of those so employed are finding 
higher status positions. In contrast to these groups, 93 percent 


The Society and Its Environment 

of farmers are the sons of farmers; farmers' offspring who leave 
the farm usually become either skilled or unskilled workers. 

As of the first half of the 1990s, social mobility trends in the 
new Lander had not yet stabilized. Both upward and downward 
mobility are greater than in the old Lander. The widespread dis- 
qualification of the GDR elite meant downward mobility for 
many. The rapid transformation of the social structure through 
the replacement of a command socialist economy with a social 
market economy is also causing much social mobility, especially 
between generations. Children often do not work in the same 
sector as their parents. A new social class of entrepreneurs is 
being formed as the new Lander become integrated into the 
western economy. 

The Search for a New National Identity 

In the aftermath of unification, Germans are searching for a 
new identity. There appear to be at least two distinct German 
identities, and obstacles to their speedy fusion seem formida- 

In the postwar period, West Germany became an upwardly 
mobile, success-oriented society. By 1990 a broad and prosper- 
ous middle-class and upper-middle-class society had developed. 
Although they still worked hard to earn the vacation and work- 
ing conditions among the best in the world, West Germans 
sought to create a "leisure society." There was a movement, for 
example, advocating the adoption of a four-day workweek. 
Work was intrinsically less important to West Germans than to 
East Germans; instead, they prized personal fulfillment, recre- 
ation, health, and the natural environment. 

Through a remarkable transformation, West Germans had 
rehabilitated themselves, had become internationally oriented, 
and had assumed a leading role within the larger European 
community. Members of the older generation, especially those 
"blessed by a late birth" (too young to be Nazis), were 
self-assured and proud of the Federal Republic's political, eco- 
nomic, and social achievements. Starting in the 1960s, the 
younger generation discovered new freedoms and exercised 
them. In the 1970s and 1980s, youth- and student-led protests 
were mounted against nuclear weapons and nuclear power 
plants and in favor of peace, disarmament, and environmental 

By the early 1990s, most of the 1960s generation had been 
assimilated into the German establishment, but its experiences 


Germany: A Country Study 

in challenging authority and winning concessions produced 
evolutionary changes in German society economy, and cul- 
ture. This generation's influence could be seen in the huge 
candlelight vigils staged by people of all ages to protest 
right-wing violence and xenophobia. 

On the other side of the fortified border, East German soci- 
ety was decidedly working class, with comparatively minor class 
distinctions. Where there were significant income differentials, 
the extra money was of little consequence in an economy 
marked by shortages of most consumer goods. The state appa- 
ratus provided security in the form of guaranteed employment, 
free education and health care, and subsidized low rent. 
Homelessness was unknown in the GDR. Other social ills such 
as violent crime, drug abuse, and prostitution also were much 
less prevalent than in the west. 

In terms of their attitude toward state authority and the fam- 
ily, easterners manifested values characteristic of westerners in 
the late 1950s and 1960s. On the factory floor or the collective 
farm, conditions were often primitive and the workweek long 
(forty-three or more hours). The workforce, too, was reminis- 
cent of an earlier Germany, with greater numbers employed in 
smokestack industries or in fields and mines, and far fewer in 
the services or information sector. One of many revelations 
after unification was the information illiteracy of easterners. 

With few external options or diversions, East Germans iden- 
tified with home and family more than their counterparts in 
the west. Deprived of the means and liberty to travel outside 
communist Eastern Europe, they formed what some sociolo- 
gists called a "niche society," retreating into an inner circle to 
find a degree of privacy. 

For three generations, East Germans had been indoctri- 
nated in the thought processes of two forms of totalitarianism 
in succession: nazism and communism. With the collapse of 
communism, Germans living in the new Lander had few values 
and beliefs, aside from personal ones, with which to identify. 
Embittered by the seemingly imperialistic imposition of all 
things West German, some easterners developed "an identity of 
defiance" ( Trotzidentitat) . 

In the initial stage of union, Germans focused on the pro- 
found differences that had evolved in the two states since the 
end of World War II. In the Federal Republic, one of the 
world's wealthiest countries, quality-of-life issues played key 
roles in defining one's place and identity in society. Home own- 


The Society and Its Environment 

ership, travel experiences, and leisure activities of all kinds 
were translated into powerful status symbols. 

In stark contrast, the state owned practically all property in 
East Germany. Expectations of improving individual or family 
lifestyles were modest. Overall, the eastern Ldnderwere decades 
behind the west in most categories measuring standard of liv- 
ing. Coming from a society grown accustomed to measuring 
itself and others by the yardstick of material prosperity, it was 
not surprising that West Germans felt more in common with 
their neighbors to the west, in whose countries they frequently 

In some respects, the former GDR stood in relation to the 
FRG as a colony to an imperial power, and it was not long 
before westerners and easterners began acting out the roles of 
"know-it-alls" (westerners) and "whimpering easterners." 
Within several years of the opening of the Berlin Wall, the 
former East Germany was transformed from a full-employment 
society to one having more than 1 million unemployed and 
hundreds of thousands of part-time workers. 

Forced resocialization has weighed heavily on eastern Ger- 
mans' self-esteem. The cleft between east and west is suffi- 
ciently deep and wide to make easterners appear to be 
foreigners in their own land, or at best second-class citizens. By 
August 1992, the situation had deteriorated to the point where 
a headline on the cover of Der Spiegel, the influential weekly 
magazine, summed it up in three words: "Germans Against 

In modern European history, the merging of two fundamen- 
tally different social, political, and economic systems such as 
those that evolved in the two Germanys has no precedent. For- 
tunately for the newly united country, most Germans still rely 
on the traditional traits of diligence, orderliness, discipline, 
and thrift, and these shared values ultimately should resolve 
the problems associated with the merger of two states and soci- 
eties at vastly different levels of development and achievement. 

* * * 

As of mid-1995, no postunification survey of German geogra- 
phy in English had been published. The standard text remains 
Roy E.H. Mellor's The Two Germanies. Alun Jones's The New Ger- 
many, published in 1994, deals with key social and economic 
developments since unification. Developments in German Politics, 


Germany: A Country Study 

edited by Gordon Smith, William E. Paterson, Peter H. Merkl, 
and Stephen Padgett, includes chapters dealing with aspects of 
German society, including ones on women, the environment, 
and immigration policies. Each chapter has been written by a 
noted specialist and includes suggestions for further reading. 
German Politics and Society, a quarterly journal published by the 
Center for German and European Studies of the University of 
California at Berkeley, contains a variety of scholarly articles 
dealing with German society. A more journalistic approach is 
John Ardagh's widely available and highly informative Germany 
and the Germans. 

Three articles especially illuminating on demographic devel- 
opments are "Germany's Population: Turbulent Past, Uncer- 
tain Future" by Gerhard Heilig, Thomas Buttner, and Wolfgang 
Lutz; "Bericht 1990 zur demographischen Lage: Trends in 
beiden Teilen Deutschlands und Auslander in der Bundesre- 
publik Deutschland" by Charlotte Hohn, Ulrich Mammey, and 
Hartmut Wendt; and "Demographic Shocks after Communism: 
Eastern Germany, 1989-93" by Nicholas Eberstadt. 

A comprehensive survey of German social structure is 
Rainer Geissler's Die Sozialstruktur Deutschlands. The German 
government's annual statistical survey, Statistisches Jahrbuch fur 
die Bundesrepublik Deutschland, provides much statistical infor- 
mation about many aspects of German society. Facts about Ger- 
many, edited by Arno Kappler and Adriane Grevel, periodically 
updated and available from German embassies, contains brief 
surveys of several areas covered in this chapter. (For further 
information and complete citations, see Bibliography.) 


Chapter 4. Social Welfare, Health Care, and 


Ludwig van Beethoven, 1 770-1827, received his early music training in Bonn. 

followed a unique historical path. During a long process of 
growth and social experimentation, Germany combined a vig- 
orous and highly competitive capitalist economy with a social 
welfare system that, with some exceptions, has provided its citi- 
zens cradle-to-grave security. The system's benefits are so exten- 
sive that by the 1990s annual total spending by the state, 
employers, and private households on health care, pensions, 
and other aspects of what Germans call the social safety net 
amounted to roughly DM1 trillion (for value of the deutsche 
mark — see Glossary) and accounted for about one-third of the 
country's gross national product (GNP — see Glossary). Unlike 
many of the world's advanced countries, however, Germany 
does not provide its citizens with health care, pensions, and 
other social welfare benefits through a centralized state-run sys- 
tem. Rather, it provides these benefits via a complex network of 
national agencies and a large number of independent regional 
and local entities — some public, some quasi-public, and many 
private and voluntary. Many of these structures date from the 
nineteenth century, and some from much earlier. 

The legislation that established the basis of this system dates 
from the 1880s and was passed by imperial Germany's parlia- 
ment, the Reichstag, with the dual purpose of helping German 
workers meet life's vicissitudes and thereby making them less 
susceptible to socialism. This legislation set the main principles 
that have guided the development of social policy in Germany 
to the present day: membership in insurance programs is man- 
dated by law; the administration of these programs is delegated 
to nonstate bodies with representatives of the insured and 
employers; entitlement to benefits is linked to past contribu- 
tions rather than need; benefits and contributions are related 
to earnings; and financing is secured through wage taxes levied 
on the employer and the employee and, depending on the pro- 
gram, sometimes through additional state financing. 

These insurance programs were developed from the bottom 
up. They first covered elements of the working class and then 
extended coverage to ever broader segments of the population 
and incorporated additional risks. Over time, these programs 
came to provide a wide net of entitlements to those individuals 
having a steady work history. 


Germany: A Country Study 

By international standards, the German welfare system is 
comprehensive and generous. However, not everyone benefits 
equally. In the mid-1990s, the so-called safety net was deficient 
for the lower-income strata and the unemployed. It was also 
inadequate for persons needing what Germans term "social 
aid," that is, assistance in times of hardship. In 1994, for exam- 
ple, 4.6 million persons needed social aid, a 100 percent 
increase since the 1980s. Germans who had been citizens of the 
former German Democratic Republic (GDR, or East Ger- 
many), which became part of the Federal Republic of Germany 
(FRG, or West Germany) in 1990, tend to be overrepresented 
in each of these groups. 

Women are more at a disadvantage than any other social 
group. This fact stems from the bias of German social insur- 
ance programs in favor of a male breadwinner model; most 
women receive social and health protection by virtue of their 
dependent status as spouse. Hence, despite the existence of a 
comprehensive interlocking social net, women face inequali- 
ties in accruing benefits in their own right because of periods 
spent rearing children or caring for an elderly parent. 
Divorced women also fare poorly because of the welfare sys- 
tem's provisions, as do widows, whose pensions are low. 

In addition to these problems or shortcomings, Germany's 
social welfare and health programs have had to contend with 
the unification of the former West Germany and East Germany 
in 1990. West Germany's approach to social insurance, health 
insurance, unemployment insurance (which did not exist in 
the former GDR), accident insurance, and social aid and assis- 
tance has been applied to East Germany. This fact has meant 
that the complex and heterogeneous organizational and finan- 
cial arrangements present in the former West Germany to 
deliver health and social services have had to be built up in the 
former East Germany, in many cases entirely from scratch. 

The need for this extension of social welfare programs fol- 
lows logically from the former East Germany's transition to a 
free-market economy in which employment, health care, and 
social insurance benefits have always been highly contingent 
upon each other. In the absence of an East German democratic 
tradition and attitudes supportive of the new institutions and, 
as well, of adequate private organizational resources and skilled 
manpower, Germany's attempt to integrate two entirely differ- 
ent systems of social protection, education, and health care 


Social Welfare, Health Care, and Education 

purely by means of law, administrative provisions, and financial 
resources is bound to produce problems for years to come. 

In the mid-1990s, representatives of Germany's political par- 
ties, businesses, unions, and voluntary social services agencies 
continued to wage a vigorous debate over social policy. At issue 
is the role to be played by state and/or nongovernmental vol- 
untary charitable agencies, churches, and other social service 
providers and how to find a politically acceptable mix of public 
and private institutions. Ever since the nineteenth century, 
especially during periods of economic and social crisis, there 
has been a recurrent demand to shift from insurance-based 
programs to a universal flat-rate and tax-financed program in 
order to secure a minimum income for all. However, there has 
never been sufficient political support for eliminating insur- 
ance-based programs. In the postwar period, business groups 
and the Christian Democratic Union (Christlich Demo- 
kratische Union — CDU), with the exception of the left wing 
within the CDU, tended to support the continued segmenta- 
tion of the labor force into separate insurance-based programs 
for various occupational groups. In contrast, the labor unions 
and the Social Democratic Party of Germany (Sozialdemo- 
kratische Partei Deutschlands — SPD) tended to support uni- 
tary programs for the entire labor force. 

The great costs of unification have raised the possibility of 
ending the steady expansion of social welfare programs that 
had been going on for more than a century. The current con- 
servative governing coalition has proposed reductions in bene- 
fits to finance unification. Other factors such as the 
increasingly competitive global economy and structural 
changes in the labor market have also raised questions about 
the continued affordability of German social policy. As a result, 
the government is increasingly listening to employers who 
insist that their share of employee benefit payments be 
reduced in order that German business remain competitive in 
a global economy. 

The integration of the two entirely different education sys- 
tems that emerged after the 1945 division of the country has 
also raised many controversial issues. No consensus has 
emerged on whether Germany should adopt the unified school 
system found in the former East Germany or the heteroge- 
neous three-tiered system of the former West Germany. Nor is 
there consensus on whether to increase the number of school 
years by one year for students in eastern Germany or to reduce 


Germany: A Country Study 

the thirteen years of schooling in western Germany to twelve 
years. A greater uniformity within the country's education sys- 
tem is also needed because the plethora of school tracks and 
the diversity of curricula and qualifying examinations might 
indeed endanger the mobility of students and teachers within 
Germany and within Europe in general. 

Social Insurance and Welfare Programs 

Historical Development 

After Germany was united in 1871 under the direction of 
Otto von Bismarck, the nation developed a common govern- 
ment structure and social policy. But the fact that united Ger- 
many had been formed out of four kingdoms, five grand 
duchies, twelve duchies, twelve principalities, and three free cit- 
ies was a crucial factor in the way social welfare was adminis- 
trated. Although after unification social welfare policy was 
increasingly formulated on the national level, the social insur- 
ance programs implementing national policy were aimed at 
different social strata and were administered in highly decen- 
tralized ways. 

The new social welfare system that developed after unifica- 
tion in 1871 used existing decentralized structures to provide 
an ever increasing range of benefits. Because of this, most 
social welfare programs in Germany are not administered by 
state bureaucracies. Instead, except for the period when Ger- 
many was ruled by the regime of Adolf Hitler (1933-45) and 
when the former East Germany (1949-90) established a state- 
run social welfare program, the organizations implementing 
social policy have been private voluntary entities, some of 
which date from the Middle Ages. Thus, Germany has imple- 
mented a national social policy through an extensive decentral- 
ized and pluralistic network of voluntary agencies. 

Germans see their economy as a social market economy, that 
is, one that combines a capitalist mode of production with the 
belief that society should protect all its members from eco- 
nomic and social need. Such protection is provided by a system 
of social insurance to which people contribute according to 
their incomes with the understanding that they may someday 
need its assistance. The belief that society is responsible for the 
well-being of its members is called solidarity, or Solidaritat, and 
is a key concept of German social policy. 


Social Welfare, Health Care, and Education 

Germans have combined the notion of solidarity with fed- 
eral and decentralized arrangements of power sharing, or Sub- 
sidaritdt, another concept that lies at the heart of German 
political culture and is characteristic of all German-speaking 
countries. Fundamentally, Subsidaritdt means building social 
organizations and society from the bottom up rather than from 
the top down. As a result of this concept, Germans rely on 
grassroots social entities whenever possible to provide social 
services and make use of higher-level institutions only when 
lower-level ones are found to be inadequate. 

Solidaritdt and Subsidaritdt have affected the development of 
a national social policy, but most of all they have shaped its 
implementation. For example, Germany's social insurance pro- 
grams are quasi-public self-governing bodies subject in most 
cases to labor and management control, but they are largely 
independent of the public sector, which retains only supervi- 
sory powers. The primary providers of most social assistance 
services are private-sector voluntary organizations, most of 
which are church related. Government offices at the regional 
and local levels generally determine and handle cash benefits 
and allowances established at the national level. 

Some of the most important voluntary social service agen- 
cies and church-related groups predate the unification of Ger- 
many in 1871; others date from the last decades of the 
nineteenth century. The first German chapter of the Interna- 
tional Red Cross was founded in 1863. Out of it grew the Ger- 
man Red Cross, one of the country's key voluntary agencies. 
The Innere Mission, which later became the Diakonisches 
Werk of the Evangelical Church in Germany, was founded in 
1848. The Roman Catholic charity Deutscher Caritasverband, 
the largest of the voluntary welfare associations, dates from 
1897. The German Non-Denominational Welfare Association, 
as it became known after 1932, was founded in 1920 to repre- 
sent all nonchurch-related hospitals. The Workers' Welfare 
Organization was founded in 1919 from numerous Social Dem- 
ocratic women's groups working for the well-being of children. 

Despite the radically different political regimes in power in 
Germany since 1871, German social policy has shown a remark- 
able degree of continuity in organizational arrangements and 
financing. Change has been largely of an incremental nature, 
and new programs have conformed to previously existing prin- 
ciples and patterns. 


Germany: A Country Study 

The beginning of the national German social welfare system 
occurred in the 1880s while Bismarck was in power. A primary 
motivation for social legislation was the government's desire to 
erode support for socialism among workers and to establish the 
superiority of the Prussian state over the churches. The govern- 
ment hoped that provision of economic security in case of 
major risks and loss of income would promote political integra- 
tion and political stability. Three laws laid the foundations of 
the German social welfare system: the Health Insurance of 
Workers Law of 1883, which provided protection against the 
temporary loss of income as a result of illness; the Accident 
Insurance Law of 1884, which aided workers injured on the 
job; and the Old Age and Invalidity Insurance Law of 1889. Ini- 
tially, these three laws covered only the top segments of the 
blue-collar working class. 

The second phase of the German social welfare system 
spanned the period from 1890, the year of Bismarck's resigna- 
tion, to 1918. During this period, improvements were made in 
the initial programs.The National Insurance Code of 1911 inte- 
grated the three separate insurance programs into a unified 
social security system, and compulsory coverage and benefits 
were extended to white-collar workers. Survivors' pensions for 
widows were also introduced in 1911. (The many amendments 
to the National Insurance Code of 1911 were later integrated 
into the Social Insurance Code of 1988.) In 1916 survivors' 
benefits were increased, and the retirement age for workers 
was reduced from seventy to sixty-five. Because its cooperation 
was needed to maintain production during World War I, the 
working class acquired more political influence and won 
greater social protection and representation during this 
period. Efforts were also made to develop mechanisms for set- 
tling labor disputes and organizing voluntary employee com- 
mittees, issues taken up by new labor legislation and decrees. 
Most efforts were completed by the mid-1920s. 

The Weimar Republic (1918-33) saw a further expansion of 
social welfare programs. In 1920 war victims' benefits were 
added to the social welfare system. In 1922 the Youth Welfare 
Act was passed, which today continues to serve as the basic 
vehicle for all youth-related programs. Unemployment relief 
was consolidated in 1923 into a regular assistance program, 
financed by employees and employers. The same year, the 1913 
agreement between doctors and sickness funds about who 
could treat sickness-funds patients was integrated into the 


Social Welfare, Health Care, and Education 

National Insurance Code. Also in 1923, a national law on min- 
ers created a single agency for the administration of social 
insurance programs for miners; before the law went into effect, 
110 separate associations had administered the program. In 
1924 a modern public assistance program replaced the poor 
relief legislation of 1870, and in 1925 the accident insurance 
program was reformed, allowing occupational diseases to 
become insurable risks. In 1927 a national unemployment 
insurance program was also established. These gains in social 
insurance and assistance programs were threatened by the 
Great Depression of the early 1930s, however. Reduced wages 
meant smaller contributions to social insurance and assistance 
programs, all of which were soon on the brink of bankruptcy. 

The Hitler regime introduced major changes in individual 
programs and program administration. In 1934 the regime dis- 
mantled the self-governance structure of all social insurance 
programs and appointed directors who reported to the central 
authorities. The regime made many improvements in social 
insurance programs and benefits, but these changes were con- 
ceived to serve the regime rather than the population. In 1938 
artisans came to be covered under compulsory social insur- 
ance, and in 1941 public health insurance coverage was 
extended to pensioners. In 1942 all wage-earners regardless of 
occupation were covered by accident insurance, health care 
became unlimited, and maternity leave was extended to twelve 
fully paid weeks with job protection. 

Two separate German states evolved after World War II, each 
with its own social welfare programs. In the GDR, the state 
became even stronger than it had been under Hitler. The com- 
munist-directed Socialist Unity Party of Germany (Sozialis- 
tische Einheitspartei Deutschlands — SED) had a near 
monopoly of control over all social and political institutions, 
including those that administered social welfare programs. 

Initially, the GDR retained separate social insurance plans, 
but by 1956 the plans had been unified into two compulsory, 
centrally controlled, and hierarchically organized systems that 
provided universal flat-rate benefits. Special programs also 
served the so-called technical and scientific intelligentsia, civil 
servants, police, and members of the National People's Army 
(Nationale Volksarmee — NVA) and other security organiza- 
tions. All programs were heavily state subsidized, unlike those 
in West Germany. Because the right to work was guaranteed, 
unemployment insurance did not exist. 


Germany: A Country Study 

West Germany moved away from Hitler's central state direc- 
tion and returned to decentralized administration and control. 
Social insurance and social protection programs under labor 
and management control, which were characteristic of the 
Weimar period, were restored. The return to separate earn- 
ings-related and means-tested benefits for different groups 
meant that social insurance, social compensation, and public 
assistance (or social aid) were not integrated into one overall 
administration, as some Germans wished and as the Allied 
Control Council had intended in 1946 when it drafted a uni- 
fied national insurance system. In the mid-1970s, legislators 
attempted to consolidate the goals, the protection, and the 
entitlements as much as possible. But they failed to develop a 
coherently organized and uniform system that would have 
eliminated disparities in individual entitlements. Indeed, by 
the mid-1990s the disparities in welfare benefits entitlements in 
unified Germany had become more significant than ever 

Provisions of the Social Welfare System 

The German social welfare tradition divides entitlement pro- 
grams into three types. The first and most common type con- 
sists of contributory social insurance programs that protect 
those who pay into them from loss of income and unplanned 
expenditures because of illness, accident, old age or disability, 
and unemployment. The second type consists of noncontribu- 
tory social compensation programs that provide tax-financed 
social welfare (such as health care, pensions, and other bene- 
fits) to those — civil servants, for example — who perform a pub- 
lic service to society. Tax-financed social compensation is also 
provided to those who have suffered from income loss or dis- 
ability as a result of military or other public service, and allow- 
ances are provided to their dependents in the case of death. 
Since 1976 victims of violent crimes have also been eligible for 
social compensation. In addition, social compensation can con- 
sist of payments to all members of society and includes tax- 
funded child, housing, and educational allowances. The third 
type of social welfare programs provides social aid, or assis- 
tance, to persons in need who are not eligible for assistance 
from the other two kinds of social entitlement programs or 
who need additional aid because they are still in need — for 
example, if their pensions are too small to provide them with 
decent housing. Aid can consist of general income mainte- 


Social Welfare, Health Care, and Education 

nance payments (including payments for food, housing, cloth- 
ing, and furniture) and assistance for those with special needs, 
such as the disabled, and individuals without health insurance 
(0.3 percent of the total German population). 

In order to better measure the extent of social welfare 
expenditures, since 1960 the Germans have used the concept 
of a social budget to lump together all forms of social spend- 
ing, whether by the government, by the country's large social 
insurance programs, or by other sources. The steady expansion 
of social welfare programs and the increased costs of such 
items as pensions and medical care caused West Germany's 
social budget to increase tenfold between 1960 and 1990, from 
DM68.9 billion in 1960 to DM703.1 billion in 1990. The West 
German economy expanded greatly in this period so that the 
social budget's share of GNP increased from about one-fifth in 
1960 to about one-third by 1990. Roughly two-fifths of the 1990 
social budget went to pension payments and one-third to 
health care. By 1992 the social budget had grown to about 
DM900 billion, a sharp increase caused by the unification of 
the two Germanys. Unification meant an increased population 
and many special needs of the five new states (Lander, sing., 
Land) in eastern Germany. 

In 1990 the public sector (federal, Land, and local govern- 
ments) paid for about 38 percent of the social budget, employ- 
ers for 32 percent, and private households for about 29 
percent. The remainder was financed by social insurance and 
private organizations. 

The cost of the social budget for an average wage earner is 
difficult to assess. By the mid-1990s, however, a typical wage 
earner was estimated to pay about one-fifth of his or her 
income in direct taxes (only part of which went to the social 
budget) and another one-fifth for the compulsory social insur- 
ance programs. In addition, there were many indirect taxes, 
which accounted for about two-fifths of all tax revenue. The 
most important of the indirect taxes is the value-added tax 
(VAT — see Glossary), set in 1993 at 15 percent for most goods 
and at 7 percent for basic commodities each time it is assessed. 
Given Germany's demographic trends, the cost of the social 
budget is certain to increase in the coming decades. 

Social Insurance 

The social insurance program was established in 1889 and 
provides retirement pay. Although the central government has 


Germany: A Country Study 

always formulated social insurance policy, the implementation 
of the program is decentralized. In unified Germany, control 
over the blue-collar insurance programs remains in the hands 
of twenty-three Land-based insurance agencies and four federal 
insurance agencies. In the old Lander in western Germany, 
eighteen Land-based insurance agencies serve people in geo- 
graphical districts that conform to those established in the 
nineteenth century, not to the geographical entities created 
after 1945. With the assistance of staff from the West German 
insurance agencies, five Land-based and self-governing insur- 
ance agencies were established in the new Lander. 

Four federal insurance agencies serve four groups in unified 
Germany: federal railroad workers, merchant marine seamen, 
miners, and white-collar workers. Civil servants and their 
dependents are covered by a separate retirement program 
financed by outlays from federal, Land, and local governments. 
Other retirement programs provide retirement income for reg- 
istered craftsmen, agricultural workers, and self-employed pro- 

Because of population trends that indicate a worsening 
worker/retiree ratio and the likelihood of solvency problems 
in the next century, the pension reform of 1992 increased the 
usual retirement age from sixty-three to sixty-five, beginning in 
2001. Whatever the legal retirement age, many Germans retire 
early for health reasons on disability pensions. 

The amount of retirement pay is determined by the length 
and level of the insured person's contributions. Contributions 
in 1995 were scheduled to amount to 18.6 percent of an 
employee's annual gross income up to a maximum of 
DM93,600 in the old Lander and DM76,800 in the new Lander, 
with the employee and employer each paying half. In the early 
1990s, the average retirement pension amounted to about 
DM1,600 per month for retired persons over the age of sixty. 
This meant that Germany had the fourth-highest pensions in 
Europe, surpassed only by Luxemburg, France, and Denmark. 
In 1957 legislation was passed that required pensions to be 
indexed, that is, raised according to average wage increases. 

Unemployment Insurance 

Unemployment insurance was introduced in 1927, relatively 
late in comparison with the pioneering programs of the nine- 
teenth century. It replaced the welfare program for the unem- 
ployed that had been created in 1919. With the exception of 


exterior and a living room of an apartment house for pensioners 

in Reutlingen, Baden-Wiirttemberg 
Courtesy German Information Center, New York 


Germany: A Country Study 

civil servants, all employed individuals and trainees, irrespec- 
tive of salary or wage levels, are covered by the program. Con- 
tributions in 1995 to unemployment insurance were scheduled 
to amount to 6.5 percent of an employee's gross pay up to 
DM96,600 in the old Lander and DM76,800 in the new Lander, 
with the employee and employer each paying half. In return, 
the employee receives unemployment pay of 68 percent of net 
earnings for a married worker and 63 percent for a nonmar- 
ried worker, provided that the unemployed person has worked 
for 360 insurable days in the last three years before being laid 
off. Unemployment pay can be paid from the first day of unem- 
ployment for seventy-eight to 832 weekdays, depending on the 
length of insured employment and the age of the unemployed. 
In the early 1990s, unemployment pay averaged DM1,300 per 
month. Once unemployment pay runs out, the employee is eli- 
gible for unemployment aid, which averaged DM975 a month 
in the early 1990s. Because the unemployed frequently do not 
receive enough benefits to maintain their basic living standard, 
local social welfare entities often provide additional assistance. 
During unemployment, entitlements to benefits of other social 
insurance and health insurance programs remain in place. 

The unemployment insurance program is administered 
through a three-tiered administration: a federal labor agency, 
regional labor agencies in the Lander, and local labor offices. 
Unlike the labor-management partnership in the administra- 
tion of the other insurance programs, this program is con- 
trolled by tripartite boards composed of representatives of 
labor, management, and governments at the federal, Land, and 
local level. Because East Germany did not have an unemploy- 
ment insurance program, the adoption of such a program in 
the new Lander has entailed numerous administrative prob- 
lems. In addition, unemployment there is higher than in the 
old Lander (in 1994 about 15 percent, compared with 10 per- 
cent in the old Lander) . 

Accident Insurance 

Enacted in 1884, the accident insurance program initially 
covered only accidents in the workplace. In 1925 occupational 
diseases also came to be covered. In the post-1945 era, cash and 
in-kind benefits such as rehabilitation and vocational training 
were expanded and improved. Travel to and from work is also 
now covered. If an accident leads to total disability, the injured 
person receives a pension amounting to 66 percent of the latest 


Social Welfare, Health Care, and Education 

year's earnings. Survivor pensions can amount to a maximum 
of 80 percent of earnings. Disability pensions and survivors' 
benefits were indexed in 1957, that is, adjusted according to 
wage increases. In addition to covering members of the labor 
force, the plan also covers students and children; their cover- 
age is paid for out of general tax revenues. Employers pay pre- 
miums for their employees; premiums amount to 1.44 percent 
of an employee's gross earnings. The self-employed are also 
able to enroll in the program. 

Social Assistance 

Social assistance is provided to persons who, for any of a 
number of reasons, are unable to provide themselves with a 
decent standard of living. In 1991 some 4.2 million persons 
received various forms of social assistance. In the same year, the 
most important reasons that people needed social assistance 
were unemployment (34 percent; social assistance is paid once 
unemployment pay runs out), pensions or incomes too small to 
allow their recipients a decent standard of living (11 and 7 per- 
cent, respectively), refusal of divorced fathers to pay child sup- 
port (11 percent), and sickness (6 percent). Half of all 
recipients of social assistance are single elderly women. For- 
eigners residing in Germany also receive social assistance at a 
higher than average rate because they are more likely to be 
unemployed or earn low incomes. 

Unlike the benefits provided by social insurance programs, 
social assistance is funded by taxes and is not determined by 
previous contributions. Social assistance is means tested, and 
recipients generally must have exhausted their savings. The 
incomes of a recipient's close relatives (parents and children) 
may also be considered when assessing the provision of social 
assistance. In the mid-1990s, social assistance for the head of 
household amounted to about DM500 a month in the old 
Lander, 80 percent of this amount was allocated for the spouse, 
and 50 to 90 percent of this amount was allocated for the chil- 
dren, depending on their ages. In addition to these benefits, 
social assistance can cover housing costs, medical care, cloth- 
ing, winter heating, and many other expenses. 

Other Social Benefits 

In addition to social assistance, Germany's social welfare sys- 
tem provides many other tax-funded benefits. The most widely 
paid benefit is that of the child allowance. It is paid to parents 


Germany: A Country Study 

of all income levels to lessen the burden of raising children. 
Benefits are generally paid until the child reaches the age of 
sixteen and thereafter up to the age of twenty-seven if the child 
is receiving an education. In the mid-1990s, DM70 a month was 
paid for the first child, DM130 for the second, DM220 for the 
third, and DM240 for the fourth and subsequent children. 
Upper-income parents receive smaller amounts. Child benefits 
are tax exempt. Taxpayers also have an annual income tax 
exemption of DM4,104 for each dependent child. 

Since 1986 payments for child rearing have also been made 
to parents who are either unemployed or working only up to 
nineteen hours per week. In 1994 these payments amounted to 
DM600 a month per child for the first six months of the child's 
life; after this age, household income was considered. Pay- 
ments continue until the child's second birthday. Beginning in 
1994, a single parent with a net annual income of more than 
DM75,000 and a couple with a net annual income of more than 
DM100,000 were no longer eligible to receive this benefit. 

A single parent raising a child and receiving inadequate 
financial support from the other parent is eligible to receive 
maintenance payments up to a child's twelfth birthday for a 
maximum period of seventy-two months. In 1994 in the old 
Lander, these payments could amount to as much as DM291 a 
month for children up to age six and DM353 a month for chil- 
dren between the ages of six and twelve. 

Families and single individuals can also receive payments to 
help them with housing expenses if their incomes are insuffi- 
cient to afford decent shelter. Unlike housing aid provided 
through social assistance, aid of this nature does not require 
that recipients exhaust their savings or lack close relatives to 
assist them. 

The disabled are also served by a broad range of medical 
and vocational programs designed to provide them with 
humane living conditions. Statutory social insurance programs 
are responsible for meeting the various needs of their mem- 
bers who become disabled. In addition, government agencies 
at the federal, Land, and local levels seek to provide employ- 
ment and help with special housing and transportation provi- 
sions. Employment of the disabled is furthered by federal 
legislation that requires firms employing more than fifteen per- 
sons to reserve 6 percent of positions for the disabled or to 
make annual compensatory payments. In 1994 Germany had 
nearly 600 sheltered workplaces able to provide special employ- 


Social Welfare, Health Care, and Education 

ment for about 140,000 disabled persons unable to find 
employment in the general economy. 

Since 1995 German residents have been obliged to join a 
new social insurance program that arranges for its members' 
future need for long-term nursing care. Those with public 
health insurance will continue with that insurance; those with 
private health insurance are obliged to secure a new insurance 
policy to arrange long-term nursing care. The new insurance 
program will initially cover the expenses of long-term nursing 
provided at home; monthly benefits, in some special cases, will 
go up to DM3,750 but usually will be set at much lower levels 
depending on the kind of nursing care provided and the con- 
dition of the insured person's health. Some benefits will be pro- 
vided in kind, such as visits by health care professionals to the 
home. Some benefits will be cash payments to friends or rela- 
tives who provide nonprofessional nursing care. Beginning in 
mid-1996, long-term institutional care will also be covered. 

Until this program was instituted, the lack of long-term nurs- 
ing care was seen as the single most important shortcoming in 
the country's system of social welfare. One effect of this short- 
coming was that patients who should have been receiving nurs- 
ing care at home or in a nursing institution remained instead 
in hospitals, a more expensive form of treatment. As of late 
1994, officials had set an initial contribution of 1 percent of 
incomes up to DM68,400 a year in the old Lander and 
DM53,100 in the new Lander, with the employee and the 
employer each paying half. Part of the costs of long-term nurs- 
ing care may in the future be covered by abolishing a public 
holiday that always falls on a workday. To cover the cost of long- 
term institutional nursing care, the contribution rate will 
increase to 1.7 percent in mid-1996. The great expense of this 
benefit may require the abolition of a second public holiday. 

The administration of the nursing care insurance program is 
unique. It overlaps somewhat that of the sickness funds but will 
also include many federal, Land, and local agencies. In fact, the 
program will involve more implementors than all other social 
insurance programs combined. Implementation problems 
arise primarily from different entitlements and services pro- 
vided through social assistance, or social aid, and by nursing 
care insurance. Problems also stem from differing evaluations 
by sickness-funds medical experts about who needs care and 
how much and what kind of nursing care is needed throughout 


Germany: A Country Study 

Current Social Welfare Issues and Outlook for the Future 

As of mid-1995, the policy and institutional features that 
characterized the development of German social policy over 
the last century continued to provide the overall umbrella of 
social policy in Germany. This has meant the continuation of 
separate programs for different groups in the labor force; 
decentralized and mostly nongovernment, self-administering 
bodies and private grassroots voluntary social welfare agencies; 
an emphasis on earnings-related individualized cash benefits 
determined by past contributions rather than by need; and a 
continued reliance on social insurance programs. For most 
people living in Germany, these programs have worked well 
and in the postwar period have provided a continuous expan- 
sion of coverage and improved benefits. 

Behind these achievements, however, are hidden inequities 
and inequalities. During the last forty years, the system favored 
the improvement of benefits for those with a continuous work 
record. For the most part, these were male workers and women 
who had never left the workforce. They received earnings- 
related insurance benefits while other population groups 
tended to receive means-tested benefits or a combination of 
the two. 

The number of individuals receiving means-tested social 
assistance, however, was increasing in the former FRG even 
prior to unification. And in 1995, in a united Germany, the 
recipients of social assistance included a growing number of 
impoverished elderly women, female-headed single house- 
holds, and families with several children. For example, a 1992 
study found that households with a sick or disabled person 
needing constant home care, households with a newborn 
child, and non-German households had an increased likeli- 
hood of receiving social assistance benefits. 

Women are more heavily represented among the disadvan- 
taged than men. Their lower wages on average mean smaller 
benefits because of smaller contributions into insurance pro- 
grams. In addition, the time women spend caring for children 
and other relatives generally means that women have shorter 
work histories, which affects their pension levels. German wel- 
fare regulations also place divorced and separated women at a 

The new Lander present a challenge to Germany's social wel- 
fare system. From the perspective of individuals, unification 
brought a number of social and institutional innovations and 


Social Welfare, Health Care, and Education 

improvements in living conditions, along with a few new enti- 
tlements — for example, disability pay, retirement for men 
under the age of sixty-five, and pensions for widows and widow- 
ers. However, the abolition of familiar social service centers, 
child-care facilities, and nursing homes, coupled with inexperi- 
enced staff in administrative agencies, has increased social and 
psychological stress for many in the east. Women of child-bear- 
ing age living in the new Lander have been particularly affected 
because before unification they had better prenatal and post- 
natal care, the right to abortion, and a fairly widespread net- 
work of day-care centers at work or in their communities. 

The lack of private voluntary organizations in the new 
Lander has made the administration of social programs there 
difficult. Western German voluntary and church-related agen- 
cies have provided and still do provide much assistance. They 
have also assisted in setting up local and district government 
offices and have trained new manpower to decide on entitle- 
ments, calculate benefits, and interpret new laws. But a serious 
shortage of social workers and facilities to train or retrain them 

The difference between the two Germanys in terms of bene- 
fits received and resources available for different social strata 
will continue for some time. The resulting dissatisfaction and 
social decline can be considered time bombs that might bring 
future political, social, and psychological instability. 

National Health Insurance and Medical Care 

Germany's health care system provides its residents with 
nearly universal access to comprehensive high-quality medical 
care and a choice of physicians. Over 90 percent of the popula- 
tion receives health care through the country's statutory health 
care insurance program. Membership in this program is com- 
pulsory for all those earning less than a periodically revised 
income ceiling. Nearly all of the remainder of the population 
receives health care via private for-profit insurance companies. 
Everyone uses the same health care facilities. 

Although the federal government has an important role in 
specifying national health care policies and although the 
Lander control the hospital sector, the country's health care sys- 
tem is not government run. Instead, it is administered by 
national and regional self-governing associations of payers and 
providers. These associations play key roles in specifying the 
details of national health policy and negotiate with one 


Germany: A Country Study 

another about financing and providing health care. In addi- 
tion, instead of being paid for by taxes, the system is financed 
mostly by health care insurance premiums, both compulsory 
and voluntary. 

In early 1993, the Health Care Structural Reform Act 
(Gesundheitsstrukturgesetz — GSG) came into effect, marking 
the end of a more than a century-long period in which benefits 
and services under statutory public health insurance had been 
extended to ever larger segments of the population. Rising 
health expenditures may prompt policy makers to impose fur- 
ther restrictions on providers and consumers of health care. 
These high expenditures have been caused by a rapidly aging 
population (retirees' costs rose by 962 percent between 1972 
and 1992), the intensive and costly use of advanced-technology 
medical procedures, and other economic and budgetary pres- 
sures. As of mid-1995, the drafting of new reform proposals was 
under way. 

For residents of the former GDR, the era of free care ended 
in 1991. The political decision to adopt the FRG's health care 
system required the reorganization of nearly all components of 
health care in the new Lander. As of mid-1995, the reorganiza- 
tion of the health care system in the former GDR still was far 
from completion. 

Development of the Health Care System 

Nearly everyone residing in Germany is guaranteed access to 
high-quality comprehensive health care. Statutory health insur- 
ance (Gesetzliche Krankenversicherung — GKV) has provided 
an organizational framework for the delivery of public health 
care and has shaped the roles of payers, insurance or sickness 
funds, and providers, physicians, and hospitals since the Health 
Insurance Act was adopted in 1883. In 1885 the GKV provided 
medical protection for 26 percent of the lower-paid segments 
of the labor force, or 10 percent of the population. As with 
social insurance, health insurance coverage was gradually 
extended by including ever more occupational groups in the 
plan and by steadily raising the income ceiling. Those earning 
less than the ceiling were required to participate in the insur- 
ance program. In 1995 the income ceiling was an annual 
income of about DM70, 00 in the old Lander and DM57,600 in 
the new Lander. 

In 1901 transport and office workers came to be covered by 
public health insurance, followed in 1911 by agricultural and 


Social Welfare, Health Care, and Education 

forestry workers and domestic servants, and in 1914 by civil ser- 
vants. Coverage was extended to the unemployed in 1918, to 
seamen in 1927, and to all dependents in 1930. In 1941 legisla- 
tion was passed that allowed workers whose incomes had risen 
above the income ceiling for compulsory membership to con- 
tinue their insurance on a voluntary basis. The same year, cov- 
erage was extended to all retired Germans. Salespeople came 
under the plan in 1966, self-employed agricultural workers in 
1972, and students and the disabled in 1975. 

The 1883 health insurance law did not address the relation- 
ship between sickness funds and doctors. The funds had full 
authority to determine which doctors became participating 
doctors and to set the rules and conditions under which they 
did so. These rules and conditions were laid down in individual 
contracts. Doctors, who had grown increasingly dissatisfied 
with these contracts and their limited access to the practice of 
medicine with the sickness funds, mobilized and founded a 
professional association (Hartmannbund) in 1900 and even 
went on strike several times. In 1913 doctors and sickness funds 
established a system of collective bargaining to determine the 
distribution of licenses and doctors' remuneration. This 
approach is still practiced, although the system has undergone 
many modifications since 1913. 

The formation of two German states in the second half of 
the 1940s resulted in two different German health systems. In 
East Germany, a centralized state-run system was put in place, 
and physicians became state employees. In West Germany, the 
prewar system was reestablished. It was supervised by the gov- 
ernment but was not government run. According to the Basic 
Law of 1949, Germany's constitution, the federal government 
has exclusive authority in public health insurance matters and 
sets broad policy in relation to the GKV. The government's 
authority applies in particular to benefits, eligibility, compul- 
sory membership, covered risks (physical, emotional, mental, 
curative, and preventive), income maintenance during tempo- 
rary illness, employer-employee contributions to the GKV, and 
other central issues. However, except for the funding of some 
benefits and the planning and financing of hospitals, the 
responsibility for administering and providing health care has 
been delegated to nonstate entities, including national and 
regional associations of health care providers, Land hospital 
associations, nonprofit insurance funds, private insurance com- 
panies, and voluntary organizations. 


Germany: A Country Study 

Portability of coverage, eligibility, and benefits are indepen- 
dent of any regional and/ or local reinterpretations by either 
insurers, politicians, administrators, or health care providers. 
Universal coverage is honored by any medical office or hospi- 
tal. Check-ins at doctors' offices, hospitals, and specialized facil- 
ities are simple, and individuals receive immediate medical 
attention. No one in need of care can be turned away without 
running a risk of violating the code of medical ethics or Land 
hospital laws. 

The health care system has achieved a high degree of equity 
and justice, despite its fragmented federal organization: no sin- 
gle group is in a position to dictate the terms of service deliv- 
ery, reimbursement, remuneration, quality of care, or any 
other important concerns. The right to health care is regarded 
as sacrosanct. Universality of coverage, comprehensive bene- 
fits, the principle of the healthy paying for the sick, and a ^dis- 
tributive element in the financing of health care have been 
endorsed by all political parties and are secured in the Basic 

By the mid-1990s, health care benefits provided through the 
GKV were extensive and included ambulatory care (care pro- 
vided by office-based physicians), choice of office-based physi- 
cians, hospital care, full pay to mothers (from six weeks before 
to eight weeks after childbirth), extensive home help, health 
checkups, sick leave to care for relatives, rehabilitation and 
physical therapy, medical appliances (such as artificial limbs), 
drugs, and stays of up to one month in health spas every few 
years. Persons who are unable to work because of illness receive 
full pay for six weeks, then 80 percent of their income for up to 
seventy-eight weeks. In an attempt to contain costs, beginning 
in the 1980s some of these benefits required copayments by the 
insured. Although these fees were generally very low, some 
copayments were substantial. For example, insured patients 
paid half the cost of dentures, although most other dental care 
was paid by health insurance. 

The system has managed these achievements relatively eco- 
nomically. In 1992 about 8.1 percent of the gross domestic 
product (GDP — see Glossary) went into medical care, or 
US$1,232 per capita, compared with 12.1 percent of GDP and 
US$2,354 per capita in the United States. Even so, Germany 
devoted about one-third of its overall social budget to health 
care, an amount surpassed only by retirement payments. 


Social Welfare, Health Care, and Education 

The German health care community has made a serious and 
sustained effort to control the growth of health costs since the 
mid-1970s. The steep rise in health expenditures in the first 
half of the 1970s prompted the passage of the Health Insur- 
ance Cost Containment Act of 1977. The law established an 
advisory board, the Concerted Action in Health Care, to sug- 
gest nonbinding guidelines for health care costs. Chaired by 
the federal minister for health, its sixty members represent the 
most important interest groups having a stake in health care. 
The board has contributed to slowing the growth of health care 
costs, but further legislation has been necessary. 

Modest copayments for medications, dental treatment, hos- 
pitalization, and other items were introduced in 1982 for mem- 
bers of sickness funds. These payments were further increased 
by the Health Care Reform Act of 1989 (Gesundheitsre- 
formgesetz — GRG) and again by the Health Care Structural 
Reform Act (Gesundheitsstrukturgesetz — GSG) of 1993. The 
GSG also introduced new regulatory instruments to monitor 
more closely access to medical practice, to reorganize sickness- 
funds governance, and to control medication costs and pro- 
spective hospital payments. In addition, it proposed measures 
to overcome the separation between ambulatory medical care 
and hospital care that prevailed in the former FRG. 

Health Insurance 

Some 92 percent of Germany's residents receive health care 
through statutory health insurance, that is, the GKV. As of late 
1992, the GKV relied on about 1,200 nonprofit sickness funds 
that collect premiums from their members and pay health care 
providers according to negotiated agreements. Those not 
insured through these funds, mostly civil servants and the self- 
employed, have private for-profit insurance. An estimated 0.3 
percent of the population has no health insurance of any kind. 
They are generally the rich who do not need it and the very 
poor, who receive health care through social assistance. 

Sickness funds are divided into two categories: primary 
funds and substitute funds. Workers earning less than the peri- 
odically revised income ceiling are required to belong to the 
primary funds; those earning more than this ceiling may be 
members on a voluntary basis. Some primary-fund members 
have a choice of funds. Others do not and become members of 
a particular fund because of their occupation or place of resi- 
dence. According to figures from the Ministry of Labor and 


Germany: A Country Study 

Social Affairs for late 1992, of the six types of primary funds, 
local sickness funds, then about 270 in number, are the most 
important. Organized geographically, they supply about 46 per- 
cent of the insured workforce with health insurance. About 800 
company-based funds, located in firms with more than 450 
employees, cover about 11 percent of workers. Some 180 occu- 
pational funds organized by craft cover another 2.5 percent. 
There are three other kinds of primary funds (about two dozen 
in all); they supply insurance for self-employed farmers, sailors, 
and miners and cover about 4 percent of the workforce. There 
are also two kinds of substitute funds; they provide health 
insurance to white-collar and blue-collar workers earning more 
than the income ceiling. Substitute funds are organized on a 
national basis, and membership is voluntary. Such funds cover 
about 34 percent of insured workers. 

Employers and employees each pay half of a member's pre- 
miums, which in the first half of the 1990s averaged between 12 
and 13 percent of a worker's gross earnings up to the income 
ceiling. Premiums are set according to earnings rather than 
risk and are not affected by a member's marital status, family 
size, or health; they are the same for all members of a particu- 
lar fund with the same earnings. In a household with two wage 
earners, each pays the full premium assessed by his or her sick- 
ness fund. The unemployed remain members of their sickness 
fund. Their contributions are paid by federal and local govern- 
ment offices, with one-third coming from local social assistance 
offices. The contributions of retirees are paid by the pension- 
ers themselves and by their pension funds. Thus, the public 
health insurance program redistributes from higher to lower 
income groups, from the healthy to the sick, from the young to 
the old, from the employed to the unemployed, and from 
those without children to those with children. 

Because some funds have poorer overall health profiles than 
others as a result of the occupations of their members, the 
number of dependents and pensioners among its members, or 
other factors, premiums can range from as low as about 6.5 
percent to as much as 16.0 percent of a member's gross earn- 
ings. To counter this inequity, a national reserve fund makes 
payments to funds with high numbers of pensioners. The GSG 
of 1993 mandates an equalization of contribution rates across 
all sickness funds by authorizing payments to funds burdened 
with health risks associated with age and gender. 


Social Welfare, Health Care, and Education 

About 11 percent of Germans pay for private health insur- 
ance provided by about forty for-profit insurance carriers. A 
good portion of those choosing private insurance are civil ser- 
vants who want insurance to cover the roughly 50 percent of 
their medical bills not covered by the government. Some sick- 
ness-fund members buy additional private insurance to secure 
such extras as a private room or a choice of physicians while in 
a hospital. Otherwise, the medical care provided to the pub- 
licly and privately insured is identical, and the same medical 
facilities are used. Self-employed persons earning above the 
income ceiling must have private insurance. Members of a sick- 
ness fund who leave it for a private insurance carrier will gener- 
ally not be allowed to return to public insurance. 

Although private insurance companies pay health care pro- 
viders about twice the amount paid by the primary sickness 
funds, private insurance is often cheaper than statutory health 
insurance, especially for policyholders without dependents. As 
is the case for members of sickness funds, employees who have 
private insurance have half their premiums paid by their 
employers. German private health insurance is unusual in that 
whatever the insured person's age, his or her premium will 
remain that set for his or her age cohort when the policy ini- 
tially was taken. Premiums rise only according to increases in 
overall health care costs. Policyholders generally stay with their 
original policy because if they change companies, they will pay 
the higher rates of an older age cohort. 

Health Care Providers 

Germany's principal health care providers are its physicians, 
dentists, and three types of hospitals (public, private nonprofit, 
and private for-profit). The health industry also includes large 
pharmaceutical companies and the manufacturers of various 
kinds of medical supplies. Public health departments, which 
are operated by the Lander, are not an important part of Ger- 
man health care. The public health clinics in the new Lander 
are being phased out during the integration of the two medical 

Germany's supply of physicians is high. Students who meet 
academic requirements have a constitutionally guaranteed 
right to study medicine. This fact, plus an excellent and inex- 
pensive university system, has resulted in the country's educat- 
ing physicians at a much higher per capita rate than the United 
States. Between 1970 and 1990, the number of physicians in 


Germany: A Country Study 

the former West Germany more than doubled, and in 1991 the 
country had 3.2 physicians per 1,000 population, a higher ratio 
than most other members of the Organisation for Economic 
Co-operation and Development (OECD — see Glossary). (In 
1990 the United States rate was 2.3 per 1,000.) With 11.5 physi- 
cian visits per person per year in 1988, West Germans and Ital- 
ians went to a doctor more frequently than other Europeans. 
(In 1989 the United States rate was 5.3 visits per person per 
year.) Even so, expenditures to physicians per capita amounted 
to less than half (US$193) of those in the United States 

German physicians have good incomes (dentists earn even 
more), although their average earnings have declined from six 
to three times the average wage since efforts at cost contain- 
ment began in the 1970s. The high number of physicians could 
reduce physicians' earnings still further. In addition, many 
young physicians face unemployment. The GSG of 1993, for 
example, mandates a reduction in the number of office-based 
physicians who treat GKV patients (generally about 90 percent 
of physicians join the association that allows them this prac- 
tice). The law also has the long-term goal of limiting the num- 
ber of specialists in geographic areas where they are 

German health care makes a sharp distinction between phy- 
sicians who provide office-based or ambulatory care and physi- 
cians who work in hospitals. Office-based physicians are fee-for- 
service entrepreneurs whose incomes depend on the amount 
and kinds of medical care they provide. In contrast, hospital 
physicians are salaried employees of the hospitals in which they 
work. Very few hospital physicians are permitted to bill their 
patients. Until recent health reform legislation, the two types 
of physicians did not work together. Once an ambulatory-care 
physician decided that a patient should enter a hospital (only 
in emergencies could a patient go directly to a hospital), the 
patient's care was entirely taken over by a hospital-based physi- 
cian. When a patient left the hospital, by law he or she again 
came under the care of an office-based physician. Since the 
late 1970s, hospital-based physicians have outnumbered ambu- 
latory-care physicians. In 1990 there were about 96,000 of the 
former and 75,000 of the latter in the old Lander. 

The GRG aimed at encouraging a better integration of 
office and hospital care, but little progress was made. The GSG 
of 1993 intended to lessen the traditional division by, among 


University clinic in Miinster, 
North Rhine-Westphalia 
Courtesy German Information 
Center, New York 

other reforms, making it possible for hospital-based physicians 
to see their patients after their release from the hospital. It is 
expected that lessening the separation of the types of medical 
care will reduce overall health care costs, but as of mid-1995 no 
marked successes in achieving this goal had been noticed. 
Additionally, new budgeting rules that go into effect in 1996 
may cause outpatient surgery, still unusual in Germany, to 
become more common by making it more profitable for hospi- 

The ownership of hospitals (there were a total of about 3,100 
hospitals in the early 1990s) is the outcome of historical devel- 
opment and regional traditions rather than conscious policy 
and has resulted in three types of hospitals: public, nonprofit, 
and private for-profit. Each type accounts for about one-third 
of the hospitals. Public-sector hospitals are mostly owned by the 
Lander, municipalities, and counties and provide about 50 per- 
cent of all hospital beds. Nonprofit hospitals, typically run by 
Catholic or Protestant organizations, provide about 35 percent 
of the beds, and for-profit hospitals account for 15 percent. 

Germany has too many hospital resources. In 1988 the ratio 
of 10.9 patient beds per 1,000 population in the former West 
Germany was higher than the OECD average. The number of 
admissions as a percentage of the total German population was 


Germany: A Country Study 

21.5 percent, significantly above the OECD average of 16.1 per- 
cent. The average length of stay of 16.6 days was below the 
OECD average but quite high by United States standards. Ger- 
many's inpatient occupancy rate was 86.5 percent, also fairly 
high by international standards. 

Between 1972 and 1986, the federal government and the 
Lander were jointly responsible for hospital policy making, but 
in 1986 the Land governments once again assumed sole 
responsibility. Lander own and partially finance medical school 
hospitals and accredited teaching hospitals. They enforce 
accreditation and licensing of health facilities and of health 
professionals working in social services. The Lander are respon- 
sible for policy development and implementation of social and 
nursing services, social assistance, youth services, and social 
work. Most important, the Lander remain responsible for the 
effective and efficient allocation and distribution of hospital 

Remuneration of Health Care Providers 

Each year the national associations of sickness funds negoti- 
ate agreements with the national associations of sickness-funds 
physicians. The same bargaining procedures apply to dental 
care. The associations work with guidelines suggested by the 
Advisory Council for the Concerted Action in Health Care and 
establish umbrella agreements on guidelines for the delivery of 
medical care and fee schedules tied to the relative value scales 
of about 2,000 medical procedures. At the national level, the 
Federal Committee of Sickness Funds Physicians and Sickness 
Funds is a key player, although it is little known outside the cir- 
cle of health care practitioners and experts. It sets spending 
limits on the practice of medicine in physicians' offices, deter- 
mines the inclusion of new medical procedures and preventive 
services, adjusts the remuneration of physicians, and formu- 
lates guidelines on the distribution and joint use of sophisti- 
cated medical technology and equipment by ambulatory-care 
or office-based physicians and hospital physicians. 

At the regional level, regional associations of sickness funds 
and regional associations of sickness-funds physicians negotiate 
specific contracts, including overall health budgets, reimburse- 
ment contracts for all physicians in a region, procedures for 
monitoring physicians, and reference standards for prescrip- 
tion drugs. 


Social Welfare, Health Care, and Education 

A key instrument for containing GKV health care costs is the 
global budget, introduced in the mid-1980s, which sets limits 
on total health care expenditures. The GSG of 1993 retained 
cost containment methods until 1996, when it is hoped that 
structural reforms will no longer make it necessary. By means 
of the global budget, regional increases in total medical expen- 
ditures are linked to overall wage increases of sickness-funds 
members. The sickness funds transfer monies amounting to 
the negotiated budget to the regional associations of sickness- 
funds physicians; the associations pay their members on the 
basis of points earned from services performed in a billing 
period. The value of the services is determined by the negoti- 
ated fee-for-service schedule, which assigns points to each ser- 
vice according to the relative value scale. No exchange of 
money occurs between sickness-fund patient and physician. Pri- 
vately insured patients pay their physicians themselves and are 
reimbursed by their insurance companies. 

The monetary value of a point is determined by dividing the 
total value of points billed by all sickness-funds physicians into 
the region's total negotiated health budget. A greater than 
expected number of services billed will mean that a point has 
less value, and a physician will earn less for a particular service 
than in a previous year. To prevent physicians from attempting 
to earn more by billing more services, committees of doctors 
and sickness funds closely scrutinize physician practices. Excess 
billing practices are easily detected by means of statistical pro- 
files of diagnostic and therapeutic practices that identify depar- 
tures of individual doctors from the group average (a form of 
community rating). Physicians found guilty of improper con- 
duct are penalized. The same procedures apply to dentists. 

Land hospital associations and Land associations of sickness 
funds negotiate the general standards for hospital care and 
procedures and criteria by which to monitor the appropriate 
and efficient delivery of medical care. Each hospital negotiates 
a contract on hospital care and the prices for hospital services 
with the regional sickness-funds association. Until 1993 hospi- 
tals' operating costs (of which salaries made up as much as 75 
percent) were covered by per diem rates paid by public and pri- 
vate insurance. Hospital investments and equipment are 
financed by Land general revenues. 

The GSG of 1993 developed a more sophisticated reimburse- 
ment method for hospitals than the simple per diem rate in an 
attempt to achieve greater hospital efficiency and thereby 


Germany: A Country Study 

reduce costs. The law requires that four sets of costs be negoti- 
ated for each hospital: payments to diagnosis-related groups 
for the full treatment of a case, with the possibility of an extra 
payment if a patient is hospitalized for an unusual length of 
time; special payments for surgery and treatments before and 
after surgery; departmental allowances that reimburse the hos- 
pital for all nursing and medical procedures per patient per 
day; and finally a basic allowance for all nonmedical proce- 
dures and covered accommodations, food, television, and simi- 
lar expenses. The law also introduced new aggregate spending 
targets and spending caps on hospitals for the period 1993 to 
1995. Moreover, the law imposes more stringent capital spend- 
ing controls on hospital construction and expensive medical 

Current Health Care Issues and Outlook for the Future 

German health care has long overemphasized curative medi- 
cine and neglected preventive medicine and health promo- 
tion. In 1994 the Advisory Council for the Concerted Action in 
Health Care recognized this imbalance and recommended 
improving prenatal and postnatal care, providing more vacci- 
nations for young children, and better educating the public 
about the dangers of alcohol consumption and smoking both 
during pregnancy and at other times. The council also found 
that schoolchildren need more sports, dental care, and sex 
education, and that they should be taught better dietary habits. 
Adolescents require better information about the dangers of 
drug abuse, sexually transmitted diseases, and obesity. All 
adults should exercise more and make better use of available 
cancer and dental screening. The council further recom- 
mended that fewer prescription drugs be taken (the cost for 
prescription drugs for the elderly is almost one-third higher 
than the cost of physician visits). Improving the control of 
blood pressure, counseling diabetics, eliminating occupational 
hazards, and promoting self-help groups are other goals. 

The council also found that many older Germans have bad 
dietary habits. Although eating habits have improved in recent 
decades, the German diet is rich in fats, carbohydrates, and 
sugar and is deficient in fruits and vegetables. In addition, the 
consumption of tobacco and alcohol is high, although it 
decreased between 1980 and 1990 among both men and 
women. Because of these factors, specialists estimate that 30 to 


Social Welfare, Health Care, and Education 

40 percent of the population has health problems related to 

Cardiovascular diseases are the cause of about half of all 
deaths, followed by cancer, which accounts for about one-quar- 
ter of deaths (see table 10, Appendix). Modern medicine has 
largely eradicated traditional threats to health such as tubercu- 
losis, diphtheria, and pneumonia. Marked improvements are 
also seen in other areas, such as infant and maternal mortality 
rates. In 1970 infant mortality rates (defined as deaths under 
one year of age per 1,000 live births) were 18.5 in the former 
East Germany and 23.4 in the former West Germany, com- 
pared with an estimated 6.3 in united Germany by 1995. Mater- 
nal deaths fell from 140 per 100,000 live births in the mid- 
1950s to fewer than ten per 100,000 by 1989 in the former West 
Germany. A similar improvement was measured in the former 
East Germany. 

A new health problem is acquired immune deficiency syn- 
drome (AIDS). By late 1994, a total of 11,854 AIDS cases had 
been reported in Germany. 

Another institutional challenge is extending the old Lander 
health care system based on statutory health insurance to the 
new Lander. Achieving this goal has meant a complete overhaul 
of the GDR's state-run and highly centralized system; the intro- 
duction of insurance funds, private insurance, and voluntary 
organizations; and the training of physicians to become fee-for- 
service entrepreneurs, rather than salaried state employees as 
they were under the old system. The Treaty on Monetary, Eco- 
nomic, and Social Union of May 18, 1990, also set the goal of 
bringing hospitals in the former GDR up to the standards of 
those in the West. An ambitious program to invest about US$1 
billion per year beginning in 1995 will be aimed at this last 
goal, with about 40 percent of funds coming from the federal 
government, another 40 percent from the new Lander, and 20 
percent from public and private insurance carriers. It is 
expected that realization of the full integration of the two 
health systems will take many years, however. 


Germany has one of the world's best and most extensive 
school and university systems. Although shortcomings exist, on 
the whole the country's varied and multifaceted education sys- 
tem addresses well the needs of a population with widely differ- 
ing characteristics and abilities. Some young people are best 


Germany: A Country Study 

served by a traditional classroom-based education that pre- 
pares them for study at a wide choice of institutions of higher 
learning. Others profit more from vocational training and edu- 
cation consisting of on-the-job training combined with class- 
room instruction. At the end of this kind of education, 
graduates enter the workforce with a useful skill or profession. 
Other students may choose one of many combinations of ele- 
ments of these two paths, or decide later in life to embark on 
one of them by means of adult education and night school. 
Because education in Germany costs little compared with that 
in the United States, for example, and because educational 
support of various kinds is widely available, Germans are likely 
to receive education and training suited to their abilities and 

But however well Germans have arranged their system of 
education, problems remain. The integration of two entirely 
different education systems within the country's highly federal- 
ized system had not been completed as of mid-1995. In addi- 
tion, the country's vaunted system of higher education is beset 
by severe overcrowding despite its great expansion since the 
1960s. Moreover, many who begin study at the university level 
are not adequately prepared to meet its demands. Many others 
who successfully complete their courses of study can find no 
suitable employment once they graduate. Solving these prob- 
lems will engage the country's educators and public into the 
next century. 

Historical Background 

The origins of the German education system date back to 
church schools in the Middle Ages. The first university was 
founded in 1386 in Heidelberg; others were subsequently 
established in Cologne, Leipzig, Freiburg, and a number of 
other cities. These universities, which trained only a small intel- 
lectual elite of a few thousand, focused on the classics and reli- 
gion. In the sixteenth century, the Reformation led to the 
founding of universities along sectarian lines. It was also in this 
century that cities promulgated the first regulations regarding 
elementary schools. By the eighteenth century, elementary 
schools had increasingly been separated from churches and 
had come under the direction of state authorities. Prussia, for 
example, made school attendance for all children between the 
ages of five and fourteen compulsory in 1763. A number of uni- 


Social Welfare, Health Care, and Education 

versities dedicated to science also came into being in the eigh- 
teenth century. 

The defeat of Prussia by France led to a reform of education 
by the Berlin scholar Wilhelm von Humboldt (1767-1835). His 
reforms in secondary schools have shaped the German educa- 
tion system to the present day. He required university-level 
training for high school teachers and modernized the struc- 
ture and curriculum of the Gymnasium, the preparatory school. 
He also proposed an orientation phase after the Gymnasium 
and a qualifying examination known as the Abitur for university 
admission. In 1810 Humboldt founded the university in Berlin 
that now bears his name. Humboldt also introduced the three 
principles that guided German universities until the 1960s: aca- 
demic freedom, the unity of teaching and research, and self- 
government by the professors. Also of much influence in edu- 
cation, both within Germany and abroad, was Friedrich 
Froebel's development of the kindergarten in 1837. 

For much of the nineteenth century, Germany had two dis- 
tinctive educational tracks: the Gymnasium, which provided a 
classical education for elites; and the Volksschule, which was 
attended for eight years by about 90 percent of children. The 
two schools were administered and supervised separately. Later 
in the century, two additional types of school emerged: the 
Realgymnasium, which substituted modern languages for the 
classics, and the Oberrealschule, which emphasized mathematics 
and science. Most children, however, could not attend the 
schools that prepared students for the professions or university 
entrance because of the schools' high standards and long dura- 
tion. Hence, around the turn of the century, the Mittelschule, or 
middle school, was introduced to meet parental demand for 
expanded educational and economic opportunities. Children 
entered the Mittelschule after three years of elementary school, 
and they attended that school for six years. 

In the nineteenth century, new universities were established 
in a number of major German cities, including Munich, Ham- 
burg, and Frankfurt am Main. The older universities had been 
located mainly in smaller cities, such as Heidelberg. Many of 
the new universities were technical universities, and Germany 
soon attained a leadership in science that it lost only with 
World War II. Universities were state supported but largely 
independent in matters of curriculum and administration. A 
university degree brought much social status and was the pre- 


Germany: A Country Study 

requisite for entering the professions and the higher levels of 
the civil service. 

A serious problem of German education before World War I 
was the rigid differentiation between primary education, 
received by all, and secondary education, received mainly by 
the children of the more prosperous classes. This division 
meant that most children of the poor had no access to second- 
ary schooling and subsequent study at the university level. After 
the war, the Weimar constitution outlined a democratic vision 
of education that would address the problem: supervision by 
the state, with broad legislative powers over education; uniform 
teacher training; a minimum of eight years of primary school 
attendance; continuing education until the age of eighteen 
years; and free education and teaching materials. Many of 
these reform proposals never came to fruition, however. 

During the Hitler era (1933-45), the national government 
reversed the tradition of provincial and local control of educa- 
tion and sought centralized control as part of the regime's aim 
to impose its political and racist ideology on society Despite an 
agreement with the Vatican that theoretically guaranteed the 
independence of Roman Catholic schools, during the 1930s 
the regime considerably reduced church control of the paro- 
chial school system. Universities also lost their independence. 
By 1936 approximately 14 percent of all professors had been 
dismissed because of their political views or ethnic back- 
ground. The introduction of two years of military service and 
six months of required labor led to a rapid decline in university 
enrollment. By 1939 all but six universities had closed. 

After the defeat of the Hitler regime in 1945, the rebuilding 
of the education system in the occupied zones was influenced 
by the political interests and educational philosophy of the 
occupying powers: the United States, Britain, and France in 
what became West Germany; and the Soviet Union in East Ger- 
many. As a result, two different education systems developed. 
Their political, ideological, and cultural objectives and their 
core curricula reflected the socioeconomic and political-ideo- 
logical environments that prevailed in the two parts of Ger- 
many from 1945 to 1989. 

The Western Allies had differing views on education, but the 
insistence of the United States on the "reeducation" of German 
youth, meaning an education in and for democracy, proved the 
most persuasive. Thus, the West German education system was 
shaped by the democratic values of federalism, individualism, 


Lunchtime in a Grundschule in North Rhine-Westphalia 
Playground at a Grundschule in Berlin 
Courtesy German Information Center, New York 


Germany: A Country Study 

and the provision of a range of educational choices and oppor- 
tunities by a variety of public and private institutions. Students 
began to express themselves more freely than before and to 
exercise a greater degree of influence on education. In West 
Germany, religious institutions regained their footing and rep- 
utation. By contrast, the East German education system was 
centralized. The communist-controlled Socialist Unity Party of 
Germany (Sozialistische Einheitspartei Deutschlands — SED) 
retained a monopoly over education and subjected it to rigid 

Both Germanys faced the task of "denazifying" teachers and 
reeducating students, but they moved in different directions. 
The authorities in the East sought teachers who had opposed 
fascism and who were committed to a Marxist-Leninist ideol- 
ogy. In the West, authorities dismissed several thousand teach- 
ers and replaced them with educators holding democratic 
values. The ensuing Western reform program included recon- 
structing facilities and reinvigorating the system. In 1953 
reforms were introduced that aimed at standardizing educa- 
tion throughout the Lander. In the 1960s, reforms were under- 
taken that introduced apprentice shops and new instruction 
techniques for vocational training. 

The 1970s saw further major educational reform, detailed in 
the document Structural Plans for the Educational System. The 
plan was approved in 1970 by the Council of Education, which 
was established in 1957 to serve as an advisory committee for 
the entire education system, and by each Land minister of edu- 
cation and cultural affairs. The main components of the 
reform program were the reorganization of the upper level of 
the Gymnasium, the recruitment of more students into colleges 
and universities, and the establishment of the comprehensive 
school (Gesamtschule). The Gesamtschule brings together the 
three kinds of secondary schools — the Hauptschule, the Real- 
schule, and the Gymnasium — in an attempt to diminish what 
some perceived as the elitist bias of the traditional secondary 
education system. The program also proposed expanding adult 
education and vocational training programs. 

The reform program achieved some but not all of its goals. 
The university entrance examination was made easier, and the 
number of students attending institutions of higher education 
rose from just over 200,000 in 1960 to about 1.9 million in the 
1992-93 academic year (see table 11, Appendix). Between 
1959 and 1979, twenty new universities were built, and univer- 


Social Welfare, Health Care, and Education 

sity academic staff increased from 19,000 to 78,000. However, 
some Germans opposed the lowering of university entrance 
standards, and some also resisted the introduction of the Ge- 
samtschule. In addition, the worldwide recession brought on by 
the oil crisis of 1973 caused serious financial problems for the 
government at all levels and made reforms difficult to realize. 

Despite the different educational policies implemented by 
the two Germanys between 1945 and 1990, both systems 
regarded education as a constitutional right and a public 
responsibility, emphasized the importance of a broad general 
education (Allgemeinbildung) , taught vocational education 
through the so-called dual system that combined classroom 
instruction with on-the-job training, required students to pass 
the Abitur examination before beginning university studies, 
and were committed to Humboldt's concept of university stu- 
dents' becoming educated by doing research. Despite these 
similarities, the systems differed in many important details, and 
the structural divergence was considerable. 

Educational Policy Making and Administration 

The Basic Law of 1949 reaffirmed the nineteenth-century 
tradition under which the Lander were responsible for educa- 
tion. Article 30 clearly established the autonomy of the Lander 
in most educational and cultural matters, including the financ- 
ing of education, the maintenance of schools, teacher training, 
the setting of teachers' qualifications and educational stan- 
dards, and the development of standardized curricula. In 
higher, or tertiary, education, the Lander share responsibility 
with the federal government. The federal government, for 
example, oversees vocational education and training, a very 
important component of Germany's system of education. The 
federal government also controls the financing of stipends and 
educational allowances and the promotion of research and 
support of young scientists through fellowships. In addition, 
the federal government also has passed framework laws on gen- 
eral principles of higher education. However, the federal gov- 
ernment has no power to reform higher education institutions; 
this power remains a prerogative of the Lander. 

Most teachers and university-level professors are civil ser- 
vants with life tenure and high standing in society. They receive 
generous fringe benefits and relatively lucrative compensation, 
while making no contributions to social security programs. In 
Bavaria, for example, the average starting salary for an elemen- 


Germany: A Country Study 

tary or secondary school teacher in the early 1990s was about 
US$40,000. A senior teacher in a Gymnasium earned about 

Postsecondary education is a shared responsibility imple- 
mented through "cooperative federalism" and joint policy 
areas. The federal government and the sixteen old Lander 
cooperate extensively with regard to the establishment, expan- 
sion, and modernization of institutions of higher education, 
including their financing. 

To counterbalance decentralized authority and provide lead- 
ership in education, the development of educational policy 
and implementation is influenced by a number of nationwide 
joint permanent advisory bodies. These include the Planning 
Committee for the Construction of Institutions of Higher 
Learning and the Scientific Council. Planning for education 
and the promotion of research by the federal government and 
the Lander have become more important since unification and 
are implemented by the Federal and Land Commission on 
Educational Planning and the Promotion of Research. 

Educational Finances 

Education is the second largest item of public spending after 
social security and welfare and in the 1990-91 academic year 
amounted to 4 percent of GNP. Education is not paid for by 
local property taxes but rather out of general revenues. Since 
1949 the federal government, the Lander, and the local govern- 
ments, including in some cases intercommunal single or multi- 
purpose districts (Zweckverbande) , have shared in financing 
education. For elementary, primary, and secondary education, 
the Lander and the local governments are the major funding 
sources. The Lander are responsible for teachers' salaries, cur- 
riculum development, and the setting of standards and qualifi- 
cations. Local governments are responsible for the 
maintenance and operation of school facilities. The Lander 
remain the main source of funding for higher education, but 
the federal government also plays a role. In 1991 the Lander 
paid about 74 percent of total education costs (68 percent in 
1970); local governments contributed 16 percent (24 percent 
in 1970); and the federal government contributed 10 percent 
(8 percent in 1970). 

The Education System 

The Basic Law of 1949 grants every German citizen the right 


Social Welfare, Health Care, and Education 

to self-fulfillment. In theory, citizens are able to choose the 
type of education they want and are given access to their pre- 
ferred occupation or profession. The goal of educational pol- 
icy is therefore to provide each citizen with opportunities to 
grow personally, professionally, and as a citizen in accordance 
with his or her abilities and preferences. The Lander axe to pro- 
vide equal educational opportunities and quality education for 
all through a variety of educational institutions. 

Education is free and in most types of school is coeduca- 
tional. Almost all elementary and secondary schools and about 
95 percent of higher education institutions are public. College, 
graduate, and postgraduate students pay a nominal fee ranging 
from DM35 to DM60 a semester, which includes extensive 
rights to health care and other social benefits. When churches 
or private organizations run kindergartens, they do so inde- 
pendently, and the public sector is not involved. 

According to the terms of the Dusseldorf Treaty of 1955, the 
first major attempt to unify or coordinate the school systems of 
the Lander, school attendance is mandatory for a minimum of 
nine years (or in some Lander lew years), beginning at age six. 
A student who starts vocational training as an apprentice must 
attend a part-time vocational school until the age of eighteen. 

Elementary and Primary Education 

The first level of education is called elementary education 
and consists of kindergarten for children ages three to five (see 
fig. 9). Attendance is voluntary. In the first half of the 1990s, 
about 80 percent of children were in kindergarten. Beginning 
in 1996, all children will be guaranteed a place in kindergar- 
ten. Because the former GDR had maintained an extensive kin- 
dergarten system, the new Lander had enough kindergarten 
places to meet this requirement. In contrast, in the early 1990s 
the old Lander had only enough places to accommodate about 
75 percent of children in the relevant age-group. 

The second level of education is called primary education 
and consists of the Grundschule (basic school). Children 
between the ages of six and ten attend the Grundschule from 
grades one through four. Children are evaluated in the fourth 
grade and tracked according to their academic records, 
teacher evaluations, and parent-teacher discussions. The three 
tracks lead to different secondary schools and play a significant 
role in determining a child's subsequent educational options. 


Germany: A Country Study 




15 10 

14 9 

13 8 

12 7 

11 6 

10 5 





AVS 3 

ITS 4 

HTS 5 










EHS— Evening High School/College (Abendgymnasium/Kolleg). 
Includes technical universities, teacher training colleges, 
academies of art, music conservatories, and other institutions 
of higher learning. 

AVS — Advanced Vocational School (Berufsaufbauschule). 
ITS — Intermediate Technical School (Berufsfachschule). 
HTS — Higher Technical School (Fachoberschule). 
Includes specialized high schools and comprehensive schools. 

Source: Based on information from Arno Kappler and Adriane Grevel, eds., Facts about 
Germany, Frankfurt am Main, 1994, 407. 

Figure 9. Structure of the Education System, 1994 


Social Welfare, Health Care, and Education 

Junior Secondary Education 

Secondary education, the third level of education, is divided 
into two levels: junior secondary education (also called inter- 
mediate secondary education) and senior secondary educa- 
tion. Upon completion of the Grundschule, students between 
the ages of ten and sixteen attend one of the following types of 
secondary schools: the Hauptschule, the Realschule, the Gymna- 
sium, the Gesamtschule, or the Sonderschule (for children with 
special educational needs). Students who complete this level of 
education receive an intermediate school certificate. Adults 
who attend two years of classes in evening schools can also earn 
these intermediate school certificates, which permit further 

Junior secondary education starts with two years (grades five 
and six) of orientation courses during which students explore a 
variety of educational career paths open to them. The courses 
are designed to provide more time for the student and parents 
to decide upon appropriate subsequent education. 

The Hauptschule, often called a short-course secondary 
school in English, lasts five or six years and consists of grades 
five to nine or five to ten depending on the Land. Some Lander 
require a compulsory tenth year or offer a two-year orientation 
program. About one-third of students completing primary 
school continue in the Hauptschule. The curriculum stresses 
preparation for a vocation as well as mathematics, history, 
geography, German, and one foreign language. After receiving 
their diploma, graduates either become apprentices in shops 
or factories while taking compulsory part-time courses or 
attend some form of full-time vocational school until the age of 

Another one-third of primary school graduates attend the 
Realschule, sometimes called the intermediate school. These 
schools include grades five through ten. Students seeking 
access to middle levels of government, industry, and business 
attend the Realschule. The curriculum is the same as that of the 
Hauptschule, but students take an additional foreign language, 
shorthand, wordprocessing, and bookkeeping, and they learn 
some computer skills. Graduation from the Realschule enables 
students to enter a Fachoberschule (a higher technical school) or 
a Fachgymnasium (a specialized high school or grammar school) 
for the next stage of secondary education. A special program 
makes it possible for a few students to transfer into the Gymna- 
sium, but this is exceptional. 


Germany: A Country Study 

The Gymnasium, sometimes called high school or grammar 
school in English, begins upon completion of the Grundschule 
or the orientation grades and includes grades five through thir- 
teen. The number of students attending the Gymnasium has 
increased dramatically in recent decades; by the mid-1990s, 
about one-third of all primary school graduates completed a 
course of study at the Gymnasium, which gives them the right to 
study at the university level. In the 1990s, the Gymnasium con- 
tinued to be the primary educational route into the universi- 
ties, although other routes have been created. 

The Gesamtschule originated in the late 1960s to provide a 
broader range of educational opportunities for students than 
the traditional Gymnasium. The Gesamtschule has an all-inclusive 
curriculum for students ages ten to eighteen and a good deal 
of freedom to choose coursework. Some schools of this type 
have been established as all-day schools, unlike the Gymnasium, 
which is a part-day school with extensive homework assign- 
ments. The popularity of the Gesamtschule has been mixed. It 
has been resisted in more conservative areas, especially in 
Bavaria, where only one such school had been established by 
the beginning of the 1990s. A few more were established in 
Bavaria in the next few years; their presence is marginal when 
compared with the Gymnasium, of which there were 395 in 
1994. Even North Rhine-Westphalia, Germany's most populous 
Land and an outspoken supporter of the Gesamtschule, had only 
181, compared with 623 of the traditional Gymasium. 

Senior Secondary Education 

The variety of educational programs, tracks, and opportuni- 
ties available to students increases at the senior secondary level. 
The largest single student group attends the senior level of the 
Gymnasium, the Gymnasiale Oberstufe. This level includes the tra- 
ditional academically oriented Gymnasium, the vocational Gym- 
nasium, the occupation-specific Fachgymnasium, and the 
Gesamtschule. Graduation from these schools requires passing 
the Abitur, the qualifying examination for studying at the uni- 
versity level. Until the late 1970s, nearly everyone who passed 
the Abitur had access to an institution of higher education. 
However, in the 1980s the numerus clausus, a restrictive quota 
system that had been introduced for the study of medicine in 
the late 1960s, began to be used for other popular fields of 
study Strict selection criteria limiting access to higher educa- 


Social Welfare, Health Care, and Education 

tion had become necessary because the demand for places at 
universities had become much greater than the supply. 

Vocational Education and Training 

The German education system has been praised for its abil- 
ity to provide quality general education combined with excel- 
lent specific training for a profession or a skilled occupation. In 
1992 about 65 percent of the country's workforce had been 
trained through vocational education. In the same year, 2.3 
million young people were enrolled in vocational or trade 

Building upon the junior secondary program, the Berufs- 
schulen are two- and three-year vocational schools that prepare 
young people for a profession. In the 1992-93 academic year, 
there were 1.8 million enrolled in these schools. About 264,000 
individuals attended Berufsfachschulen, also called intermediate 
technical schools (ITS). These schools usually offer full-time 
vocation-specific programs. They are attended by students who 
want to train for a specialty or those already in the workforce 
who want to earn the equivalent of an intermediate school cer- 
tificate from a Realschule. Full-time programs take between 
twelve and eighteen months, and part-time programs take 
between three and three-and-one-half years. Other types of 
schools designed to prepare students for different kinds of 
vocational careers are the higher technical school (HTS), the 
Fachoberschule, attended by about 75,000 persons in 1992-93, 
and the advanced vocational school (AVS), the Berufsaufbau- 
schule, attended by about 6,500 persons in the same year. Stu- 
dents can choose to attend one of these three kinds of schools 
after graduating with an intermediate school certificate from a 
Realschule or an equivalent school. 

The method of teaching used in vocational schools is called 
the dual system because it combines classroom study with a 
work-related apprenticeship system. The length of schooling/ 
training depends on prior vocational experience and may 
entail one year of full-time instruction or up to three years of 
part-time training. 

Students can earn the Fachhochschulreife after successfully 
completing vocational education and passing a qualifying 
entrance examination. The Fachhochschulreife entitles a student 
to enter a Fachhochschule, or a training college, and to continue 
postsecondary occupational or professional training in engi- 
neering or technical fields. Such programs last from six 


Germany: A Country Study 

months to three years (full-time instruction) or six to eight 
years (part-time instruction). Some students with many years of 
practical experience or those with special skills may also attend 
a Fachhochschule. 

Vocational education and training is a joint government- 
industry program. The federal government and the Lander 
share in the financing of vocational education in public voca- 
tional schools, with the federal government bearing a slightly 
higher share (58 percent in 1991) than the Lander. On-the-job 
vocational training, whose cost is entirely borne by companies 
and businesses, is more costly to provide than vocational educa- 
tion. In the early 1990s, companies and businesses annually 
spent 2 percent of their payrolls on training. 

Tertiary or Higher Education 

In the 1992-93 academic year, higher education was avail- 
able at 314 institutions of higher learning, with about 1.9 mil- 
lion students enrolled. Institutions of higher learning included 
eighty-one universities and technical universities, seven com- 
prehensive universities (Gesamthochschuleri) , eight teacher-train- 
ing colleges, seventeen theological seminaries, 126 profession- 
specific technical colleges, thirty training facilities in public 
administration (Verwaltungsfachhochschulen) , and forty-five acad- 
emies for art, music, and literature. Nearly 80 percent, or 250, 
of these institutions were located in the old Lander, and sixty- 
four were in the new Lander. Baden-Wurttemberg and North 
Rhine-Westphalia had the largest share of these institutions, 
sixty-one and forty-nine, respectively. In 1990 about 69.7 per- 
cent of students at tertiary-level institutions went to universities 
and engineering schools, and another 21. V percent attended 
vocational training colleges (Fachhochschulen) . 

German university students can complete their first degree 
in about five years, but on average university studies last seven 
years. Advanced degrees require further study. Because tuition 
at institutions of higher education amounts to no more than a 
nominal fee except at the handful of private universities, study 
at the university level means only meeting living expenses. An 
extensive federal and Land program provides interest-free 
loans to students coming from lower-income households. Half 
of the loan must be paid within five years of graduation. Stu- 
dents graduating in the top third of their class or within a 
shorter time than usual have portions of their loans forgiven. 
Loans are also available to students receiving technical and 


A sixth-grade class at the Geschwister Scholl Gymnasium in Pulheim, 

North Rhine-Westphalia 
Courtesy William Collins 

vocational training. In the early 1990s, about half of all stu- 
dents were obliged to work while attending university. 

Unlike the United States, Germany does not have a group of 
elite universities; none enjoys a reputation for greater overall 
excellence than is enjoyed by the others. Instead, particular 
departments of some universities are commonly seen as very 
good in their field. For example, the University of Cologne has 
a noted economics faculty. Also in contrast to the United 
States, German universities do not offer much in the way of 
campus life, and collegiate athletics are nearly nonexistent. 
Universities generally consist of small clusters of buildings dis- 
persed throughout the city in which they are located. Students 
do not live on university property, although some are housed in 
student dormitories operated by churches or other nonprofit 


Germany: A Country Study 

Education in the New Lander 

The Soviet-supported SED centralized and politicized educa- 
tion far more than had been the case during the Hitler era. 
About 70 percent of teachers and all school counselors, super- 
intendents, members of the teachers' union, and school admin- 
istrators were SED members, often performing both 
professional and party functions. In theory, parents were part 
of the educational process, but in practice they were expected 
to support party educational policy. Teacher-student ratios 
were low — 1:5 compared with 1:18 in West Germany. 

Under the new system, public education was expanded by 
establishing preschools and kindergartens. Because most 
women returned to work after six months of maternity leave, 
these new schools were widely attended. Lowered standards of 
admission and scholarships expanded access to higher educa- 
tion for working-class children and diminished its elitist bias. 
The state emphasized education in "socialist values" and Marx- 
ism-Leninism at all levels of the system, following the Soviet 
model. Students were required to spend one day per week 
working in a factory, in an office, or on a farm in order to rein- 
force the importance of labor. 

In terms of organization, all types of schools were replaced 
by a uniform ten-grade polytechnical school, which empha- 
sized technical education. Upon graduation from this school, 
about 85 percent of students entered a two-year vocational edu- 
cation school. The remaining students attended special classes 
to prepare for university studies, some going to an extension of 
secondary school for two years, others attending vocational 
school for three years. The GDR had six universities, nine tech- 
nical universities, and several dozen specialized institutions of 
higher education. In the 1950s and 1960s, the children of 
workers were favored for university study. In later decades, the 
children of the intelligentsia (state officials, professionals, and 
academicians) again formed a greater part of the student pop- 
ulation. However, in addition to passing the qualifying exami- 
nation, students had to demonstrate political loyalty and 
commitment to Marxist-Leninist ideology. Throughout their 
schooling, children were constantly exposed to party ideology 
and values. 

The system had a strong vocational element that focused on 
providing a bridge to adult work. The system was particularly 
successful in some respects; literacy was practically universal by 
1989, and the proportion of unskilled workers and trainees in 


Social Welfare, Health Care, and Education 

the workforce fell from 70 percent in 1955 to 13 percent in 
1989. The system was best suited to the teaching of mathemat- 
ics, the natural sciences, and other technical and nonideologi- 
cal subjects. It was less effective in teaching the social sciences, 
current affairs, and information technology. Language teach- 
ing emphasized Russian, which was compulsory. Few learned 
other European languages such as English or French. 

The revolutionary events of November 1989 led to an 
abrupt transformation of the institutional, political, and philo- 
sophical foundations of education in the GDR. In heated 
debates, grassroots groups of parents, teachers, and citizens dis- 
cussed the future of education and vocational training in the 
new Lander. By May 1990, the GDR educational leadership had 
been dismissed, and steps had been taken to reduce the 
bloated educational bureaucracy. Evaluation commissions reas- 
sessed the quality of research and academic institutions and 
their staff, and many social science departments suspended 
activity until they were evaluated. Departments of Marxism- 
Leninism were closed outright, and most institutions modeled 
on the Soviet system were dismantled. 

In May 1990, the ministers of education of the Lander agreed 
that the new Lander should develop their own educational strat- 
egies. The unification treaty of August 31, 1990, specified that 
this should be done by June 30, 1991, when the new Lander 
were expected to have passed new laws on education. A major 
change effected by those laws is the replacement of the general 
polytechnic school with the range of educational models pre- 
vailing in West Germany. The five new Lander, with the excep- 
tion of Brandenburg, introduced the four-year Grundschule. 
Brandenburg established a six-year Grundschule, like that found 
in Berlin. Secondary schooling also resembles that of the old 
Lander in that the Gymnasium is common to all; however, other 
schools at the junior secondary level differ somewhat in their 
names and organization. Education at the senior secondary 
level resembles closely that of the old Lander. 

Higher education has also seen changes. To improve geo- 
graphic access to higher education, regions previously without 
institutions of higher learning have received a number of such 
institutions. In other regions, institutions of higher learning 
have been abolished, some of which have been replaced by 
Fachhochschulen, nonexistent in the former GDR. University 
staffs have also been cut, sometimes by as much as 50 percent. 
Within two or three years of unification, about 25 percent of 


Germany: A Country Study 

university faculty were arrivals from the old Lander. By late 
1994, institutions of higher learning in the new Lander had 
benefited from annual payments from western Germany of 
about DM3 billion. 

Although the old structure has been replaced, observers 
agree that the values and preferences internalized by parents, 
students, and teachers who came to maturity in the GDR can 
be expected to survive for many years. Because it lasted 
decades longer than nazism, the Marxist-Leninist influence on 
education in the new Lander will probably take far longer to 

Current Education Issues and Outlook for the Future 

Germany's system of education faces a number of chal- 
lenges, among them a surplus of teachers in a period of declin- 
ing birth rates. A chief problem is reconciling the tradition of 
Land responsibility for education, which has resulted in a vari- 
ety of school types, programs, and standards, with the need for 
a uniform national system. This is the central problem con- 
cerning whether or how to integrate the education systems of 
the new Lander with those of the old Lander. Such an integra- 
tion will entail deciding whether to increase the number of 
years of schooling by one year for eastern Germans or to 
reduce the thirteen years of schooling for western Germans to 
twelve. It will also mean deciding on whether to introduce a 
postsecondary vocational qualifying examination (Fachabitur) 
in the new Lander to mirror the one that has existed in the 
former FRG since the 1970s. Other unresolved issues relate to 
such questions as educational standards, qualifications, and the 
mutual recognition of qualifying examinations and diplomas. 
The diversity resulting from a reluctance to impose the same 
standard norms and diplomas in all Lander, in contrast to 
France and many other European countries, is so extreme that 
some observers think it may hinder the mobility of students 
and teachers within Germany and the larger Europe. 

Unification has also thrown into sharp focus the ongoing 
debate about the weaknesses of the university system in the 
former FRG. Many West German universities are overcrowded, 
understaffed, underequipped, and underfinanced. Frequently 
criticized are the length and structure of degree courses, the 
excessive length of studies, the high number of long-term stu- 
dents, and the disturbingly high number of dropouts who leave 
higher education without graduating. Some of these problems 


Germany: A Country Study 

result from Germany's success in expanding access to second- 
ary education. About 34 percent of all students graduated with 
the Abiturin 1990, compared with only 11 percent in 1970. 

Critics charge that many students who fail to complete their 
university studies may not have been well educated. A 1994 
study cast serious doubt on the assumption that passing the Abi- 
tur is adequate preparation for study at a university. It found 
that almost one-third of those who had passed the examination 
failed to complete their coursework at institutions of higher 
education and that the number of dropouts had quadrupled 
from 14,000 in the mid-1970s to 60,000 two decades later. The 
study also found that on average, dropouts left the university 
after three years, or six semesters, that women had a higher 
dropout rate than men, and that the highest dropout rate was 
in liberal arts, formerly the core of university studies. 

Students cited a lack of correlation between curriculum con- 
tent and career goals as one reason for breaking off their stud- 
ies. One out of three students also reported feeling 
unprepared for higher education. Other reasons listed were 
the limited opportunities in the labor market, overcrowding, 
anonymity (impersonality), a lack of mentors, and the poor 
quality of teaching. Financial reasons also were mentioned 
more often than they had been in the mid-1970s. 

As remedies, some advocate establishing a better balance 
between pure and applied research and teaching, making a dis- 
tinction between first-degree courses offering training for a 
profession and research-oriented postgraduate courses, and 
substituting well-defined curricula for the existing uncoordi- 
nated requirements. Delegating a larger share of teaching to a 
new breed of middle-rank lecturers has also been recom- 

* * * 

The best and most comprehensive historical and compara- 
tive account of German social policy, although published in 
1988, is a nearly book-length chapter by Jens Alber in Growth to 
Limits (Vol. 2), edited by Peter Flora. Peter J. Katzenstein also 
provides a good introduction to German social policy in Policy 
and Politics in West Germany. Stephan Leibfried is the author of 
valuable articles on various aspects of German social policy, as 
is Arnold J. Heidenheimer. AlfredJ. Kahn and Sheila B. Kamer- 
man have written on family and child care policies. 


Social Welfare, Health Care, and Education 

Analyses in English of recent developments regarding spe- 
cific programs after unification are regrettably rare. An excep- 
tion is "Social Policy: One State, Two-Tier Welfare" by Steen 
Mangen. A new British periodical, Journal of European Social Pol- 
icy, publishes research findings in English and is beginning to 
fill the gap in this area. Examples of the journal's articles 
include Winifried Schmahl's article on the 1992 reform of pub- 
lic pensions; Wolfgang Voges and Gotz Rohwer's very useful 
article on social assistance; Kirsten Scheiwe's report on poverty 
risks of mothers in Belgium, Germany, and Britain; and 
Rudolph Bauer's analysis of voluntary welfare associations in 
Germany and the United States. 

The literature on the German health care system in English 
is extensive. Written for readers in the United States and dating 
from 1993, Richard A. Knox's Germany: One Nation with Health 
Care for All is an excellent discussion of the system's compo- 
nents. A more recent publication is Ullrich K. Hoffmeyer's 
long article "The Health Care System in Germany." It includes 
a discussion of the Health Care Structural Reform Act of 1993. 
Other useful sources are John K. Iglehart's articles in the New 
England Journal of Medicine, Deborah A. Stone's article "German 
Unification: East Meets West in the Doctor's Office," and "Glo- 
bal Budgeting in Germany: Lessons for the United States" by 
Klaus-Dirk Henke, Margaret A. Murray, and Claudia Ade. 

There is no recent one-volume comprehensive survey of the 
German education system. Christoph Fuhr's Schools and Institu- 
tions of Higher Education in the Federal Republic of Germany, dating 
from 1989, is still quite useful, however, as is his more recent 
book, On the Education System in the Five New Laender of the Federal 
Republic of Germany. Also valuable is Peter J. Katzenstein's discus- 
sion of university reform in his book Policy and Politics in West 
Germany. Val D. Rust and Diane Rust examine the difficulties of 
integrating the two German education systems in The Unifica- 
tion of German Education. 

The Press and Information Office of the Federal Republic of 
Germany publishes brief accounts in English and German on a 
variety of topics, including social programs. These can be 
obtained through the German Information Center in New 
York. (For further information and complete citations, see Bib- 


Chapter 5. The Domestic Economy 

The Frankfurt am Main skyline. In the foreground is the Paulskirche, meeting 
place of the 1848-49 National Assembly. 

THE GERMAN ECONOMY is replete with contradictions. It is 
modern but old-fashioned. It is immensely powerful but suffers 
from serious structural weaknesses. It is subject to national laws 
and rules but is so closely tied into the European Union (EU — 
see Glossary) that it is no longer truly independent. It has a 
central bank that controls European monetary policy and has a 
deepening impact on the global economy but that also insists 
on making its decisions mainly on the basis of domestic consid- 
erations. Finally, although Germany must compete against 
highly efficient economies outside its own continent, it contin- 
ues to carry the expense and burden of traditional industries 
that drain resources that could be better used elsewhere. 

The German economy as it is known today is an outgrowth 
of the 1990 merger between the dominant economy of the Fed- 
eral Republic of Germany (FRG, or West Germany) and that of 
the German Democratic Republic (GDR, or East Germany). 
This merger will one day produce a massive economic entity 
that will constitute the fulcrum of Europe as a production cen- 
ter, as well as a transportation and communications center. But 
each partner brings different elements to the mix, and the 
merger has proved difficult and costly. The merger will domi- 
nate Germany's economic policy and reality until well into the 
next century. 

The record of the West German economy during the four 
decades before unification shows a signal achievement. The 
first decade, that of the 1950s, had been that of the "economic 
miracle." The second decade, that of the 1960s, had seen con- 
solidation and the first signs of trouble. The 1970s had brought 
the oil shocks, the generous social programs, the rising deficits, 
and finally a loss of control. In the 1980s, new policies at home 
and a more stable environment abroad had combined to put 
West Germany back on the path of growth. 

The East German economy had been a powerhouse in East- 
ern Europe, where Moscow had relied on it to produce 
machine tools, chemicals, and electronics. But it had grown 
increasingly inefficient, and its currency had become worthless 
outside its own borders. East Germans had felt frustrated at 
their lack of true material well-being, as well as their lack of 
freedom. They joined their economy enthusiastically with that 
of West Germany in 1990. The merger gave them a rude shock, 


Germany: A Country Study 

however, in part because of the simultaneous collapse of East 
Germany's markets in the Soviet empire and in part because of 
the inefficiencies that the communist system had left behind. 

The united German economy is a dominant force in world 
markets because of the strong export orientation that has been 
part of the German tradition for centuries. Although the bur- 
dens of unification have cut into West Germany's traditional 
export surplus, German industry continues to produce some of 
the best machine tools, automobiles, trucks, chemicals, and 
engineering products in the world. Its management culture, 
which mingles competition and cooperation, stresses quality 
and durability above all other virtues. Because many German 
companies are small or medium-sized, they are able to concen- 
trate on a few production lines that compete effectively even if 
they are expensive. 

The German culture of cooperation also extends to the rela- 
tions between the private sector and the government. The 
social market economy, in which all elements of the system 
cooperate, stresses the importance of having all parties to the 
social contract work together. Workers play a role in manage- 
ment. Managers mingle with workers. The bureaucracy 
attempts to create an environment in which all parties serve a 
common purpose. Although the rules intended to prevent the 
recurrence of the German cartel system of the last century are 
strictly enforced by the Bundeskartellamt (Federal Cartel 
Office), certain practices that would be forbidden under 
United States antitrust laws are widely tolerated in Germany. 

The dominant force in the German economy is the banking 
system. The central bank, the Bundesbank, is deeply commit- 
ted to maintaining the value of the nation's currency, the deut- 
sche mark, even at some potential cost to economic growth. It 
fears inflation above all other ills and is determined to prevent 
the recurrence of Germany's ruinous Great Inflation of the 
early 1920s. Private banks also play an important role. German 
industrial and service companies rely much more on bank 
finance than on equity capital. The banks provide the money 
and in turn sit on the supervisory boards of most of Germany's 
corporations. From that vantage point, they stress the tradi- 
tional banking virtues of slow but steady and nonrisky growth. 
Their influence and thinking permeate the economy. 

German agriculture is not as strong as German industry. It is 
a relatively small part of the gross domestic product (GDP — see 
Glossary) and is heavily subsidized by the EU's Common Agri- 


The Domestic Economy 

cultural Policy (CAP — see Glossary) and by the German gov- 
ernment itself. The accession of East Germany to a united 
Germany expanded the relative size of the agricultural sector 
and somewhat improved its efficiency, but Germany is not an 
agricultural producer like Spain or Italy. 

West Germany developed a system of high wages and high 
social benefits that has been carried over into united Germany. 
The extent and the generosity of its social programs now leave 
Germany at a competitive disadvantage with respect to the 
states of Eastern Europe and Asia. German labor costs are 
above those of most other states, not because of the wages 
themselves — which are high by global standards but not out of 
line with German labor productivity — but because of social 
costs, which impose burdens equal to the wages themselves. 
Thus, German companies and German workers must decide 
either to abandon some of the social programs that are at the 
core of the revered social market economy or to risk losing out 
in the increasingly intense global competition of the 1990s and 
beyond. The Germans have not solved this problem, but they 
are beginning to address it more seriously than before. 

Patterns of Development 

Medieval Germany, lying on the open Central European 
Plain, was divided into hundreds of contending kingdoms, 
principalities, dukedoms, bishoprics, and free cities. Economic 
survival in that environment, like political or even physical sur- 
vival, did not mean expanding across unlimited terrain, as in 
the United States. It meant a constant struggle that required 
collaboration with some, competition with others, and an inti- 
mate understanding among government, commerce, and pro- 
duction. A desire to save was also born in the German 
experience of political, military, and economic uncertainty. 

Even under these difficult conditions, Germany had already 
developed a strong economy during the Middle Ages. It was 
based on guild and craft production, but with elements of mer- 
chant capitalism and mercantilism. The trade conducted by its 
cities ranged far and wide throughout Europe in all directions, 
and Germany as a whole often had trade surpluses with neigh- 
boring states. One reason for these exports was the sheer 
necessity for the small states to sell abroad in order to buy the 
many things they could not produce at home. 


Germany: A Country Study 

The German guilds of the Middle Ages established the Ger- 
man tradition of creating products known for quality and dura- 
bility. A craftsman was not permitted to pursue a trade until he 
could demonstrate the ability to make high-quality products. 
Out of that same tradition came an equally strong passion for 
education and vocational training, for no craftsman was recog- 
nized until he had thoroughly learned a trade, passed a test, 
and been certified. 

The Industrial Revolution reached Germany long after it 
had flowered in Britain, and the governments of the German 
states supported local industry because they did not want to be 
left behind. Many enterprises were government initiated, gov- 
ernment financed, government managed, or government sub- 
sidized. As industry grew and prospered in the nineteenth 
century, Prussia and other German states consciously sup- 
ported all economic development and especially transporta- 
tion and industry. 

The north German states were for the most part richer in 
natural resources than the southern states. They had vast agri- 
cultural tracts from Schleswig-Holstein in the west through 
Prussia in the east. They also had coal and iron in the Ruhr Val- 
ley. Through the practice of primogeniture, widely followed in 
northern Germany, large estates and fortunes grew. So did 
close relations between their owners and local as well as 
national governments. 

The south German states were relatively poor in natural 
resources except for their people, and those Germans there- 
fore engaged more often in small economic enterprises. They 
also had no primogeniture rule but subdivided the land among 
several offspring, leading those offspring to remain in their 
native towns but not fully able to support themselves from their 
small parcels of land. The south German states, therefore, fos- 
tered cottage industries, crafts, and a more independent and 
self-reliant spirit less closely linked to the government. 

German banks played central roles in financing German 
industry. They also shaped industrywide producer coopera- 
tives, known as cartels. Different banks formed cartels in differ- 
ent industries. Cartel contracts were accepted as legal and 
binding by German courts although they were held to be illegal 
in Britain and the United States. 

The first German cartel was a salt cartel, the Neckar Salt 
Union of 1828, formed in Wurttemberg and Baden. The pro- 
cess of cartelization began slowly, but the cartel movement took 


The Domestic Economy 

hold after 1873 in the economic depression that followed the 
postunification speculative bubble. It began in heavy industry 
and spread throughout other industries. By 1900 there were 
275 cartels in operation; by 1908, over 500. By some estimates, 
different cartel arrangements may have numbered in the thou- 
sands at different times, but many German companies stayed 
outside the cartels because they did not welcome the restric- 
tions that membership imposed. 

The government played a powerful role in the industrializa- 
tion of the German Empire founded by Otto von Bismarck in 
1871 (see Bismarck and Unification, ch. 1). It supported not 
only heavy industry but also crafts and trades because it wanted 
to maintain prosperity in all parts of the empire. Even where 
the national government did not act, the highly autonomous 
regional and local governments supported their own indus- 
tries. Each state tried to be as self-sufficient as possible. 

Despite the several ups and downs of prosperity and depres- 
sion that marked the first decades of the German Empire, the 
ultimate wealth of the empire proved immense. German aristo- 
crats, landowners, bankers, and producers created what might 
be termed the first German economic miracle, the turn-of-the- 
century surge in German industry and commerce during 
which bankers, industrialists, mercantilists, the military, and 
the monarchy joined forces. 

The German Empire also established, under Bismarck's 
direction, the social compact under which the German labor- 
ing classes supported the national ambitions of the newly 
united German state in exchange for a system of social welfare 
that would make them, if not full participants in the system, at 
least its beneficiaries and pensioners. Bismarck was not a social- 
ist, but he believed that it was necessary to accept portions of 
the socialist platform to sustain prosperity and social cohesion. 

From the prosperity of the empire during the Wilhelmine 
era (1890-1914), Germany plunged into World War I, a war it 
was to lose and one that spawned many of the economic crises 
that would destroy the successor Weimar Republic (see The 
Weimar Republic, 1918-33, ch. 1). Even the British economist 
John Maynard Keynes denounced the 1919 Treaty of Versailles 
as ruinous to German and global prosperity. The war and the 
treaty were followed by the Great Inflation of the early 1920s 
that wreaked havoc on Germany's social structure and political 
stability. During that inflation, the value of the nation's cur- 
rency, the Reichsmark, collapsed from 8.9 per US$1 in 1918 to 


Germany: A Country Study 

4.2 trillion per US$1 by November 1923. Then, after a brief 
period of prosperity during the mid-1920s, came the Great 
Depression, which destroyed what remained of the German 
middle class and paved the way for the dictatorship of Adolf 
Hitler. During the Hitler era (1933-45), the economy devel- 
oped a hothouse prosperity, supported with high government 
subsidies to those sectors that Hitler favored because they gave 
Germany military power and economic autarchy, that is, eco- 
nomic independence from the global economy. Finally, the 
entire enterprise collapsed in the Stunde Null (Zero Hour), 
when Germany lay in ruins at the end of World War II in May 
1945 and when every German knew that he or she had to begin 
life all over again. 

The first several years after World War II were years of bitter 
penury for the Germans. Their land, their homes, and their 
property lay in ruin. Millions were forced to flee with nothing 
but the clothes on their backs. Tens of millions did not have 
enough to eat or to wear. Inflation raged. Parker pens, nylon 
stockings, and Camel cigarettes represented the accepted, if 
not the legal, tender of the time. Occupation projections 
showed that the average German would be able to purchase a 
plate every five years, a pair of shoes every twelve years, and a 
suit every fifty years. 

As Germany's postwar economic and political leaders shaped 
their plans for the future German economy, they saw in ruin a 
new beginning, an opportunity to position Germany on a new 
and totally different path. The economy was to be an instru- 
ment for prosperity, but it was also to safeguard democracy and 
to help maintain a stable society. The new German leaders 
wanted social peace as well as economic prosperity. They 
wanted an economic system that would give all an equal oppor- 
tunity in order to avoid creating underprivileged social groups 
whose bitter frustration would erupt into revolution and — in 
turn — repression. 

The man who took full advantage of Germany's postwar 
opportunity was Ludwig Erhard, who was determined to shape 
a new and different kind of German economy. He was given his 
chance by United States officials, who found him working in 
Nuremberg and who saw that many of his ideas coincided with 
their own. 

Erhard's first step was currency reform: the abolition of the 
Reichsmark and the creation of a new currency, the deutsche 
mark. He carried out that reform on June 20, 1948, installing 


The Domestic Economy 

the new currency with the concurrence of the Western Allies 
but also taking advantage of the opportunity to abolish most 
Nazi and occupation rules and regulations in order to establish 
the genesis of a free economy. The currency reform, whose 
purpose was to provide a respected store of value and a widely 
accepted legal tender, succeeded brilliantly. It established the 
foundations of the West German economy and of the West Ger- 
man state. 

The Social Market Economy 

The Germans proudly label their economy a " soziale Markt- 
wirtschaft," or "social market economy," to show that the system 
as it has developed after World War II has both a material and a 
social — or human — dimension. They stress the importance of 
the term "market" because after the Nazi experience they 
wanted an economy free of state intervention and domination. 
The only state role in the new West German economy was to 
protect the competitive environment from monopolistic or oli- 
gopolistic tendencies — including its own. The term "social" is 
stressed because West Germans wanted an economy that would 
not only help the wealthy but also care for the workers and oth- 
ers who might not prove able to cope with the strenuous com- 
petitive demands of a market economy. The term "social" was 
chosen rather than "socialist" to distinguish their system from 
those in which the state claimed the right to direct the econ- 
omy or to intervene in it. 

Beyond these principles of the social market economy, but 
linked to it, comes a more traditional German concept, that of 
Ordnung, which can be directly translated to mean order but 
which really means an economy, society, and polity that are 
structured but not dictatorial. The founders of the social mar- 
ket economy insisted that Denken in Ordnungen — to think in 
terms of systems of order — was essential. They also spoke of 
Ordo-Liberalismus because the essence of the concept is that this 
must be a freely chosen order, not a command order. 

Over time, the term "social" in the social market economy 
began to take on a life of its own. It moved the West German 
economy toward an extensive social welfare system that has 
become one of the most expensive in the world. Moreover, the 
West German federal government and the states {Lander, sing., 
Land) began to compensate for irregularities in economic 
cycles and for shifts in world production by beginning to shel- 
ter and support some sectors and industries. In an even greater 


Germany: A Country Study 

departure from the Erhard tradition, the government became 
an instrument for the preservation of existing industries rather 
than a force for renewal. In the 1970s, the state assumed an 
ever more important role in the economy. During the 1980s, 
Chancellor Helmut Kohl tried to reduce that state role, and he 
succeeded in part, but German unification again compelled 
the German government to assume a stronger role in the econ- 
omy. Thus, the contradiction between the terms "social" and 
"market" has remained an element for debate in Germany. 

Given the internal contradiction in its philosophy, the Ger- 
man economy is both conservative and dynamic. It is conserva- 
tive in the sense that it draws on the part of the German 
tradition that envisages some state role in the economy and a 
cautious attitude toward investment and risk-taking. It is 
dynamic in the sense that it is directed toward growth — even if 
that growth may be slow and steady rather than spectacular. It 
tries to combine the virtues of a market system with the virtues 
of a social welfare system. 

The Economic Miracle and Beyond 

The economic reforms and the new West German system 
received powerful support from a number of sources: invest- 
ment funds under the European Recovery Program, more 
commonly known as the Marshall Plan; the stimulus to German 
industry provided by the diversion of other Western resources 
for Korean War production; and the German readiness to work 
hard for low wages until productivity had risen. But the essen- 
tial component of success was the revival of confidence 
brought on by Erhard's reforms and by the new currency. 

The West German boom that began in 1950 was truly memo- 
rable. The growth rate of industrial production was 25.0 per- 
cent in 1950 and 18.1 percent in 1951. Growth continued at a 
high rate for most of the 1950s, despite occasional slowdowns. 
By 1960 industrial production had risen to two-and-one-half 
times the level of 1950 and far beyond any that the Nazis had 
reached during the 1930s in all of Germany GDP rose by two- 
thirds during the same decade. The number of persons 
employed rose from 13.8 million in 1950 to 19.8 million in 
1960, and the unemployment rate fell from 10.3 percent to 1.2 

Labor also benefited in due course from the boom. 
Although wage demands and pay increases had been modest at 
first, wages and salaries rose over 80 percent between 1949 and 


The Domestic Economy 

1955, catching up with growth. West German social programs 
were given a considerable boost in 1957, just before a national 
election, when the government decided to initiate a number of 
social programs and to expand others. 

In 1957 West Germany gained a new central bank, the 
Deutsche Bundesbank, generally called simply the Bundes- 
bank, which succeeded the Bank Deutscher Lander and was 
given much more authority over monetary policy. That year 
also saw the establishment of the Bundeskartellamt (Federal 
Cartel Office), designed to prevent the return of German 
monopolies and cartels. Six years later, in 1963, the Bundestag, 
the lower house of Germany's parliament, at Erhard's urging 
established the Council of Economic Experts to provide objec- 
tive evaluations on which to base German economic policy. 

The West German economy did not grow as fast or as consis- 
tently in the 1960s as it had during the 1950s, in part because 
such a torrid pace could not be sustained, in part because the 
supply of fresh labor from East Germany was cut off by the Ber- 
lin Wall, built in 1961, and in part because the Bundesbank 
became disturbed about potential overheating and moved sev- 
eral times to slow the pace of growth. Erhard, who had suc- 
ceeded Konrad Adenauer as chancellor, was voted out of office 
in December 1966, largely — although not entirely — because of 
the economic problems of the Federal Republic. He was 
replaced by the Grand Coalition consisting of the Christian 
Democratic Union (Christlich Demokratische Union — CDU), 
its sister party the Christian Social Union (Christlich-Soziale 
Union — CSU), and the Social Democratic Party of Germany 
(Sozialdemokratische Partei Deutschlands — SPD) under Chan- 
cellor Kurt Georg Kiesinger of the CDU. 

Under the pressure of the slowdown, the new West German 
Grand Coalition government abandoned Erhard's broad lais- 
sez-faire orientation. The new minister for economics, Karl 
Schiller, argued strongly for legislation that would give the fed- 
eral government and his ministry greater authority to guide 
economic policy. In 1967 the Bundestag passed the Law for 
Promoting Stability and Growth, known as the Magna Carta of 
medium-term economic management. That law, which 
remains in effect although never again applied as energetically 
as in Schiller's time, provided for coordination of federal, 
Land, and local budget plans in order to give fiscal policy a 
stronger impact. The law also set a number of optimistic targets 
for the four basic standards by which West German economic 


Germany: A Country Study 

success was henceforth to be measured: currency stability, eco- 
nomic growth, employment levels, and trade balance. Those 
standards became popularly known as the magisches Viereck, the 
"magic rectangle" or the "magic polygon." 

Schiller followed a different concept from Erhard's. He was 
one of the rare German Keynesians, and he brought to his new 
tasks the unshakable conviction that government had both the 
obligation and the capacity to shape economic trends and to 
smooth out and even eliminate the business cycle. Schiller's 
chosen formula was Globalsteuerung, or global guidance, a pro- 
cess by which government would not intervene in the details of 
the economy but would establish broad guidelines that would 
foster uninterrupted noninflationary growth. 

Schiller's success in the Grand Coalition helped to give the 
SPD an electoral victory in 1969 and a chance to form a new 
coalition government with the Free Democratic Party (Freie 
Demokratische Partei— FDP) under Willy Brandt. The SPD- 
FDP coalition expanded the West German social security sys- 
tem, substantially increasing the size and cost of the social bud- 
get. Social program costs grew by over 10 percent a year during 
much of the 1970s, introducing into the budget an unalterable 
obligation that reduced fiscal flexibility (although Schiller and 
other Keynesians believed that it would have an anticyclical 
effect) . This came back to haunt Schiller as well as every Ger- 
man government since then. Schiller himself had to resign in 
1972 when the West German and global economies were in a 
downturn and when all his ideas did not seem able to revive 
West German prosperity. Willy Brandt himself resigned two 
years later. 

Helmut Schmidt, Brandt's successor, was intensely interested 
in economics but also faced great problems, including the dra- 
matic upsurge in oil prices of 1973-74. West Germany's GDP in 
1975 fell by 1.4 percent (in constant prices), the first time since 
the founding of the FRG that it had fallen so sharply. The West 
German trade balance also fell as global demand declined and 
as the terms of trade deteriorated because of the rise in petro- 
leum prices. 

By 1976 the worst was over. West German growth resumed, 
and the inflation rate began to decline (see table 12, Appen- 
dix). Although neither reached the favorable levels that had 
come to be taken for granted during the 1950s and early 1960s, 
they were accepted as tolerable after the turbulence of the pre- 
vious years. Schmidt began to be known as a Macher (achiever), 


The Domestic Economy 

and the government won reelection in 1976. Schmidt's success 
led him and his party to claim that they had built Modell 
Deutschland (the German model). 

But the economy again turned down and, despite efforts to 
stimulate growth by government deficits, failed to revive 
quickly. It was only by mid-1978 that Schmidt and the Bundes- 
bank were able to bring the economy into balance. After that, 
the economy continued expanding through 1979 and much of 
1980, helping Schmidt win reelection in 1980. But the upturn 
proved to be uneven and unrewarding, as the problems of the 
mid-1970s rapidly returned. By early 1981, Schmidt faced the 
worst possible situation: growth fell and unemployment rose, 
but inflation did not abate. 

By the fall of 1982, Schmidt's coalition government col- 
lapsed as the FDP withdrew to join a coalition led by Helmut 
Kohl, the leader of the CDU/CSU. He began to direct what was 
termed die Wende (the turning or the reversal). The govern- 
ment proceeded to implement new policies to reduce the gov- 
ernment role in the economy and within a year won a popular 
vote in support of the new course. 

Within its broad policy, the new government had several 
main objectives: to reduce the federal deficit by cutting expen- 
ditures as well as taxes, to reduce government restrictions and 
regulations, and to improve the flexibility and performance of 
the labor market. The government also carried through a 
series of privatization measures, selling almost DM10 billion 
(for value of the deutsche mark — see Glossary) in shares of 
such diverse state-owned institutions as VEBA, VIAG, Volks- 
wagen, Lufthansa, and Salzgitter. Through all these steps, the 
state role in the West German economy declined from 52 per- 
cent to 46 percent of GDP between 1982 and 1990, according 
to Bundesbank statistics. 

Although the policies of die Wende changed the mood of the 
West German economy and reinstalled a measure of confi- 
dence, progress came unevenly and haltingly. During most of 
the 1980s, the figures on growth and inflation improved but 
slowly, and the figures on unemployment barely moved at all. 
There was little job growth until the end of the decade. When 
the statistics did change, however, even modestly, it was at least 
in the right direction. 

Nonetheless, it also remained true that West German growth 
did not again reach the levels that it had attained in the early 
years of the Federal Republic. There had been a decline in the 


Germany: A Country Study 

growth rate since the 1950s, an upturn in unemployment since 
the 1960s, and a gradual increase in inflation except during or 
after a severe downturn. 

Global economic statistics also showed a decline in West Ger- 
man output and vitality. They showed that the West German 
share of total world production had grown from 6.6 percent in 
1965 to 7.9 percent by 1975. Twelve years later, in 1987, how- 
ever, it had fallen to 7.4 percent, largely because of the more 
rapid growth of Japan and other Asian states. Even adding the 
estimated GDP of the former East Germany at its peak before 
unification would not have brought the all-German share 
above 8.2 percent by 1989 and would leave all of Germany with 
barely a greater share of world production than West Germany 
alone had reached fifteen years earlier. 

It was only in the late 1980s that West Germany's economy 
finally began to grow more rapidly. The growth rate for West 
German GDP rose to 3.7 percent in 1988 and 3.6 percent in 
1989, the highest levels of the decade. The unemployment rate 
also fell to 7.6 percent in 1989, despite an influx of workers 
from abroad. Thus, the results of the late 1980s appeared to 
vindicate the West German supply-side revolution. Tax rate 
reductions had led to greater vitality and revenues. Although 
the cumulative public-sector deficit had gone above the DM1 
trillion level, the public sector was growing more slowly than 

The year 1989 was the last year of the West German economy 
as a separate and separable institution. From 1990 the positive 
and negative distortions generated by German unification set 
in, and the West German economy began to reorient itself 
toward economic and political union with what had been East 
Germany. The economy turned gradually and massively from 
its primarily West European and global orientation toward an 
increasingly intense concentration on the requirements and 
the opportunities of unification. 

Unification and Its Aftermath 

The East German and West German economies at the time 
of unification looked very similar. They both concentrated on 
industrial production, especially machine tools, chemicals, 
automobiles, and precision manufactures. Both had a well- 
trained labor force and an important export component, 
although their exports went largely in opposite directions. But 
the East German economy was highly centralized and guided 


The Domestic Economy 

by a detailed and purportedly precise planning system, with vir- 
tually no private property and with no room for decision or ini- 

On July 1, 1990, the economies of the two Germanys became 
one. It was the first time in history that a capitalist and a social- 
ist economy had suddenly become one, and there were no pre- 
cise guidelines on how it could be done. Instead, there were a 
number of problems, of which the most severe were the com- 
paratively poor productivity of the former East German econ- 
omy and its links to the collapsing socialist economies of the 
Soviet Union and Eastern Europe. 

Even before economic unification, the West German govern- 
ment had decided that one of its first tasks was to privatize the 
East German economy. For this reason, it had taken over in 
June the Treuhandanstalt (Trust Agency, commonly known as 
Treuhand), which had been established by the GDR to take 
over East German firms and to turn them over to new manage- 
ment through privatization. The agency assumed the assets and 
liabilities of about 8,000 East German enterprises in order to 
sell them to German and other bidders. By the time the Treu- 
hand was disbanded at the end of 1994, it had privatized some 
14,000 enterprises. 

As economic unification proceeded, issues that had been 
recognized but inadequately understood in advance began to 
surface. There was massive confusion about property rights. As 
wave after wave of Nazi, Soviet, and later GDR expropriations 
had taken place between 1933 and 1989, there was often little 
knowledge of the actual ownership of property. More than 2 
million claims on properties in the territory of the former GDR 
were filed by the December 31, 1992, deadline. As more claim- 
ants emerged, with many winning cases in the courts, potential 
investors were often scared off. 

Another problem was that East German production costs 
had been very high. The conversion rates of East German 
marks to deutsche marks often kept those costs high, as did the 
early wage negotiations, which resulted in wages far above the 
productivity level. Western German firms found it easier and 
cheaper to serve their new eastern German markets by expand- 
ing production in western facilities. 

A third problem was that the inadequate infrastructure also 
became a problem for many potential investors. Telephone ser- 
vice was improved only very slowly. Many investors also com- 
plained about energy shortages, as many East German power 


Germany: A Country Study 

stations were shut down for safety and other reasons. Roads 
and railroads had to be virtually rebuilt because they had been 
so badly maintained. 

In addition to these practical problems, there was also a 
deep policy dilemma that underlay the entire process of unifi- 
cation. From the beginning, there had been a pernicious link 
between the earlier and later phases of the East German transi- 
tion to a free-market economy. Policies calculated to make the 
initial adjustment as painless as possible hampered long-run 
growth and prosperity. Real economic efficiency could only be 
achieved by permitting and even forcing considerable immedi- 
ate dislocations, whereas temporary compromises might lead 
to permanent structural burdens. However, excessive disrup- 
tions could jeopardize the economic and political stability 
required for a smooth unification process and might also cause 
streams of East Germans to move west. The government was 
never able to solve this dilemma. When it was forced to choose, 
it usually selected the more expensive and slower course to 
encourage persons to stay in the east. 

Despite these problems, the process of unification moved 
ahead, albeit slowly. The Treuhand, staffed almost entirely by 
Germans from the west, became the virtual government of east- 
ern Germany. In the course of privatization, the agency 
decided which companies would live and which would die, 
which communities would thrive and which would shrivel, and 
which eastern Lander would be prosperous and which would 
not. It also decided who might or might not buy eastern firms 
or services. 

Whether correct or not, reports persisted throughout the 
first years of unification that foreign enterprises were being 
screened more carefully and more skeptically than German 
firms even as they were being invited to invest. Less than 5 per- 
cent of all investment in eastern Germany was non-German, 
and most of that was from companies with subsidiaries in west- 
ern Germany who were expanding them to the east. The Japa- 
nese did not invest, although they had earlier expressed some 
interest, and the offices Treuhand established in New York and 
Tokyo found few investors. 

As might have been expected, the economy of eastern Ger- 
many went into a deep and precipitous slump immediately 
after unification. Within a year after unification, the number of 
unemployed rose above 3 million. Industrial production in 
eastern Germany fell to less than half the previous rate, and the 


The Domestic Economy 

total regional product fell precipitously through 1991. One 
estimate was that in 1991 the entire production of eastern Ger- 
many amounted to less than 8 percent of that of western Ger- 

Because the process of unification was managed by persons 
from western Germany, new eastern firms were usually subsid- 
iaries of western firms, and they followed the western owner- 
ship and management patterns. Bank participation became 
customary, especially because the large Frankfurt banks 
assumed the assets of the former East German State Bank, and 
most eastern firms thus owed money to those Frankfurt banks. 
The banks installed their representatives on the boards of the 
new firms and assumed some supervisory functions — either 
directly or through control by western firms with bank repre- 
sentation. The Treuhand had close contacts with western Ger- 
man banks. Many of its employees came from those banks and 
planned to return to their jobs at the banks. 

Because of these circumstances, private investment and eco- 
nomic growth came to eastern Germany at a relatively slow 
rate. Little new equity capital flowed in. Investment during the 
early years of unification was only 1 percent of the all-German 
GDP, when much more was needed to jump-start the economy 
of eastern Germany. Much of the investment was for the pur- 
chase of eastern German companies, not yet for their rehabili- 
tation. Many western German firms bought eastern firms on a 
standby basis, making sure they could produce in the east when 
the time came and paying enough wages to satisfy the Treu- 
hand but not starting production. Many others, including 
Daimler-Benz, did not even meet the commitments that they 
had made when they had purchased the eastern German firms 
from the Treuhand. Thus, western German private investment 
was not strong enough to boost the eastern German economy. 

As private funds lagged, and in part because those funds 
lagged, federal budget investments and expenditures began 
flowing into eastern Germany at a consistently high rate. Gov- 
ernment funds were used essentially for two purposes: infra- 
structure investment projects (roads, bridges, railroads, and so 
on), and income maintenance (unemployment compensation, 
social security, and other social costs). The infrastructure 
projects sustained employment levels, and the income mainte- 
nance programs sustained income. But neither had an early 
growth payoff. 


Germany: A Country Study 

Although the precise level of German official expenditures 
in eastern Germany has been difficult to estimate because 
funds appropriated in one year might have been spent in 
another, it is beyond dispute that the federal government 
expended well over DM350 billion in eastern Germany during 
the first three years after economic, or monetary, unification. 
After 1992 this requirement has continued at an annual level of 
around DM150 billion, so that the sum of private and public 
funds put into eastern Germany during the half-decade 
between monetary unification in 1990 and the end of 1995 
would probably amount to at least DM750 billion and perhaps 
as much as DM850 billion. Between one-fifth and one-fourth of 
those funds were private, and the remainder were government 
funds. This constituted an infusion of outside money of about 
DM50,000 for every resident of eastern Germany, a far greater 
level of assistance than contemplated for any other area that 
had been behind the Iron Curtain and a token of German 
determination to bring eastern Germany to western levels as 
quickly as possible. 

As eastern Germany went into a deep recession during the 
first phase of unification, the western German economy went 
into a small boom. Western German GDP grew at a rate of 4.6 
percent for 1990, reflecting the new demand from eastern Ger- 
many. The highest growth rate came during the second half of 
1990, but growth continued at only a slightly slower pace into 
early 1991. Prices, however, remained relatively stable because 
the cost of living grew at only 2.8 percent despite some high 
wage settlements in some industries. Employment rose during 
the year, from 28.0 million to 28.7 million, and the unemploy- 
ment rate sank to 7.2 percent. Notably, the number of regis- 
tered unemployed in western Germany only declined by about 
300,000, showing that at least half of the new jobs in western 
Germany had been taken by persons who had moved to or 
were commuting from eastern Germany. 

The dramatic improvement in the western German figures 
resulted from the opening in eastern Germany of a large new 
market of 16 million persons and the simultaneous availability 
of many new workers from eastern Germany. Many easterners 
did not want the shoddy goods produced at home, preferring 
western consumer products and food. Moreover, many eastern- 
ers were coming to the west to work. By the end of 1990, as 
many as 250,000 were commuting to work in the west, and that 


An advanced model of a plant-protection tractor in use in Saxony 
Courtesy German Information Center, New York 

number was estimated to have grown to 350,000 or even 
400,000 by the middle of 1991. 

This meant that western Germany not only had a vast new 
market but also a growth of over 1 percent in its workforce, as 
sharp an increase as since the days of the economic miracle. It 
also increased its capital base because eastern German deposits 
were placed in western German banks that had come east and 
because those deposits moved back to the central German 
financial market at Frankfurt. 

The Bundesbank became worried about three elements of 
the sudden boom: the sudden financial shifts between east and 
west, which led to a jump in money supply; government deficits 
resulting from large expenditures in eastern Germany; and the 
potentially inflationary effects of a rapid growth rate in the 
west. The bank warned that interest rates would have to remain 
high to keep price increases under control. The bank raised 


Germany: A Country Study 

short-term interest rates sharply through 1991 and 1992, with 
the average rate of short-term interest climbing from 7.1 per- 
cent in 1989 to 8.5 percent in 1990, to 9.2 percent in 1991, and 
to 9.5 percent in 1992. The Bundesbank permitted rates to 
begin falling only in 1993 — to 7.3 percent — when it believed 
that the inflationary pressures had been contained by the 
recessionary effects of the credit squeeze. 

As the Bundesbank's policies began to take hold, growth 
slowed in western Germany, from 4.2 percent in the first quar- 
ter of 1991 to 0.8 percent in the last quarter of 1992. For all of 
1992, the western German growth rate was 1.5 percent, a 
decline from the 3.7 percent rate of 1991 and even more from 
the 4.6 percent rate of 1990. The eastern German growth rate 
was 6.1 percent during 1992, well below the 7 percent to 10 
percent growth rate originally anticipated for the region. The 
number of employed in western Germany fell for the first time 
in ten years, by 89,000 persons. 

Despite the slowdown, during 1992 the German economy 
reached a milestone of sorts. With the addition of eastern Ger- 
man production, Germany's GDP rose for the first time above 
DM3 trillion. Of that total, the new Lander contributed a gross 
regional product of DM231 billion, or 7.7 percent. However, 
the total of German unemployed also reached a record num- 
ber, 4 million. Two-thirds of that number were unemployed in 
western Germany; the other one-third were unemployed in 
eastern Germany. Eastern Germany contributed more to 
unemployment than to production. 

The 1992 depression continued into 1993, so that the econ- 
omy actually registered a negative growth rate of -1.2 percent. 
By 1994, however, after the Bundesbank had been lowering 
short-term interest rates for over a year, German growth 
resumed at an annual rate of about 2.4 percent, but unemploy- 
ment declined only very slowly despite the uptrend in GDP 
growth. It was expected that stronger growth would begin 
reducing the numbers of unemployed by 1995 and that Ger- 
many would return to its postwar path toward prosperity. But 
the absorption of eastern Germany, and the methods by which 
it had been accomplished, had exacted a high price through- 
out all of Germany. 

Structural and Technological Questions 

Although Germany is one of the world's most powerful econ- 
omies, there have been growing doubts within Germany about 


The Domestic Economy 

the state of its economy. The principal doubts have been about 
the ability of the German economy to modernize quickly 
enough to keep up in an increasingly competitive global envi- 
ronment. There is also a fundamental debate about the direc- 
tion that the economy must take if it is to remain successful and 
prosperous. That debate includes a seminal discussion about 
Germany's place in the global division of labor, an issue of 
immense importance to an exporting nation such as Germany. 

Those who have led the debate, and those who have insisted 
most firmly that Germany's economy must change, are those 
who have seen the world economy changing in directions that 
would increasingly relegate Germany to a second rank. They 
have seen the coming of a world in which the work performed 
by traditional German production sectors — whether coal, steel, 
chemicals, agriculture, electronics, or machinery — can be 
done better and more cheaply elsewhere. They believe firmly 
that Germany has to deemphasize some of those sectors and 
abandon others in order to move with the greatest speed and 
the most powerful possible commitment into new areas that 
will lead the growth of the world economy. 

Five German institutes charged with analyzing economic 
issues have played a central role in the debate, issuing a series 
of reports and recommendations throughout the 1980s and 
1990s in which they warned that the German economy had to 
change — and change quickly. They complained ever more 
insistently about what they described as the inadequate 
response of federal, Land, and local governments to the needs 
of the evolving global economy. 

Those who opposed the arguments of the institutes fell into 
several categories. Some remained committed to traditional 
economic sectors, which they believed could still perform com- 
petitively, especially if enough effort was made to modernize 
and rationalize them or to find particular specialties. Others 
supported traditional sectors, not for economic but for social 
and political reasons. Still others believed that the issues had to 
be raised and understood but that action could and perhaps 
should be postponed. 

The basic complaint about modernization has been that the 
German economy has not remained at the forefront of global 
development and progress and is not moving decisively into 
the ranks of the most advanced industrial societies, such as the 
United States, Japan, and the smaller Asian economies. The 
institutes have pointed out that new technologies — such as 


Germany: A Country Study 

computer hardware and software — could not only improve tra- 
ditional production but also could become new industries in 

As part of their assertion that Germany was not modernizing 
quickly enough, the institutes have also expressed concern that 
the country has not given adequate priority to research and 
development and that German capital has not been venture- 
some enough. They have argued that funds have not gone suf- 
ficiently into the kinds of research or into the start-up ventures 
that have helped keep the United States at the forefront of 
international inventiveness even as that country's traditional 
industries have declined. 

This does not mean that German industry does not invest in 
research and development. EU statistics have consistently 
shown that Germany has been either first or second in Euro- 
pean research and development expenditures, with only 
France coming close enough to be a real competitor. But those 
same and related statistics also have shown that the German 
lead has been shrinking and that Germany does not have the 
lead in computer-oriented research and development. In par- 
ticular, they have shown that Germany has not been doing well 
at the global level, lagging behind the United States and even 
further behind Japan in the pace at which it has been increas- 
ing its research expenditures. In advanced-technology areas, 
Germany has been trailing badly. The total German private and 
public research effort has consistently amounted to about 2.8 
percent of GDP, but that is about the same percentage as the 
United States and Japan and is clearly not enough to allow the 
smaller German economy to keep up. A German patent office 
study showed that by 1989 West Germany had fallen behind in 
three of four major areas of domestic patent grants compared 
with Japan and the United States. 

German technological progress has been uneven. The 
country has certainly remained competitive in biotechnology 
and general medical research. The same could be said about its 
competitive position in smaller robotic machine tools and in 
many areas of electronic and even specialized computer 
research. But this does not compensate fully for the lag in cel- 
lular communications, microtechnology, and computers. 

The German government has been slow to assist firms in 
technological development. There has been strong German 
financial and scientific participation in a variety of European 
programs, such as Esprit, Eureka, Jessi, Race, or Brite — pro- 


The Domestic Economy 

grams that are designed to internationalize research at the 
European level to enable the smaller European states to com- 
pete against the United States and Japan. These European 
efforts are significant, but their results as of the mid-1990s have 
not allayed the concerns of many Germans about falling 

The institutes have also addressed another problem, the 
German lag in establishing new ventures. This shortcoming 
goes to the core of the total functioning of the German system, 
including the conservatism of banking and financial practices. 
Germany has not found a way to create an environment in 
which small entrepreneurs in new fields arise in large numbers. 

With unification as Germany's principal economic priority, 
the debate about structural reform has taken second place, 
and the government is giving it less priority than it received in 
the 1980s. But it remains an issue and will continue to be so as 
other parts of the world economy — including Eastern 
Europe — become more competitive. 

The Role of Government and Other Institutions 

The Federal Government Role 

The German federal government plays a crucial role in the 
German economy, sometimes directly and sometimes indirectly 
through the effects of other policies on the economy. Unlike 
the Japanese government, there is no single ministry that 
attempts to direct industrial government and competitiveness, 
but government policy can have wide-ranging effects because 
of the many offices that play a role. 

The three principal figures responsible for economic policy 
are the chancellor, the minister for economics, and the minis- 
ter of finance. The three positions have rarely been held simul- 
taneously by members of a single party and are usually divided 
among two or sometimes three parties. Economic policy there- 
fore has to reflect the interests of at least two political parties, 
with all that this means in terms of compromise and concilia- 
tion. The coalition negotiations to form a new government 
after a national election are never more delicate or more diffi- 
cult than when they touch on economic policies. 

The main parties have different economic philosophies and 
pursue generally different objectives. The CDU and the CSU 
are conservative, business-oriented parties, but with a long tra- 
dition of support for social welfare programs. The FDP is lib- 


Germany: A Country Study 

eral in the British sense, very much in favor of the free market 
and a minimum of government regulation. The SPD believes 
in combining political freedom with large social programs and 
government involvement in the economy. It is impossible for 
any of the three parties to be in a government with the others 
without yielding something, and government policy has there- 
fore usually contained a mixture of sometimes contradictory 
objectives that then must be resolved by compromises within 
the cabinet. 

The Chancellor 

The way the chancellor and his office, the Chancellory, deal 
with the economy depends very much on the incumbent's 
interests and personal style. For example, under Helmut 
Schmidt (1974-82), who was very interested in economic mat- 
ters, the Chancellory shaped, directed, and coordinated the 
economic policy of the entire government economic appara- 
tus. It also kept close contact with the business and financial 
community, including the Bundesbank, and became deeply 
involved in long-range planning. Helmut Kohl (1982- ), how- 
ever, has operated very differently, using the Chancellory for 
limited day-to-day coordination but not attempting to use it to 
manage the economic policy of the government. He has used 
the political, not the bureaucratic, structure to make policy, 
working through the CDU/CSU and the FDP or through per- 
sonal contacts. Although Kohl was definitely in charge of die 
Wende and other government policies, he has not usually pre- 
sented himself as either the originator or the executor of eco- 
nomic and financial policy. He has chosen to control events 
from behind the scenes, reducing the government's visibility as 
well as its role. 

The Minister of Finance and the Minister for Economy 

In the cabinet, roles are more fixed, although they might 
change in accordance with personalities and political parties. 
The primus inter pares over the last several decades has been the 
minister of finance. He is responsible for the federal budget, 
which has become ever more important as the government's 
share of national income has grown and as governments 
increasingly use the budget to set priorities and guide national 
economic activity. The minister of finance also accompanies 
the chancellor to the annual financial summits and is the main 
German spokesperson in the meetings of the Group of Seven 


The Domestic Economy 

(G-7 — see Glossary), the world's principal economic powers. 
He is thus in a position to manage not only domestic but also 
international financial policy for Germany and to coordinate 
the two. 

The minister for economics, once the government's chief 
economic policy maker (especially when the minister was Lud- 
wig Erhard), has gradually lost power as many of the important 
functions have been transferred to other ministries — including 
new ministries concerned with environment and research. 
Since the 1970s, the minister for economics has functioned 
more like a United States secretary of commerce, remaining a 
principal channel for contact with industry, labor, and semi- 
public associations. But several of the ministers have com- 
plained in bitter frustration that they were not able to carry out 
the policies they wanted. 

The Bundeskartellamt 

The Bundeskartellamt (Federal Cartel Office) is the institu- 
tion specifically instructed and empowered to prevent a return 
to the monopolies and cartels that periodically controlled 
much of the German economy between the 1870s and 1940s. 
The policies of the office, like the office itself, have been con- 
troversial, with some Germans wanting it to have greater power 
and others believing that it is already abusing its existing 

The Bundeskartellamt was established in 1957. Many, includ- 
ing Erhard, believed that it had not been given enough author- 
ity to restrict cartels and other monopolistic practices. The 
Western Allies had insisted that the fledgling Federal Republic 
have such a law, but West German business associations used 
their influence to undercut the authority of the Bundeskartel- 
lamt to the point where it has sometimes been described as a 
"Swiss cheese with countless holes." Some of the holes in the 
Swiss cheese were closed in 1973, when the Bundestag passed a 
merger law (Fusions gesetz) intended to block monopolies in 
advance so that the Bundeskartellamt would not always have to 
act after the fact. 

In retrospect, the laws and the office have performed a cen- 
tral and useful function, but they have not been able to prevent 
a gradual shift toward ever larger companies in Germany. The 
number of mergers in West Germany increased rapidly during 
the late 1980s, rising to over 1,000 per year. And the Bundes- 
kartellamt has not been effective in curtailing the countless 


Germany: A Country Study 

informal contacts and discussions that have characterized the 
German system (like other European systems) and that would 
be suspect and perhaps illegal in the United States. 

Because the Bundeskartellamt tends to use nonconfronta- 
tional tactics, the office has often been denounced as ineffec- 
tive. Critics contend that the office has actually blocked very 
few mergers or other forms of cooperation. They also assert 
that hidden monopolistic or oligopolistic practices have been 
creeping back into the German economy. But others argue 
that the very existence of the Bundeskartellamt has enhanced 
competition and that the office's predilection for solving prob- 
lems through nonjudicial processes fits properly into the Ger- 
man system and is therefore effective in that system. 

Despite its title, the Bundeskartellamt does not have the 
final authority over German mergers and acquisitions. That 
authority is reserved for the political level, the Ministry for Eco- 
nomics, which on more than one occasion has overruled the 
Bundeskartellamt. After the Bundeskartellamt had raised a 
number of searching questions about the legality and propriety 
of Daimler-Benz's 1989 acquisition of Messerschmidt-Bolkow- 
Blohm (MBB), and after it had even disapproved the acquisi- 
tion, the minister for economics approved the merger on con- 
dition that Daimler-Benz and MBB sell off majority control in a 
small marine and technology division. The government justi- 
fied the step by recalling that it had specifically sought the 
merger to support MBB — which was engaged in military pro- 
duction and could not be permitted to collapse — with Daimler- 
Benz's financial resources. 

The Bundeskartellamt has faced a particularly difficult task 
in the integration of the East German and West German econ- 
omies. Many eastern German firms could not survive unless 
they could merge with large western German firms. The pro- 
cess may, however, create new enterprises whose size and com- 
bination of resources could open the way for monopolistic or 
oligopolistic temptations. Powerful economic and political 
pressures for such mergers exist, especially to help revitalize 
eastern Germany, but they also raise serious questions about 
their potentially negative impact on competition. Under those 
circumstances, the Bundeskartellamt has acted with consider- 
able circumspection, blocking some mergers but approving 
most of them. 

The Bundeskartellamt faces an even greater problem in the 
growing Europeanization of German business under the aegis 


The Domestic Economy 

of deeper EU integration. It became clear by the early 1990s 
that the EU's European Commission in Brussels was prepared 
to permit greater cooperation between European firms in 
order to compete more effectively against the worldwide reach 
of the giant corporations of the United States and Japan. Such 
cooperation went against German cartel laws. To solve the 
problem, the Bundeskartellamt announced in early 1993 that it 
would permit greater degrees of cooperation between small- 
and medium-sized German firms if that cooperation actually 
led to greater intra-European competition. 

Land and Local Governments 

Because Germany has a federal system, state {Land; pi., 
Lander) and local governments also have important functions. 
This reflects the German tradition, which before Hitler com- 
bined a mix of national, Land, and local structures with care- 
fully defined and deliberately circumscribed powers. Land and 
even local authorities are involved in many economic func- 
tions, such as social services, development and energy policy, 
education (including vocational training), public housing, 
environmental protection, and industrial policy. They also 
share certain tax revenues that are centrally collected but dis- 
tributed among the central, Land, and local authorities in 
accordance with carefully negotiated ratios that were changed 
after unification slightly to the advantage of the new eastern 

The Lander do not always act and think alike. Different old 
Lander have followed different economic policies since the 
early years of the Federal Republic. On the one hand, the min- 
ister presidents, or heads, of two Lander, Bavaria and Baden- 
Wurttemberg, have stressed industrial development policies 
that have departed radically from those of others, putting their 
Lander into the forefront of German technological develop- 
ment. On the other hand, the Lander of North Rhine-Westpha- 
lia and the Saarland for a long time concentrated their 
resources on subsidizing coal and steel production, entering 
the competition for new industries much later than other 
Lander. The possibility for creating separate Land policies has 
also encouraged some new Lander to try their own develop- 
ment policies. They have invited potential investors from other 
countries to visit them, and they have engaged in export pro- 


Germany: A Country Study 

Government Subsidies 

The Lander are not alone in subsidizing or supporting cer- 
tain industries: the federal government does it to a massive and 
increasingly significant degree. Despite Germany's commit- 
ment to a social market economy, exceptions to market princi- 
ples existed in West Germany and are proliferating in united 
Germany. German economic institutes and experts have 
repeatedly warned that authorities at various levels have sup- 
ported many economic activities that should long ago have 
been discontinued or compelled to become competitive. Fed- 
eral and Land authorities have ignored the complaints of the 
economists but have usually promised to reduce or eliminate 
subsidies as soon as feasible. 

Before unification, the West German government and vari- 
ous Lander supported a number of industries and services, such 
as coal, steel, aerospace, shipbuilding, and agriculture, with the 
federal government supporting activities across the board and 
the Lander supporting locally important and influential indus- 
tries. Between 1970 and 1989, the total volume of subsidies, 
including those paid through the European Community (EC — 
see Glossary), rose from DM12 billion to over DM45 billion. 
The level of subsidies rose almost uninterruptedly, even after 
Kohl assumed office and his government had committed itself 
to reducing them. Although some categories of subsidies — for 
example, those for agriculture — were not fully under West Ger- 
man but rather under EC control, even the portion specifically 
designated for German farmers also rose by 250 percent dur- 
ing the 1980s. Overall, the federal government provided about 
one-third of total West German subsidies. The other two-thirds 
came from the Lander and the localities. During the late 1980s 
and early 1990s, the total has generally averaged around 6 per- 
cent of West German GDP, although it has risen because of uni- 

Despite the concern expressed about West German subsi- 
dies, a 1990 Organisation for Economic Co-operation and 
Development (OECD — see Glossary) survey of Germany con- 
cluded that German subsidies were not unusually high by the 
standards of the EC. The OECD described them as being 
around the average for OECD countries. Separate Interna- 
tional Monetary Fund (IMF — see Glossary) and Ministry of 
Finance studies reached a similar conclusion, indicating that 
West Germany was actually somewhat below the average among 
EC members in the level of subsidies. 


The Domestic Economy 

Although such conclusions might have offered some com- 
fort as a matter of general policy, it remains true that some Ger- 
man industries — especially in the traditional coal and steel 
complex — are dependent on subsidies to such an extent that 
they would have to be closed if they no longer benefited from 
government support of one kind or another. But subsidies are 
also often paid even to some of the largest and most profitable 
German concerns, such as Daimler-Benz, Siemens, Bayer, and 
Volkswagen, for special production or research lines. Those 
companies have usually stated that the subsidies cover only a 
minute part of their expenditures. 

After unification, the combined subsidies of western and 
eastern budgets rose even higher, and the new all-German gov- 
ernment has found itself compelled to provide even more sub- 
sidies in order not to permit an excessive level of structural 
unemployment in the former East Germany. Official East Ger- 
man statistics suggested that the level of subsidies in the GDR 
budget was 30 percent, but in reality the level may have been 
much higher because of the generally low level of productivity 
in the GDR. Although no total figures for German subsidies 
have been available in the confusion and diversity of programs 
since unification, the government has already promised to 
keep a number of unprofitable East German ventures (such as 
the steel complex around Eisenhuttenstadt and the shipbuild- 
ing docks around Rostock) in production until they become 
competitive — which will not be for decades, if at all. 

Government Expenditures and the National Debt 

Beyond subsidies, German politicians, businessmen, and 
economists have consistently had difficulty calculating the most 
suitable role for the state in the German economy. Many econ- 
omists believed that the role of the state had become too large 
in West Germany during the 1970s because of government 
ownership of large companies, because of subsidies, and 
because of the high social welfare programs established by the 
SPD-led governments. The right level after unification is even 
more difficult to define and to agree upon, because eastern 
Germany will need much more infrastructure construction and 
many more social programs than western Germany for many 
years to come. 

As a share of national income, German government expen- 
ditures at all levels were 15 percent before World War I, 25 per- 
cent during the interwar period, 35 percent around 1960, 48 


Germany: A Country Study 

percent in 1975, and about 50 percent by 1980-81. The govern- 
ment's share of spending, although worrisome to the West Ger- 
mans, still remained lower than that of several other European 
states, such as Sweden, the Netherlands, France, and Belgium. 
West Germany and Britain were the only major European states 
to reduce government spending as a share of GDP during the 
1980s. But their government share still remained higher than 
that of two principal competitors, the United States, at about 
37 percent, and Japan, at about 33 percent. The German share 
has risen well over 50 percent again during the early 1990s 
because of the costs of unification, and there is little if any pros- 
pect that it will decline again until the end of the decade. 

Despite the declining deficits of the 1980s, the cumulative 
public-sector debt of various levels of German government has 
grown during virtually the entire existence of the Federal 
Republic. During the 1960s, the total debt doubled. During the 
1970s, it doubled every five years. The growth rate in debt 
began to slow after the first years of the 1980s, but it began to 
rise rapidly during the 1990s as a result of unification. By the 
end of 1989, the West German government said that the total 
public-sector debt in Germany was DM1,020 billion, or 45 per- 
cent of what was then West German GDP. By the early 1990s, 
however, that figure had risen by several 100 billion deutsche 
marks and was estimated to be almost DM1.5 trillion, or 50 per- 
cent of united German GDP. It rose to over DM1.6 trillion by 
the end of 1993 and is expected to rise to over 60 percent of 
GDP by the mid-1990s and then to begin to decline slowly after 
that. Interest payments on the public debt have become the 
second largest single line item in the German budget, absorb- 
ing 14 percent of the budget. 

The Associations 

All participants in the German national economy organize 
themselves into various associations. They do so either volun- 
tarily or, in some associations, as a legal requirement. The asso- 
ciations are commonly known in German as the Verbande. Over 
1,200 are represented in Bonn. Each plays a chosen or assigned 
role, and together they help contribute to a broad framework 
of cooperation mingled with competition. 

All the Verbande operate as lobbies in Germany itself, working 
with the parliament, the Bundestag, and the bureaucracy, and 
they also lobby appropriate EU offices in Brussels. But they are 
far more than lobbies. They act as sector and regional coordi- 


The Domestic Economy 

nators. Some not only exercise a voice toward the government 
but also represent a forum where industrialists or others can 
meet and talk about business affairs. Some serve as planning 
institutions, collecting and disseminating information on antic- 
ipated sales, production capacities, and investment goals. Oth- 
ers negotiate and settle conflicts between different firms or 
industries. They help to administer the German economic 
mechanism as a whole. 

Among the main associations are the Federation of German 
Industry (Bundesverband der Deutschen Industrie — BDI) and 
the German Chambers of Industry and Commerce (Deutscher 
Industrie- und Handelstag — DIHT). The BDI is the central 
organization representing the interests and policies of German 
industry. Because of its role in organizing and representing 
German industry, the BDI has immense influence. Any Ger- 
man government, even one with an SPD majority, will consult 
with it before making any policy or introducing any legislation 
that could affect German industry or the German economy as 
a whole. So will key members of the Bundestag. The BDI has 
no individual members, but only other associations of one or 
another industry, so that it is in effect an association of associa- 

The DIHT is the umbrella organization of the German 
Chambers of Commerce. It represents all business interests, 
but especially small business, on a regional as well as a sectoral 
basis. Membership is obligatory for German firms, and mem- 
bership is on an individual or a company basis rather than on 
an association basis as in the BDI. 

Some of the powers of the chambers of commerce in Ger- 
many would be exercised by government authorities in almost 
any other country. The chambers participate in vocational 
training programs, issue licenses and work permits, set store 
hours, solve disputes between members, issue certificates of ori- 
gin, run stock exchanges, and so on. They are legally entitled 
to make their views known in a variety of governmental forums 
from the local to the national level, and they thus have direct as 
well as indirect influence over many elements of the economy. 
Their functions are central to the operation of the German sys- 
tem, as they have been throughout much of German history. 

The chambers constitute an important link not only in the 
formal but also in the informal coordinating mechanisms that 
operate throughout the economy. Whereas the BDI might be 
more visible in national policy matters and might influence 


Germany: A Country Study 

national government decisions more directly, the chambers 
and the DIHT have a more pervasive presence at the local and 
regional level than at the national level. They shape and often 
author most of the regulations that determine how commerce 
and industry can act, helping to establish the day-to-day rules 
under which production and trade take place. 

Another important interest organization is the Federation of 
German Employers' Associations (Bundesvereinigung der 
Deutschen Arbeitgeberverbande — BDA). It coordinates the 
collective bargaining strategy of German employers, adminis- 
ters the strike fund, gives legal advice, and deals with matters 
relating to social policy. Eight member federations organize 
enterprises in industry, handicrafts, commerce, banking, agri- 
culture, transportation, insurance, and publishing. 

A broad division of labor exists among the separate German 
employers' associations. The BDI, for which the closest United 
States parallel is the National Association of Manufacturers, 
mainly addresses matters of broad economic policy. It is, how- 
ever, much more influential than any parallel United States 
organization. It helps shape Germany's policies in the EU and 
is a voice for an open trading system. The DIHT might be com- 
pared to the United States Chamber of Commerce. It repre- 
sents regional interests as well as the interests of small- and 
medium-sized enterprises. It exercises a great deal more influ- 
ence and even authority locally. The BDA concentrates on 
labor and social legislation and also acts as the representative 
of employers with the trade unions. 

German farmers are organized into the German Farmers' 
Association (Deutscher Bauernverband — DBV) . This organiza- 
tion has over 1 million members. It has exercised a powerful 
influence on German and European agricultural policies, help- 
ing to keep production and consumption prices above world 
levels. The proportional influence of the DBV has grown since 
German unification because agriculture represented a more 
important share of eastern German than western German pro- 
duction (see Agriculture, this ch.). 

The Culture of German Management 

German management, as it has evolved over the centuries 
and has established itself since World War II, has a distinct style 
and culture. Like so many things German, it goes back to the 
medieval guild and merchant tradition, but it also has a sense 
of the future and of the long term. 


The Domestic Economy 

The German style of competition is rigorous but not ruin- 
ous. Although companies might compete for the same general 
market, as Daimler-Benz and BMW do, they generally seek mar- 
ket share rather than market domination. Many compete for a 
specific niche. German companies despise price competition. 
Instead, they engage in what German managers describe as 
Leistungswettbewerb, competition on the basis of excellence in 
their products and services. They compete on a price basis only 
when it is necessary, as in the sale of bulk materials like chemi- 
cals or steel. 

The German manager concentrates intensely on two objec- 
tives: product quality and product service. He wants his com- 
pany to be the best, and he wants it to have the best products. 
The manager and his entire team are strongly product ori- 
ented, confident that a good product will sell itself. But the 
manager also places a high premium on customer satisfaction, 
and Germans are ready to style a product to suit a customer's 
wishes. The watchwords for most German managers and com- 
panies are quality, responsiveness, dedication, and follow-up. 

Product orientation usually also means production orienta- 
tion. Most German managers, even at senior levels, know their 
production lines. They follow production methods closely and 
know their shop floors intimately. They cannot understand 
managers in the United States who want only to see financial 
statements and "the bottom line" rather than inspect a plant's 
production processes. A German manager believes deeply that 
a good-quality production line and a good-quality product will 
do more for the bottom line than anything else. Relations 
between German managers and workers are often close, 
because they believe that they are working together to create a 
good product. 

If there is a third objective beyond quality and service, it is 
cooperation — or at least coordination — with government. Ger- 
man industry works closely with government. German manage- 
ment is sensitive to government standards, government 
policies, and government regulations. Virtually all German 
products are subject to norms — the German Industrial Norms 
(Deutsche Industrie Normen — DIN) — established through 
consultation between industry and government but with strong 
inputs from the management associations, chambers of com- 
merce, and trade unions. As a result of these practices, the con- 
cept of private initiative operating within a public framework 


Germany: A Country Study 

lies firmly imbedded in the consciousness of German manag- 

The German management style is not litigious. Neither the 
government, the trade unions, nor the business community 
encourages litigation if there is no clear sign of genuine and 
deliberate injury. Firms do not maintain large legal staffs. Dis- 
agreements are often talked out, sometimes over a conference 
table, sometimes over a beer, and sometimes in a gathering 
called by a chamber of commerce or an industrial association. 
Differences are usually settled quietly, often privately. Frequent 
litigation is regarded as reflecting more on the accuser than on 
the accused. Because of these attitudes, Germany has compara- 
tively few lawyers. With one-third the population and one-third 
the GDP of the United States, Germany has about one-twenti- 
eth the number of lawyers. 

German managers are drawn largely from the ranks of engi- 
neers and technicians, from those who manufacture, design, or 
service, although more nonengineers have risen to the top in 
recent years. They are better paid than other Europeans 
(except the Swiss), but on average receive about two-thirds of 
the income that their American counterparts expect. 

Because managers usually remain in one firm throughout 
their careers, rising slowly through the ranks, they do not need 
a visible bottom-line result quickly. Managers do not need to be 
concerned about how their careers might be affected by a com- 
pany's or a division's progress, or lack of progress, for each year 
and certainly not for each quarter. 

German taxation also induces management toward long- 
term planning. German tax legislation and accounting prac- 
tices permit German firms to allocate considerable sums to 
reserves. German capital gains tax rules exempt capital gains 
income if the assets are held for more than six months or, in 
the case of real estate, for more than two years. 

Because management has not been regarded in Germany as 
a separate science, it was rare until the 1980s to find courses in 
management techniques such as those taught at schools of 
management in the United States. Germans believed that man- 
agement as a separate discipline bred selfishness, disloyalty, 
bureaucratic maneuvering, short-term thinking, and a danger- 
ous tendency to neglect quality production. Instead, courses at 
German universities concentrated more on business adminis- 
tration, or Betriebswirtschaft, producing a Betriebswirt degree. 
Despite this, two West German schools for business administra- 


A robot in use at a Daimler- 
Benz plant in Stuttgart 
Turbine manufacture at the 
Kraftwerk-Union plant in 
Courtesy German 
Information Center, New York 

Germany: A Country Study 

don, the Hochschule fur Unternehmensfuhrung and the Euro- 
pean Business School, were established during the 1980s, but 
they teach in ways that reinforce rather than overturn tradi- 
tional German ways of management. 

Out of this compendium of business practices arises what 
might be termed a German management style, with the follow- 
ing characteristics: collegial, consensual, product- and quality- 
oriented, export-conscious, and loyal to one company and 
committed to its long-term prospects. One could legitimately 
conclude from this that the German system could stifle change 
because it is not as innovative, aggressive, or results-oriented as 
the United States management style. That, however, would not 
be correct, for change can and does take place. It occurs gradu- 
ally, not always obviously, under the mottoes of stability and 
permanence, with the least dislocation possible, and often 
under competitive pressures from abroad. German managers 
themselves occasionally speculate that change might come too 
slowly, but they are not certain whether or how to alter the sys- 
tem and its incentive structures. 

Labor and Codetermination 

German labor has as much of a culture as German manage- 
ment. The abilities and the attitudes of the labor force have 
contributed at least as much to the success of the German sys- 
tem as those of management, and perhaps even more so. Many 
workers, especially in small- or medium-sized firms, regard 
themselves as serious professionals with a stake in their com- 
pany and are usually treated as such. They live in comfortable 
circumstances, not as the factory workers of old. They usually 
travel abroad, often own foreign property, and otherwise lead 
lives that had formerly been reserved for the middle class. 

German workers have consistently had the highest level of 
education of any group of workers in Europe, with much of 
that education acquired after they finish formal secondary 
school training. Worker training usually lasts two to three years 
and may last longer for highly specialized vocations (see The 
Education System, ch. 4). About 2.5 million Germans, or 
almost half of the fifteen- to nineteen-year-old age-group of 
both genders, annually receive vocational training within a 
range of about 400 designated occupational specialties, often 
on the basis of contracts with preselected employers. 


The Domestic Economy 

Of the many fields to choose from in German vocational 
training, most apprentices select from about twenty specializa- 
tions. Young men prefer training in manufacturing, crafts, car- 
pentry, electronics, or painting. Young women prefer training 
in sales, industrial purchasing, officework or banking, or medi- 
cal assistance. Even while they are in training, the students 
might receive up to DM1,200 in salary per month, although 
most receive less than that, down to DM255. 

After finishing vocational training, students can go to techni- 
cal colleges located all over Germany, or to public health or 
nursing colleges, and they can move on to advanced specializa- 
tion courses in programs for continuing education. Those sys- 
tems exist separately from academic colleges and universities 
but can be as demanding. 

The programs are expensive for industry as well as for gov- 
ernment. One estimate was that West German industry before 
unification spent about DM35 billion annually to support the 
program. The philosophy governing the expenditure of time 
and money was articulated by the head of personnel at Volks- 
wagen, who said: "Training costs money; not to train costs a 
great deal more money." 

The high level of training of German workers produces a 
"quality time" labor productivity formula. The German worker 
spends fewer hours per year at work than any competitor, aver- 
aging an annual 1,708 hours compared with 1,763 in France, 
1,778 in Britain, 1,912 in the United States, and 2,166 in Japan. 
Yet Germany has the highest share of world trade in goods with 
a high skill content: 20 percent, as against 17 percent for Japan, 
15 percent for the United States, and 7 percent for France. 

Many of western Germany's labor traditions have moved 
smoothly to eastern Germany since unification. Vocational 
training already existed in the GDR, and labor in East Germany 
was not as inefficient as management or as the often anti- 
quated production machinery. Therefore, although there have 
been problems of adjustment, especially for older workers in 
the east who were not accustomed to the pace of a modern pro- 
duction site, on the whole the eastern labor force has adapted 

Many of the generalizations that can be made about German 
labor cannot be applied equally to the foreign workers who 
constitute about one-tenth of the country's labor force. The 2 
million foreigners employed in Germany often work in very 
large companies, on assembly lines, in mining and chemical 


Germany: A Country Study 

operations with little prospect for advancement, or in some ser- 
vice sectors at menial tasks under difficult conditions. Approxi- 
mately 25 percent of foreigners work in steel and iron 
foundries, another 25 percent in hotels and restaurants (often 
as cleaning staff), and another 15 percent on automobile 
assembly lines. Certain industries, such as steel production, tex- 
tiles, or mining, could not function without them. 

Among the principal reasons for the decline in Germany's 
economic growth have been the high costs associated with pro- 
duction. German labor costs per hour in the manufacturing 
industry have achieved the dubious honor of being the highest 
in the world — largely because of high social costs. As the 
Bundesbank's tight money policies have consistently made the 
deutsche mark ever stronger, German labor costs have grown 
even higher against those in other countries. In part because of 
the rise in the value of the deutsche mark, total German wage 
costs were estimated by 1992 to be about 50 percent higher 
than in the average West European state, the United States, or 
Japan, and many times higher than those prevailing in most 
Asian states, in Eastern Europe, or in the developing world. 
The Bundesbank estimated that those costs had risen by almost 
10 percent between the beginning of 1991 and the beginning 
of 1993. Chancellor Kohl himself complained that German 
workers could not afford to continue to have "the shortest 
working week, the lowest number of working years, and above 
all, which is the worst, the shortest machine operating time . . . 
in all the European Community." But, although a number of 
German wage settlements in 1993 and 1994 raised wages by less 
than the anticipated inflation rate, there are no signs that Ger- 
man labor is prepared to lower its income to meet interna- 
tional competition. The average German worker believes that 
quality production and efficiency justify his or her high 

Codetermi nation 

Codetermination (Mitbestimmung), under which German 
workers or their representatives sit on the governing boards or 
the factory councils of most German firms, is a classic example 
of how the German system reconciles apparent opposites and 
points them to a common purpose and in a common direction. 
Codetermination did not come about in West Germany in a 
single step. It evolved and expanded through five different 
West German laws, beginning in 1951 and continuing in 1952, 


The Domestic Economy 

1954, 1972, and 1976. The first three laws were passed by CDU- 
led coalition governments, the last two by SPD-led govern- 
ments. All the codetermination statutes were applied to eastern 
Germany after unification. Through the combination of those 
laws, 85 percent of all German employees are included in some 
form of codetermination. 

Codetermination takes place through two structures, the 
Aufsichtsrat (supervisory board) in a large enterprise and/or 
the Betriebsrat (factory council) in most companies. Over two- 
thirds of all German firms have a Betriebsrat. Only about one- 
fourth have an Aufsichtsrat. Many large firms have both. If a 
firm is large enough to have both, the workers are twice repre- 
sented. Depending on the size of the firm, the Aufsichtsrat must 
have between one-third and one-half worker membership. The 
Betriebsrat is composed entirely of employee representatives. 

The result of forty years of codetermination is the kind of 
bargain typical of the way the German economy is managed. 
Management can largely direct the functioning of the com- 
pany. It makes investment, financial, operational, and market 
decisions, but it makes those decisions through a mechanism 
in which labor can have a voice. Labor can make certain that 
the conditions under which the workers operate are socially 
acceptable. It can also make certain that the workers benefit 
from the company's well-being. But labor in turn has a stake in 
ensuring that the demands and actions of the workers do not 
jeopardize the firm itself. 

In addition to their participation in company management, 
German workers are also represented in trade unions. The 
principal organization is the Federation of German Trade 
Unions (Deutscher Gewerkschaftsbund — DGB), an umbrella 
organization that joins seventeen trade unions along industry 
lines that match those of the BDA (see Labor Unions, ch. 7). 
Trade union membership is not obligatory in Germany. Less 
than one-half of all West German workers belonged to the 
trade unions in 1989, but German unification has led to a rise 
in trade union membership in absolute and percentage terms 
because the East German workers were accustomed to union 

Agriculture, Forestry, and Fishing 

Agriculture is a small sector of the German economy (see 


Germany: A Country Study 

table 13, Appendix). It has declined in importance all during 
the twentieth century and by 1989 amounted to only 1.6 per- 
cent of West German GDP. Although agriculture's share of East 
German GDP was twice as high as in the west, even after the 
two economies are completely united, agriculture's share of 
GDP is expected to amount to only about 2 percent. However, 
despite the sector's small size, it remains politically important. 

The number of farms had decreased steadily in West Ger- 
many, from 1.6 million in 1950 to 630,000 in 1990. In East Ger- 
many, where farms were collectivized under the socialist 
regime, there had been about 5,100 agricultural production 
collectives with an average of 4,100 hectares under cultivation. 
Since unification, about three-quarters of the collectives have 
remained as cooperatives, partnerships, or joint-stock compa- 
nies. The others were returned to their original owners — if 
those owners could be found — or were privately sold, becom- 
ing about 14,000 private farms. In western Germany and in the 
newly privatized farms in eastern Germany, family farms pre- 
dominate. For the 630,000 farms, there are 750,000 full-time 
employees. There are also, however, many more part-time 
employees, and most farms do not represent their owners' full- 
time occupation. 

Although the number of farms has declined, production has 
actually increased through more efficient production methods. 
By the early 1990s, a single farmer could produce enough food 
for seventy-five persons, far more than was the case in the 1950s 
or 1960s. 

Agricultural products vary from region to region. In the flat 
terrain of northern Germany and especially in the eastern por- 
tions, cereals and sugar beets are grown. Elsewhere, with the 
terrain more hilly and even mountainous, farmers produce 
vegetables, milk, pork, or beef (see table 14; table 15, Appen- 
dix). Almost all large cities are surrounded by fruit orchards 
and vegetable farms. Most river valleys in southern and western 
Germany, especially along the Rhine and the Main, have vine- 
yards. Beer is produced mainly, but not exclusively, in Bavaria. 

Since the 1960s, German agricultural policy has not been 
made in Germany but in the EC. All agricultural laws and regu- 
lations are written in Brussels, often after difficult negotiations 
between food-producing and food-consuming states. The main 
objective of those negotiations is to obtain high incomes for 
the farmers while keeping market prices low enough to avoid 
consumer protests. To make up the difference, the EC adopted 


The Domestic Economy 

the Common Agricultural Policy (CAP — see Glossary) subsidy 
program and the export subsidy program, both of which bene- 
fit German farmers as well as other EU farmers. In return, the 
German farmers have complied with European directives on 
the quality and quantity of production. 


Germany also has significant lumber production. Almost 
one-third of Germany's total land area, especially in the south, 
is forested. German forests produce nearly 40 million cubic 
meters of timber every year, satisfying two-thirds of domestic 
demand. However, Germany has to import most of its hard- 

There has been growing concern for decades about environ- 
mental damage to Germany's forests. By the 1970s, trees were 
losing their needles or leaves and were growing less full than in 
the past (see The Environment, ch. 3). A number of laws and 
regulations have attempted to stem this phenomenon, which 
the Germans call Waldsterben (death of the forest). The Forest 
Preservation and Forestry Promotion Act was passed in West 
Germany in 1975 to prevent destructive and wasteful timber 
policies. It now applies to all of Germany. Under the act, forest 
owners must return cut areas to their original condition, con- 
verting forests into timber farms in which the cut trees are 
replaced by seedlings. This policy works better for pine than 
for other timber. However, despite legislation and the great 
attention paid to the forests, no lasting solution has yet been 
found. As a result of the decades of ecological damage, many 
German forests, including the highland Black Forest in the 
southwest, are badly depleted. 


The German fishing industry also suffers from depletion, 
because its principal fishing grounds have become overfished 
by the many modern fishing fleets that enter North European 
waters. German vessels have long fished the North Sea, the Bal- 
tic Sea, and the Atlantic Ocean off the British Isles and around 
Greenland, all areas where many competing fishing fleets also 
operate. The German ocean-fishing fleet has shrunk. Germany 
attempted through the EC to establish rules that would prevent 
overfishing, but those rules have proved difficult to enforce. 


Germany: A Country Study 



The German economy is essentially a processing economy. 
This was true of both West Germany and East Germany before 
unification. It will remain true in the future, although the 
detailed shares of GDP remain to be determined by unification 
and may not be clearly evident until the mid- or late 1990s. 

Before unification, 40 percent of the German workforce was 
involved in manufacturing, with the main industries being 
machine tools, automotive manufacturing, electrical engineer- 
ing, iron, steel, chemicals, and optics. Although the industrial 
sector in the former East Germany is still evolving, manufactur- 
ing in that part of Germany is expected to concentrate in the 
same industries over time. Thus, the future German economy 
will retain a powerful industrial component that will likely total 
well above 30 percent of German GDP. 

Almost all areas of western Germany have some industry. 
The main industrial areas are the Ruhr district in North Rhine- 
Westphalia, the traditional center of German coal, steel, and 
heavy industry; the concentration of industry around several 
large cities, such as Hanover, Munich, Frankfurt am Main, and 
Stuttgart; the chemical production areas that stretch mainly 
along the Rhine River in Baden-Wurttemberg and farther 
north; and the automotive manufacturing centers, increasingly 
concentrated in southern Germany in Bavaria and Baden- 

In eastern Germany, the main industrial manufacturing 
areas are in Saxony, Saxony-Anhalt, and Thuringia, principally 
concentrated in the Leipzig, Dresden, Halle, and Chemnitz 
regions. Before World War II, Saxony was the technology cen- 
ter of Central Europe. The Elbe River, like the Rhine, attracted 
chemical and other industry along its shores. It is uncertain 
which eastern German industries will survive, but the firms in 
the southern part of the region appear to have better chances 
than those farther north. Even before unification, more indus- 
try was concentrated in the south than in the north. The dis- 
tricts in northern East Germany had industrial employment 
below 25 percent, those around Berlin had industrial employ- 
ment between 25 and 35 percent, and those south of Berlin 
had over 35 percent employment in industry. No such clear 
geographical delineation for sector employment existed in 
West Germany. 


The Domestic Economy 

The glory of German industry is not in the big firms that are 
well known around the world, such as Daimler-Benz, Volks- 
wagen, Siemens, or Bayer (see table 16, Appendix). It is in the 
small- and medium-sized firms that constitute what the Ger- 
mans call the Mittelstand. Although that term has political and 
social as well as management connotations, it has been widely 
accepted to mean companies that employ fewer than 500 work- 
ers. Such firms constitute 98 percent of all German companies, 
hire 80 percent of all employees, are responsible for a signifi- 
cant share of exports, and provide one of the firmest founda- 
tions of the middle class. 

The government has supported and furthered the Mittel- 
stand, in part for political reasons, but also because it makes a 
crucial contribution to the economy. The government has 
established special provisions that permit those firms to coop- 
erate if they do not thereby hinder competition. It makes avail- 
able special funds to promote research and development by 
Mittelstand companies. After unification, the government used 
investment and tax incentives to encourage Mittelstand compa- 
nies to invest in eastern Germany. 

The single most successful German industry is mechanical 
engineering, with a total turnover in 1991 of DM240 billion. 
Unlike many industries in Germany and elsewhere, it is domi- 
nated by small rather than large companies. It includes over 
4,000 firms throughout Germany. Only 3 percent of the com- 
panies have more than 1,000 employees. German mechanical 
engineering has a range of more than 17,000 products. Almost 
two-thirds of the products are exported. 

The best-known industry and the second-largest, with a turn- 
over of DM217 billion in 1991, is automotive manufacturing. 
Such companies as Daimler-Benz, Volkswagen, and Bayerische 
Motorenwerke (BMW) are known throughout the world. 
Almost half of all German-produced automobiles are exported, 
mainly to other EU members and to North America. 

Electrical engineering ranks third in importance among 
German industries, with a turnover of DM207 billion in 1991. 
The biggest single firm is Siemens, although Bosch also ranks 
among Germany's largest companies. Products range from 
giant electric generating turbines exported all over the world 
to smaller electric engines and some consumer goods. 

The chemical industry, with a total output of DM166 billion 
in 1991, is based principally on three large corporations that 
have been leaders in the field for 100 years — Hoechst, Bayer, 


Germany: A Country Study 

and BASF. There are also many medium-sized companies. 
About one-half of the industry's products are exported. 

Other important industries are the traditional German 
industries of steel and coal mining, both heavily subsidized and 
still large employers. Precision engineering remains a strong 
area. Aerospace is a small but growing industry, also heavily 
subsidized, and German companies often join with companies 
from other EU countries — such as Airbus and military aircraft 
production (see fig. 10). 

One reason to believe that the eastern and western portions 
of the united Germany will again knit together into one large 
manufacturing economy is that such an economy has been part 
of the German tradition for centuries and that both Germanys 
have specialized in the same general industrial sectors. Some 
analysts contend that the eastern economy will even have a 
competitive edge later in the 1990s because of the vast sums 
being invested in modernizing its industrial plant. 

Energy and Natural Resources 

Like most modern states, Germany relies principally on fos- 
sil fuels as sources of energy. About 40 percent of German 
energy consumption comes from petroleum, largely for trucks 
and automobiles. About 30 percent comes from domestic coal 
deposits, half from lignite, or brown coal, in the east and the 
other half from anthracite located in the west. Natural gas pro- 
vides about 17 percent of energy consumed, and nuclear 
energy about 10 percent. Other sources of energy, such as 
hydroelectric, solar, or wind-powered electric power plants, are 
relatively insignificant. Most production is in private hands. 

Electrical power comes almost equally from three sources: 
the largest (31 percent) is generated by lignite, the next largest 
(28 percent) from nuclear reactors, and the third largest (26 
percent) from anthracite. Natural gas provides about 7 per- 
cent. Those proportions will undoubtedly shift over time 
because of the high pollution levels generated by the relatively 
inefficient lignite, especially in the new Lander, where it 
accounts for over 90 percent of electricity production (see 
table 17, Appendix). The public's aversion to nuclear power 
that developed in Germany in the 1980s will likewise cause this 
source of power to become less important. Natural gas will 
become more significant. 

The necessary reduction of brown coal consumption is 
unfortunate for the nation's economy because it and anthracite 


The Domestic Economy 

are Germany's only significant natural resources. As of 1993, 
Germany was the world's largest producer of brown coal, min- 
ing nearly twice as much as the next greatest producer, Russia. 
Anthracite mining is also significant, and Germany was the 
world's ninth greatest producer of this substance in 1993. 

Germany has over twenty nuclear reactors, most of them 
small and having production levels below 2,000 megawatts per 
reactor. It has virtually no domestic uranium deposits and must 
import enriched uranium for its reactors. Most of the reactors 
in operation in the early 1990s were built during the 1970s and 
early 1980s. Reliance on nuclear power has become controver- 
sial, however. Because of the controversy, no new nuclear reac- 
tor has entered service since 1988. A number of older reactors 
dating to the 1960s have ceased operations. A major interna- 
tional energy crisis would be needed to renew impetus in Ger- 
many's nuclear energy program because the country is densely 
populated, and most of its inhabitants do not want a reactor 
near their houses or offices. 

Germany must import almost all the oil and gas that it uses. 
In 1993 the three largest suppliers of crude petroleum were 
Norway (18.4 percent of the total), the Commonwealth of 
Independent States (CIS — see Glossary) (17.4 percent), and 
Britain (12.4 percent) (see table 18, Appendix). Germany has 
its own modest oil deposits, estimated in 1990 at 50 million 
tons, in the North German Plain. It has a share of North Sea 
gas reserves and production, with reserves estimated in 1990 at 
9.9 billion cubic meters. But these are not adequate long-term 
sources. Thus, Germany will increase its imports of oil and gas, 
most likely from Russia. East Germany relied heavily on Soviet 
gas before unification, and united Germany will want to pur- 
chase petrochemicals from Russia to enable Russia to pay for 
the German manufactures that Russia is purchasing. 

Like all modern economies, Germany has become increas- 
ingly cost conscious and conservation conscious about energy 
consumption. Whereas GDP in West Germany rose by about 50 
percent from 1973 to the early 1990s, energy consumption rose 
by only 7 percent. 

The Financial System 

The Bundesbank 

The single most important economic institution in Germany 
outside the federal government is the central bank, the 


Germany: A Country Study 

International boundary 


National capital 


Populated place 


Petroleum refining 


Iron and steel 

Automotive assembly 











100 Kilometers 

100 Miles 



"Baltic Sea 

9{prt£ Sea 



p # Essen 

;.SDusseldorf , 



# Eisenach 

• Leipzig \ 
H Dresden j 

Chemnitz ( 


£fc Frankfurt 
_ am Ma/n 

• Mannheim 




V ft Karlsruhe 

•' Stuttgart* 

• Nuremberg K 
Regensburg^m' V. 

- * V 




■L • ft 






necessarily authoritative 

Figure 10. Economic Activity, 1995 

Deutsche Bundesbank (commonly called the Bundesbank). It 
has the dominant voice in German monetary policy. Through 
that voice, it establishes and maintains a firm policy in favor of 
solid currency value within Germany and increasingly within 
the EU and even the world at large. 

If a central bank's reputation is its most precious asset, the 
Bundesbank is among the world's most highly endowed institu- 
tions. Its contribution to the economic and political stability of 


The Domestic Economy 

West Germany and Western Europe in the postwar years was 
almost legendary and was given due respect even by those who 
disagreed with some or many of its policies. 

Although the Bundesbank often appears to be the principal 
maker of German economic policy, its exact powers are care- 
fully set forth and circumscribed in the 1957 law establishing 
the bank. The law assigned to the bank the responsibility for 
"the preservation of the value of German currency," a mandate 
that was so important that it was clearly intended to override 
the bank's other principal task, "to support the general eco- 
nomic policy of the federal government." Even the latter task 
was carefully limited by the specific provision that the bank 
"shall be independent of instructions from the federal govern- 

The government does have a role, if it wishes to exercise it. 
Government representatives can and at times do attend the 
meetings of the bank's governing board, the Central Bank 
Council (see Glossary), although the government cannot block 
the bank's actions but is authorized only to delay them for no 
longer than two weeks. There are also informal contacts 
between the government and the bank, and it is not unusual 
for senior officials at the Chancellory or the Ministry of 
Finance to know in advance what the council might be 
expected to decide at its next meeting. 

The bank has more authority in the realm of monetary pol- 
icy than any other major European central bank. It is most 
closely based, at least in its structure although not in its formal 
mandate, on the United States Federal Reserve Bank. It exer- 
cises more functions than the Federal Reserve, however, in part 
because it carries out some exchange responsibilities that are 
assigned to the United States Department of the Treasury. The 
Bundesbank issues money and makes monetary policy by con- 
trolling short-term interest rates such as the discount rate for 
loans to other banks and the Lombard rate (see Glossary) for 
short-term funding for business. 

As of mid-1995, the president of the Bundesbank was Hans 
Tietmeyer, who made his mark in the economics and finance 
ministries as a career official and then as a state secretary. Kohl 
appointed him Bundesbank president in 1993. The Bundes- 
bank's Central Bank Council has seventeen members, with the 
majority of nine being the presidents of regional or Land cen- 
tral banks. The representatives of these banks can, therefore, 
outnumber the eight members of the Central Bank Council 


Germany: A Country Study 

who work out of the bank's executive office in Frankfurt am 
Main, the Direktorium (Directorate — see Glossary), giving the 
bank a strong orientation toward developments in the country 
as a whole, while public and foreign attention usually concen- 
trates on the Directorate. Land central bank presidents are 
nominated by Land governments. They do not serve at any gov- 
ernment's pleasure, including that of the Land that nominated 
them. The members of the council who are in the Directorate 
are appointed by the president upon the nomination of the 
chancellor, but even these members are not subject to govern- 
ment direction. 

The single most important fact about the Bundesbank, how- 
ever, is its powerful and consistent anti-inflationary philosophy. 
That philosophy, grounded in its absolute determination to 
avoid the social upheaval caused by the Great Inflation of the 
early 1920s, is central to the bank's thinking on every occasion 
and has given it enormous influence. Although a number of 
economists, especially some in the United States, have long 
argued that the Bundesbank's policies are excessively restrictive 
and potentially deflationary, the bank is popular with most 
German voters and with much of German business. The voters 
do not wish to see their savings eroded by inflation. Business- 
men are inclined to believe that a lower inflation rate will per- 
mit them to hold down their costs and remain highly 
competitive over the long run although others might receive 
some temporary advantage from devaluation. Germans believe 
that a country with a stable currency will be able to have lower 
capital and labor costs because lower inflation expectations 
make lower interest rates and stable wages acceptable. 

German demographic realities have added further reasons 
for anti-inflationary policies. As the population ages and as 
more Germans live on pensions or on fixed investment 
incomes, the importance of price stability has become a power- 
ful consideration for a growing sector of the electorate. That 
sector of the electorate fully supports the Bundesbank's anti- 
inflationary policies. 

Banking and Its Role in the Economy 

The German economy is a bank economy, with the main 
role in finance and credit being played by commercial and sav- 
ings banks while other forms of credit are secondary. Banks 
provide most of the country's investment capital because of the 
high German savings rate and because most Germans prefer to 


A petroleum refinery in Ludwigshafen, Rhineland-Palatinate 
Courtesy German Information Center, New York 
A nuclear power plant outside Munich 
Courtesy Inter Nationes, Bonn 


Germany: A Country Study 

put those savings into banks rather than into stocks or bonds. 
As with many other German economic phenomena, this bank 
role is not new. Banks have played a central role in German 
financial and economic history since the Middle Ages. 

German banks function as universal banks, able to offer a 
full range of banking, saving, foreign exchange, and invest- 
ment services to their depositors and clients. They hold funds 
or other assets, broker securities, underwrite equity issues, give 
advice on asset placement, manage accounts, and so on. About 
one-quarter of German banks are commercial. Most of the 
remainder are savings banks, mainly owned locally or region- 
ally and operating under public statutes, or cooperatives that 
perform such specialized services as agricultural, crafts, or 
mortgage lending. 

The three best known and most important German universal 
banks — the Deutsche Bank, the Dresdner Bank, and the Com- 
merzbank — are omnipresent throughout unified Germany and 
have immense influence. These banks opened hundreds of 
new offices in the east during unification and sent large staffs 
of bankers to manage offices and to train permanent person- 
nel there. In effect, they were the principal agents for control 
of Germany's economic unification. 

But the "big three," as they are often known, are not the only 
large banks in Germany. A number of other banks, including 
regional banks, are even more important than the big three 
within their areas of operations. The DG Bank, which operates 
out of Frankfurt am Main, has a higher nominal capital stock 
than that of the Commerzbank. The Westdeutsche Landes- 
bank, headquartered in Dusseldorf and owned in part by the 
Land of North Rhine-Westphalia, has a higher nominal capital 
stock value than that of the Deutsche Bank. The value of the 
combined nominal stock of the three major banks in Bavaria is 
even higher, and those banks have helped finance the eco- 
nomic boom in southern Germany. Other major banks exist in 
other Lander, often owned in part by the Lander themselves with 
additional capital coming from state-wide savings associations 
or other local institutions. An important element in the Ger- 
man savings system is the Postbank, the postal savings bank, 
with 2V, 000 employees. Almost one in three Germans has an 
account in the Postbank, using it for savings and for personal 
financial transactions such as paying monthly bills in prefer- 
ence to bank accounts. The Postbank has 24 million savings 


The Domestic Economy 

accounts and hopes to branch into other areas of financial ser- 

The most important and most controversial aspect of Ger- 
man banking is the role that banks play as shareholders and 
policy makers in the country's industrial firms. It has been esti- 
mated that banks directly or indirectly hold more than 25 per- 
cent of the voting capital in one-quarter of Germany's largest 
corporations and hold about 28 percent of all seats on the 
supervisory boards. The banks are empowered to vote not only 
their own shares but also, by proxy, shares that they hold for 
their clients. Although there are indications that the banks' 
ownership proportion of major firms has been reduced over 
time as other sources of investment funds have become more 
available, the combined influence and presence of the banks is 
considerable. They are even said to pool information on the 
basis of which they steer investments throughout the economy. 

According to a Commerzbank listing of ownership of 10,000 
large West German companies, the Deutsche Bank owns shares 
in seventy-seven different firms, the Dresdner Bank in fifty-five, 
and the Commerzbank in forty-eight. Other smaller banks are 
also widely invested. The Commerzbank listing did not show 
the bond or loan holdings of the banks or the votes they exer- 
cised in proxy, but it did show that in pure ownership terms 
alone the banks have a strong voice in a significant number of 
major German companies. The positions that the banks hold 
could afford wide opportunities to influence industrial deci- 
sion making, although they are not the kinds of true monopoly 
positions that earlier German cartel arrangements offered. 

A mid-1980s study by the government agency that examines 
potential monopolies, the Monopolkommission, looking only 
at major companies, concluded that the three major banks 
could vote well over three-quarters of the shares of many major 
German corporations and that all banks together had even 
greater voting authority. The power of the banks also is evident 
in the seats they hold on the boards of the country's most 
important corporations, with bank presidents or representa- 
tives sitting on the boards of every major German firm. 

The banks do not appear to want to seize industrial power or 
make production decisions. They would be hard put to exer- 
cise monopoly power, and their actions on individual boards 
are clearly subject to enough scrutiny — at least by other board 
members — that improper actions would become widely known. 
German business is prepared to accept the power and influ- 


Germany: A Country Study 

ence of the banks and to see it perpetuated. Nonetheless, the 
direction of bank influence probably adds a conservative ele- 
ment to German economic decision making because banks tra- 
ditionally prefer to avoid risk-taking in favor of slow but steady 
dividends and debt repayment. They also could be accused of 
becoming new masters of German cartel-like structures, with 
banks directing separate firms toward similar policies even if 
the firms themselves are not colluding. 

The role of the banks in the economy has raised questions. 
Some political figures, including FDP leader Otto Lambsdorff, 
have charged that the banks have accumulated excessive 
power. Newspapers and magazines, including business jour- 
nals, periodically make the same charge. But there are no indi- 
cations that the system is changing or will change in response 
to those criticisms. One could even argue that it is more perva- 
sive than ever, as banks now also play roles in managing former 
East German firms that were privatized with western bank 

Nonbank Financing 

Ever since the collapse of the Berlin stock exchange after 
Hitler's seizure of power in 1933, Germany has lacked a major 
international market for bonds and equities. Nothing in Ger- 
many rivals those of New York or Tokyo, and even the London 
market does more overall trading than Frankfurt. London even 
trades almost one-third of all German shares. There are now 
ten regional exchanges in Germany, but no single exchange is 
very large. 

To help promote nonbank financing and a greater German 
interest in equities, the German government has launched a 
drive for what it terms Finanzplatz Deutschland, making stock 
and bond trading easier in Germany and subordinating the 
roles of the smaller exchanges to the Frankfurt exchange as the 
major site for German nonbank finance. Proposals include a 
futures market, improved electronic links among regional mar- 
kets, some computerized trading, longer opening hours, free- 
dom for firms to issue commercial paper, and the elimination 
of a small but annoying German turnover tax on securities 
transactions. They also include tighter national supervision to 
prevent misuse of the exchanges and of new methods of 
finance. Finally, there are tight restrictions on insider training, 
and a supervisory organization that will correspond to the 


The Domestic Economy 

Securities and Exchange Commission in the United States is 
being created. 

The smaller regional exchanges have objected that some of 
the steps proposed under the Finanzplatz Deutschland pro- 
posal violate the federal principle on which postwar West Ger- 
many had been founded, and they have been supported by the 
Land governments that do not want Frankfurt to have too 
much power. Therefore, not all parts of the government plan 
have been carried out as soon as its proponents wished. None- 
theless, an important step has been taken in the merger of the 
Frankfurt stock exchange and the German futures and options 
exchanges, the Deutsche Terminborse (DTB). 

Despite such measures to encourage equity placements, 
most German firms still do not seek equity financing, and even 
if they do, they often work through banks to obtain it. West 
Germany had 370,000 limited liability companies or closed cor- 
porations (Ges ells chaf ten mit beschrankter Haftung — GmbH) as 
against 2,300 corporations (Aktiengesellschaften — AG). Of those, 
only 619 had their shares quoted on the markets at the end of 
1990, and the number thereafter grew only slowly. There has 
been no upsurge toward new equity finance as a result of unifi- 
cation, with many East German firms being taken over by West 
German firms and with banks supplying the needed financing 
as well as sitting on new boards. Although there are some signs 
that German firms appear to be turning increasingly to 
exchanges for funds, and the volume of such placements 
increased over the late 1980s and early 1990s, many firms still 
feel more comfortable with their established banking links. 

A step that may lead to a greater financial role for Frankfurt 
in Germany itself as well as in Europe has been the EU's 1994 
decision to place the new European central bank in Frankfurt 
when that bank is established. This would reinforce Frankfurt's 
place as the center of the European Monetary Union (EMU — 
see Glossary) and also as the center of German finance (see 
Germany and the European Monetary Union, ch. 6). Berlin's 
emergence as a center for trade and services with Eastern 
Europe might over time boost Berlin's prospects as an alterna- 
tive center of German finance. 

Other Services 

Germany has one of the world's largest and most sophisti- 


Germany: A Country Study 

cated transportation systems. This reflects the intensely mobile 
nature of the German population, who are among the world's 
most active drivers, tourists, and travelers. It also reflects Ger- 
many's location in the center of Europe and the many far- 
reaching industrial and commercial relationships developed 
over centuries. Because of the density of the network, many 
towns, but especially such major cities as Berlin, Frankfurt am 
Main, Munich, and Hamburg, function as transportation and 
communications centers, lying either at the intersections of 
major east-west and north-south routes or on transshipment 
points of ship, barge, road, and railroad traffic. With Europe 
again uniting from the Atlantic to the Urals, Germany's posi- 
tion as a transportation and communications hub for the conti- 
nent will become ever more important. 

To cope with the additional demands caused by German and 
European unification, the German government has designated 
seventeen major transport routes to be either completed or 
rebuilt as soon as possible during the last decade of the twenti- 
eth century and the first decade of the twenty-first century. The 
first transport plan for newly united Germany was adopted in 
1993 and will cost DM453 billion by the year 2012. More than 
half of the investment will be dedicated to rail and waterway 
travel, not road travel (see fig. 11). 

Trucks have been the most important instrument for freight 
transport throughout Germany for decades. They carried 203 
billion ton-kilometers of freight in 1992, with railroads second 
(83 billion ton-kilometers) and inland shipping (55 billion ton- 
kilometers) third. But the railroad system is also perceived as 
very important, and it will be extensively modernized. The 
Deutsche Bahn railroad company, formed in January 1994 
from the East German and West German railroad systems and 
to be gradually privatized, has a network of over 40,000 kilome- 
ters at standard 1.435 meter gauge, of which 16,000 kilometers 
are electrified. Perhaps 8,000 kilometers of German railroad 
tracks will be eliminated through rationalization. To speed traf- 
fic, new high-speed railroad tracks have been designed to per- 
mit special trains to move at up to 250 kilometers per hour 
between such principal cities as Hamburg and Munich, with 
more tracks to follow. The purpose of these new trains is to 
relieve some of the pressure on airports by making surface 
transportation fast and attractive for distances of fewer than 
500 kilometers. 


A Lufthansa Boeing 737-300 at Berlin-Tegel Airport 
Courtesy German Information Center, New York 
The Rhine-Main-Danube Canal, which completes the link between the 

North Sea and the Black Sea 
Courtesy Inter Nationes, Bonn 


Germany: A Country Study 

Figure 11. Transportation System, 1995 

Germany has one of the densest road networks in the world 
and the largest after the United States. There were a total of 
226,000 kilometers of roads in 1992, including more than 
11,000 kilometers of four-or-more-lane superhighways. None- 
theless, especially in crowded areas and for the long routes 
toward southern Europe, many trucks are carried piggyback on 
trains to increase speed and to reduce pollution. The former 
East German system required several years of rebuilding after 


The Domestic Economy 

International boundary 

® National capital 

• Populated place 

vL Inland port 

i < i i i i . Canal 
50 100 Kilometers 
6 " 50^ U)0 Miles 


Figure 12. Inland Waterways, 1995 

unification to enable it to serve the infrastructural require- 
ments of modern business travel. 

Germany had 45 million motor vehicles in 1992, with 39 mil- 
lion automobiles. Automobiles accounted for some 685 billion 
passenger-kilometers in 1990, a number that could be expected 
to rise rapidly by the mid-1990s as the eastern German popula- 
tion begins to acquire automobiles at a rate similar to that of 
their compatriots in the west. 


Germany: A Country Study 

The German inland shipping system is one of the world's 
most highly developed, especially because of the large flat areas 
in northern and western Germany. Duisburg, located in north- 
western Germany on the Rhine, is the largest inland port in the 
world. Germany has 6,900 kilometers of navigable inland water- 
ways, including such principal canals as the Kiel Canal, the Mit- 
telland Canal, and the Dortmund-Ems Canal. The Rhine-Main- 
Danube Canal, completed in 1992, joins the Main and the 
Danube rivers in northern Bavaria and for the first time per- 
mits river transport between the North Sea and the Black Sea 
(see fig. 12). 

The main German seaports are those of the old Hanseatic 
League, with the best-known being Hamburg, Bremen-Bremer- 
haven, Wilhelmshaven, Lubeck, and Rostock. To compensate 
for their greater distance from the Atlantic Ocean (in compari- 
son with Rotterdam), German ports have invested heavily in 
technology, equipment, and training that permit fast and eco- 
nomical loading and unloading. 

Germany also has a large system of inland and international 
air travel. Lufthansa, the national airline, has an extensive 
domestic and global route system. In 1992 approximately 87.5 
million passengers were registered at Germany's airports, and 
1.5 million tons of air freight were carried from those airports. 
The largest international airport is Frankfurt-Rhein Main, 
located near Frankfurt am Main and one of the world's most 
important centers for both passengers and air freight. Other 
important airports are those at Dusseldorf, Munich, the three 
serving Berlin (Berlin-Tegel, Berlin-Schonefeld, and Berlin- 
Tempelhof), Hamburg, Stuttgart, and Cologne-Bonn. Berlin- 
Schonefeld, located to the south of Berlin, will be expanded to 
reestablish it as a major international air center. 


The German postal services are among the oldest in Europe. 
In 1990 Germany celebrated 500 years of organized mail ser- 
vice. At the same time, the German government broke up the 
Bundespost monopoly over all forms of communications and 
created three new structures to handle the services formerly 
handled by the Bundespost. 

The largest of the new services is the Postdienst, with 
390,000 employees. It is Germany's largest service enterprise, 
handling over 15 billion pieces of mail every year. The second 
largest is Telekom, the telephone/telex service, with a total of 


The Domestic Economy 

260,000 employees. Telekom is intended to keep the German 
telecommunications system competitive with the new systems 
being developed in the United States and Asia. Germany has 35 
million telephones, but service in eastern Germany took a long 
time to come up to western German standards. The third is the 
Postbank, with 24,000 employees, which manages the postal 
savings bank system in which about 30 million Germans have 
accounts (see Banking and Its Role in the Economy, this ch.). 


Germany is a principal attraction for foreign tourists, and 
the Germans themselves are among the world's most enthusias- 
tic tourists. Although Germany attracts millions of foreign tour- 
ists, German tourists every year spend tens of billions of 
deutsche marks more than foreign tourists spend in Germany. 
In fact, tourism constitutes a major drain on German foreign 

The areas that attract the most tourists to Germany are the 
Alps, the Rhine and Moselle valleys, and several large cities, 
especially Berlin. But those are not the only attractions. Music 
festivals such as those at Bayreuth and Munich draw many tour- 
ists. So do some of the old German medieval cities like Rothen- 
burg ob der Tauber and Dinkelsbuhl. Because of the wealth of 
hiking and bicycle trails, many tourists come to the Black For- 
est and to other German woodlands and mountains. Since uni- 
fication, tourists have increasingly visited the former East 
German states and especially the Baltic beaches and such cities 
as Leipzig and Dresden. 

Unlike Austria or Spain, Germany does not regard tourism 
as a major source of foreign exchange. Hotel stays by foreign 
visitors to Germany do not rise above 15 percent of total occu- 
pancy, as opposed to the two-thirds levels that they reach in 
those countries. But as many as 1.5 million jobs in Germany are 
connected in one way or another to the tourist industry. 

* * * 

The literature on the German economy is surprisingly lim- 
ited, given its importance in Europe and the world as a whole. 
German economic unification produced a spate of books and 
articles, but most were out of date within months of publica- 
tion. The most comprehensive current book in English is The 
German Economy by W.R. Smyser. Another survey is The German 


Germany: A Country Study 

Economy by Eric Owen Smith. There are also some current 
books that deal with specialized topics, such as Banks, Finance, 
and Investment in Germany by Jeremy S.S. Edwards and Klaus 
Fischer. The Bundesbank has attracted growing attention, with 
the most comprehensive work being The Bundesbank by David 
Marsh. The Organisation for Economic Co-operation and 
Development publishes an annual OECD Economic Survey on 
Germany as well as a special section on Germany in its biannual 
OECD Economic Outlook. 

There is, however, a rich literature about the specifics of the 
German economy. The German Council of Economic Experts 
(Sachverstandigenrat zur Begutachtung der gesamtwirtschaft- 
lichen Entwicklung) publishes an extensive annual review of 
the German economy in German, and the German economic 
institutes continually publish specialized papers in German 
and sometimes in English. The Bundesbank and the German 
Ministry for Economics publish monthly and annual reports 
that concentrate on financial and macroeconomic information 
but also provide a general economic roundup. The bank also 
publishes a dozen statistical annexes every month. Both pub- 
lish their basic reports in English as well as in German. Other 
German ministries as well as the German Federal Press and 
Information Office provide large quantities of information on 
a regular basis, but much of it is in primary form and requires 
analysis. (For further information and complete citations, see 


Chapter 6. International Economic Relations 


The port of Hamburg 

EVER SINCE ITS CREATION IN 1949, the Federal Republic of 
Germany (FRG) , or West Germany, as it was also called until its 
unification in 1990 with the German Democratic Republic 
(GDR, or East Germany), has played an increasingly important 
role in the world economy. Consistently among the most 
important trading nations in the world, Germany often derives 
a higher share of its gross domestic product (GDP — see Glos- 
sary) from exports than any other major state. The Federal 
Republic plays an even more important role in international 
financial matters. Its currency, the deutsche mark, is the sec- 
ond most important currency in the world after the United 
States dollar. 

Germany does not act alone in international economic mat- 
ters. Instead, it usually acts through Europe. West Germany was 
a founding member of the European Coal and Steel Commu- 
nity (ECSC) and of the follow-on European Community (EC — 
see Glossary), known since late 1993 as the European Union 
(EU — see Glossary). Germany increasingly makes its interna- 
tional policies in conjunction and consultation with other EU 
members. More than half of its trade is with other EU states, 
and the deutsche mark is the anchor of the European Mone- 
tary System (EMS — see Glossary) and of its planned follow-on, 
the European Monetary Union (EMU — see Glossary). 

Despite its central role in the world economy, Germany has 
never developed nor sought a high profile as a major interna- 
tional economic player. It receives much less attention than 
Japan in United States newspapers and economic journals, 
even though it wields as least as much influence in global finan- 
cial affairs. This relative discretion reflects Germany's general 
reticence about projecting itself on the world stage in eco- 
nomic matters and the consistent German wish to integrate its 
economy into the EU. 

Germany has benefited from a strikingly benign interna- 
tional economic climate for the past half-century. Despite occa- 
sional crises — such as the effects of the United States decision 
to end the dollar's link to gold in 1971 and of the "oil shocks" 
of the 1970s that resulted from exporters' sharp increases in 
the price of petroleum — the global economic scene has been 
remarkably stable in comparison with that of the 1920s and 
1930s. This stability has favored the kind of international trad- 


Germany: A Country Study 

ing state that West Germany represented and that united Ger- 
many is expected to become once unification is complete. 

Under United States leadership, the Western world with 
free-market economies established the International Monetary 
Fund (IMF — see Glossary) and the World Bank (see Glossary) 
in 1944. In 1947 these nations created a virtually universal 
trade structure, the General Agreement on Tariffs and Trade 
(GATT — see Glossary). The combination of open financial and 
trade systems has helped promote continuous and even dra- 
matic expansion since World War II of world trade and the 
liquidity of international capital. Nothing could have better 
suited West Germany and now united Germany. 

The productive capacities of both East Germany and West 
Germany always exceeded the absorptive capacity of their 
respective domestic markets. From the West German stand- 
point, this characteristic helped to fuel the German export 
drive and to generate investment capital. It also strengthened 
the deutsche mark and helped make the German economy 
internationally prominent. 

Although Germany has a global currency and a world-class 
trade sector, the German economy remains essentially conti- 
nental in focus. Because the economy lacks the size necessary 
to deal with the effects of truly massive currency flows, Ger- 
many has looked for partners in international economic mat- 
ters as it has in international strategic and political matters. 

The German government and the Bundesbank, Germany's 
central bank, are active participants in formal and informal 
international institutions and arrangements concerned with 
global finance and the coordination of national economic poli- 
cies. West Germany was a founding member of the association 
of free-market economies known as the Group of Five (G-5), 
which later became the Group of Seven (G-7 — see Glossary). 
But the German government has also had to acknowledge that 
it cannot direct the policies of the independent Bundesbank, 
which are more often based on Germany's domestic needs 
than on the wishes of the outside world. 

Germany in the World Economy 

Germany in World Finance and in the Group of Seven 

Along with the United States and Japan, Germany has one of 
the world's biggest economies and most dominant central 
banks. Of the three, Germany has the smallest and most vulner- 


International Economic Relations 

able economy. Germany's GDP of DM3 trillion (for value of the 
deutsche mark — see Glossary) is less than one-third of United 
States GDP and less than one-half of Japan's. 

Despite Germany's relatively small size, it has consistently 
exerted a powerful influence on the world economy. Since the 
end of World War II, the Federal Republic has played a key role 
in beginning, managing, or ending each crisis and each phase 
experienced by the global monetary system. 

The first phase was the Bretton Woods era, named after the 
New Hampshire resort where the Allied monetary conference 
of July 1944 created the IMF and shaped the global postwar 
order. The dollar was pegged to gold at a fixed rate of US$35 
per troy ounce, constituting the official backing of the global 
monetary system; other currencies were linked to the system 
through their own fixed, dollar-pegged exchange rates. Coun- 
tries could devalue or revalue with respect to the dollar, and 
the dollar price of gold could at least theoretically remain con- 
stant even as rates of exchange between separate currencies 

By the late 1960s, there was a surplus of dollars in the inter- 
national financial system. Largely for domestic reasons, the 
United States had put far more emphasis on expanding dollar 
liquidity than on maintaining dollar value. Growing fear of 
United States inflation had made those dollars less desirable, 
and many central banks held more dollars than they wanted. 
The United States proposed that other countries revalue their 
currencies as provided under the Bretton Woods Agreement. 
But those other countries, and West Germany in particular, 
were not prepared to revalue. Money poured into purchases of 
the deutsche mark, sometimes for the purchase of German 
goods, but more often to hedge against the dollar or to make a 
profit when — as was widely expected — the deutsche mark 
would have to be revalued. West German foreign-exchange 
reserves rose from US$2. V billion in December 1969 to 
US$12.6 billion by December 1971, and to US$28.1 billion by 
September 1973. The steady flow of foreign money into 
deutsche marks not only undercut the Bretton Woods system 
(see Glossary) but also threatened to import inflation into Ger- 
many by expanding the German money supply. 

West Germany tried to help support the dollar during the 
late 1960s and early 1970s. Bundesbank president Karl Blessing 
sent a letter to the chairman of the United States Federal 
Reserve Board pledging not to purchase United States gold but 


Germany: A Country Study 

to maintain West German reserves in dollars. West German 
chancellor Ludwig Erhard (1963-66) agreed to make large 
purchases of United States dollar instruments and to make 
"offset" payments to lessen demands in the United States Con- 
gress for a reduction in United States forces stationed in West 
Germany. The United States and several other nations pressed 
West Germany to revalue in order to compensate for the dollar 
glut. Although the Bundesbank would have favored revaluation 
to reduce the risk of inflation, the West German government 
was afraid that a revaluation would cut into West Germany's 
global competitiveness and curtail exports. 

Finally, after intensifying waves of speculation, the Bretton 
Woods system collapsed in August 1971. The United States 
stopped the sale of gold at US$35 per troy ounce and thus 
removed the fixed link between the dollar and gold. With that 
step, the system lost its anchor. 

The deutsche mark remained under strain throughout the 
post-Bretton Woods period. It was alternately used in interven- 
tions to support the dollar or as a hedge against it. Other cur- 
rencies again flooded into purchases of deutsche marks. To 
ease pressure within Europe, West Germany and other Euro- 
pean states agreed to peg their currencies to a special system of 
relatively narrow exchange-rate bands formally entitled the 
"European narrow-margins agreement" but informally known 
as the "snake." But the snake also failed to hold. The domestic 
policies and even the economic philosophies of its leading 
member states — West Germany, France, Britain, and Italy — 
diverged too widely. The deutsche mark was the strongest cur- 
rency, and others could not hold their value against it. 

The United States and West Germany played key roles in try- 
ing to arrange a new global monetary system. But they had 
opposite objectives: the United States was determined not to 
have the dollar reassume responsibility for maintaining an 
international arrangement, fearing the great cost to its exports 
and economic stability. The United States government believed 
that countries with a trade surplus, such as West Germany, 
should accept part of the responsibility for solving exchange- 
rate crises and should be prepared to revalue, and it insisted on 
advance agreement for sanctions against any country that 
refused to do so. Despite its readiness to make minor 
exchange-rate adjustments for the sake of new currency align- 
ments, West Germany refused to commit itself to any arrange- 
ment that would oblige it to revalue in the future. 


International Economic Relations 

In March 1973, the United States and other governments 
and central banks gave up trying to preserve the Bretton 
Woods system by setting new fixed exchange rates. With that 
decision, the next phase of the postwar international system, 
"floating," began. With floating, the relationship between the 
United States dollar and the deutsche mark became subject to 
market forces rather than official negotiations. West Germany 
was not certain whether floating would serve its needs but was 
not prepared to pursue any alternative. 

Floating did not insulate domestic economies from interna- 
tional events and global economic forces. Although the float- 
ing era may have ended the period of fixed links to the dollar 
and to gold, it did not give countries complete monetary free- 
dom. It only meant that adjustments would be made by the 
markets, not by government decree or agreement. Those 
adjustments would, at least theoretically, occur in reaction to 
trade and payments imbalances, correcting them over time. 
However, the situation did not work out as expected or 
planned. The increasingly important role played by capital 
flows, speculative or not, undercut the theoretically self-regu- 
lating mechanism of trade flows as the basis of currency values. 

The economic consequences of floating for Germany were 
not uniformly beneficial. The Bundesbank welcomed floating 
because it gave the bank more flexibility. The bank, in fact, 
could virtually control the deutsche mark's exchange rate if it 
was prepared to manipulate interest rates to that end. But West 
German industry, and especially West German exporters, did 
not welcome the unpredictability that flexible exchange rates 
introduced into commercial arrangements and production 

West German exporters also faced a particular problem that 
persisted in the 1990s. The Bundesbank's favorite instrument 
for fighting inflation, a high real domestic interest rate, is also 
the instrument that attracts capital to the deutsche mark and 
keeps the currency valuable. Many businesspeople feared then, 
as they have since, that the Bundesbank's anti-inflationary pol- 
icy would always keep the deutsche mark stronger than most 
other currencies and would thus jeopardize exports. 

German exchange-rate policy has been constantly caught on 
the horns of that dilemma. When a decision absolutely needed 
to be made during the floating era, however, German govern- 
ments and the Bundesbank have almost always chosen an anti- 
inflationary course of action. They have preferred a strong cur- 


Germany: A Country Study 

rency, which might adversely affect trade, to a weak one, which 
would jeopardize the stability of the German monetary system. 
With that choice, they set policy for others as well as for them- 
selves. As long as the deutsche mark is strong and German 
interest rates remain high, even the United States can diverge 
from German policy only at the risk of seeing its own currency 
fall in value. Because of Germany's monetary dilemma, and 
because the German government as well as the nation's bank- 
ers and industrialists have recognized German limitations and 
vulnerabilities, all have been anxious to establish the highest 
possible level of international predictability. The Germans have 
become regular participants in international economic consul- 
tations, and they have emphasized the value of such consulta- 
tions at every opportunity. 

Global economic coordination after the end of the Bretton 
Woods system has resulted in the development of a number of 
coordinating institutions. One, first known informally as the 
Group of Five (G-5), consisted of the United States, West Ger- 
many, Japan, Britain, and France. After Canada and Italy 
joined, the association became known as the Group of Seven 
(G-7). The G-7 includes the finance ministers and central 
bankers of the principal economic powers, who meet periodi- 
cally and consult regularly between meetings. 

In addition to the meeting of G-7 finance ministers, there is 
an annual G— 7 economic summit at which the heads of state or 
government of the same seven countries meet to coordinate 
economic and political policies or at least to attempt to under- 
stand each other better. The summits have been held annually 
since 1975 on a rotating basis among the summit states, usually 
in the capital. At the Naples summit of the G-7 in 1994, Russia 
joined the political discussions, essentially turning the gather- 
ing into the Group of Eight (G-8). 

Three summits, those of 1978, 1985, and 1992, took place in 
Germany. Each was significant for different reasons. In 1978 
Chancellor Helmut Schmidt (1974-82) committed West Ger- 
many to a more reflationary policy, to his later regret. Seven 
years later, Chancellor Helmut Kohl (1982- ) and other sum- 
mit principals made commitments toward supply-side policies 
that most participants agreed were then necessary and that 
both Kohl and United States president Ronald Reagan wanted 
to use to reduce the role of government in their national econ- 
omies. Seven years later, at Munich in 1992, the G-7 agreed to 
provide aid to Russia. However, the summit did not reach 


International Economic Relations 

agreement on the Uruguay Round of the GATT negotiations, 
and Chancellor Kohl did not carry out what the United States 
had regarded as his promise to persuade the French to reduce 
their insistence on large EC agricultural export subsidies. 

German bankers and financial officials have usually spoken 
skeptically about possible results from the summits, making 
abundantly clear that the meetings do not affect their views, 
although they may subsequently adjust specific policies. 
Bundesbank president Hans Tietmeyer has stated that West 
Germany sees them as occasions for "cooperation," not "coor- 
dination." German global policy has thus been guided by broad 
efforts to coordinate specific policies, but with a firm wish to 
preserve German interests and its friendships with the EU 
members it considers its principal economic partners. 

The Deutsche Mark as an International Currency 

At the core of Germany's success and influence lies its cur- 
rency. The deutsche mark gave concrete expression to West 
Germany's international financial and economic success and 
also contributed to it. Since unification, it has become even 
more important as a symbol as well as an instrument of Ger- 
many's new central role in Europe. The success of the deutsche 
mark has been anchored in the success of West German 
exports, in the Bundesbank's solicitous management of the 
currency's value, and in the confidence generated by the coun- 
try's prosperity. 

The deutsche mark has been a model of stability since it 
became fully convertible in 1958. No other major currency, 
including the Japanese yen or the Swiss franc, has been stron- 
ger. The United States dollar, the cornerstone of the global sys- 
tem, has lost about two-thirds of its value against the deutsche 
mark since 1958. 

The deutsche mark has become the second-largest currency 
component of global monetary reserves, second only to the 
United States dollar. Less than 10 percent of the world's mone- 
tary reserves were held in deutsche marks throughout most of 
the 1970s, but the amount rose to 15 percent by the end of 
1987. By the end of 1989, around 20 percent of all global mon- 
etary reserves were in deutsche marks. The deutsche mark's 
position in global monetary reserves largely reflects the exten- 
sive deutsche mark holdings in European foreign-exchange 
reserve accounts as well as the desire among all industrial state 
treasuries and central banks to hold a stable currency in their 


Germany: A Country Study 

reserves. According to the United States Federal Reserve 
Board, the United States government holds more than US$13 
billion of its reserves in deutsche marks, an amount greater 
than its holdings in Japanese yen. 

The deutsche mark is not used as widely for transactions as it 
is to supply central-bank reserves. Global commodity prices are 
still largely denominated in United States dollars. Whatever the 
deutsche mark's strengths may be, it does not offer the kind of 
liquidity that the dollar does. Invoicing in deutsche marks is 
concentrated on Germany's own commerce, but almost 15 per- 
cent of world trade is conducted on a deutsche mark basis. The 
deutsche mark figures much less significantly than the dollar in 
the creation of international credits or in debt servicing. But a 
growing quantity of international bond issues — including some 
being floated in the United States — are denominated in deut- 
sche marks. Major United States banks offer deutsche mark 
accounts for Americans who want to hedge some of their assets 
against a fall in the dollar. The World Bank has floated Euro- 
deutsche mark bonds, as have various United States corpora- 
tions. In Europe the deutsche mark has virtually become a 
parallel currency, with prices in Western Europe and Eastern 
Europe increasingly quoted in deutsche marks as well as in 
local currencies. 

Bundesbank officials worry constantly that the growing cir- 
culation of the deutsche mark makes it difficult to control the 
supply of the central bank's own currency. Deutsche marks 
held abroad, circulating abroad, and perhaps even used for 
currency intervention abroad are still part of the total German 
money supply. Sudden, large flows could have undesirable 
impacts on German interest rates or German prices, materially 
complicating the execution of German monetary policy. The 
bank fears that any decline in the deutsche mark's value or in 
the German current-account surplus could set off a selling 
wave that would force it to intervene massively and perhaps 
unsuccessfully. Bundesbank president Tietmeyer has warned 
that the high deutsche mark holdings abroad place a particular 
burden on the Bundesbank because any loss of faith in the Ger- 
man currency could provoke large-scale selling. The deutsche 
mark has thus become a burden for Germany as well as a bless- 
ing. The Bundesbank stated in May 1991 that one reason it had 
to maintain high interest rates was to avoid the kind of decline 
and subsequent market effects that Tietmeyer had cited. The 
German currency risks finding itself on a treadmill where the 


Frankfurt am Main, a typical German mixture of old and new, has a 
medieval square, the Romerplatz, and a skyline of skyscrapers, 

headquarters of large banks. 
Courtesy German Information Center, New York 

stronger it gets, the stronger it must remain until the German 
monetary authorities no longer dare to reduce interest rates 
significantly for fear that they might spark a deutsche mark sell- 

The IMF recognized the reality of German monetary power 
in 1990, when it promoted Germany and Japan to share the 
second rank just below the United States and ahead of Britain 
and France. German government and banking officials were 
not certain that they welcomed such prominence, but they 
were prepared to accept it as a reflection of international 
appreciation of German monetary policies. 

The West German role in the development of the global 
financial and monetary system has been replete with ironies. 
No state consistently had a greater interest in developing a sta- 


Germany: A Country Study 

ble system and in cooperating in such a system. Nonetheless, 
West German policy helped undermine and even destroy some 
of the arrangements that West Germany wanted to maintain. 
During the Bretton Woods era, pressures on the dollar almost 
always expressed themselves in massive purchases of deutsche 
marks. The strength of the deutsche mark weakened the sys- 
tem because any currency — including the United States dol- 
lar — could come under attack if it were not defended and 
preserved as solicitously as the deutsche mark was by Germany. 
The only currencies and systems that survived this pressure 
were those whose governments determined from the begin- 
ning that they would follow a strict monetary discipline similar 
to that applied by the Bundesbank to the deutsche mark. 

Germany in the European Economy 

Germany in the European Community 

If Germany's global role is beset with complications, its Euro- 
pean role seems relatively clear. Germany has always concen- 
trated its economic interests and activities, whether in trade, 
investment, or finance, within whatever form was being taken 
by West European integration. 

Although German economic and political interests cover all 
of Europe, they have been most immediately reflected in the 
EU and the European Monetary System (EMS). The Germans 
have found that these two systems complement each other. But 
the German government and German business and banking 
establishments have long had separate attitudes toward the two 
institutions, and they play a different role in each. 

The EC was West Germany's economic home, and the coun- 
try remains one of the organization's strongest supporters. 
Chancellor Kohl on several occasions made special efforts to 
promote European cooperation, especially concentrating on 
the drive to create a European Single Market and on the nego- 
tiation and ratification of the Treaty on European Union (com- 
monly known as the Maastricht Treaty — see Glossary) (see The 
European Single Market, this ch.). Kohl also intervened on 
occasion to avert potential conflicts between Germany's Euro- 
pean interests and its ties with the United States, although he 
had great difficulty resolving the dispute over agricultural trade 
that broke out between the United States and France during 
negotiation of the Uruguay Round of the GATT talks. He also 


International Economic Relations 

followed up German unification with efforts to draw the EU 
further toward Eastern Europe. 

Germans have consistently pressed for closer integration of 
the states of Western Europe, officially and in public opinion. 
They have also been among the staunchest European advo- 
cates of open trade between Europe and the outside world. 
German officials and political leaders have strongly and consis- 
tently asserted that United States fears about a "Fortress 
Europe" are misplaced. Whereas several other European 
states — especially France and Italy — have tried to limit imports 
of various foreign products to the EU, the German government 
has argued for open markets, imposing fewer controls or 
restrictions on trade than most European states. 

West Germany, and especially West German industry, carved 
out an important export niche within the EC. In the process, it 
made the EC an essential market for German goods and an 
important factor in German prosperity. Because one-third of 
West German GDP was exported and because one-half of all 
exports went to countries of the EC, at least one of every six 
West German jobs depended directly on the EC market. Many 
other jobs depended on imports from EC states or on the gen- 
eral prosperity the EC had brought to all its members. 

The intimate connection with the EC was reflected in West 
German trade statistics (see table 19, Appendix). Not only did 
more than half of West German exports go to other EC coun- 
tries, but many West German industries relied on the EC for a 
major share of their total market — whether domestic or inter- 
national. Before unification in 1990, 48 percent of West Ger- 
many's production of office machinery was exported to other 
EC countries, as was 24 percent of its chemical goods and 
machinery, 23 percent of its motor vehicles, 17 percent of its 
electronic goods, 16 percent of its textiles, and 14 percent of its 
iron and steel. 

But if West European trade was vital to West Germany and 
remains so for united Germany, West Germany was vital to the 
success of the EC. Even before German unification, there were 
more Germans — more than 60 million — than any other 
nationality in the EC. With unification the figure came to 
about 80 million. West Germany alone already had the largest 
share of the EC's GDP, over 25 percent; the largest amount of 
private consumption, more than DM1.2 trillion in 1988; and 
the largest investment in other EC countries, DM56.7 billion. 
Because the German share of EC production and consumption 


Germany: A Country Study 

was expected to grow in the aftermath of unification, the EC 
recognized the impact of this process by allotting united Ger- 
many a larger number of seats — ninety-nine — in the European 
Parliament than any other state. 

The Federal Republic was often termed the EC's "paymas- 
ter." Its net contribution to the EC budget was often four times 
as large as the next-largest contribution because West Germany 
never drew as heavily as such states as France or the poorer 
Mediterranean countries on either the agricultural or the 
developmental support programs. West Germany regularly pro- 
vided over 25 percent of the EC budget, with no other state 
contributing more than 20 percent; and united Germany's pro- 
jected share of the 1994 EU budget was 30 percent, or DM44.1 
billion. Although Germany was receiving some EU aid in 1994 
to develop the economy of the former East Germany, united 
Germany will in the future be expected to contribute an even 
larger share to the EU than West Germany did — in part 
because Germany itself is larger and in part because many pro- 
spective East European members will need support. This was 
one reason Germany strongly supported the EU membership 
applications of such relatively well-to-do states as Norway, Swe- 
den, Finland, and Austria. Germany's contribution to the EU is 
becoming increasingly controversial, however, as more and 
more Germans complain about the growth of the EU budget. 
Several German political figures, including Bavaria's political 
leader, Minister President Edmund Stoiber, have said that Ger- 
many must reduce its contribution. 

Because of the multifaceted economic relationships between 
Germany and other EU countries, different ministries in Bonn 
can have different and even conflicting interests and policies 
concerning various items on the European agenda. Many min- 
istries have their own direct links to the EU bureaucracy in 
Brussels, and the German government has occasionally spoken 
with several voices at different levels until the problems were 
brought to the attention of senior officials in Bonn and priori- 
ties were established. By the same token, German ministries 
have at times used elements within the European bureaucracy 
to support their views at home. It has been left to the three 
ministries with the broadest responsibilities — the Ministry for 
Economics, the Ministry of Finance, and the Ministry of For- 
eign Affairs — to try to keep these separate issues in a total 
national-interest perspective. Those ministries have also had to 
block collusion between European and German bureaucracies 


International Economic Relations 

to devise new subsidies and new ways to protect or subsidize 
special German or European interests. 

Management of the EU's Common Agricultural Policy 
(CAP — see Glossary) illustrates some of the conflicts in intra- 
German interests. That system, by its commitment to subsidize 
both production and exports, has become increasingly expen- 
sive. It consumes more than half of the EU budget, or more 
than US$35 billion a year. Germany's Ministry of Agriculture 
has often tried to use the EU to drive support prices higher and 
to prevent or restrict foreign imports. The Ministry of Finance, 
by constrast, has sought to reduce the CAP in order to cut the 
German contribution to the EU. 

The European Single Market 

To advance the EC toward a truly integrated and borderless 
internal market — the European Single Market — the EC's Euro- 
pean Commission (see Glossary) in 1985 submitted a white 
paper to the European Council (see Glossary) in which it listed 
a series of 225 steps needed to create such a market. It also pro- 
posed a schedule for completing these steps in time for the 
internal market to begin functioning by the end of 1992. The 
council accepted the commission's proposals, with West Ger- 
many strongly supporting the concept. West Germany later 
advanced the process significantly during its presidency of the 
council in the second half of 1988. 

Once Germany was united, it remained among the Euro- 
pean states the most determined to implement the conditions 
of the European Single Market. Even before the formal imple- 
mentation of the single market on January 1, 1993, Germany 
had already incorporated 80 percent of the single-market regu- 
lations into its own legislation, a higher percentage than any 
European state except Denmark or France. Notably, the Ger- 
man government also applied those new regulations in the five 
new states {Lander, sing., Land) of the former East Germany, as 
well as in the old Lander of western Germany. 

Not all Germans welcomed the coming of an open internal 
market. Many worried that the guidelines for such a market 
would give so much power to the bureaucrats within the Euro- 
pean Commission that economic initiative within the member 
states might be stifled. Many German businesspeople dreaded 
the prospect of more EU offices in Brussels enforcing more 
regulations. Some Lander, especially Bavaria, as well as a num- 
ber of German communities, became disturbed by prospects 


Germany: A Country Study 

that the EU would in the future have such immense powers 
over economic life that the German federal system itself could 
be placed in jeopardy. As a result, Germans have become 
strong advocates of the principle of Subsidaritat (subsidiarity), 
under which matters not specifically covered by EU laws are left 
to the practices and the laws of the individual national states. 

Despite steady German government support for the internal 
market, attitudes in German business and economic circles 
also have remained mixed, depending on the size and interests 
of the affected firms. The largest German firms with strong 
export positions strongly favor the internal market. The mid- 
sized firms, which are unable to relocate their main production 
sites or develop subsidiary sites abroad, have a more cautious 
reaction. Smaller firms, especially those involved in handicrafts 
or services, are fearful of the competition that might come 
from other European countries with lower production costs. 

Just as firms of different sizes have reacted differently to the 
internal market, so have firms in different industries. The pro- 
ducers of Germany's most competitive products — whether 
automotive manufacturers, toolmakers, chemical firms, or elec- 
tronics firms — regard the single market as an opportunity. By 
constrast, Germany's relatively inefficient service firms, 
whether in telecommunications, banking, or insurance, see the 
market as a threat because it would eliminate national regula- 
tions that had given them privileged positions. 

German trade unions particularly fear the internal market. 
They have warned that it will cause production to move to 
countries and regions where wages are lowest and social bene- 
fits most limited. Despite the existence of strict EU standards 
governing the rights and privileges of workers, the trade 
unions have consistently warned of "social dumping," the temp- 
tation for manufacturers to look for those sites where regula- 
tions are less stringent or are less vigorously enforced than in 

German environmentalists, for their part, fear that German 
manufacturers might shade their environmental commitments 
in order to keep their costs as low as possible against competi- 
tors who face fewer environmental problems in less densely set- 
tled countries (see The Environment, ch. 3). Environmentalists 
have also expressed concern that manufacturers will be 
tempted to locate production facilities abroad, where environ- 
mental standards might be less rigorously enforced or where 
less severe population and land-use pressures might make pol- 


International Economic Relations 

lution seem less onerous. As German trade unions fear social 
dumping, the environmental groups fear "environmental 

With the continued development of the internal European 
market, many Germans began to perceive another danger — 
that the EU might become so internally focused that it could 
become too protectionist. The Board of Advisers to the Ger- 
man Ministry for Economics warned in 1990 that such protec- 
tionist thinking, if not promptly countered, could jeopardize 
European prosperity. German industry and trade associations 
have expressed similar concerns, warning that the protectionist 
risk of the internal market must be fought at every level to 
avoid driving Germany ever more into a limited European 
mold. German industry has consistently pointed out that Ger- 
many stands to lose far more than any other European state if 
the global trading system collapses because of the protectionist 
proclivities of the EU. 

The increasing power of protectionist forces in the EU has 
raised concerns in Germany about the potential for the emer- 
gence of three separate and competitive regional trading areas, 
the EU, the Americas, and Asia, with some form of negoti- 
ated — or managed — trade among them. Any such arrange- 
ment negotiated by the EU would establish quotas for each 
side, and Germany almost certainly would not obtain as large a 
share of any European quota as that which German exporters 
could obtain on their own. 

Regardless of its concerns about protectionism, the German 
government has continued to insist that it will fulfill its commit- 
ment to complete European integration and the single market. 
Political considerations, especially Germany's relationship with 
France, have helped to shape and support that policy as much 
as economic considerations have. But the Germans have 
noticed with concern that France is often the state that tries to 
make the EU more protectionist. The Germans believe that 
they cannot support such French efforts, even if they cannot 
block them. German minister of foreign affairs Klaus Kinkel 
has warned that Germany does not agree with all French views 
on international trade rules, but Chancellor Kohl remains 
reluctant to press France toward a more open global trading 

Kohl, in fact, has sought to use EU cooperation to help 
cement a close German relationship with France. He and 
French president Francois Mitterrand promised in early 1994 


Germany: A Country Study 

that they would use the successive German and French presi- 
dencies of the European Council during the last half of 1994 
and the first half of 1995 to plan and execute a joint program 
for the further development of the EU. 

Germany and the European Union 

Kohl believed that it was important for a united Germany to 
have a firm anchor in the West, especially in a structure for 
West European and, later, European, integration (see Euro- 
pean Union, ch. 8). He therefore played a major part in gain- 
ing Europe-wide approval of the Maastricht Treaty negotiated 
at the European Council summit in December 1991. He 
refused to be deterred after a first Danish referendum rejected 
the treaty, insisting that Germany proceed to ratification. The 
two houses of parliament, the Bundestag and Bundesrat, vindi- 
cated Kohl's position, approving the Maastricht Treaty by over- 
whelming majorities despite reservations in some Lander that it 
might undermine the German federal system by giving the EC 
and its European Commission greater powers over the separate 
Lander than even the Bonn government possessed. 

Germany also strongly supported the creation of the Euro- 
pean Economic Area (EEA — see Glossary), established in 1993 
to create a trade area consisting of the EC and most of the 
states of the European Free Trade Association (EFTA — see 
Glossary). It later advocated the entry of four EFTA mem- 
bers — Norway, Sweden, Finland, and Austria — into the EU. By 
the same token, Germany has favored developing close links 
between the EU and the East European states, although Ger- 
man farmers and steel manufacturers have joined other EU 
producers in seeking to block those East European imports 
that would be most competitive with their own output. 

During the entire process of creating a more integrated 
Europe, Kohl and Minister of Foreign Affairs Kinkel continu- 
ously stressed the German commitment to integration. Kohl 
has told the Bundestag that Germany's national future lies in 
Europe, and he has used every possible opportunity to point 
out that Germany's firmly anchored position within Europe has 
been mainly responsible for giving Germany peace, prosperity, 
and its chance at unification. 

Germany in the European Monetary System 

West Germany helped to start the European Monetary Sys- 
tem (EMS) in the late 1970s and has long provided the anchor 


International Economic Relations 

of its principal operating element, the European exchange-rate 
mechanism (ERM — see Glossary). It has exercised consider- 
able and sometimes even dominant influence on the evolution 
of European monetary affairs. Nonetheless, the EMS was much 
more difficult for West Germany to propose or even to accept 
than the EC. Although much of West German business and 
government felt very much at home in the EC from the begin- 
ning, Germany had reasons to be much more anxious about 
monetary cooperation. 

The concepts of the EMS and the EU are very different, 
although they may be complementary, and they look especially 
different to Germans. A common trading area within Europe 
helps Germany to do what it does best: produce and export. 
Although Germans have had to open their own borders to oth- 
ers, they have always been confident about meeting such a chal- 

Money, however, is something else again, especially in Ger- 
many. West Germany's strict monetary policy was seen by many 
West Germans as the guarantor of the Federal Republic's stabil- 
ity and prestige. Any West German political or economic 
debate assumed the solidity of the deutsche mark. European 
monetary cooperation could only be acceptable in West Ger- 
many if it jeopardized neither the deutsche mark nor the pol- 
icy that had given the currency its success and had given West 
Germany its prosperity and domestic tranquillity. 

Many West Germans feared that European monetary coop- 
eration would have a pernicious effect on West Germany's own 
money by posing a risk to the independence and integrity of 
West German financial and monetary policies. They believed, 
and not without reason, that many other states in Europe did 
not share West Germany's belief in monetary stability as the 
principal objective of financial policy. They looked with partic- 
ular suspicion at Britain, Italy, and the smaller countries of 
southern Europe. 

The West German government and the Bundesbank tried, 
therefore, to ensure that no European monetary arrangement 
would interfere with West Germany's freedom to choose its 
monetary objectives and policies. They consistently tried to 
construct arrangements that would give them a dominant 
influence over European policy or, if that was impossible, 
would at least enable them to continue pursuing their tradi- 
tional goals. The West German government and the Bundes- 
bank did not always agree about what constituted satisfactory 



Liibeck, a Baltic port, has linked Germany to the outside world since 
the Middle Ages. On the left: old salt warehouses; on the right: one of 

the city 's gates, the Holstentor. 
Courtesy Liibeck-North America Representation, New York 


Germany: A Country Study 

arrangements, however, with the bank usually being more cau- 
tious than the government. Nonetheless, West Germany 
helped to establish the system of European monetary coopera- 
tion and was among its main beneficiaries. 

A number of proposals for European monetary cooperation 
were advanced and discussed as the European Coal and Steel 
Community (ECSC) came into being in 1951, as other plans 
for West European cooperation were considered, and as the 
Bretton Woods system began to crumble in the 1960s. None 
came to fruition, but they provided some of the intellectual 
foundations for later efforts. It was only in 1972, after the col- 
lapse of the Bretton Woods system, that the first arrangement 
for true European coordination was put into place — the Euro- 
pean narrow-margins agreement, which came to be known as 
the "snake" (see Germany in World Finance and in the Group 
of Seven, this ch.). West Germany helped to establish the sys- 
tem, a joint European float whose purpose was to ensure that 
European currencies would not fluctuate more against each 
other than against the United States dollar. 

The deutsche mark became the strongest currency in the 
snake. It remained at the top of the snake's trading range, in 
part because of West Germany's export surplus but especially 
because West German domestic monetary policy inspired con- 
fidence that the deutsche mark's value would be protected and 
might even rise against other currencies. Others soon learned 
that staying in the snake meant a commitment to emulate the 
policies of the Bundesbank or to suffer the exchange-rate con- 
sequences of any divergence. Because most countries could not 
do this, the snake had to be abandoned as a major interna- 
tional currency arrangement. But a truncated snake did sur- 
vive, in part because some smaller countries were prepared and 
to some extent were obliged to follow the West German lead, 
and in part because, despite its imperfections, it offered a 
modicum of stability. 

As the 1970s drew to a close, there were debates about mon- 
etary policy in almost every European country. Whatever the 
imperfections of the snake, it was clear to many states that any 
port in a storm might be better than none. The oil shocks con- 
fronted Western states with pressures that paradoxically could 
be both recessionary and inflationary. Some countries, such as 
the United States, chose to counteract the recessionary pres- 
sures. Others, such as West Germany, chose to counteract the 
inflationary threats. Most European countries increasingly 


International Economic Relations 

found the West German approach more congenial than that of 
the United States. 

The main debate in West Germany, as in several other large 
European countries, was between those who came to be known 
as the "monetarists" and those who came to be known as the 
"economists." The monetarists believed that introducing fixed 
exchange rates would force countries to pursue similar eco- 
nomic policies and that this would make interventions less nec- 
essary, and perhaps even unnecessary. The economists argued 
that common economic policies had to precede fixed 
exchange rates because the exchange-rate system would break 
down otherwise. They thought that a common currency should 
cap a structure of common policy, not help to build it. 

Most West German economists as well as government and 
Bundesbank officials belonged solidly in the economist camp. 
They did not want to join in any European monetary collabora- 
tion until European states had shown that they would coordi- 
nate economic policies. The experience with the snake, and 
the costly and frequent interventions that it had required 
before it finally broke down, only hardened their attitudes. 

It was against this background of deep skepticism that Chan- 
cellor Helmut Schmidt decided in 1978 and 1979 to cooperate 
with French president Valery Giscard d'Estaing in creating the 
EMS. Because of opposition from the Bundesbank and the 
Ministry for Economics, Schmidt conducted the crucial initial 
phase of the negotiations in great secrecy, keeping them secret 
from the German bureaucracy and the Bundesbank. 

The EMS established not only a zone of monetary coopera- 
tion but also a European currency known as the European cur- 
rency unit (ECU — see Glossary). It was designated to represent 
a basket of currencies from the EMS countries, to be used ini- 
tially for certain clearing and credit transactions and ultimately 
as a common European currency. Deutsche marks became the 
largest element in the backing of the ECU. 

When the EMS and its companion, the ERM, were formally 
established on March 25, 1979, Schmidt's role committed Ger- 
many to their success. Thus, West Germans became involved in 
an area of European economic policy that was of the utmost 
sensitivity to them. They did not do so without some reserva- 
tions. But they saw no alternative. 

The EMS and especially the ERM succeeded in making West- 
ern Europe something of a zone of stability around the 
deutsche mark. After a difficult beginning, marked by frequent 


Germany: A Country Study 

currency realignments during the early and mid-1980s, the 
exchange rates of the ERM currencies were much more stable 
relative to each other than in relation to the United States dol- 
lar or the Japanese yen until 1992. 

However one might choose to allot credit for the success of 
the EMS and ERM, they represented both a theoretical setback 
and a practical triumph for the Bundesbank, because they 
showed that the monetarist school might well have been cor- 
rect and that a stable ERM, accompanied by a commitment to 
hold to the agreed rates, could compel states and their central 
banks to pursue congruent policies as long as they were deter- 
mined to stay within a system. The effectiveness of the EMS and 
ERM also suggested that a system of fixed exchange rates might 
act as a catalyst in facilitating policy because it would give states 
an additional reason to coordinate and could be said to pro- 
vide a sanction if they failed to coordinate. 

It has often been said that the ERM represents a "deutsche- 
mark zone" within the EU. The deutsche mark has been the 
EU's lead currency, the principal intervention currency, the 
principal reserve currency, and its psychological as well as prac- 
tical anchor. 

During the twelve years from the onset of the ERM to the 
Maastricht summit in 1991, the revaluation of the deutsche 
mark against other ERM currencies had been 38 percent 
(including 58 percent against the Italian lira and 45 percent 
against the French franc), but most of the revaluation had 
taken place early in that period, with the practice becoming 
much less common after the mid-1980s. At the end of the 
1980s, it could be said that the ERM had been a considerable 
success for all the states involved. But it had mainly been a suc- 
cess for West Germany, demonstrating the benefits to others of 
associating themselves with West Germany's economic philoso- 

The members of the EC decided even before the end of the 
1980s to explore further monetary cooperation as the commu- 
nity advanced toward the single market. In June 1988, at the 
European Council meeting in Hanover, they established a com- 
mission chaired by the president of the European Commission, 
Jacques Delors, to study and propose "concrete stages leading 
toward economic and monetary union." Delors's report, sub- 
mitted on April 17, 1989, envisaged a transition in three stages 
toward an EMU with a single common currency. The objectives 
of the first stage, to commence on July 1, 1990, were to expand 


International Economic Relations 

the ERM to include all EC members, to permit free capital 
flows, and to take other measures toward coordinating eco- 
nomic and monetary policies. In the second stage, for which 
no starting date was then proposed, a European system of cen- 
tral banks would be created, leading to the formation of a sin- 
gle central bank. In the third stage, a single currency managed 
by a European central bank would be created, and even greater 
powers would be granted to the EC to establish common finan- 
cial policies among its members. 

After the Delors Plan was announced, the West German gov- 
ernment and the Bundesbank reacted cautiously, although 
both the Ministry of Finance and the Bundesbank had helped 
to draft the report. Having been pleased with the achievements 
of the ERM, the West Germans were prepared to examine an 
arrangement that would go further toward monetary union. 
But they were not ready to agree to anything that would upset 
what they regarded as the foundations of their own prosperity. 
The Bundesbank in particular wanted to make certain that any 
European system would reflect its own thinking. 

Germany and the European Monetary Union 

Germany played a major role in shaping the currency provi- 
sions of the Treaty on European Union signed in December 
1991 in Maastricht, the Netherlands, especially in making cer- 
tain that those provisions would assure a stable European cur- 
rency. In broad terms, the agreement, often referred to as the 
Maastricht Treaty, provided for the same three phases earlier 
proposed in the Delors report, although with later deadlines 
for each phase. It also provided for a transitional stage to eco- 
nomic and monetary union to begin in January 1994 with the 
creation of the European Monetary Institute. The institute was 
given a mandate to coordinate EU members' monetary policy, 
to oversee preparations for the transfer to a European cur- 
rency, and to create the right conditions for the final stage of 
monetary reform — a European System of Central Banks 
(ESCB), a single European Central Bank (ECB), and a com- 
mon currency. 

The ESCB and ECB agreed upon at Maastricht are the types 
of institutions the Bundesbank might welcome. Their common 
mandate was to assure price stability and a stable European cur- 
rency, although the ECB was also instructed to ensure sustain- 
able growth with high employment. The structure of the ECB 
itself was to resemble that of the Bundesbank (see The Bundes- 


Germany: A Country Study 

bank, ch. 5). Its council, like the Bundesbank's executive Direk- 
torium (Directorate — see Glossary), would consist of an 
executive board and the presidents of those national banks 
whose currencies qualified for entry into the EMU. The ECB 
would be independent of political control, and the central 
banks of all European states would be independent of such 
control even before the end of the first stage of the EMU. 
Thus, the principles guiding the Bundesbank and the deutsche 
mark would also guide the ECB and the future European cur- 

The Maastricht principals agreed that the final stage in the 
movement toward the EMU would begin in 1997 if the Euro- 
pean Council decided that a majority of EU members had met 
five convergence criteria: inflation within 1.5 percent of the 
average of the three best (i.e., lowest) rates; long-term interest 
rates within 2 percent of the three best rates; a budget deficit of 
less than 3 percent of GDP; a national debt of less than 60 per- 
cent of GDP; and a stable currency, as shown by conformity 
with the narrow band of the ERM and an absence of devalua- 
tions within two years of the council's decision to move toward 
a European currency. If the majority of EU members did not 
meet these convergence standards, the EMU was to start in 
1999 with as many members as had met the criteria. Britain was 
authorized to leave the system. At France's insistence, however, 
Germany was required to enter the EMU if France entered, 
thus ensuring that the Bundesbank could not conduct a policy 
independent of a European system. 

The convergence criteria reflect the Bundesbank's determi- 
nation to make certain that no unstable currencies enter the 
EMU. The criteria also put pressure on European governments 
and central banks to begin conforming to Bundesbank princi- 
ples before a monetary union is accomplished. 

The Maastricht formula represents a compromise between 
the monetarist and the economist camps on the issue of Euro- 
pean integration. It pleased the monetarists — and thus the 
French — by establishing a strict calendar for the transitional 
stages to the EMU and by using monetary policy and the desire 
for a common currency to compel the European economies' 
acceptance of convergence. The formula pleased the econo- 
mists — and thus the Bundesbank — by making EMU member- 
ship subject to the kind of criteria that would force 
governments and central banks to pursue similar policies even 
before the final stage of the EMU. Most important, from the 


International Economic Relations 

standpoint of the economists and the Bundesbank, it created a 
standard for EMU membership. 

Although the Maastricht arrangements were designed to 
please the Bundesbank and to assuage German concerns, the 
German people reacted negatively. Popular media depicted 
"Germany's beloved deutsche mark" vanishing into the dis- 
tance or sinking into a swamp, and opinion surveys revealed 
fears that the politicians had surrendered the cornerstone of 
German prosperity for the sake of a united Europe. If the 
Maastricht provisions for the EMU had been subject to a refer- 
endum in Germany, they almost certainly would have failed to 
gain a majority. 

The German government had to offer repeated assurances 
that it would never give up the deutsche mark for another cur- 
rency that was not as strong or as stable. It took some time for 
the German public even to entertain the notion that savings 
might one day be held in a currency other than the deutsche 
mark, and the public consistently made clear that it would 
accept that prospect only if that currency were as strong as the 
deutsche mark. 

The Bundesbank's Central Bank Council followed the Maas- 
tricht summit with a formal statement reiterating a number of 
well-known Bundesbank positions. In the statement, the coun- 
cil expressed regret that monetary union was moving forward 
more rapidly than a "comprehensive political union." It stated 
that such a political union was necessary if monetary union 
were to be effective. The council also warned that the success 
of any decisions taken on the path toward the envisaged eco- 
nomic and monetary union had to be judged "solely on their 
stability performance" and that "the fulfillment of the entry cri- 
teria of the convergence conditions must not be impaired by 
any dates set." The Bundesbank stressed that the policy unit of 
the EMU would be the ESCB — in which the Bundesbank could 
expect to have a strong voice — with the ECB to be subsidiary to 
the ESCB and thus subject to the Bundesbank's influence. It 
also stressed that the deutsche mark and the European cur- 
rency would coexist for some time at fixed exchange rates until 
all the conditions had been set for a European currency that 
would actually displace all national currencies. The Bundes- 
bank also reiterated the importance of having the ESCB and 
ECB remain completely independent of national governments. 

Both the German government and the Bundesbank wanted 
the new ECB to be located in Frankfurt am Main. To this end, 


Germany: A Country Study 

the Bundesbank and German officials indicated that they 
would make every effort to enhance the appeal of Germany 
and Frankfurt in particular as financial centers, although the 
bank warned that Germany should not take steps that could 
jeopardize financial stability for the sake of competitiveness by 
loosening German financial standards. The Institut fur Kapital- 
marktforschung (Institute for Research on Capital Markets) 
urged fast action to boost Frankfurt, warning that a more finan- 
cially integrated Europe would tend toward a single financial 
capital and that London and Paris were not only better placed 
than Frankfurt but also were making much greater efforts to 
emerge as dominant financial centers. 

But Bundesbank officials had more on their minds in early 
1992 than the Maastricht conditions for the EMU and the loca- 
tion of Europe's future financial center. The bank was attempt- 
ing to establish German monetary union within the recently 
united Germany, as well as to prepare for European unity, and 
was finding neither task particularly easy. The Bundesbank 
could have been expected to react guardedly to the Maastricht 
Treaty no matter what its terms might have been. But the fact 
that the treaty was signed as the bank was trying to deal with 
the German government's large fiscal deficits and the resulting 
upsurge in the German money supply made the Bundesbank 
both more hesitant about proceeding toward the EMU and 
more assertive in its insistence on what it considered the 
proper conditions. 

Since the early 1970s, the Bundesbank had effectively con- 
trolled European monetary policy. The deutsche mark had 
been the anchor currency of the snake and of the EMS and 
ERM. But the Bundesbank would become only one of many 
banks with a voice on the new council. The president of the 
ECB might well be a German, and the ECB might be based in 
Germany, but many different banks would have a voice in Euro- 
pean monetary policy, in effect removing the Bundesbank's vir- 
tual monopoly of authority. Some of those banks, even if they 
were to meet the Maastricht convergence criteria, might occa- 
sionally want to pursue policies different from those of the 

More problematic for the Bundesbank was the recognition 
that those other banks, through their influence on European 
monetary policy, would have a voice in German monetary pol- 
icy, because the EMU could not function if separate states and 
central banks could ignore any ECB policy they disliked. The 


The port of Bremen 
Courtesy German Information Center, New York 

Bundesbank might not only lose control over European money 
but perhaps over German money as well. Such a situation 
could violate the bank's own basic mandate, and it would cer- 
tainly violate its stability doctrine if the ECB failed to pursue 
what the Bundesbank perceived as the right kind of policy. 

The Bundesbank responded to these multiple challenges by 
setting forth on a course that was designed to put the indelible 
imprint of its philosophy on the new bank and the new cur- 
rency, or, if that were not possible, either to break up the EMU 
or to make it so selective that only a few countries could join. 
Thus the bank became engaged in a rigid, even doctrinaire, 
assertion of the primacy of currency stability. It proceeded to 
raise short-term interest rates throughout 1991 and much of 
1992, before and after Maastricht. Although it did so primarily 
for domestic reasons, it was certainly mindful of the effect that 
its policies would have on other European currencies. 


Germany: A Country Study 

As German interest rates rose, other European currencies 
and central banks found it difficult to match German policies 
at home. The recession that had hit Germany spread through- 
out Europe, in part for cyclical reasons but also because of the 
forced emulation of Bundesbank policies by countries inter- 
ested in joining the EMU. As the recession spread, several 
countries could not support their currencies except at the cost 
of an ever-greater slowdown. 

An exchange-rate crisis erupted in September 1992, after 
several countries had decided that they could no longer keep 
up with German interest rates. As those central banks began to 
lower short-term rates, investors began to abandon their cur- 
rencies, and speculators began to dump them. In response to 
desperate pleas from abroad and from large segments of the 
German political and economic communities, the Bundesbank 
lowered its Lombard rate (see Glossary), but only by a quarter 
point. Within days, the Italian lira had to be devalued and 
taken out of the ERM. The British pound also came under 
attack. This triggered "Black Wednesday," September 16, 1992, 
when the pound crashed while the Bundesbank refused to sup- 
port it. As a result, Britain withdrew the pound from the ERM. 

Only the French franc and the smaller currencies tradition- 
ally tied to the deutsche mark (such as the Belgian franc, the 
Dutch guilder, and the Danish krone) did not devalue, thus 
remaining in the ERM. All other EC currencies effectively 
devalued against the deutsche mark. The defense of the 
French franc cost the Bundesbank and the Banque de France 
tens of billions of deutsche marks, on which they realized a 
small profit after the French currency had stabilized. More 
important, however, it cost the Bundesbank its reputation for 
objectivity, at least in London, because the British complained 
that their currency had not been supported as the franc had 

In August 1993, a similar crisis erupted, but this time the cur- 
rency under attack was the French franc. With French inflation 
rates lower than those of Germany, the Banque de France 
began lowering short-term interest rates during the spring of 
1993 and continued lowering them throughout the summer. 
The French bank may have assumed that the background of 
firm French monetary policy since the mid-1980s would give it 
some leeway to lower short-term rates below the Bundesbank 
levels without weakening the franc. In the event, this proved 
incorrect. A full assault on the franc erupted in August. Even a 


International Economic Relations 

coordinated intervention by the Bundesbank and other institu- 
tions failed, and the franc weakened rapidly. 

To help protect the franc, and to avoid having to expend 
more resources in a futile fight, the ERJVI countries agreed that 
they would widen the bands in which currencies could diverge 
from each other from 2.25 percent to 15.0 percent. They 
assumed, correctly, that this change would stop the speculative 
assault on the franc. However, it also signified the collapse of 
the franc, one of the main currencies of the EMS. Only a few 
minor currencies remained as stable as the deutsche mark. 
However, the franc was able to recover later in 1993 to virtual 
parity with the deutsche mark. 

The two ERM crises left the prospects for the EMU uncer- 
tain. It seemed unlikely that more than two or three minor cur- 
rencies would be able to meet the convergence criteria by 
1997, and the system could not then come into effect because 
it would not include the majority of the countries of the EU. 
Under those circumstances, the earliest possible date for the 
EMU to take effect would be 1999, and even that target date 
would come into question if the EMU at that point were to 
encompass nothing more than the deutsche mark, the French 
franc, and some minor currencies. The German minister for 
economics, Gunter Rexrodt, predicted in mid-1994 that the 
EMU might not come about until 2001 or later. 

The Bundesbank had shown its readiness to exercise its 
power to shape and even to dictate the policies of other central 
banks. It had shown that, if Europe were no longer to be domi- 
nated by the Bundesbank itself, it should at least be dominated 
by the Bundesbank's ideals. The bank's Central Bank Council 
hoped that others would come to appreciate the value of stable 
money through the experience of having unstable money. But 
in case all central banks did not agree, Bundesbank president 
Tietmeyer said after the September 1992 crisis that the bank 
was prepared to accept what he called " gestaffeltes Vorgehen" 
(membership by stages), a process by which some states would 
join before others. The bank was clearly prepared to forego the 
EMU, or at least to postpone it, if the EMU might bring 
unqualified members into a common European currency sys- 
tem. And it was prepared to split the EMU, if necessary, to cre- 
ate at least a partial zone of European currency stability. 

The bank's stern views should not lead to the conclusion that 
the Bundesbank opposes a European currency. Indeed, several 
senior Bundesbank figures have at various times expressed 


Germany: A Country Study 

their conviction that a common European currency is desir- 
able. Such a currency would ease one of the burdens felt by the 
Bundesbank: it must now defend stability with only its own 
reserves and those of its immediate allies instead of with the 
reserves of an entire continent. Former Central Bank Council 
member Leonhard Gleske once spoke with envy about how the 
large domestic market of the United States helped the dollar 
adjust more easily than any single European currency to global 
fluctuations and crises. Gleske also observed that one of the 
objectives of a European currency would be to assume the lead- 
ing international role that even the deutsche mark could not 
assume and that such a European currency could gradually 
replace the dollar as a transactions and reserve currency. This 
prospect must be a powerful incentive for the Bundesbank, 
which has long distrusted United States monetary and fiscal 

The crises of 1992 and 1993 did not discourage other EU 
members from accepting Bundesbank discipline. They agreed 
later in 1993 to place the new European Monetary Institute as 
well as the future ECB in Frankfurt. That decision was a vote of 
confidence, or at least acceptance, for Bundesbank policies 
and attitudes, because Frankfurt is not only the home of the 
Bundesbank but is also regarded as the capital of German 
monetarist thinking. 

A full EMU will come about when the Bundesbank is satis- 
fied that all European governments are fully committed to sta- 
bility and when they have shown this commitment by adhering 
to the convergence criteria and by passing whatever other tests 
the bank may yet pose. As Bundesbank officials have said on 
every possible occasion, the Bundesbank believes that a stable 
currency is more important than a common currency. And the 
German government, although it supports the EMU, must 
accept the Bundesbank's policies if it is to secure the support of 
the German people for a common European currency. 

Foreign Trade and Investment 

Trade Philosophy and the Trade Balance 

West Germany has been one of the world's major trading 
nations, almost from the first days of the economic miracle that 
began in the early 1950s (see The Economic Miracle and 
Beyond, ch. 5). It also had high trade and current-account sur- 
pluses during most of these years, especially during the latter 


International Economic Relations 

half of the 1980s (see table 20, Appendix). It was the world's 
largest exporter in 1988, second largest after the United States 
in 1989, and first again in 1990 if East German exports before 
monetary unification in mid-1990 are included. West Germany 
was also consistently one of the world's largest importers. 

Ludwig Erhard set the tone for the future of German trade 
policy and practice when he was minister for economics in the 
early days of the Federal Republic. He made his own senti- 
ments very clear, saying in 1953 that "foreign trade is not a spe- 
cialized activity for a few who might engage in it, but it is the 
very core and even the precondition of our economic and 
social order." Commentators and authors on the German econ- 
omy speak of a German "export mystique," of deliberate 
domestic underconsumption to facilitate exports and increase 
competitiveness, and of an "almost unconscious" German mer- 
cantilism. The export sector has a powerful voice in German 
economic and commercial policy making, including a special 
Foreign Trade Advisory Council located in the Ministry for 
Economics. Senior German political figures rarely make visits 
abroad without including select German businesspeople in 
their official delegations. 

The German economy has failed to heed the export mys- 
tique only once, when the Hitler regime (1933-45) sought 
autarchy, or economic independence from the global econ- 
omy. Between 1910 and 1913, exports accounted for 17.8 per- 
cent of Germany's GDP. Their share declined to 14.9 percent 
in the second half of the 1920s and fell to only 6 percent in the 
second half of the 1930s, but by 1950 accounted for 9.3 percent 
of West Germany's GDP. Once the postwar economic boom got 
under way, exports rose to 17.2 percent of GDP in 1960, to 23.8 
percent in 1970, to 26.7 percent in 1980, and to approximately 
33 percent in 1990. 

Investment goods produced by West German industry were 
the most successful export items and contributed most heavily 
to the country's large trade surplus, although West Germany 
was competitive across a wide range of goods. The country 
imported more agricultural and processed food products than 
it exported (see table 21, Appendix). 

A number of West German industries dedicated significant 
percentages of their production for export: shipbuilding, 62 
percent; air and space, 59 percent; automotive products, 48 
percent; machine tools, 45 percent; chemicals, 44 percent; iron 


Germany: A Country Study 

and steel, 37 percent; and precision mechanics and optics, 31 

Several of the industries with a high export share, such as 
shipbuilding and airframes, were heavily subsidized in West 
Germany and have continued to be subsidized in united Ger- 
many. They are competitive in world markets on the basis of 
those subsidies. The subsidies demonstrate the extent of the 
German export commitment. West Germany would have had a 
substantial trade surplus even without the subsidized products 
of those industries, but it did not wish to sacrifice their global 
market share. 

After German unification, Germany's trade surplus shrank 
for several years. Whereas West Germany had shown a dramati- 
cally high trade surplus during the late 1980s until 1990, reach- 
ing almost US$80 billion in 1988, united Germany by 1991 was 
showing a much smaller surplus. Nonetheless, it was widely 
expected that large surpluses would return by the mid-1990s as 
the Lander of the former East Germany began to export more 
and required fewer imports. 

Especially crucial to the future foreign trade position of 
united Germany will be the competitiveness of industry in the 
new Lander of the former East Germany, which could not be 
predicted with any reliability in the years immediately following 
unification. During 1993 only 2 percent of German exports 
came from the new Lander. It was unclear whether this area's 
competitiveness had been destroyed, or whether the West Ger- 
man producers that had bought East German firms had 
decided to continue to export from their western firms instead 
of from their newly acquired eastern firms. Whatever hap- 
pened, it is worth remembering that the new Lander, like the 
western Lander, had generated a consistent trade surplus in 
capital and transport equipment, industrial consumer goods, 
and chemicals before unification. They could be expected to 
return to competitiveness in at least some of those areas. East 
Germany also suffered from several major shortages before 
unification, having trade deficits in fuels, raw materials, semi- 
manufactures, agricultural products, and processed foods. 
Most of those deficits would persist even after unification. 

With Germany united, the government expects trade with 
Eastern Europe to increase well over the levels West Germany 
had enjoyed and ultimately to exceed the level of separate East 
German and West German trade with Eastern Europe before 
unification. In fact, Germany's most important and most con- 


International Economic Relations 

sistent policy since 1990 has been to improve its connections to 
Eastern Europe without loosening its links to the West and thus 
to bring Eastern Europe and Western Europe together. After 
the fall of communism, German business representatives began 
visiting Eastern Europe in large numbers to establish or rees- 
tablish trade connections and to inspect potential investment 
sites or joint ventures. 

German economic links and outposts are being reestab- 
lished in Central Europe and Eastern Europe. The Czech 
Republic is again becoming an integral part of the industrial 
complex centered in Bavaria and Saxony, as Bohemia and 
Moravia were before World War I. The frontier region between 
Poland and Germany is already one of the most active border 
investment and trading centers in the world, beginning to 
emulate the Mexico-United States border and the Hong Kong 
hinterland as a place where Western capital meets non-Western 
labor and where goods are processed and exchanged freely. 
Cross-border traffic in goods and persons is burgeoning. Ger- 
man trade and investment being planned for the countries of 
the former Soviet Union and for Eastern Europe will make 
united Germany by far the largest single Western trading part- 
ner as well as the largest Western creditor of those states. 

Germany has provided more aid and investment to the 
former Soviet republics than any other West European state, 
contributing US$52 billion in aid to Russia and other members 
of the former Soviet Union between 1989 and 1993 as well as 
US$25 billion to the states of Central and Eastern Europe. 
More than one-half of East European and Baltic trade with the 
EU is with Germany. Other types of economic activities are also 
becoming common. For example, by 1994 the Deutsche Bank 
had opened a branch office in Prague and planned to open 
others throughout Eastern Europe. 

As part of that effort to speed the East's integration with 
Western Europe, Germany has not only endorsed but has often 
sponsored association agreements with the EU for the states of 
Eastern Europe and the former Soviet Union. It has also spon- 
sored several East European applications for EU membership. 
Kohl himself told Hungarians and Czechs in April 1994 that 
the EU without their countries would be a "torso." A month 
earlier, he told the Baltic states that they belonged in the EU as 
much as the Mediterranean states. Kohl also strongly advo- 
cated Russian membership in the annual Group of Seven (G- 
7) meetings — at least for political discussions. 


Germany: A Country Study 

The credits that Germany has been giving to its Eastern 
trading partners are not without risk. Russian and East Euro- 
pean debt has been accumulating for several decades. Virtually 
every East European state had trouble servicing its debts dur- 
ing the early 1990s, and special arrangements had to be made 
to reschedule Poland's debt. Nonetheless, the German govern- 
ment and German banks were prepared to extend further 
credits despite nagging doubts about when the credits would 
be repaid. German determination to increase trade with East- 
ern Europe and to invest more in that area reflects tradition as 
well as economic and political interest. Moreover, Germany is 
better located than any other West European state to trade with 
Eastern Europe, especially because Berlin remains one of the 
most attractive potential production, assembly, service, and 
transportation centers for East European trade. 

International Investment in and by Germany 

Before unification, West Germany had been a principal 
exporter of capital. This status was indicative of the capital sur- 
plus the country's firms and banks held abroad as a result of 
export earnings, but it was also a sign of the growing disparity 
between production costs in West Germany and abroad. Many 
West German manufacturers preferred to produce in other 
countries where lower costs might give them a greater competi- 
tive edge than they might have operating from a West German 
base. Therefore, during most of the years between 1960 and 
1989, and especially during the 1980s, the amount of West Ger- 
man investment abroad exceeded the level of foreign invest- 
ment in West Germany. 

West German and later German direct investment abroad 
remained high even around the time of unification, totaling 
DM37.4 billion in 1990, DM37.1 billion in 1991, and DM28.1 
billion in 1992. During those years, foreign direct investment 
in West Germany or unified Germany never exceeded DM6.2 
billion per year. 

The nature of West Germany's investment abroad was differ- 
ent from foreign investment in West Germany. About one- 
fourth to one-third, and sometimes as much as one-half, of 
West German investment abroad during the 1970s and 1980s 
represented direct investment in production facilities, the 
remainder being investment in various forms of long-term 
credits such as equities, bonds, and long-term bank deposits. 
However, relatively little foreign investment in West Germany 


Central Hamburg 

Courtesy Hamburg-North America Representation, New York 

during that period was in production facilities, with the annual 
share ranging from about one-twentieth to one-sixth of all for- 
eign investment. Instead, the dominant form of investment in 
West Germany was in West German equities and bonds. 

Foreign investment in German stocks and bonds was espe- 
cially heavy during the early 1990s. During 1991 that invest- 
ment amounted to DM37.4 billion; in 1992 it rose to DM62.0 
billion. Both amounts were far higher than foreign investment 
in German securities during any earlier year. As a result, Ger- 
many had a long-term capital surplus of DM46.6 billion during 
1992, the highest amount West Germany or unified Germany 
had ever recorded and a striking departure from West Ger- 
many's chronic capital deficit. 

According to Bundesbank statistics, one-fifth of all German 
securities at the end of 1990 belonged to foreigners, and one- 
half of all German publicly offered obligations between 1986 


Germany: A Country Study 

and 1990 had been bought by foreigners. Much of the invest- 
ment appears to have been motivated by the expectation that 
the deutsche mark would appreciate and that investment in 
German funds would thus produce an exchange profit as well 
as regular income. Much of it may also have reflected the sense 
that German long-term interest rates would decline as the bur- 
dens of unification eased. 

Because of the large amount of German direct investment 
abroad, German income from foreign investments exceeds 
income of foreigners investing in Germany. Bundesbank statis- 
tics showed that the net return on West German capital abroad 
had risen to almost DM25 billion by 1989. If Germans were 
going abroad to invest, they were drawing a significant return 

In 1988, of West German foreign investment, 52 percent was 
in Europe (with 41 percent in EC countries), 40 percent was in 
the Americas (with 28 percent in the United States), and only 6 
percent was in Asia (with 2 percent in Japan). The favorite sites 
for West German foreign investment were France and Britain. 
A fast-growing amount was going to Eastern Europe. A survey 
conducted by a German economic institute showed that more 
than twice as much new German investment at the end of 1993 
was going to the states of Central Europe and Eastern Europe 
as to West European states, with the largest amount by far 
going to the Czech Republic. 

The structural problems of German production were com- 
pelling German investors to abandon production in Ger- 
many — including eastern Germany — and were making 
locations in other countries more competitive. Even before 
unification, many German industrialists and investors had 
been moving German production facilities to other EC states, 
especially Spain and Portugal, or to the United States or other 
countries where labor costs were lower. German efficiency, 
thoroughness, and quality control could only compensate up 
to a point for the cost advantage that producers in other coun- 
tries increasingly enjoyed. The combination of high labor 
costs, a high level of subsidization, and a strong currency was 
putting German producers at a growing disadvantage at pre- 
cisely the moment when the costs of unification were becoming 
particularly burdensome. 

Foreign Aid 

Although Germany is a leader in foreign trade, it has never 


International Economic Relations 

been generous with foreign aid. West German official develop- 
mental assistance between 1976 and 1989 ranged between 0.40 
and 0.47 percent of German GDP, well below the 0.70 standard 
proposed by the United Nations (UN). German aid sank to 
0.36 percent of GDP in 1993 as the costs of unification rein- 
forced the reluctance of the German government to grant 
assistance. But German private contributions to international 
causes, especially for humanitarian purposes, are consistently 
high. During 1992 those contributions matched the level of 
official assistance. 

Because Germany was not involved in the wave of decoloni- 
zation that followed World War II, it has not had the special 
links to former colonies that have helped to motivate and chan- 
nel aid by such former colonial powers as France and Britain. 
The largest portion of West German aid, over 40 percent, went 
to Africa during the 1980s. Earlier, West Germany had sent 
more aid to Asia, but that portion fell to 30 percent during the 
1980s because the Asian economic boom made aid less neces- 
sary. Relatively little aid went to the Americas. 

* * * 

The literature on German external economic relations is as 
limited as the general literature on the German economy. The 
most comprehensive current books in English are The German 
Economy by W.R. Smyser and The German Economy by Eric Owen 
Smith. An annual economic survey of Germany published by 
the Organisation for Economic Co-operation and Develop- 
ment (OECD) contains current information on German exter- 
nal economic relations, as does the OECD biannual, OECD 
Economic Outlook. The Bundesbank publishes a monthly statisti- 
cal compilation on German trade, current account, and for- 
eign investment balances, but only in German. 

Two books about the specific German role in European eco- 
nomics are The Federal Republic of Germany and the European Com- 
munity by Simon Bulmer and William Paterson and Germany's 
International Monetary Policy and the European Monetary System by 
Hugo M. Kaufmann. A work that offers discussion of the com- 
petitive weaknesses of the German economy is Die japanisch- 
amerikanische Herausforderung by Konrad Seitz. Several books on 
the European economy and the EU offer some information 
about Germany's role in European economics. These include 
The National Economies of Europe, edited by David A. Dyker, The 


Germany: A Country Study 

Economics of European Integration by Willem Molle, and Euro-Poli- 
tics, edited by Alberta M. Sbragia. Books of this kind appear 
regularly and provide a continuing picture of the growing Ger- 
man role in European economics. (For further information 
and complete citations, see Bibliography.) 


Chapter 7. Government and Politics 

Villa Hammerschmidt, the residence of the federal president in Bonn 

AS OF MID-1995, GERMANY was a country coming to terms 
with the recent unification of its western and eastern portions 
following four decades of Cold War division. Achieved in Octo- 
ber 1990, German unification consisted, in effect, of the incor- 
poration of the German Democratic Republic (GDR, or East 
Germany) into the Federal Republic of Germany (FRG, or 
West Germany). Thus, the unified country, rather than reflect- 
ing a mix of both states' systems, largely represented a continu- 
ation of the West German political and economic system. West 
German chancellor Helmut Kohl preferred this "fast track" to 
unification, outlined in Article 23 of the West German Basic 
Law, or constitution, because he feared that international cir- 
cumstances might change and the chance for unification 
might be missed. The alternative path to unification, detailed 
in Article 146, would have required the replacement of the 
Basic Law with a constitution developed specifically for a uni- 
fied Germany. 

During the summer of 1990, the governments of the two 
German states drafted a 1,000-page treaty outlining the terms 
of political union. The document explained how the political 
structures and policies of West Germany would be extended to 
the east, how other institutions — such as the education sys- 
tem — would be coordinated, and which issues would be 
resolved later — for instance, abortion policy. The parliaments 
of both German states ratified the treaty, and the territory of 
East Germany joined the Federal Republic under Article 23 on 
October 3, 1990. 

The West German system of government, outlined in the 
Basic Law, reflects in particular a desire to transcend the inter- 
war period of democratic instability and dictatorship. A federal 
system of government, considered vital to a stable, constitu- 
tional democracy, was put in place as a direct response to les- 
sons learned from the Nazis' misuse of centralized structures. 
After four years of Allied occupation, the FRG was established 
in 1949. The country attained sovereignty in 1955 when the 
Allies transferred responsibility for national security to the 
newly formed armed forces, the Bundeswehr. 

Creating a climate of political stability was a primary goal of 
the authors of West Germany's Basic Law. Among other things, 
the Basic Law established the supremacy of political parties in 


Germany: A Country Study 

the system of government. In the resulting "party state," all 
major government policies emanated from the organizational 
structure of the political parties. In the decades since 1949, 
West Germany's parties have tended toward the middle of the 
political spectrum, largely because both the historical experi- 
ence with fascism and the existence of communist East Ger- 
many greatly diminished the appeal of either extreme. This 
reigning political consensus, challenged briefly in the late 
1960s by the student protest movement and in the early 1980s 
by economic recession, has led many observers to judge the 
"Bonn model" a success. However, it remains an open question 
whether the legal, economic, and political structures of the 
past will serve the unified Germany as well in the future. 

Constitutional Framework 

The Constitution 

The framers of the Federal Republic of Germany's 1949 con- 
stitution sought to create safeguards against the emergence of 
either an overly fragmented, multiparty democracy, similar to 
the Weimar Republic (1918-33), or authoritarian institutions 
characteristic of the Nazi dictatorship of the Third Reich 
(1933-45). Thus, negative historical experience played a major 
role in shaping the constitution. 

Articles 1 through 19 delineate basic rights that apply to all 
German citizens, including equality before the law; freedom of 
speech, assembly, the news media, and worship; freedom from 
discrimination based on race, gender, religion, or political 
beliefs; and the right to conscientious objection to compulsory 
military service. In reaction to the experience of the Third 
Reich, the framers of the Basic Law did, however, place limits 
on extremist political activities that might threaten to subvert 
the democratic political order. Article 18 states: "Whoever 
abuses freedom of expression of opinion, in particular free- 
dom of the press, freedom of teaching, freedom of assembly, 
freedom of association, privacy of posts and telecommunica- 
tions, property, or the right of asylum in order to combat the 
free democratic basic order, shall forfeit these basic rights." 
Article 18 was employed twice in the 1950s to ban political par- 
ties of the extreme right and left. Article 18 is seen as an essen- 
tial component of a wehrhafte Demokratie — a democracy that can 
defend itself, unlike the Weimar Republic. 


Government and Politics 

Article 20 states that "the Federal Republic of Germany is a 
democratic and social federal state." The word "social" has 
been commonly interpreted to mean that the state has the 
responsibility to provide for the basic social welfare of its citi- 
zens. The Basic Law, however, does not enumerate specific 
social duties of the state. Further, according to Article 20, "All 
state authority emanates from the people. It shall be exercised 
by the people by means of elections and voting and by specific 
legislative, executive, and judicial organs." 

Most of the Basic Law's 146 articles describe the composition 
and functions of various organs of government, as well as the 
intricate system of checks and balances governing their interac- 
tion. Other major issues addressed in the Basic Law include the 
distribution of power between the federal government and the 
state (Land; pi., Lander) governments, the administration of 
federal laws, government finance, and government administra- 
tion under emergency conditions. The Basic Law is virtually 
silent on economic matters; only Article 14 guarantees "prop- 
erty and the right of inheritance" and states that "expropria- 
tion shall be permitted only in the public weal." 

Any amendment to the Basic Law must receive the support 
of at least two-thirds of the members in both federal legislative 
chambers — the Bundestag (Federal Diet or lower house) and 
the Bundesrat (Federal Council or upper house). Certain pro- 
visions of the Basic Law cannot be amended: those relating to 
the essential structures of federalism; the division of powers; 
the principles of democracy, social welfare, and fundamental 
rights; and the principle of state power based on law. Of the 
many amendments to the Basic Law, among the most notable 
are the "defense addenda" of 1954-56, which regulate the con- 
stitutional position of the armed forces, and the "Emergency 
Constitution" of 1968, which delineates wider executive powers 
in the case of an internal or external emergency. 


Germany has a strong tradition of regional government dat- 
ing back to the founding of the German Empire in 1871. Since 
unification in 1990, the Federal Republic has consisted of six- 
teen Lander, the ten Lander of the former West Germany, the 
five new Lander of the former East Germany, and Berlin. (How- 
ever, Berlin and the eastern Land of Brandenburg are slated to 
merge in either 1999 or 2002.) The Land governments are 
based on a parliamentary system. Most Lander have unicameral 


Germany: A Country Study 

legislatures, whose members are elected directly by popular 
vote. The party or coalition of parties in control of the legisla- 
ture chooses a minister president to lead the Land government. 
The minister president selects a cabinet to run Land agencies 
and carry out the executive functions of the Land government. 
Minister presidents are highly visible national figures and often 
progress to federal office, either the chancellorship or a posi- 
tion in the federal cabinet. 

The Basic Law divides authority between the federal govern- 
ment and the Lander, with the general principle governing rela- 
tions articulated in Article 30: "The exercise of governmental 
powers and the discharge of governmental functions shall be 
incumbent on the Lander insofar as this Basic Law does not 
otherwise prescribe or permit." Thus, the federal government 
can exercise authority only in those areas specified in the Basic 
Law. The federal government is assigned a greater legislative 
role and the Land governments a greater administrative role. 
The fact that more civil servants are employed by Land govern- 
ments than by federal and local governments combined illus- 
trates the central administrative function of the Lander. 

The Basic Law divides the federal government's legislative 
responsibilities into exclusive powers (Articles 71 and 73), con- 
current powers (Articles 72, 74, and 74a), and framework pow- 
ers (Article 75). The exclusive legislative jurisdiction of the 
federal government extends to defense, foreign affairs, immi- 
gration, transportation, communications, and currency stan- 
dards. The federal and Land governments share concurrent 
powers in several areas, including civil law, refugee and expel- 
lee matters, public welfare, land management, consumer pro- 
tection, public health, and the collection of vital statistics (data 
on births, deaths, and marriages) . In the areas of mass media, 
nature conservation, regional planning, and public service reg- 
ulations, framework legislation limits the federal government's 
role to offering general policy guidelines, which the Lander 
then act upon by means of detailed legislation. The areas of 
shared responsibility for the Lander and the federal govern- 
ment were enlarged by an amendment to the Basic Law in 1969 
(Articles 91a and 91b), which calls for joint action in areas of 
broad social concern such as higher education, regional eco- 
nomic development, and agricultural reform. 

All policy areas not assigned to federal jurisdiction are within 
the legislative purview of the Lander. These areas include edu- 
cation, law enforcement, regulation of radio and television, 


Government and Politics 

church affairs, and cultural activities. The Lander retain signifi- 
cant powers of taxation. Most federal taxes are collected by 
Land officials. 

The Land governments also exercise power at the national 
level through the Bundesrat, which is made up of representa- 
tives appointed by the Land governments. In this way, the 
Lander affect the federal legislative process (see The Legisla- 
ture, this ch.). Half of the members of the Federal Convention, 
which elects a federal president, are Land officials, and the 
Land governments also take part in the selection of judges for 
the federal courts. 

Government Institutions 
The President 

The Basic Law creates a dual executive but grants most exec- 
utive authority to the federal chancellor, as head of govern- 
ment, rather than to the president, who acts as head of state 
(see fig. 13). The presidency is primarily a ceremonial post, 
and its occupant represents the Federal Republic in interna- 
tional relations. In that sphere, the president's duties include 
signing treaties, representing Germany abroad, and receiving 
foreign dignitaries. In the domestic sphere, the president has 
largely ceremonial functions. Although this official signs legis- 
lation into law, grants pardons, and appoints federal judges, 
federal civil servants, and military officers, each of these 
actions requires the countersignature of the chancellor or the 
relevant cabinet minister. The president formally proposes to 
the Bundestag a chancellor candidate and formally appoints 
the chancellor's cabinet members, but the president follows 
the choice of the Bundestag in the first case and of the chancel- 
lor in the second. If the government loses a simple no-confi- 
dence vote, the president dissolves the Bundestag, but here, 
too, the Basic Law limits the president's ability to act indepen- 
dently. In the event of a national crisis, the emergency law 
reforms of 1968 designate the president as a mediator who can 
declare a state of emergency. 

There is disagreement about whether the president, in fact, 
has greater powers than the above description would suggest. 
Some argue that nothing in the Basic Law suggests that a presi- 
dent must follow government directives. For instance, the pres- 
ident could refuse to sign legislation, thus vetoing it, or refuse 
to approve certain cabinet appointments. As of mid-1995, no 






















Source: Based on information from Russell J. Dalton, Politics in Germany, New York, 
1993, 48; and Arno Kappler and Adriane Grevels, eds., Facts about Germany, 
Frankfurt am Main, 1994, 145. 

Figure 13. Structure of the Government, 1995 

president had ever taken such action, and thus the constitu- 
tionality of these points had never been tested. 

The president is selected by secret ballot at a Federal Con- 
vention that includes all Bundestag members and an equal 
number of delegates chosen by the Land legislatures. This 
assemblage, which totals more than 1,000 people, is convened 
every five years. It may select a president for a second, but not a 
third, five-year term. The authors of the Basic Law preferred 
this indirect form of presidential election because they 


Government and Politics 

believed it would produce a head of state who was widely 
acceptable and insulated from popular pressure. Candidates 
for the presidency must be at least forty years old. 

The Basic Law did not create an office of vice president. If 
the president is outside the country or if the position is vacant, 
the president of the Bundesrat fills in as the temporary head of 
state. If the president dies in office, a successor is elected within 
thirty days. 

Usually one of the senior leaders of the largest party in the 
Bundestag, the president nonetheless is expected to be non- 
partisan after assuming office. For example, President Richard 
von Weizsacker, whose second term expired in June 1994, was 
the former Christian Democratic mayor of Berlin. Upon 
becoming president in 1984, he resigned from his party posi- 
tions. Weizsacker played a prominent role in urging Germans 
to come to terms with their actions during the Third Reich and 
in calling for greater tolerance toward foreigners in Germany 
as right-wing violence escalated in the early 1990s. Although 
the formal powers of the president are limited, the president's 
role can be quite significant depending on his or her own activ- 
ities. Between 1949 and 1994, the Christian Democratic Union 
(Christlich Demokratische Union — CDU) held the office for 
twenty-five years, the Free Democratic Party (Freie Demo- 
kratische Partei — FDP) for fifteen, and the Social Democratic 
Party of Germany (Sozialdemokratische Partei Deutschlands — 
SPD) for five (see table 2, Appendix). 

Elected by the Federal Convention in May 1994, Roman Her- 
zog succeeded Weizsacker as President on July 1, 1994. Previ- 
ously president of the Federal Constitutional Court in Karls- 
ruhe, Germany's highest court, he was nominated for the presi- 
dency by the CDU and its sister party, the Christian Social 
Union (Christlich-Soziale Union — CSU). 

The Chancellor and the Cabinet 

The federal government consists of the chancellor and his 
or her cabinet ministers. As explained above, the Basic Law 
invests the chancellor with central executive authority. For that 
reason, some observers refer to the German political system as 
a "chancellor democracy." The chancellor's authority emanates 
from the provisions of the Basic Law and from his or her status 
as leader of the party or coalition of parties holding a majority 
of seats in the Bundestag. Every four years, after national elec- 
tions and the seating of the newly elected Bundestag members, 


Germany: A Country Study 

the federal president nominates a chancellor candidate to that 
parliamentary body; the chancellor is elected by majority vote 
in the Bundestag. 

The Basic Law limits parliament's control over the chancel- 
lor and the cabinet. Unlike most parliamentary legislatures, 
the Bundestag cannot remove the chancellor simply with a vote 
of no-confidence. In the Weimar Republic, this procedure was 
abused by parties of both political extremes in order to oppose 
chancellors and undermine the democratic process. As a con- 
sequence, the Basic Law allows only for a "constructive vote of 
no-confidence." That is, the Bundestag can remove a chancel- 
lor only when it simultaneously agrees on a successor. This leg- 
islative mechanism ensures both an orderly transfer of power 
and an initial parliamentary majority in support of the new 
chancellor. The constructive no-confidence vote makes it 
harder to remove a chancellor because opponents of the chan- 
cellor not only must disagree with his or her governing but also 
must agree on a replacement. 

As of 1995, the Bundestag had tried to pass a constructive 
no-confidence vote twice, but had succeeded only once. In 
1972 the opposition parties tried to replace Chancellor Willy 
Brandt of the SPD with the CDU party leader because of pro- 
found disagreements over the government's policies toward 
Eastern Europe. The motion fell one vote shy of the necessary 
majority. In late 1982, the CDU convinced the FDP to leave its 
coalition with the SPD over differences on economic policy 
and to form a new government with the CDU and the CSU. 
The constructive no-confidence vote resulted in the replace- 
ment of Chancellor Helmut Schmidt with Helmut Kohl, the 
CDU party leader. Observers agree that the constructive no- 
confidence vote has increased political stability in Germany. 

The chancellor also may make use of a second type of no- 
confidence vote to garner legislative support in the Bundestag. 
The chancellor can append a simple no-confidence provision 
to any government legislative proposal. If the Bundestag rejects 
the proposal, the chancellor may request that the president dis- 
solve parliament and call new elections. Although not com- 
monly used, this procedure enables the chancellor to gauge 
support in the Bundestag for the government and to increase 
pressure on the Bundestag to vote in favor of legislation that 
the government considers as critical. Furthermore, govern- 
ments have employed this simple no-confidence motion as a 
means of bringing about early Bundestag elections. For exam- 


Richard von Weizsdcker, 
president, 1984-94 
Courtesy German 
Information Center, New York 

pie, after Kohl became chancellor through the constructive no- 
confidence vote in August 1982, his government purposely set 
out to lose a simple no-confidence provision in order to bring 
about new elections and give voters a chance to validate the 
new government through a democratic election. 

Article 65 of the Basic Law sets forth three principles that 
define how the executive branch functions. First, the "chancel- 
lor principle" makes the chancellor responsible for all govern- 
ment policies. Any formal policy guidelines issued by the 
chancellor are legally binding directives that cabinet ministers 
must implement. Cabinet ministers are expected to introduce 
specific policies at the ministerial level that reflect the chancel- 
lor's broader guidelines. Second, the "principle of ministerial 
autonomy" entrusts each minister with the freedom to super- 
vise departmental operations and prepare legislative proposals 
without cabinet interference so long as the minister's policies 
are consistent with the chancellor's larger guidelines. Third, 
the "cabinet principle" calls for disagreements between federal 
ministers over jurisdictional or budgetary matters to be settled 
by the cabinet. 

The chancellor determines the composition of the cabinet. 
The federal president formally appoints and dismisses cabinet 
ministers, at the recommendation of the chancellor: no 


Germany: A Country Study 

Bundestag approval is needed. According to the Basic Law, the 
chancellor may set the number of cabinet ministers and dictate 
their specific duties. Chancellor Ludwig Erhard had the largest 
cabinet, with twenty-two ministers, in the mid-1960s. Kohl pre- 
sided over seventeen ministers at the start of his fourth term in 

The power of the smaller coalition partners, the FDP and 
the CSU, was evident from the distribution of cabinet posts in 
Kohl's government in 1995. The FDP held three ministries — 
the Ministry of Foreign Affairs, Ministry of Justice, and Ministry 
for Economics. CSU members led four ministries — the Minis- 
try of Finance, Ministry for Health, Ministry for Post and Tele- 
communications, and Ministry for Economic Cooperation. 

The staff of a cabinet minister is managed by at least two 
state secretaries, both of whom are career civil servants respon- 
sible for the ministry's administration, and a parliamentary 
state secretary, who is generally a member of the Bundestag 
and represents the ministry there and in other political 
forums. Typically, state secretaries remain in the ministry 
beyond the tenure of any one government, in contrast to the 
parliamentary state secretary, who is a political appointee and 
is viewed as a junior member of the government whose term 
ends with the minister's. Under these top officials, the minis- 
tries are organized functionally in accordance with each one's 
specific responsibilities. Career civil servants constitute virtually 
the entire staff of the ministries. 

The Legislature 

The heart of any parliamentary system of government is the 
legislature. Germany has a bicameral parliament. The two 
chambers are the Bundestag (Federal Diet or lower house) and 
the Bundesrat (Federal Council or upper house). Both cham- 
bers can initiate legislation, and most bills must be approved by 
both chambers, as well as the executive branch, before becom- 
ing law. Legislation on issues within the exclusive jurisdiction 
of the federal government, such as international treaties, does 
not require Bundesrat approval. 

The federal government introduces most legislation; when it 
does so, the Bundesrat reviews the bill and then passes it on to 
the Bundestag. If a bill originates in the Bundesrat, it is submit- 
ted to the Bundestag through the executive branch. If the 
Bundestag introduces a bill, it is sent first to the Bundesrat and, 
if approved there, forwarded to the executive. The Joint Con- 


Helmut Kohl, federal 
chancellor, 1982- 
Courtesy German 
Information Center, New York 

ference Committee resolves any differences over legislation 
between the two legislative chambers. Once the compromise 
bill that emerges from the conference committee has been 
approved by a majority in both chambers and by the cabinet, it 
is signed into law by the federal president and countersigned 
by the relevant cabinet minister. 


The Bundestag is the principal legislative chamber, roughly 
analogous to the United States House of Representatives. The 
Bundestag has grown gradually since its creation, most dramat- 
ically with unification and the addition of 144 new representa- 
tives from eastern Germany, for a total of 656 deputies in 1990. 
A further expansion in 1994 increased the number to 672. 
Elections are held every four years (or earlier if a government 
falls from power). Bundestag members are the only federal 
officials directly elected by the public. All candidates must be at 
least twenty-one years old; there are no term limits. 

The most important organizational structures within the 
Bundestag are parliamentary groups (Fraktionen; sing., Frak- 
tion), which are formed by each political party represented in 
the chamber. The size of a party's Fraktion determines the 
extent of its representation on legislative committees, the num- 
ber of committee chairs it can hold, and its representation in 


Germany: A Country Study 

executive bodies of the Bundestag. The head of the largest 
Fraktion is named president of the Bundestag. The Fraktionen, 
not the members, receive the bulk of government funding for 
legislative and administrative activities. 

The leadership of each Fraktion consists of a parliamentary 
party leader, several deputy leaders, and an executive commit- 
tee. The leadership's major responsibilities are to represent the 
Fraktion, enforce party discipline, and orchestrate the party's 
parliamentary activities. The members of each Fraktion are dis- 
tributed among working groups focused on specific policy- 
related topics such as social policy, economics, and foreign pol- 
icy. The Fraktion meets once a week to consider legislation 
before the Bundestag and formulate the party's position on it. 

The Bundestag's executive bodies include the Council of 
Elders and the Presidium. The council consists of the Bundes- 
tag leadership, together with the most senior representatives of 
each Fraktion, with the number of these representatives tied to 
the strength of the party in the chamber. The council is the 
coordination hub, determining the daily legislative agenda and 
assigning committee chairpersons based on party representa- 
tion. The council also serves as an important forum for inter- 
party negotiations on specific legislation and procedural issues. 
The Presidium is responsible for the routine administration of 
the Bundestag, including its clerical and research activities. It 
consists of the chamber's president and vice presidents (one 
from each Fraktion) . 

Most of the legislative work in the Bundestag is the product 
of standing committees. Although this is common practice in 
the United States Congress, it is uncommon in other parlia- 
mentary systems, such as the British House of Commons and 
the French National Assembly The number of committees 
approximates the number of federal ministries, and the titles 
of each are roughly similar (e.g., defense, agriculture, and 
labor). Between 1987 and 1990, the term of the eleventh 
Bundestag, there were twenty-one standing committees. The 
distribution of committee chairs and the membership of each 
committee reflect the relative strength of the various parties in 
the chamber. In the eleventh Bundestag, the CDU/CSU 
chaired eleven committees, the SPD eight, the FDP one, and 
the environmentalist party, the Greens (Die Grunen), one. 
Unlike in the United States Congress, where all committees are 
chaired by members of the majority party, the German system 
allows members of the opposition party to chair a significant 


Government and Politics 

number of standing committees. These committees have either 
a small staff or no staff at all. 

Although most legislation is initiated by the executive 
branch, the Bundestag considers the legislative function its 
most important responsibility. The Bundestag concentrates 
much of its energy on assessing and amending the govern- 
ment's legislative program. The committees play a prominent 
role in this process. Plenary sessions provide a forum for mem- 
bers to engage in public debate on legislative issues before 
them, but they tend to be well attended only when significant 
legislation is being considered. The Bundestag allots each Frak- 
tion a certain amount of time, based on its size, to express its 

Other responsibilities of the Bundestag include selecting the 
federal chancellor and exercising oversight of the executive 
branch on issues of both substantive policy and routine admin- 
istration. This check on executive power can be employed 
through binding legislation, public debates on government 
policy, investigations, and direct questioning of the chancellor 
or cabinet officials. For example, the Bundestag can conduct a 
question hour (Fragestunde) , in which a government represen- 
tative responds to a previously submitted written question from 
a member. Members can ask related questions during the ques- 
tion hour. The questions can concern anything from a major 
policy issue to a specific constituent's problem. Use of the ques- 
tion hour has increased markedly over the past forty years, with 
more than 20,000 questions being posed during the 1987-90 
Bundestag term. Understandably, the opposition parties are 
active in exercising the parliamentary right to scrutinize gov- 
ernment actions. 

One striking difference when comparing the Bundestag with 
the United States Congress is the lack of time spent on serving 
constituents in Germany. In part, that difference results from 
the fact that only 50 percent of Bundestag deputies are directly 
elected to represent a specific geographic district; the other 
half are elected as party representatives. The political parties 
are thus of great importance in Germany's electoral system, 
and many voters tend not to see the candidates as autonomous 
political personalities but rather as creatures of the party. Inter- 
estingly, constituent service seems not to be perceived, either 
by the electorate or by the representatives, as a critical function 
of the legislator. A practical constraint on the expansion of 


Germany: A Country Study 

constituent service is the limited personal staff of Bundestag 


The second legislative chamber, the Bundesrat, is the federal 
body in which the sixteen Land governments are directly repre- 
sented. It exemplifies Germany's federalist system of govern- 
ment. Members of the Bundesrat are not popularly elected but 
are appointed by their respective Land governments. Members 
tend to be Land government ministers. The Bundesrat has 
sixty-nine members. The Lander with more than 7 million 
inhabitants have six seats (Baden-Wurttemberg, Bavaria, Lower 
Saxony, and North Rhine-Westphalia). The LdndervAth popula- 
tions of between 2 million and 7 million have four seats (Ber- 
lin, Brandenburg, Hesse, Mecklenburg-Western Pomerania, 
Rhineland-Palatinate, Saxony, Saxony-Anhalt, Schleswig-Hol- 
stein, and Thuringia). The least populous Lander, with fewer 
than 2 million inhabitants, receive three seats each (Bremen, 
Hamburg, and the Saarland). This system of representation, 
although designed to reflect Land populations accurately, in 
fact affords greater representation per inhabitant to the 
smaller Lander. The presidency of the Bundesrat rotates annu- 
ally among the Lander. By law, each Land delegation is required 
to vote as a bloc in accordance with the instructions of the 
Land government. 

Because the Bundesrat is so much smaller than the Bundes- 
tag, it does not require the extensive organizational structure 
of the lower house. The Bundesrat typically schedules plenary 
sessions once a month for the purpose of voting on legislation 
prepared in committee. In comparison, the Bundestag con- 
ducts about fifty plenary sessions a year. Bundesrat representa- 
tives rarely attend committee sessions; instead, they delegate 
that responsibility to civil servants from their ministries, as 
allowed for in the Basic Law. The members tend to spend most 
of their time in their Land capitals, rather than in the federal 

The legislative authority of the Bundesrat is subordinate to 
that of the Bundestag, but the upper house nonetheless plays a 
vital legislative role. The federal government must present all 
legislative initiatives first to the Bundesrat; only thereafter can a 
proposal be passed to the Bundestag. Further, the Bundesrat 
must approve all legislation affecting policy areas for which the 
Basic Law grants the Lander concurrent powers and for which 


The old Reichstag building is to become the seat of the Bundestag when 

it moves to Berlin in the late 1990s. 
The plenary chamber of the Bundestag in Bonn 
Courtesy German Information Center, New York 


Germany: A Country Study 

the Lander must administer federal regulations. The Bundesrat 
has increased its legislative responsibilities over time by success- 
fully arguing for a broad, rather than a narrow, interpretation 
of what constitutes the range of legislation affecting Land inter- 
ests. In 1949 only 10 percent of all federal laws, namely, those 
directly affecting the Lander, required Bundesrat approval. In 
1993 close to 60 percent of federal legislation required the 
upper house's assent. The Basic Law also provides the Bundes- 
rat with an absolute veto of such legislation. 

The political power of the absolute veto is particularly evi- 
dent when the opposition party or parties in the Bundestag 
have a majority in the Bundesrat. When this is the case, the 
opposition can threaten the government's legislative program. 
Such a division of authority can complicate the process of gov- 
erning when the major parties disagree, and, unlike the 
Bundestag, the Bundesrat cannot be dissolved under any cir- 

This bicameral system also has advantages. Some observers 
emphasize that different majorities in the two chambers ensure 
that all legislation, when approved, has the support of a broad 
political spectrum — a particularly valuable attribute in the 
aftermath of unification, when consensus on critical policy 
decisions is vital. The formal representation of the Lander in 
the federal government through the upper chamber provides 
an obvious forum for the coordination of policy between the 
Lander and the federal government. The need for such coordi- 
nation, particularly given the specific, crucial needs of the east- 
ern Lander, has become only more important. 

The Judiciary 

The judiciary's independence and extensive responsibilities 
reflect the importance of the rule of law in the German system 
of government. A core concept is that of the Rechtsstaat, a gov- 
ernment based on law, in which citizens are guaranteed equal- 
ity and in which government decisions can be amended. 
Federal law delineates the structure of the judiciary, but the 
administration of most courts is regulated by Land law. The 
Lander are responsible for the lower levels of the court system; 
the highest appellate courts alone operate at the federal level. 
This federal-Land division of labor allows the federation to 
ensure that laws are enforced equally throughout the country, 
whereas the central role of the Lander in administering the 


Government and Politics 

courts safeguards the independence of the judicial system from 
the federal government. 

Principles of Roman law form the basis of the German judi- 
cial system and define a system of justice that differs fundamen- 
tally from the Anglo-Saxon system. In the United States, courts 
rely on precedents from prior cases; in Germany, courts look to 
a comprehensive system of legal codes. The codes delineate 
somewhat abstract legal principles, and judges must decide spe- 
cific cases on the basis of those standards. Given the impor- 
tance of complex legal codes, judges must be particularly well 
trained. Indeed, judges are not chosen from the field of prac- 
ticing lawyers. Rather, they follow a distinct career path. At the 
end of their legal education at university, law students must 
pass a state examination before they can continue on to an 
apprenticeship that provides them with broad training in the 
legal profession over several years. They then must pass a sec- 
ond state examination that qualifies them to practice law. At 
that point, the individual can choose either to be a lawyer or to 
enter the judiciary. Judicial candidates must train for several 
more years before actually earning the title of judge. 

The judicial system comprises three types of courts. Ordi- 
nary courts, dealing with criminal and most civil cases, are the 
most numerous by far. Specialized courts hear cases related to 
administrative, labor, social, fiscal, and patent law. Constitu- 
tional courts focus on judicial review and constitutional inter- 
pretation. The Federal Constitutional Court (Bundes- 
verfassungsgericht) is the highest court and has played a vital 
role through its interpretative rulings on the Basic Law. 

The ordinary courts are organized in four tiers, each of 
increasing importance. At the lowest level are several hundred 
local courts (Amtsgerichte; sing., Amstgericht) , which hear cases 
involving minor criminal offenses or small civil suits. These 
courts also carry out routine legal functions, such as probate. 
Some local courts are staffed by two or more professional 
judges, but most have only one judge, who is assisted by lay 
judges in criminal cases. Above the local courts are more than 
100 regional courts (Landesgerichte; sing., Landesgericht) , which 
are divided into two sections, one for major civil cases and the 
other for criminal cases. The two sections consist of panels of 
judges who specialize in particular types of cases. Regional 
courts function as courts of appeals for decisions from the local 
courts and hold original jurisdiction in most major civil and 
criminal matters. At the next level, Land appellate courts ( Ober- 


Germany: A Country Study 

landesgerichte; sing., Oberlandesgericht) primarily review points of 
law raised in appeals from the lower courts. (For cases originat- 
ing in local courts, this is the level of final appeal.) Appellate 
courts also hold original jurisdiction in cases of treason and 
anticonstitutional activity. Similar to the regional courts, appel- 
late courts are divided into panels of judges, arranged accord- 
ing to legal specialization. Crowning the system of ordinary 
courts is the Federal Court of Justice (Bundesgerichtshof) in 
Karlsruhe. It represents the final court of appeals for all cases 
originating in the regional and appellate courts and holds no 
original jurisdiction. 

Specialized courts deal with five distinct subject areas: 
administrative, labor, social, fiscal, and patent law. Like the 
ordinary courts, they are organized hierarchically with the 
Land court systems under a federal appeals court. Administra- 
tive courts consist of local administrative courts, higher admin- 
istrative courts, and the Federal Administrative Court. In these 
courts, individuals can seek compensation from the govern- 
ment for any harm caused by incorrect administrative actions 
by officials. For instance, many lawsuits have been brought in 
administrative courts by citizens against the government con- 
cerning the location and safety standards of nuclear power 
plants. Labor courts also function on three levels and address 
disputes over collective bargaining agreements and working 
conditions. Social courts, organized at three levels, adjudicate 
cases relating to the system of social insurance, which includes 
unemployment compensation, workers' compensation, and 
social security payments. Finance, or fiscal, courts hear only 
tax-related cases and exist on two levels. Finally, a single Fed- 
eral Patents Court in Munich adjudicates disputes relating to 
industrial property rights. 

Except for Schleswig-Holstein, each Land has a state consti- 
tutional court. These courts are administratively independent 
and financially autonomous from any other government body. 
For instance, a Land constitutional court can write its own bud- 
get and hire or fire employees, powers that represent a degree 
of independence unique in the government structure. 

Sixteen judges make up the Federal Constitutional Court, 
Germany's highest and most important judicial body. They are 
selected to serve twelve-year, nonrenewable terms and can only 
be removed from office for abuse of their position and then 
only by a motion of the court itself. The Bundestag and the 
Bundesrat each choose half of the court's members. Thus, par- 


Government and Politics 

tisan politics do play a role. However, compromise is built into 
the system because any court decision requires a two-thirds 
majority among the participating judges. The court is divided 
into two senates, each consisting of a panel of eight judges with 
its own chief justice. The first senate hears cases concerning 
the basic rights guaranteed in Articles 1 through 19 of the 
Basic Law and concerning judicial review of legislation. The 
second senate is responsible for deciding constitutional dis- 
putes among government agencies and how the political pro- 
cess should be regulated. 

Unlike the United States Supreme Court, the Federal Con- 
stitutional Court does not hear final appeals — that function 
belongs to the Federal Court of Justice. The Basic Law explic- 
itly confines the jurisdiction of the Federal Constitutional 
Court to constitutional issues. By the late 1980s, the majority of 
the articles in the Basic Law had been subjected to judicial 
review, and the constitutionality of federal and state legislation 
had been considered in hundreds of court cases. When lacking 
the legislative clout to challenge a government policy, the 
opposition in the Bundestag traditionally has turned to the 
Federal Constitutional Court to question the constitutionality 
of legislation. 

The Civil Service 

As of June 1992, about 6.7 million Germans were employed 
by federal, Land, or local governments in Germany; close to 5 
million of these were in the western part of the country, and 
1.6 million were in the east. The vast majority (over 4.5 mil- 
lion) were employed at the Land and local levels. Included at 
the federal level were roughly 642,000 postal workers and 
434,000 railroad workers. Of these civil servants, about 5.6 mil- 
lion were working full time and 1.1 million part time. Public 
servants have considerable social status in Germany. 

Civil servants are categorized into three groups. Slightly over 
2 million are career civil servants (Beamten; sing., Beamte); 
about 3 million are employees (Angestellten; sing., Angestellte) ; 
and roughly 1.5 million are workers (Arbeiter). Beamten are 
divided into four "career groups": higher service, executive ser- 
vice, clerical service, and basic service. A public servant rarely 
moves from one category to another during his or her career. 

Beamten, or career civil servants, constitute the highest level 
of the administrative elite and enjoy special privileges. They are 
appointed for life and also receive a noncontributory pension 


Germany: A Country Study 

that substantially increases their salaries in comparison with 
those of public servants in other categories. Beamten can be 
found everywhere, from low-level jobs in the post office to the 
most senior positions in government ministries, the equivalent 
of supergrade administrative positions in the United States gov- 
ernment. These upper-level Beamten occupy most of the signifi- 
cant administrative posts within the bureaucracy and thus 
influence both formation and application of policy. Almost all 
Beamten at that level of Land and federal administration have a 
university degree, typically with a concentration in law or eco- 

In exercising Land authority, Beamten must obey the orders 
of their superiors, possess no right to strike, are bound to 
defend the constitutional order, and are legally responsible for 
the application of administrative law. In 1972 the federal and 
Land governments issued an executive decree that institution- 
alized the ban against employing antidemocratic extremists in 
the public service. This highly controversial law (known as the 
Radikalenerlass or Berufsverbot) mandated that all candidates 
for positions as Beamten be screened and those already 
employed be examined, if deemed necessary, for evidence of 
extreme political views. Other public servants may also be scru- 
tinized "in accordance with the contracts regulating each case." 

Public servants may run for public office, and many do so. 
For example, the Bundestag is often referred to as the parlia- 
ment of civil servants because a high percentage of its mem- 
bers are Beamten. During the twelfth Bundestag (1990-94), 
almost one-third of the deputies were Beamten The largest por- 
tion of that group, 10 percent, consisted of teachers. 

Land and Local Government 

The Basic Law stipulates that the structure of Land govern- 
ment must "conform to the principles of republican, demo- 
cratic, and social government based on the rule of law" (Article 
28 [1] ). Twelve of the Lander are governed by a cabinet led by a 
minister president together with a unicameral legislative body, 
the Landtag (pi., Landtage). The relationship between the leg- 
islative and executive branches mirrors that in the federal sys- 
tem: the legislatures are popularly elected, typically for four 
years, and the minister president is chosen by a majority vote 
among Landtag members. The minister president appoints a 
cabinet to run Land agencies and carry out the executive 
duties of the Land government. Bavaria is the only Land with a 


The Federal Constitutional Court in Karlsruhe in session 
Exterior of the Federal Constitutional Court 
Courtesy German Information Center, New York 


Germany: A Country Study 

bicameral legislature; the Landtag is popularly elected, but the 
second chamber, the Senate, consists of representatives of the 
major social and economic groups in Bavaria. In the city Lander 
of Berlin, Bremen, and Hamburg, the executive branch con- 
sists of a popularly elected senate. The senates' members carry 
out duties equivalent to those of the ministers in the larger 
Lander. The senate chooses a senate president in Bremen and a 
mayor in Berlin and Hamburg to serve as chief executive. Land 
cabinets consist of about ten ministers; the most important is 
the minister of the interior, who directs the internal adminis- 
tration of the Land and commands the police. 

Politics at the Land level often carry implications for federal 
politics. Opposition victories in Landtag elections — which take 
place throughout the federal government's four-year term — 
can weaken the federal government coalition. This was the case 
for the fall from the chancellorship of Konrad Adenauer in 
1963 and that of Willy Brandt in 1974. The Land elections are 
also viewed as a barometer of support for the policies of the 
federal government. If the parties of the governing coalition 
lose support in successive Land elections, those results may 
foreshadow difficulties for the federal government. The out- 
come of Land elections also directly affects the composition of 
the Bundesrat. In the early 1990s, the opposition SPD com- 
manded a two-thirds majority in that legislative chamber, which 
made it particularly difficult for the CDU/CSU-FDP govern- 
ment to achieve the constitutional changes it sought. 

Three levels of government are subordinate to the adminis- 
trative authority of the states. First, the largest Lander are 
divided into districts. These districts decentralize Land adminis- 
tration and are run by district presidents who are appointed by 
the Land minister president and report to the Land minister of 
the interior. 

Second, each Land is divided into Landkreis (pi., Landkreise) 
governments, each consisting of an elected council and an 
executive, who is selected by the council and whose duties are 
comparable to those of a county manager supervising local gov- 
ernment administration. The Landkreise have primary adminis- 
trative functions in specific areas, such as highways, hospitals, 
and public utilities. 

Third, some Landkreise are divided further into Gemeinden 
(sing., Gemeinde), or municipal government authorities. Gemein- 
den consist of elected councils and an executive, the mayor, 
who is chosen by the council. In some small municipalities, the 


Government and Politics 

mayor is popularly elected. Gemeinden have two major policy 
responsibilities. First, they administer programs authorized by 
the federal or Land government. Such programs typically 
might relate to youth, public health, and social assistance. Sec- 
ond, Article 28(2) of the Basic Law guarantees Gemeinden "the 
right to regulate on their own responsibility all the affairs of 
the local community within the limits set by law." Under this 
broad statement of competence, local governments can justify 
a wide range of activities. For instance, many municipalities 
develop the economic infrastructure of their communities 
through the development of industrial parks. Local authorities 
foster cultural activities by supporting local artists and building 
arts centers. Local government also provides basic public utili- 
ties, such as gas and electricity, as well as public transportation. 
To increase administrative efficiency, West Germany consoli- 
dated the Gemeinden, reducing the total number from roughly 
25,000 in the late 1960s to about 8,500 by the early 1990s. With 
unification, however, the number of Gemeinden for all sixteen 
Lander rose to about 16,000 because of the large number 
(more than 7,500) of small Gemeindenm former East Germany. 

The Electoral System 

The Basic Law guarantees the right to vote by secret ballot in 
direct and free elections to every German citizen eighteen 
years of age or older. To be eligible to vote, an individual must 
have resided in a constituency district for at least three months 
prior to an election. Officials who are popularly elected 
include Bundestag deputies at the federal level, Landtag repre- 
sentatives or senate members at the Land level, and council 
members at the district and local levels. Executive officials typi- 
cally are not chosen in popular, direct elections; however, in a 
minority of municipalities the mayor is elected by popular vote. 
Elections usually are held every four years at all levels. Elec- 
tions at the federal, Land, and local levels are not held simulta- 
neously, as in the United States, but rather are staggered. As a 
result, electoral campaigns are almost always under way, and 
each election is viewed as a test of the federal government's 
popularity and the strength of the opposition. All elections are 
held on Sunday. 

Voter turnout, traditionally high — around 90 percent for 
national elections — has been decreasing since the early 1980s. 
Voters are most likely to participate in general elections, but 
even at that level turnout in western Germany fell from 89.1 


Germany: A Country Study 

percent in 1983 to 84.3 percent in 1987, and to 78.5 percent in 
1990. The 1990 general election was the first following unifica- 
tion; turnout was the lowest since the first West German elec- 
tion in 1949. The most consistent participants in the electoral 
process are civil servants, and a clear correlation exists between 
willingness to vote and increasing social and professional status 
and income. Analysts had been predicting a further drop in 
turnout, the result of increasing voter alienation, for the 
national election in October 1994; in fact, turnout increased 
slightly to 79.1 percent. 

In designing the electoral system, the framers of the Basic 
Law had two objectives. First, they sought to reestablish the sys- 
tem of proportional representation used during the Weimar 
Republic. A proportional representation system distributes leg- 
islative seats based on a party's percentage of the popular vote. 
For example, if a party wins 15 percent of the popular vote, it 
receives 15 percent of the seats in the Bundestag. The second 
objective was to construct a system of single-member districts, 
like those in the United States. The framers believed that this 
combination would create an electoral system that would not 
fragment as the Weimar Republic had and would ensure 
greater accountability of representatives to their electoral dis- 
tricts. A hybrid electoral system of personalized proportional 
representation resulted. 

Under the German electoral system, each voter casts two bal- 
lots in a Bundestag election. The elector's first vote is cast for a 
candidate running to represent a particular district. The candi- 
date who receives a plurality of votes becomes the district rep- 
resentative. Germany is divided into 328 electoral districts with 
roughly 180,000 voters in each district. Half of the Bundestag 
members are directly elected from these districts. The second 
ballot is cast for a particular political party. These second votes 
determine each party's share of the popular vote. 

The first ballot is designed to decrease the anonymity of a 
strict proportional representation system — thus the description 
"personalized" — but it is the second ballot that determines how 
many Bundestag seats each party will receive. To ensure that 
each party's percentage of the combined district (first ballot) 
and party (second ballot) seats equals its share of the second 
vote, each party is allocated additional seats. These additional 
party seats are filled according to lists of candidates drawn up 
by the state party organization prior to the election. Research 
indicates that constituency representatives in the Bundestag 


The city hall in Hamburg dates from the late nineteenth century. 
Courtesy Hamburg-North America Representation, New York 

are more responsive to their electorate's needs and are slightly 
more likely to follow their constituents' preferences when vot- 
ing than deputies chosen from the party lists. 

If a party wins more constituency seats than it is entitled to 
according to its share of the vote in the second ballot, the party 
retains those seats, and the size of the Bundestag is increased. 
This was the case in both the 1990 and 1994 federal elections. 
After the 1990 election, the total number of seats in the 
Bundestag rose from 656 to 662. In 1994 sixteen extra seats 
were added, leading to a 672-member Bundestag; twelve of 
those seats went to Kohl's CDU and accounted for Kohl's ten- 
seat margin of victory. 

One crucial exception to Germany's system of personalized 
proportional representation is the so-called 5 percent clause. 
The electoral law stipulates that a party must receive a mini- 
mum of 5 percent of the national vote, or three constituency 


Germany: A Country Study 

seats, in order to get any representation in the Bundestag. An 
exception was made for the first all-Germany election in 
December 1990, with the Federal Constitutional Court setting 
separate 5 percent minimums for the old and new Lander. 
Thus, a party needed only to win 5 percent of the vote in either 
western or eastern Germany in order to receive seats in the 

The 5 percent clause was crafted to prevent the proliferation 
of small extremist parties like those that destabilized the 
Weimar Republic. This electoral hurdle has limited the success 
of minor parties and consolidated the party system. Often vot- 
ers are reluctant to vote for a smaller party if they are unsure if 
it will clear the 5 percent threshold. Smaller parties, such as the 
FDP, encourage voters to split their ticket, casting their first bal- 
lot for a named candidate of one of the larger parties and their 
second ballot for the FDP. 

Small parties rarely win the three constituency seats that 
automatically qualify a party for parliamentary representation 
according to its overall share of the national vote. This rarity 
occurred in the 1994 national election. The Party of Demo- 
cratic Socialism (Partei des Demokratischen Sozialismus — 
PDS), the renamed communist party of the former East Ger- 
many, won 4.4 percent of the national vote, an insufficient total 
to clear the 5 percent hurdle. The PDS surprised seemingly 
everyone, however, by winning four districts outright (all in 
eastern Berlin), entitling it to thirty seats in the Bundestag. 

Germany holds no by-elections; if Bundestag deputies resign 
or die in office, they are automatically succeeded by the next 
candidate on the party's list in the appropriate Land. There are 
also no primary elections through which voters can choose 
party representatives. Rather, a small group of official party 
members nominates constituency candidates, and candidates 
appearing on the Land party lists are chosen at Land party con- 
ventions held six to eight weeks before the election. Party offi- 
cials at the federal level play no part in the nominating 
procedure. Roughly two-thirds of the candidates run as both 
constituent and list candidates, thus increasing their chances of 
winning a legislative seat. If a candidate wins in a constituency, 
his or her name is automatically removed from the Land list. 
There is considerable jockeying among party factions and vari- 
ous interest groups as candidates are selected and placed on 
the Land lists. Placement near the top of the list is usually given 
to incumbents, party members of particular political promi- 


Government and Politics 

nence, or members who have the support of a key faction or 
interest group. Thus, aspiring politicians are quite dependent 
on their party, and successful candidates tend to evince loyalty 
to the party's policy platform. Candidates must be at least 
twenty-one years old. 

Political Parties 

Observers often describe political parties as critical stabiliz- 
ing institutions in democratic systems of government. Because 
of the central role played by German political parties, many 
observers refer to Germany as a "party state." The government 
of this type of state rests on the principle that competition 
among parties provides for both popular representation and 
political accountability for government action. 

On the role of parties, Article 21 of the Basic Law stipulates 
that "the political parties shall participate in the forming of the 
political will of the people. They may be freely established. 
Their internal organization must conform to democratic prin- 
ciples. They must publicly account for the sources of their 
funds." The 1967 Law on Parties further solidified the role of 
parties in the political process and addressed party organiza- 
tion, membership rights, and specific procedures, such as the 
nomination of candidates for office. 

The educational function noted in Article 21 ("forming of 
the political will") suggests that parties should help define pub- 
lic opinion rather than simply carry out the wishes of the elec- 
torate. Major parties are closely affiliated with large 
foundations, which are technically independent of individual 
party organizations. These foundations receive over 90 percent 
of their funding from public sources to carry out their educa- 
tional role. They offer public education programs for youth 
and adults, research social and political issues, and facilitate 
international exchanges. 

Party funding comes from membership dues, corporate and 
interest group gifts, and, since 1959, public funds. Figures on 
party financing from 1992 show that dues accounted for over 
50 percent of SPD revenues and 42 percent of CDU revenues. 
Federal resources accounted for 24 percent of SPD revenues 
and 30 percent of CDU revenues; donations accounted for 8 
percent and 17 percent, respectively. The parties must report 
all income, expenditures, and assets. The government substan- 
tially finances election campaigns. Any party that gains at least 
0.5 percent of the national vote is eligible to receive a set sum. 


Germany: A Country Study 

This sum has increased over time and, beginning in January 
1984, amounted to DM5 (for value of the deutsche mark — see 
Glossary) from the federal treasury for every vote cast for a par- 
ticular party in a Bundestag election. Parties at the Land level 
receive similar public subsidies. The political parties receive 
free campaign advertising on public television and radio sta- 
tions for European, national, and Land elections. Airtime is 
allotted to parties proportionally based on past election perfor- 
mance. Parties may not purchase additional time. 

Several events, including a party-financing scandal in the 
early 1980s and an electoral campaign in Schleswig-Holstein 
marked by dirty tricks in the late 1980s, have contributed to 
increased public distrust of the parties. A 1990 poll showed that 
West Germans, in ranking the level of confidence they had in a 
dozen social and political institutions, placed political parties 
very low on the list. 

Although only 3 to 4 percent of voters were members of a 
political party, all the major parties experienced a decrease in 
party membership in the early 1990s, possibly a result of the 
increased distrust of political parties. SPD membership fell by 
3.5 percent in 1992 to 888,000. At the end of the 1970s, the 
party had had more than 1 million members. CDU member- 
ship fell by 5 percent in 1992 to 714,000, while that of the FDP 
fell by about one-fifth to 110,000. 

Article 21 of the Basic Law places certain restrictions on the 
ideological orientation of political parties: "Parties which, by 
reason of their aims or the behavior of their adherents, seek to 
impair or abolish the free democratic basic order or to endan- 
ger the existence of the Federal Republic of Germany, shall be 
unconstitutional. The Federal Constitutional Court shall 
decide on the question of unconstitutionality." This provision 
allowed for the banning of the neo-Nazi Socialist Reich Party in 
1952 and the Communist Party of Germany (Kommunistische 
Partei Deutschlands— KPD) in 1956. 

The decision to regulate the organization and activities of 
political parties reflects lessons learned from Germany's expe- 
rience during the post-World War I Weimar Republic, when a 
weak multiparty system severely impaired the functioning of 
parliamentary democracy and was effectively manipulated by 
antidemocratic parties. After World War II, many parties dotted 
the West German political landscape, but electoral laws allowed 
only parties with at least 5 percent of the vote to have represen- 
tation in national and Land parliaments. Over time, the smaller 


Government and Politics 

parties faded from the scene. From 1962 to 1982, the Bundes- 
tag contained representatives from only four parties: the CDU, 
the CSU, the SPD, and the FDP (see table 4, Appendix). The 
Greens gained enough of the national vote to win seats in 1983, 
and unification brought additional parties into the Bundestag 
in late 1990. At the federal level, the CSU coalesces with the 
CDU, the largest conservative party. The SPD is the major party 
of the left. The liberal FDP is, typically, the critical swing party, 
which can form a coalition with either the CDU/CSU or the 
SPD to create the majority needed to pass legislation in the 

Christian Democratic Union/Christian Social Union 

Following World War II, the Christian Democratic Union 
(Christlich Demokratische Union — CDU) was founded by a 
diverse group of Catholics and Protestants, businesspeople and 
trade unionists, and conservatives and moderates. The party 
espoused a Christian approach to politics and rejected both 
Nazism and communism. CDU members advocated conserva- 
tive values and the benefits of a social market economy — that 
is, one combining capitalist practices and an extensive welfare 
system. Konrad Adenauer, the CDU's first leader and West Ger- 
many's first chancellor, envisioned the CDU as a conservative 
catchall party ( Volkspartei) that would attract a majority of the 

The CDU is a national party except in the Land of Bavaria, 
where it is not active, in deference to its sister party, the Chris- 
tian Social Union (Christlich-Soziale Union — CSU). Bavaria 
has the largest concentration of conservative, rural, Catholic 
voters, and the CSU has dominated politics there since 1957. 
The CSU was personified by its leader, Franz-Josef Strauss, until 
his death in 1988. By 1994 no clear heir to Strauss had 
emerged, but the CSU nonetheless retained its absolute major- 
ity in the Land election of September 1994 (see table 21, 
Appendix). Germany's population increased through unifica- 
tion, and thus it has become more difficult for the CSU to pass 
the 5 percent electoral threshold at the national level. How- 
ever, the CSU performed strongly in the 1994 national elec- 
tion, garnering 7.3 percent of the vote. The CDU and the CSU 
form a single Fraktion in parliament, choose a common candi- 
date for chancellor, and have always governed in coalition. 
Below the federal level, the two party organizations are entirely 


Germany: A Country Study 

From 1949 until 1963, Adenauer and his CDU dominated 
German politics (see West Germany and the Community of 
Nations, ch. 2). At the time of the 1961 election, Adenauer was 
eighty-five years old, and the opposition SPD was gaining in 
popularity. Ludwig Erhard, a CDU member credited with engi- 
neering Germany's postwar economic miracle, succeeded Ade- 
nauer as chancellor in 1963 (see table 3, Appendix). An 
economic recession then hastened the end of the CDU/CSU's 
hold on power. November 1966 brought the creation of the 
Grand Coalition between the CDU/CSU and the SPD with 
Kurt Georg Kiesinger (CDU) as chancellor and Willy Brandt 
(SPD) as vice chancellor (see Ludwig Erhard and the Grand 
Coalition, ch. 2). The FDP was relegated to the opposition 
benches. After the 1969 election, the SPD formed a coalition 
with the FDP, leaving the CDU/CSU in opposition for the first 
time in West German history. 

For thirteen years, the CDU/CSU waited to regain power. By 
the early 1980s, the CDU had adopted a new party program 
consisting of conservative economic policies, resembling those 
of Margaret Thatcher and Ronald Reagan, and moderate social 
and foreign policies. Helmut Kohl, as leader of the CDU/CSU 
Fraktion in the Bundestag, was also rebuilding a political bridge 
to the FDP. In 1982, as West Germany's economy weakened, 
the liberal SPD and the economically conservative FDP could 
not settle on a package of economic remedies. The FDP chose 
to leave the coalition and form a new government with the 
CDU/CSU. The constructive vote of no-confidence was used 
successfully for the first time to unseat Helmut Schmidt as 
chancellor; Kohl replaced him. West Germans ratified this 
change through early elections called for March 1983 (see The 
Christian Democratic/ Christian Socialist-Free Democratic Coa- 
lition, 1983- , ch. 2). 

By the late 1980s, the CDU/CSU was growing increasingly 
unpopular. The CDU/CSU was also facing a new challenge 
from the right in the form of a new extreme right party, the 
Republikaner. In a series of Land elections, the Republikaner 
successfully eroded some of the CDU/CSU's support. The col- 
lapse of the German Democratic Republic, however, provided 
Kohl with a historic opportunity to reverse the fortunes of his 
party. While most Germans reacted to the change in the geopo- 
litical landscape with amazement, Kohl seized the moment and 
actively advocated early unification (see Unification, ch. 8). 
The first, free, all-Germany election since November 1932 took 


Government and Politics 

place in December 1990. In essence, this election became a ref- 
erendum on the process of unification; the CDU/CSU 
emerged victorious, with Kohl promising greater prosperity for 
all Germans. As the costs of unification, in economic, social, 
and psychological terms, became more apparent to both west- 
ern and eastern Germans, the CDU began suffering setbacks in 
Land and local elections. Nonetheless, Chancellor Kohl was 
able to claim a narrow victory in the national election of Octo- 
ber 1994. Kohl's governing coalition benefited from an increas- 
ingly positive economic outlook in Germany and from the fact 
that the opposition Social Democratic candidate, Rudolf 
Scharping, was seen by many as lackluster (see Political Devel- 
opments since Unification, this ch.). 

The organizational structure of the CDU is a product of the 
parry's evolution. In its early years, the CDU was a loose collec- 
tion of local groups. Over time, a weak national party emerged 
to complement the strong Land party organizations. In the 
early 1970s, the CDU built up its national organization to com- 
pete with the more tightly structured SPD. Membership and 
party income increased accordingly. The Federal Executive is 
the primary executive organ of the CDU. It consists of about 
sixty individuals, including the party chair (elected for two 
years), several deputy chairs, a general secretary, a treasurer, 
the CDU's main legislative representatives, and the leaders of 
the Land party organizations. Because the Federal Executive is 
too large and does not meet frequently, a smaller subset called 
the Presidium, composed of the highest ranking CDU officials, 
actually sets party policy and makes administrative decisions. 
Each Land except Bavaria, where the CSU is active, holds semi- 
annual party congresses and has an executive committee. 
These party structures are primarily responsible for the selec- 
tion of party candidates for Bundestag elections. Every two 
years, the CDU holds a full party congress of several hundred 
party activists. Kohl has served as national chairman of the 
CDU since 1973, headed the parliamentary Fraktion from 1976 
until 1982, and continues to lead the party as chancellor. Kohl's 
single-handed management of the party has given him a politi- 
cal dominance within the CDU that only Adenauer surpassed. 

The CDU maintains several auxiliary organizations designed 
to increase the party's attractiveness to particular societal 
groups and to represent their views within the party. CDU stat- 
utes list seven organizations representing youth, women, work- 
ers, business and industry, the middle class, municipal politics, 


Germany: A Country Study 

and refugees. Other, unofficial groupings exist as well. The 
most powerful of the auxiliary organizations has traditionally 
been the one representing business and industry. Although 
these auxiliary organizations are legally autonomous from the 
CDU, a high percentage of their members are also members of 

Social Democratic Party of Germany 

Founded in 1875, the Social Democratic Party of Germany 
(Sozialdemokratische Partei Deutschlands — SPD) is Germany's 
oldest political party and its largest in terms of membership. 
After World War II, under the leadership of Kurt Schumacher, 
the SPD reestablished itself as an ideological party, represent- 
ing the interests of the working class and the trade unions. The 
party's program, which espoused Marxist principles, called for 
the nationalization of major industries and state planning. A 
strong nationalist, Schumacher rejected Adenauer's Western- 
oriented foreign policy and gave priority to unifying Germany, 
even if that meant accommodating Soviet demands. Despite 
the SPD's membership of almost 1 million in 1949, it was 
unable to dent Adenauer's popularity. Schumacher's death in 
1952 and a string of electoral defeats led the SPD to rethink its 
platform in order to attract more votes. The Bad Godesburg 
Program, a radical change in policy, was announced at the 
SPD's 1959 party conference. The new program meant aban- 
doning the party's socialist economic principles and adopting 
the principles of the social market economy. The party also 
dropped its opposition to West German membership in the 
North Atlantic Treaty Organization (NATO — see Glossary). 
Like the CDU, the SPD was becoming a catchall party ( Volks- 
partei) — albeit of the left. 

Introduction of the Bad Godesberg Program, together with 
the emergence of a dynamic leader in the person of Willy 
Brandt, marked the beginning of improved fortunes for the 
SPD. Although the party gained support from election to elec- 
tion, suspicion about its ability to govern persisted. Joining the 
CDU/CSU in the Grand Coalition in November 1966 proved 
critical in erasing doubts among voters about SPD reliability. 
After the 1969 election, the FDP decided to form a coalition 
with the SPD — a governing configuration that held until 1982 
(see The Social Democratic-Free Democratic Coalition, 1969- 
82, ch. 2). 


Government and Politics 

Brandt served as chancellor from 1969 to 1974. His most 
notable achievements were in foreign policy. Brandt and his 
key aide, Egon Bahr, put into place an entirely new approach 
to the East — Ostpolitik — premised upon accepting the reality 
of postwar geopolitical divisions and giving priority to reconcil- 
iation with Eastern Europe. Brandt addressed long-standing 
disputes with the Soviet Union and Poland, signing landmark 
treaties with both countries in 1970. His efforts won him the 
Nobel Prize for Peace in 1971. The Brandt government also 
negotiated the Basic Treaty with East Germany in 1972, which 
formally granted recognition to the GDR. On the domestic 
side, the SPD-FDP coalition succeeded in almost doubling 
social spending between 1969 and 1975. 

Helmut Schmidt succeeded Brandt as chancellor in 1974. 
Although Schmidt won a reputation as a highly effective leader, 
the SPD experienced increasingly trying times. The oil crises of 
the 1970s undermined economic growth globally, and West 
Germany experienced economic stagnation and inflation. A 
critical problem for the SPD-FDP coalition government was a 
difference in opinion over the appropriate response to these 
problems. Divisions over economic policy were exacerbated by 
a debate within the party over defense policy and the stationing 
of United States intermediate nuclear forces in West Germany 
in the early 1980s. In 1982 the Free Democrats decided to 
abandon the coalition with the SPD and allied themselves with 
the CDU/CSU, forcing the SPD out of power. Schmidt, 
although regarded as a statesman abroad and an effective 
leader at home, became increasingly isolated within his own 
party, and he chose not to campaign as the SPD chancellor can- 
didate in the March 1983 elections. Hans-Jochen Vogel was the 
SPD standard-bearer in that election, and the party suffered a 
serious loss. 

The SPD has been wrought by internal crises since the late 
1970s, and these divisions have continued into the 1990s. The 
party is split into two factions, one giving priority to economic 
and social justice, egalitarianism, and environmental protec- 
tion, and the other most concerned with controlling inflation, 
encouraging fiscal responsibility, and playing a significant part 
in the European security system. The SPD faces a challenge on 
the left from the Greens and on the right from the CDU/CSU 
and the FDP. Rather than move to the left, the SPD chose a 
centrist strategy in the 1987 national election and earned only 
a small increase in voter support. 


Germany: A Country Study 

In 1990 the nomination of Oskar Lafontaine as chancellor 
candidate suggested a tactical shift to the left aimed at attract- 
ing liberal, middle-class voters. The national election in 
December 1990 became, in essence, a referendum on unifica- 
tion, and the CDU's Kohl, who had endorsed a speedy union, 
far outstripped the more ambivalent and pessimistic Lafon- 
taine in the polls. The SPD did not receive the support it had 
expected in the heavily Protestant eastern Lander. Leadership 
of the SPD passed to Bjorn Engholm, a moderate, who 
resigned in May 1993 in the wake of a political scandal. 

Rudolf Scharping, the moderate and relatively unknown 
minister president of Rhineland-Palatinate, was elected by SPD 
members — the first time in the history of the party that its 
members directly chose a new leader — to replace Engholm in 
late June 1993. Scharping opposed Kohl in the 1994 national 
election. The SPD candidate began 1994 with a strong lead in 
public opinion polls, but, beginning in late April, the SPD's 
support began a sustained decline for several reasons. For one, 
the increasingly positive economic situation was credited to the 
governing coalition. For another, Scharping was perceived by 
many Germans to be a lackluster candidate; further, he was not 
wholly successful in portraying himself as the conciliator who 
had brought harmony to a traditionally fractious SPD. Follow- 
ing the election, Scharping became the leader of the SPD's par- 
liamentary group in the Bundestag. 

The organizational structure of the SPD is highly central- 
ized, with decisions made in a top-down, bureaucratic fashion. 
Technically, the SPD's highest authority is the party congress, 
which meets biannually. Arguably, its only significant function 
is to elect the thirty-six-member Executive Committee, which 
serves as the SPD's primary executive body and its policy 
maker. The members of the Executive Committee typically rep- 
resent the various political factions within the party. The core 
of the Executive Committee is the nine-member Presidium, 
which represents the inner circle of party officials and is gener- 
ally composed of the party leadership. The Presidium meets 
weekly to conduct the business of the party, deal with budget- 
ary issues, and handle administrative and campaign matters. 
The Presidium is also responsible for endorsing policy originat- 
ing either with an SPD government or with the leadership of 
the parliamentary Fraktion when the party is in opposition. In 
almost all cases, decisions made in the Presidium are ratified by 
the Federal Executive and the party congress. All SPD organiza- 


Government and Politics 

tions below the national level elect their own party officials. 
The district, subdistrict, and local levels are all subordinate to 
the Land executive committees, which direct party policy below 
the national level and are relatively independent of the federal 
party officials. Like the CDU/CSU, the SPD maintains special- 
ized groups representing particular professions, youth, women, 
trade unions, refugees, and sports interests. In the case of the 
SPD, these groups are closely tied to the SPD bureaucracy, and 
only the Young Socialists and the trade union group have pol- 
icy-making roles. 

Free Democratic Party 

The Free Democratic Party (Freie Demokratische Partei — 
FDP) is much smaller than the CDU or SPD, but its limited 
electoral strength masks the party's inordinate influence. Prior 
to the 1994 election, the FDP had experienced its worst results 
in national elections in 1969 (5.8 percent) and 1983 (7 per- 
cent) . Both of those poor showings occurred following an FDP 
decision to switch coalition partners. Beyond these two excep- 
tions, between 1949 and 1990 the FDP averaged 9.6 percent of 
the vote in national elections. Given its pivotal role in govern- 
ing coalitions, the FDP has held over 20 percent of the cabinet 
posts during its time in government. 

The FDP served in coalition governments with the CDU 
from 1949 to 1956 and from 1961 to 1966. As of mid-1995, it 
has governed with the CDU since 1982. The FDP governed in 
coalition with the SPD from 1969 to 1982. The remarkable 
amount of time that the FDP has spent in government has 
been a source of continuity in the German political process. 
FDP ministers carry a detailed knowledge of government per- 
sonnel and procedures unsurpassed among the other parties. 

The central role played by the FDP in forming governments 
is explained by the fact that a major party has been able to gar- 
ner an outright majority of Bundestag seats only once (the 
CDU, in 1957); thus, the CDU and the SPD have been com- 
pelled to form coalition governments. Therefore, the FDP has 
participated in every government except the one from 1957 to 
1961 and the Grand Coalition of 1966-69. Because the SPD 
and CDU/CSU enjoyed roughly equal electoral support, the 
FDP could choose with which major party it wished to align. 
This ability to make or break a ruling coalition has provided 
the small FDP with considerable leverage in the distribution of 
policy and cabinet positions. To take one example, as of mid- 


Germany: A Country Study 

1995, the FDP, in the person of Klaus Kinkel, led the Ministry 
of Foreign Affairs, which it has held since 1969. The most 
prominent member of the FDP, Hans-Dietrich Genscher, 
served as foreign minister from 1974 until his resignation in 

The FDP was created in 1948 under the chairmanship of 
Theodor Heuss, who served as the first president of the Federal 
Republic, from 1949 to 1959. The party's founders wanted the 
FDP to revive the liberal party tradition of pre-World War II 
Germany. Although there was some initial debate over what 
was meant by "liberal," the party did articulate a political phi- 
losophy distinct from that of the two major parties. The FDP 
gave precedence to the legal protection of individual free- 
doms. Unlike the SPD, it supported private enterprise and dis- 
avowed any socialist leaning, and, unlike the CDU/CSU, it 
envisioned a strictly secular path for itself. In the early 1990s, 
the Free Democrats remained closer to the CDU/ CSU on eco- 
nomic issues and closer to the SPD on social and foreign policy. 
Many Germans view the FDP as the party of the middle, moder- 
ating the policies of both major parties. 

Following the 1949 national elections, the FDP emerged as a 
natural ally of the CDU/CSU, most importantly because of a 
congruity of economic policy. During the mid- to late 1960s, 
the FDP, under the leadership of Walter Scheel, went through a 
transformation of sorts, shedding its conservative image and 
emphasizing the reformist aspects of its liberal tradition. Its 
new focus on social concerns resulted in an SPD-FDP coalition 
in 1969. The party's new direction was ratified at the FDP's 
1971 party congress, which endorsed a program of "social liber- 
alism." As economic conditions worsened in the early 1980s, 
however, the FDP returned to its earlier advocacy of economic 
policies more conservative than those endorsed by the SPD. 
The FDP was most concerned with the growing budget deficit, 
whereas the SPD gave priority to the impact of the economic 
downturn on workers. The FDP abandoned the coalition with 
the SPD in September 1982, shifting allegiance to the CDU/ 
CSU. The FDP lost considerable electoral support in the 1983 
federal election but regained strength in the 1987 election. 

The Free Democrats benefited initially from unification, gar- 
nering 11 percent of the vote in the first all-Germany elections 
in December 1990. In part, the FDP's popularity in the east was 
directly attributable to Genscher, an eastern German by birth 


Government and Politics 

who played a leading role in negotiations over the interna- 
tional agreements that made unification possible. 

In light of the FDP's strong showing in the 1990 election, it is 
perhaps surprising to note that, by the time of the 1994 
national election, the FDP was, in many ways, a party in crisis. It 
had lost representation in every Land that held elections in 
1994, and thus the FDP has no seats in any eastern Land legisla- 
ture. Minister of Foreign Affairs Kinkel had been elected party 
chairman in 1993, and some critics felt that the two posts had 
overwhelmed him, leading him to perform inadequately in 
both. Other observers, however, argued that it was the party's 
message, rather than its messenger, that needed revamping. 
Increasingly, the FDP found it difficult to differentiate its policy 
from that of Kohl's CDU. Given the fact that the FDP had per- 
formed so poorly at the Land level in 1994, there was much 
speculation as to whether the party would cross the 5 percent 
hurdle in the national election. FDP politicians breathed a col- 
lective sigh of relief when the party garnered 6.9 percent of the 
vote when Germans went to the polls in October 1994. Report- 
edly, the FDP had over 500,000 CDU voters to thank for this 
outcome, because they gave their second votes tactically to the 
FDP to ensure a victory for Kohl. One poll showed that 63 per- 
cent of those who voted for the FDP gave the CDU as their pre- 
ferred party. 

The structure of the FDP is decentralized and is loosely orga- 
nized at all levels. The party basically is a federation of Land 
organizations, each maintaining a degree of well-guarded inde- 
pendence. The national party headquarters lacks the power to 
orchestrate activities at the Land level, and the formal party 
institutions — the Federal Executive, Presidium, and party con- 
gress — are weak. The FDP deemed this lack of centralization 
necessary to accommodate differences within the party, partic- 
ularly between economic conservatives and social liberals. The 
FDP has never sought to be a mass party, and its members 
accordingly have little influence on decision making. 

The Greens 

In the early years of the FRG, several minor parties repre- 
senting a range of political views from the neo-Nazi right to the 
communist left played a role in the political system. Support 
for these parties dwindled over time, and, after 1961, the FDP 
was the only smaller party to cross the 5 percent threshold nec- 
essary to gain Bundestag representation. The presence of the 5 


Germany: A Country Study 

percent clause in federal, Land, and most local election laws 
was a significant reason for the decline of minor parties. The 
major parties have encouraged this trend by sponsoring certain 
regulations — for instance, in the areas of federal financing for 
political parties and procedures for nominating party candi- 
dates — that have also made it more difficult for minor parties 
to survive. 

A challenge to West Germany's established party system 
emerged in 1983 when a relatively new party, the Greens (Die 
Grunen), entered the Bundestag. The Green movement had 
been gaining support steadily since the late 1970s, and by the 
end of 1982 the Greens were represented in six of West Ger- 
many's eleven Land parliaments. The Greens' platform gave 
priority to environmental concerns and an end to the use of 
nuclear energy as a power source. The party also opposed the 
stationing of United States intermediate-range nuclear weap- 
ons in Western Europe. On the basis of this platform, the 
Greens won 5.6 percent of the vote in the 1983 federal elec- 
tion. The success of the Greens at the federal level — which con- 
tinued in the 1987 national election with the party winning 8.3 
percent of the vote — led to a "greening" of the established par- 
ties, with environmental awareness increasing across the politi- 
cal spectrum. The Greens also livened up the Bundestag, 
appearing in jeans and sweaters rather than business suits and 
bringing plants into proceedings. 

The Greens were plagued by a split between the Realos (real- 
ists) and the Fundis (fundamentalists). The Realos are pragma- 
tists who want to serve as a constructive opposition and 
ultimately exercise power. The more radical Fundis are com- 
mitted to a fundamental restructuring of society and politics; 
they do not want to share power with the Social Democrats — 
their obvious allies — or in any way legitimate the existing politi- 
cal system. 

The Greens did not embrace the unification of Germany 
and opposed any automatic extension of West German eco- 
nomic and political principles to the east. The West German 
Greens chose not to form an electoral alliance with their east- 
ern counterparts, Alliance 90 (Bundnis 90), prior to the 1990 
elections because of their opposition to union. This lack of 
enthusiasm for unification alienated the Greens from much of 
their own constituency. The party's chances for success in the 
December 1990 all-Germany election were further under- 
mined by the SPD's choice of Lafontaine as its candidate for 


Government and Politics 

chancellor. Lafontaine moved the SPD to the left, successfully 
co-opting "green" issues. The West German Greens received 
only 4.8 percent of the vote in the 1990 election, an outcome 
that left them with no seats in the Bundestag. Alliance 90, com- 
posed largely of former dissidents and focusing heavily on civil 
rights, received 6 percent of the eastern vote and therefore 
received eight seats in the Bundestag. Had these two parties 
run in coalition, they could have secured about forty parlia- 
mentary seats. Alliance 90 had grown out of the major human 
rights groups that demonstrated against the communist system 
and effectively brought down the Berlin Wall in 1989. Like the 
West German Greens, Alliance 90 had not wanted quick unity 
with the west either, but the sentiment of the majority of east- 
ern Germans was clear. 

Young middle-class voters living in urban areas form the core 
of support for the West German Greens. Alliance 90 also 
receives much of its support from this group, although one- 
third of its supporters are over fifty years of age. Employees of 
the public sector are disproportionately strong supporters of 
both parties. Election results suggest that neither working-class 
voters nor independent businesspeople are likely to vote for 
either party. 

The devastating loss for the West German Greens in the 
1990 election brought the conflict between Realos and Fundis 
to a head, with the pragmatic wing emerging as victor. The 
party conference in April 1991 ratified a set of Realo reforms. 
In the series of Land elections that followed (Hesse, Rhineland- 
Palatinate, Hamburg, and Bremen), the Greens did well. This 
trend continued in 1992 as the Greens received an impressive 
9.5 percent of the vote in the wealthy, southwestern Land of 
Baden-Wurttemberg. In the rural, northwestern Land of 
Schleswig-Holstein, the Greens garnered 4.97 percent of the 
vote, coming within 397 votes of surpassing the 5 percent hur- 

In January 1993, the West German Greens merged with Alli- 
ance 90 in preparation for the spate of federal and Land elec- 
tions scheduled for 1994. The new party is listed officially as 
Alliance 90/Greens (Bundnis 90/Die Grunen), but members 
informally call it the Greens. 

Overall, the Greens performed well in the series of Land 
elections in 1994. Following the 1994 national election, with 
7.3 percent of the vote, the Greens emerged as the third stron- 
gest party in the federal parliament. The obvious coalition part- 


Germany: A Country Study 

ner for the Greens is the SPD, though one increasingly hears 
talk of possible CDU/Green coalitions. Indeed, the Greens 
have moderated many of their positions, a reflection of the 
dominance in the party of the Realos. The best known figure in 
the party is Joschka Fischer, a prominent Realo and a former 
environment minister in the Land of Hesse. 

The Republikaner and the German People's Union 

On the opposite end of the political spectrum from the 
Greens are two parties of the far right, the Republikaner (Die 
Republikaner — REP), with about 23,000 members, and the 
German People's Union (Deutsche Volksunion — DVU), with 
26,000 members. As of mid- 1995, these two parties had not 
gained sufficient support to win seats in the Bundestag, but the 
DVU was represented in Land parliaments in Bremen (with 6.2 
percent of the vote in 1991) and Schleswig-Holstein (with 6.3 
percent of the vote in 1992); the Republikaner held seats in 
Baden-Wurttemberg (with 10.9 percent of the vote in 1992). 
The Republikaner received 2.1 percent of the vote in the all- 
Germany election of December 1990 and 1.9 percent in the 
October 1994 election. 

In the early 1990s, the rallying cry of the far right was "Ger- 
many for the Germans." This slogan appeals to many Germans, 
particularly young, male, rural, less educated, blue-collar work- 
ers who fear for their economic future and regard the large 
pool of asylum-seekers as competitors for housing, social pro- 
grams, and jobs. These particular Germans are also uneasy 
about greater integration within the European Union (EU — 
see Glossary), which, in their minds, requires Germany to for- 
feit too much of its identity and share too much of its prosper- 
ity. According to some observers, the far right's electoral 
support represents, in part, a protest vote against the main- 
stream parties. German politicians repeatedly remark on the 
electorate's Politikverdrossenheit — a deep disaffection with all 
things political. 

Franz Schonhuber, a one-time Bavarian television moderator 
and former officer in the Nazi Waffen-SS, formed the Republi- 
kaner in 1983 from a group of discontented members of the 
CSU. Schonhuber published a book in 1981 boasting of his 
experiences in the Waffen-SS but has staunchly denied that his 
party has neo-Nazi leanings. Elected to the European Parlia- 
ment in 1989, Schonhuber, over seventy years old in mid-1995, 
tried to portray the party as a mainstream group that does not 


Government and Politics 

promote bigotry but merely protects German national inter- 
ests. The party platform speaks for itself. In it, the Republi- 
kaner blame foreigners, who make up about 8 percent of the 
German population, for the housing shortage, street crime, 
and pollution. Among other things, the party has proposed 
banning Islamic community centers from sponsoring political 
or cultural activities other than prayer, and it has advocated 
putting asylum-seekers in collection camps "to minimize the 
native population's existing and growing antipathy toward for- 
eign residents." The party platform also proposes creating sep- 
arate classes for foreign schoolchildren, and it rejects "the 
multicultural society that has made the United States the 
world's largest showplace of crime and latent racial conflict." 
Reportedly, the Republikaner attracted about 5,000 new mem- 
bers in eastern Germany in 1992 and 1993. Schonhuber con- 
tends that support in the east comes from young Germans 
between twenty and thirty years of age, whereas in the west sup- 
port comes from members of his own generation. Schonhuber, 
the party's only nationally known figure, was deposed as party 
leader in the fall of 1994 because he had proposed that his 
party join forces with the more extreme DVU. 

Gerhard Frey, the Munich publisher of two weekly neofascist 
newspapers, Deutsche National-Zeitung (print run 63,000) and 
Deutsche Wochen-Zeitung (20,000), founded the DVU in 1971. 
The DVU espouses many of the views held by the Republi- 
kaner, but it goes one step further in tacitly supporting vio- 
lence against asylum- seekers and foreign workers. Frey, over 
sixty years old in mid-1995, has sought to distance himself from 
pro-Nazi sentiments while simultaneously insisting that most 
Germans want to live in a racially pure country. 

Germany's domestic intelligence agency, the Federal Office 
for the Protection of the Constitution (Bundesamt fur Verfas- 
sungsschutz — BfV), announced in April 1992 that the DVU was 
under surveillance to determine if the party met the legal defi- 
nition of "antidemocratic," a classification that would permit 
the government to ban it. A similar investigation of the Repub- 
likaner was announced in December 1992. Such surveillance 
legally can include government infiltration of the party, moni- 
toring of mail and telephone calls, and interrogation of party 
members. The BfV has classified both parties as "right-wing 
extremist" and "constitutionally hostile." 


Germany: A Country Study 

Party of Democratic Socialism 

The communist party that ran East Germany was the Social- 
ist Unity Party of Germany (Sozialistische Einheitspartei 
Deutschlands — SED). Founded in 1946, the SED controlled 
the government and the electoral process and supervised the 
omnipresent State Security Service (Staatssicherheitsdienst — 
Stasi). To be considered for important positions in East Ger- 
man government and society membership in the party was a 
requirement (see The Ulbricht Era, 1949-71, ch. 2). 

When the East German public toppled the communist 
regime, the SED and its extensive organizational structure also 
came unraveled. Membership fell dramatically; local and 
regional party groups disbanded. In a desperate attempt to 
save itself, the SED sought to reconstruct itself for the new 
democratic climate. It changed its name in February 1990 to 
the Party of Democratic Socialism (Partei des Demokratischen 
Sozialismus — PDS). The old party guard was replaced by mod- 
erate leaders, such as the new chairman, Gregor Gysi. The PDS 
won 11 percent of the vote in eastern Germany in the 1990 all- 
Germany election, an outcome that entitled the party to seven- 
teen seats in the Bundestag. In the Bundestag, the PDS has 
advocated communist values and has energetically criticized 
the Kohl government. The PDS's all-Germany tally reached 
only 2.4 percent because of a showing in western Germany of 
0.3 percent. 

The party's electoral base is limited to the east, particularly 
areas in which substantial numbers of former SED members 
live. In mid-1995 the PDS had roughly 130,000 members in the 
east, giving the PDS the largest membership of any party in 
eastern Germany. The party's strongholds are Saxony, Berlin, 
and Brandenburg. The party continues to have a tiny following 
in the west, with 1,200 members. 

Two main factors account for the success of the PDS in the 
east: the PDS inherited the infrastructure and local grassroots 
organization of the SED, and the PDS has come to be seen by 
many in the east as the only party that represents specifically 
eastern German interests and that stresses the positive aspects 
of eastern German life. Over 90 percent of PDS members 
belonged to the SED, and 66 percent are over the age of sixty. 
The established parties have largely ostracized the PDS. 

The PDS garnered 4.4 percent of the vote in the 1994 
national election, an outcome that, as predicted, left the party 
beneath the 5 percent hurdle. However, the party won parlia- 


Government and Politics 

mentary representation, thanks to a peculariarity of the Ger- 
man electoral law: the fact that the PDS won four districts 
outright (all in eastern Berlin) entitled it to thirty seats in the 
Bundestag. Much credit for the strong showing of the PDS in 
the east has been given to the party's leading figure, the lawyer 
Gysi, an articulate and charismatic member of parliament. 

Extraparty Political Forces 

German society is highly organized into associations that 
represent the occupational, socioeconomic, religious, and rec- 
reational interests of individuals — a tradition that dates back to 
the corporate guild system of the Middle Ages. Most Germans 
belong to at least one voluntary association, and many belong 
to several. The vast majority of these organizations (such as 
sports clubs) have little political significance, but an important 
core of groups combines a strong organizational base with a 
particular interest in policy issues. The size of these interest 
groups varies. Smaller groups represent subsectors of the popu- 
lation, such as farmers. The large associations include trade 
unions, professional associations, and religious groups. More 
than 1,000 of these interest groups are registered formally as 
lobbyists with the federal government, and hundreds more are 
active at the Land level. 

The primary interest associations in Germany are organized 
differently from interest groups in the United States. The 
United States offers a pluralist model of interest groups, in 
which loosely structured factions compete within the policy 
process to represent the same social interests. The government 
offers a neutral forum in which these groups vie for influence 
on policy. In contrast, many of the major interest associations 
in Germany reflect a neocorporatist model of interest articula- 
tion that channels interests into a number of unified, noncom- 
petitive associations. 

Four large, national "peak" associations (Spitzenverbdnde; 
sing., Spitzenverband) represent groups of similar interest associ- 
ations as a whole. The labor unions, business, the churches, 
and the agricultural lobbying organizations each has its own 
Spitzenverband. Membership in one of these peak associations is 
often mandatory for individuals in a given social or occupa- 
tional sector. Most peak associations are also organized hierar- 
chically, with the national office determining the objectives 
and directing the strategy of the association as a whole. 


Germany: A Country Study 

The influence of the interest associations is institutionalized 
in several ways. Political parties provide one major channel of 
influence. Although the associations eschew formal party ties 
and claim to remain above partisan politics — for instance, they 
do not officially endorse a party at election time — ties between 
these associations and the parties are close. To take one exam- 
ple, the labor unions maintain a highly developed relationship 
with the Social Democrats, and a large percentage of SPD party 
activists are union members. Another forum for interest group 
activity is the Bundestag. The interest associations not only 
monitor legislation, lobby members, and testify at hearings, but 
they also maintain formal affiliations with deputies. Since 1972, 
when the Bundestag first started keeping records, roughly 50 
percent of the members reported either being employed by an 
interest group or holding an executive position in a group. 
About 25 percent of the members are affiliated with economic 
groups, such as labor unions or the business lobby, and about 
17 percent are affiliated with religious or cultural associations. 
Members of key committees such as agriculture, labor, and 
education are particularly likely to have ties to the relevant 
groups. The government ministries themselves provide yet 
another means by which interest groups influence the policy 
process. The neocorporatist system encourages formal ties 
between the two. For instance, ministries are required by law to 
consult with the peak associations about draft legislation that 
would affect them. To fulfill this obligation, the federal minis- 
tries have established standing advisory committees, which 
include representatives of the relevant interest groups. 

Business and Industry 

There are three levels at which business and industrial inter- 
ests seek representation. First, business wants its perspective 
heard as the government formulates policy. Second, business 
needs representation in negotiations with labor unions. Third, 
business may desire support in cultivating new clients or suppli- 
ers. Each of these objectives is met by a separate umbrella orga- 

The Federation of German Industry (Bundesverband der 
Deutschen Industrie — BDI) is the most important representa- 
tive of business interests in the policy-making process. The BDI 
is the national peak association for thirty-nine separate 
national trade associations, including associations for the auto- 
mobile and machine tool industries. Thus, it is the primary 


Government and Politics 

representative of the business community in the political pro- 
cess and the principal intermediary between business and gov- 
ernment. The importance of the National Association of 
Manufacturers (NAM) in the United States pales in compari- 
son with that of the BDI in Germany. In western Germany, the 
BDI's associations represent over 90 percent of all industrial 
firms; by contrast, the NAM accounts for only a fragment of 
United States industry. Although private businesses were still in 
the early stages of development in eastern Germany in the 
early 1990s, most trade associations have already set up offices 
there to coordinate the new industries. 

The Federation of German Employers' Associations 
(Bundesvereinigung der Deutschen Arbeitgeberverbande — 
BDA) is the second important representative of business. The 
BDA is a peak association of sixty-four employers' associations, 
consisting of seventeen regional organizations, including the 
employers' associations of each Land, and forty-seven national 
trade associations organized by economic sector. The BDA rep- 
resents the full range of business activity in Germany, but most 
of its members are in industrial associations. Almost every 
medium or large employer is a member of a BDA association. 
The BDA provides advice and serves as a coordinating mecha- 
nism for employers on social and labor policy. Among other 
things, the BDA negotiates general salary guidelines with 
unions, and it lobbies Land and federal governments on legisla- 
tion affecting the interests of its members, such as social secu- 
rity and labor practices. 

The German Chambers of Industry and Commerce 
(Deutscher Industrie- und Handelstag — DIHT) is the third leg 
of businesses' representational triad. All companies paying 
business taxes are required by law to join the local chamber 
and pay membership dues. Thus, several million firms belong 
to the eighty-four district and local associations of the DIHT, 
including the fifteen postunification chambers in eastern Ger- 
many. Beyond its national role, the DIHT represents German 
business abroad, as well as on international trade issues. The 
DIHT has been particularly engaged in attracting foreign 
investment to the east. 

Labor Unions 

During the Weimar Republic, labor unions were divided 
along partisan lines, a situation that led to competition among 
the socialist, communist, Catholic, and liberal trade associa- 


Germany: A Country Study 

tions. After World War II, labor leaders wanted to break with 
the past and form a trade union federation independent of 
political parties. The result was the establishment of the Feder- 
ation of German Trade Unions (Deutscher Gewerkschafts- 
bund— DGB) in 1949. 

Four principles guided the founders of the DGB. First, the 
labor movement wanted representation through an organiza- 
tion that was unitary and autonomous, with no ties to particu- 
lar religions or political parties. Second, labor leaders decided 
to organize the unions along industrial lines so that all workers 
at one firm would belong to the same union irrespective of 
their individual occupations. For instance, an electrician at an 
automobile plant would join the metalworkers' union. This 
organizing principle provides unions with greater bargaining 
power when negotiating with employer associations, because 
one union represents the entire workforce of an industry. 
Third, a decentralized system of interest representation was 
created. Individual unions typically emulate the federal struc- 
ture, with local, district, Land, and national offices. Each level 
has some input into the shape of union policy. Fourth, the 
unions chose to rely on legislation for the protection of work- 
ers' rights, rather than on direct negotiations with business rep- 
resentatives. Thus, when the unions enter into contract 
negotiations with employers, they can focus on improving 
workers' economic welfare. 

The DGB is the national peak association of the German 
labor movement and encompasses sixteen unions, from metal- 
workers to leather workers. The DGB represents virtually all 
organized industrial workers, most white-collar employees, and 
many government workers. As of mid-1995, out of a total work- 
force of 35 million, 9.8 million workers were members of these 
labor unions. Although the DGB does not represent even half 
of the German workforce, its unions negotiate the collective 
bargaining agreements covering over 90 percent of all jobs. 
Thus, the work of the labor unions affects nearly all workers. 
The DGB lost over 2 million members between the end of 1991 
and the end of 1994. The vast majority of these members (1.7 
million) were from eastern Germany, which has been in the 
throes of radical economic restructuring and has suffered high 
unemployment. Some DGB officials express the hope that, 
once the economy in the eastern part of the country stabilizes, 
DGB membership will grow. 


Government and Politics 

In 1995 the three largest unions were the Metalworkers' 
Union with just under 3 million members, the Public Services 
and Transport Workers' Union with 1.9 million, and the Chem- 
icals, Paper, and Ceramics Workers' Union with 742,000. 
Roughly 31 percent of all members are women. 

DGB members can be divided into "activist" and "accommo- 
dationist" factions. The activists, led by the Metalworkers' 
Union and the Industriegewerkschaft Medien, the union for 
workers in the media, aggressively challenge business interests 
and are major advocates of social reform. For example, the 
Metalworkers' Union led the drive for codetermination (Mit- 
bestimmung) in the early 1950s, for substantial wage gains in the 
1960s, and for the thirty-five-hour workweek in the 1980s (see 
Codetermination, ch. 5). The activist unions are more likely to 
strike if collective bargaining fails to achieve desired results. In 
contrast, the accommodationist unions, including those repre- 
senting chemical workers, construction workers, textile work- 
ers, and food-processing workers, prefer to cooperate with 
employers to achieve stable, sustainable economic growth. The 
individual unions have responded differently to German unifi- 
cation as well. Activist unions have been assertive in pushing 
for wage equalization between east and west, an effort that cul- 
minated in a massive strike in the metalworking industry in 
eastern Germany in May 1993. 

Two other, significantly smaller peak interest associations 
represent labor sectors independent of the DGB. The German 
White-Collar Employees' Union (Deutsche Angestellten- 
Gewerkschaft — DAG) is composed solely of salaried employ- 
ees, principally high-level technocrats and managers in private 
enterprise. The Federation of German Civil Servants (Deut- 
scher Beamten Bund — DBB) has competed successfully with 
the DGB to represent civil servants. The DBB is better 
described as a lobbying organization, because civil servants can 
neither strike nor engage in collective bargaining. 

The Churches 

Religious associations represent a third major group of orga- 
nized interests in the German policy process. The experience 
of the Third Reich had a profound influence on the postwar 
development of Protestant and Roman Catholic churches in 
the Federal Republic (see Religion, ch. 3). Both espoused the 
view that moral responsibility extends to political responsibility 
and that passivity toward the political process is inappropriate. 


Germany: A Country Study 

Both also desired greater ecumenism in German society. The 
establishment of the CDU perhaps best illustrates this last 
point. The CDU sought to include both Roman Catholics and 
Protestants in a catchall party that was committed to Christian 
values. The two churches maintain distinct identities, but the 
major cleavage in German society is no longer between reli- 
gious denominations, but between religious and secular inter- 

In postwar West Germany, many people felt that organized 
religion was an important element in the country's newly form- 
ing political ethos. Unlike the United States, West Germany 
acknowledged no separation of church and state. The state for- 
mally recognized the political role of the churches, establishing 
a special legal status for them as public law corporations. 
Under a German system developed in the nineteenth century, 
unless church members formally leave the denomination into 
which they were baptized, they must pay an annual church sur- 
tax equal to 8 or 9 percent of their income tax. The federal gov- 
ernment collects this surcharge and remits the proceeds to the 
churches to finance their activities. In 1992 the figure totaled 
about US$10 billion for Protestant and Catholic churches com- 
bined. Churches are included on government commissions 
and supervisory bodies that influence social and family policy, 
education, and related topics. 

Not surprisingly, the relationship between church and state 
in East Germany was markedly different. The communist 
regime wanted control over all aspects of society, and the exist- 
ence of autonomous churches was unacceptable. In the 1950s, 
the regime sought to limit the role of the churches to the reli- 
gious sphere, keeping them out of politics or education. The 
state proved unable to suppress the churches fully, however, 
and by the 1970s the SED had resigned itself to accommodat- 
ing them. 

Roman Catholics constituted only 7 percent of the popula- 
tion in the east; thus, it was the Protestant church, with broad 
backing among East Germans, that played an important social 
and political role. The Protestant church retained some auton- 
omy from the state, and by the late 1980s the church had 
become gathering places for dissidents. In 1989 weekly peace 
services at churches in big cities, such as East Berlin and 
Leipzig, became hotbeds of opposition to the regime and led 
to the mass demonstrations that ultimately brought down the 
communist regime. 


Government and Politics 

The Evangelical Church in Germany (Evangelische Kirche 
in Deutschland — EKD), the peak association for the seventeen 
autonomous provincial churches in West Germany, was estab- 
lished in 1948. The structural unity of the German Protestant 
church officially ended in 19.69, when the eight provincial 
churches in East Germany withdrew from the EKD and formed 
the Federation of the Evangelical Churches (Bund der Evange- 
lischen Kirchen — BEK). German unity ushered in the reunifi- 
cation of these two federations in 1991, under the auspices of 
the EKD. As the formal political representative of German 
Protestant churches, the EKD represents its member congrega- 
tions in all formal agreements with the government on church- 
state affairs. On religious and social matters, however, the EKD 
serves only as a coordinating agent for its largely independent 
member churches. 

The principal organizational forum for the German Roman 
Catholic Church is the Bishops' Conference, at which all Ger- 
man bishops convene semiannually. Since unification, the east- 
ern bishops also have attended these meetings. As elsewhere in 
the Catholic world, all decisions on theological matters and 
general policy emanate from the Vatican; the annual Bishops' 
Conference addresses current pastoral and religious issues 
within Germany. 

In West Germany, the Roman Catholic Church was tradition- 
ally much more active politically on a day-to-day basis than the 
Protestant denominations. The Bishops' Conference maintains 
a permanent secretariat in Bonn to monitor activity in parlia- 
ment and in the federal ministries. Catholic leaders regularly 
lobby the government on pending legislation relating to social 
or moral issues. The EKD participates less actively in the politi- 
cal process, but it is more inclined than its Catholic counter- 
part to speak out on controversial political issues that have 
spiritual implications. Examples include the Protestant 
church's strong stance against the remilitarization of West Ger- 
many in the 1950s and its continued activism in the areas of 
peace and nuclear nonproliferation. 


Although agriculture accounts for only 5 percent of the 
labor force in western Germany, the agricultural lobby has long 
been known as the best organized and most successful in Bonn. 
The peak association of this lobby, the German Farmers Associ- 
ation (Deutscher Bauernverband — DBV), focuses exclusively 


Germany: A Country Study 

on farm issues. The DBV has consistently convinced the gov- 
ernment to guarantee the financial welfare of farmers through 
generous programs of price supports, subsidies, and agricul- 
tural grants. These programs have made German food costs 
among the highest in Western Europe, but no strong call for 
reform has ever emerged. The minister of agriculture is often a 
farmer and, regardless of whether the CDU or the SPD is in 
power, that minister has single-mindedly pursued policies ben- 
eficial to farmers. 

Citizens' Initiative Associations 

In the early 1970s, a new form of political participation in 
the form of citizens' initiative associations sprang up through- 
out West Germany. These associations, in essence nontradi- 
tional interest groups, were loosely and often temporarily 
organized groups of citizens mobilized in response to one par- 
ticular local issue. Concerns ranged from school reform, urban 
redevelopment, and traffic to environmental protection. The 
staying power of these associations reflected a dissatisfaction 
with established political institutions. Unlike traditional inter- 
est groups, these associations aimed to improve the quality of 
life, rather than the material well-being, of their supporters. 
Although their ultimate goal is to produce a new social model, 
these groups tend to be more skilled at critiquing the existing 
order than at constructing a new one. Activists in these organi- 
zations tend overwhelmingly to be young and highly educated, 
espousing a New Left ideology. Citizens' initiative associations 
employ diverse tactics, ranging from lobbying and circulating 
petitions to organizing mass demonstrations and protest 
marches. Three major political movements have grown out of 
these associations: the environmental lobby, the women's 
movement, and the peace lobby. 

With public consciousness of the environment growing sub- 
stantially in the 1970s and 1980s, a new set of nationwide orga- 
nizations was formed, including the Federal Association of 
Citizens' Initiatives on Environmental Protection (Bundesver- 
band Burgerinitiativen Umweltschutz — BBU), Greenpeace, 
and Robin Wood. The BBU was at its strongest in the late 
1970s, when it coordinated more than 1,000 local citizens' ini- 
tiative associations and when almost 1 million people were affil- 
iated with the environmental movement. By the late 1980s, the 
BBU was associated with several hundred local groups whose 
cumulative membership reached only 150,000. Environmental 


Government and Politics 

activists have focused on a range of issues, including nuclear 
power, acid rain, and Waldsterben (death of the forest). 

The women's movement, organized in the late 1960s and 
early 1970s, sought to fight discrimination against women in 
the workplace and at home. Guarantees of gender equality in 
the Basic Law had done little to alter the traditional male bias 
within society. The women's movement in western Germany 
developed a two-pronged approach to securing equality for 
women: programs for raising the consciousness of women, and 
programs aimed at legislative reform. The first approach 
focused on the personal development of women and has met 
with success at the local level, with most larger cities offering a 
women's center, women's bookstores, self-help groups, and a 
network of other women's organizations. The attempt at the 
national level to mobilize the movement's supporters and bring 
about legislative change remains underdeveloped. 

The peace movement blossomed in the early 1980s in 
response to the controversy over the stationing of intermedi- 
ate-range nuclear weapons in West Germany. Mass demonstra- 
tions called for the government to pursue arms control 
negotiations to eliminate these weapons altogether. Instead, 
the Bundestag voted for deployment in October 1983, and, 
with its major objective lost, the peace movement lost momen- 
tum. The end of the Gold War brought a reduction in East- 
West tensions and the conclusion of substantial arms control 
agreements. These developments have further deprived the 
peace movement of focus. The peace movement was able to 
mobilize activity against the Persian Gulf War in early 1991, 

Autonomous citizens' initiative associations were unaccept- 
able in East Germany. The communist government established 
official organizations — the Society for Nature and the Environ- 
ment, the Peace Council, and the Democratic Women's Federa- 
tion of Germany — to co-opt the issues. The peaceful revolution 
of 1989 that brought down the communist regime in East Ger- 
many showed both the willingness among eastern Germans to 
demonstrate and protest in large numbers, as well as the power 
of such citizen action. Nonetheless, the levels of protest and 
direct action are lower in the east than in the west. However, as 
easterners become more accustomed to the freedoms afforded 
in a democracy, it is thought that they might become more 
inclined to exercise them. 


Germany: A Country Study 

The Mass Media 

West Germany has always had highly developed mass media. 
The independence of the press and its freedom from censor- 
ship are guaranteed in Article 5 of the Basic Law. Conversely, 
the communist regime in East Germany tightly controlled the 
media. Despite government censorship, East Germans were 
voracious newspaper and magazine readers. More than three 
dozen newspapers enjoyed a combined circulation of almost 10 
million in the GDR. 

The complexion of the print media in eastern Germany 
changed markedly with unification. By mid-1991 only 100,000 
copies of East Germany's most widely circulated newspaper, 
Neues Deutschland, the newspaper of the communist party, were 
being printed daily, down from roughly 1 million in the recent 
past. Western consortia bought many of the other established 
urban newspapers and brought in new management. Accord- 
ing to a public opinion survey during the 1990 national elec- 
tion, 68 percent of western Germans and 88 percent of eastern 
Germans read a newspaper on a regular basis. Not surprisingly, 
Germany boasts among the highest per capita newspaper circu- 
lations within Europe. 

The press is privately owned, and most Germans rely on 
local or regional newspapers for their information. Five daily 
newspapers enjoy good reputations nationally because of their 
sophisticated domestic and international coverage: Frankfurter 
Allgemeine Zeitung (FAZ), Suddeutsche Zeitung, Frankfurter Rund- 
schau, Handelsblatt, and Die Welt. The FAZ is probably Ger- 
many's most prestigious daily newspaper and is the one 
newspaper read by virtually all members of the political and 
business establishment. Although independent of any political 
party, its views are similar to those of the right-of-center CDU. 
Handelsblatt is the leading business daily. Die Zeit, a weekly news- 
paper, provides an erudite review of news and culture from a 
perspective sympathetic to Social Democratic views. Weekly edi- 
tions of Die Zeit are often more than 100 pages, with in-depth 
articles filling an entire page. Former chancellor Schmidt is 
one of its publishers; the paper's circulation is 493,000. 
Because these newspapers appeal to an elite readership, their 
circulation figures are much lower than that of the tabloid 
press. Bild Zeitung, with a daily circulation of close to 5 million, 
is Germany's most widely circulated daily. It puts a sensational- 


Government and Politics 

ist spin on topical issues and tends to support right-of-center 

Both Bild Zeitung and Die Welt are published by the Axel 
Springer Group, based in Hamburg. Axel Springer, now 
deceased, built an enormous media empire, which also 
includes the two largest Sunday newspapers, Bild am Sonntag 
and Welt am Sonntag, two Berlin daily newspapers, and many 
popular magazines. Springer publications are generally consid- 
ered to have a strong conservative bent. 

The liberal counterpart to Axel Springer and his successors 
has been Rudolf Augstein, founder and publisher of the weekly 
Der Spiegel, a highly respected and influential newsmagazine 
combining news coverage with investigative journalism. The 
magazine's decidedly liberal critique of politics and politicians 
has often steeped it in controversy (see Ludwig Erhard and the 
Grand Coalition, ch. 2). In 1994 its circulation stood at over 1 
million copies. Der Spiegelis distributed in 165 countries, and 
close to 15 percent of its sales are outside Germany. 

In 1993 competition for market share held by Der Spiegel 
emerged with the publication of Focus, a newsmagazine fash- 
ioned after Time and Newsweek, with shorter articles and a more 
colorful layout than that offered by Der Spiegel Focus appeared 
on newsstands in January 1993, was less expensive than Der Spie- 
gel, and, after a few months, was faring better than expected. By 
mid-April Focus was maintaining a circulation of 600,000 and 
had exceeded its annual target for pages of advertising sold. 
Since its founding in 1946, Der Spiegel has successfully faced 
down competition from more than fifty publications. However, 
the circulation of Focus is growing while that of Der Spiegel is fall- 

Although newspapers owned by political parties were com- 
mon during the Weimar period, the partisan press is much less 
significant in the Germany of the 1990s. Vorwdrts is the official 
newspaper of the SPD, and Bayernkurier serves the GSU. Rhei- 
nis cher Merkur has informal links to the CDU, and Neues Deutsch- 
land offers views of the PDS. 

Radio and Television 

Radio and television are administered in a decentralized 
fashion as prescribed in the Basic Law. The intent behind the 
pattern of regional decentralization is to prevent the exploita- 
tion of the media by a strong national government, as had hap- 
pened under the Nazi dictatorship. Germany has two public 


Germany: A Country Study 

broadcasting corporations. The first, ARD, was established in 
1954 and encompasses eleven regional public television and 
radio stations. ARD employs roughly 23,000 people and has an 
annual budget of about US$6 billion. The second, ZDF was 
founded in 1961 and is structured as a single corporation, not 
as a consortium. A third channel broadcasts cultural and edu- 
cational programs for all Land corporations. 

The Land broadcasting corporations have similar organiza- 
tional structures. Each governs itself under the direction of a 
broadcasting council consisting — in most Lander — of represen- 
tatives of the major social, economic, cultural, and political 
groups, including political parties, churches, unions, and busi- 
ness organizations. The broadcasting corporations are 
financed largely through monthly fees (DM23.80 per house- 
hold as of late 1994) charged to television and radio owners. 
Public television is allowed to devote no more than thirty min- 
utes per day to commercial advertisements. No advertisements 
are aired after 8:00 RM. on weekdays or on Sundays. Advertis- 
ing provides roughly one-third of television revenues and one- 
fourth of radio revenues. What distinguishes public television 
from commercial television is the ability to offer greater cover- 
age of public service activities and cultural events. 

Most eastern Germans were familiar with western German 
television even before unification because broadcasts from the 
west could be received in most of East Germany. According to a 
1990 survey, 49 percent of western Germans and 70 percent of 
eastern Germans watched a nightly news program at least five 
times each week. Surveys also indicate that television is the 
most important source of political information: 51 percent of 
Germans rank television first, ahead of newspapers and maga- 
zines (22 percent), conversation (16 percent), and radio (6 

Private broadcasting was virtually nonexistent in West Ger- 
many until 1981, when the Federal Constitutional Court recog- 
nized the right of the Lander to grant broadcasting licenses to 
private companies. Enabling legislation took the form of a new 
broadcasting treaty enacted by the Lander in 1987 that allowed 
the creation of private broadcasting companies to compete 
with public stations. In general, private broadcasters do not 
have an internal supervisory council, but the Lander in which 
they broadcast can exercise supervisory rights. 

Commercial broadcasters finance their operations solely 
with advertising revenues. Beyond the substantial capital costs 


Government and Politics 

associated with starting up a new television channel, private 
broadcasters have to rely on satellite and cable transmission 
because the airwaves do not offer unlimited capacity. Thus, 
viewers have to pay an additional fee to get access to private 
channels. In 1983 the federal post office undertook a large- 
scale program of wiring the country for cable television. In 
March 1993, of the 27 million households in western Germany 
that had televisions, 70 percent had access to cable service; of 
the 6.4 million households in eastern Germany, 12 percent had 
access to cable. However, at that point only about 60 percent of 
those eligible households had chosen to subscribe to cable. 

In 1985 SAT-1 became Germany's first private satellite televi- 
sion station. A group of publishing firms, including Springer, 
owns SAT-1; the channel offers a program of popular enter- 
tainment and news. Other stations subsequently sprang up, 
including 3-SAT, a joint production of German, Swiss, and Aus- 
trian national television; RTL, or Radio-Television-Luxem- 
bourg; and various European satellite stations. In early 1993, 
two all-news channels made their debut: Time Warner and 
CNN own one, n-tv; and German publishing giant Bertelsmann 
and the Siiddeutsche Zeitung are major financial backers of Vox, 
the second news channel. Vox failed quickly, however, closing 
its doors in April 1994. On the whole, private channels none- 
theless are prospering. The percentage of Germans watching 
public channels has dropped to less than one-half since the 
start of private broadcasting in 1987. 

Political Developments since Unification 

The political institutions of unified Germany are remarkably 
similar to those of the former West Germany, reflecting minor 
adjustments to accommodate the larger population rather 
than making fundamental changes. The unfolding drama of 
unification is much more evident when one takes into consid- 
eration Germany's political landscape, including elections, 
political climate in the unified country, and issues that have 
dominated that landscape. 

The Bundestag election of December 2, 1990, was the first 
all-Germany election since 1932. The election returned to 
power the governing coalition of the CDU/CSU and the FDR 
The central issue of the campaign was unification. Parties that 
strongly supported unification scored well; those that were 
ambivalent or opposed to unification, such as the SPD and the 
Greens, fared poorly. 


Germany: A Country Study 

Helmut Kohl's political fortunes soon declined, however, in 
the wake of problems with the unification process. Increasing 
unemployment in the east, and anger in the west about a tax 
increase that Kohl had pledged to avoid before the 1990 elec- 
tion, caused the CDU to lose a series of Land elections after 
unification. As a result, in 1991 the ruling coalition lost its 
majority in the Bundesrat when the CDU lost power in the 
Lander of Hesse and Rhineland-Palatinate (Kohl's home Land). 
This development made it more difficult for the Kohl govern- 
ment to gain approval for key legislative initiatives. 

The year 1994 was nicknamed the "super election year" 
because Germany conducted approximately twenty elections at 
the local, Land, federal, and European levels, culminating in 
the national election in October. In eight Land elections 
throughout 1994, the SPD fared better than did the CDU. The 
SPD thus increased its majority in the Bundesrat. The FDP per- 
formed miserably at the Land level, failing to gain the required 
5 percent for representation in all eight elections. Given this 
poor showing, many observers question the staying power of 
the FDP as a political force in Germany. Observers were sur- 
prised by the strength of the former Communists (PDS) in the 
eastern Lander, all five new Lander held elections in 1994, with 
the PDS garnering from 16 to 23 percent of the vote in each 
(see table 21, Appendix). The PDS increased its share of the 
vote over the results in 1990 and solidified the party's position 
as the third strongest political force in eastern Germany. On 
November 9, 1994, Germans celebrated the fifth anniversary of 
the fall of the Berlin Wall. However, much still divides eastern 
and western Germans, not least economic success, and the PDS 
was able to capitalize on eastern resentments. 

Germans voted in national elections on October 16, 1994. 
Chancellor Kohl was challenged by Rudolf Scharping, the min- 
ister president of the western Land of Rhineland-Palatinate and 
the chairman of the SPD. Election themes included unemploy- 
ment and economic growth, particularly in light of unification, 
as well as law and order. Except for the future of the EU, for- 
eign policy issues did not figure in the election campaign. 

Scharping began 1994 with a strong lead in public opinion 
polls, but, beginning in late April, the SPD's support began a 
sustained decline for several reasons. First, the CDU benefited 
from an increasingly positive economic outlook in Germany. 
Second, Scharping was seen by many to be a lackluster candi- 
date; further, he was not wholly successful in portraying himself 


Government and Politics 

as the conciliator who had brought harmony to a traditionally 
fractious SPD. Chancellor Kohl, however, was seen to embody 
stability, continuity and predictability; one of his election slo- 
gans was "no experiments." Third, the CDU/CSU launched a 
fierce campaign against the PDS, whose members had 
belonged to the Communist SED, calling them "red-painted 
fascists," and Kohl succeeded in incriminating the SPD, at least 
marginally, in this seeming Communist revival. The SPD pro- 
vided Kohl with this opportunity by forming a minority govern- 
ment with the Greens in the eastern Land of Saxony-Anhalt 
that depended on the votes (or abstention) of the PDS to 
remain in office. This CDU/CSU tactic was aimed, effectively it 
would seem, at those western German voters who, despite 
Scharping, questioned the SPD's commitment to centrist poli- 

Kohl's governing coalition claimed a narrow victory; its 
majority in the Bundestag was reduced from 134 to ten seats 
(see table 4, Appendix). The Greens and the former Commu- 
nists also won representation in the Bundestag. The far-right 
Republikaner, seen as a spent political force, failed to clear the 
5 percent hurdle necessary to enter the Bundestag. Voter turn- 
out, up slightly from the 1990 election, was 79.1 percent. Fol- 
lowing the election, Scharping became the leader of the SPD's 
parliamentary group in the Bundestag, which will allow him to 
keep a high national profile in preparation for the next 
national election. The coalition government of Kohl's CDU, 
the CSU, and the FDP will focus on creating jobs, trimming 
bureaucracy, fighting crime, and expanding the EU eastward. 

The FDP's seemingly chronic inability to win representation 
in Land parliaments means that it is increasingly losing its 
regional bases and its reservoirs of future political talent. If and 
how the FDP can regenerate support remains to be seen. 
Recent CDU overtures to the Greens — until recently an 
unthinkable development — also suggest a CDU awareness of 
the possible need for an alternate coalition partner in the 
future. The 1994 election may thus mark the beginning of 
some profound changes in political alignments in Germany. 

Unified Germany's second national election suggests that 
the country's east-west divide has not narrowed. The strongest 
evidence is the success of the PDS in winning parliamentary 
representation. In eastern Germany, the PDS received 19.2 per- 
cent of the vote, compared with only 0.9 percent in the west. 
The national tally of 4.4 percent was insufficient to clear the 5 


Germany: A Country Study 

percent hurdle for parliamentary representation, but the PDS 
benefited from an oft-forgotten electoral law that automatically 
qualifies a party for representation according to its overall 
share of the national vote when the party wins three electoral 
districts outright (first votes). The PDS surprised seemingly 
everyone in winning four districts outright (all in eastern Ber- 
lin), entitling it to thirty seats in the Bundestag. 

The future of the PDS is unclear and may well depend on 
whether the CDU and the SPD develop programs that attract 
current PDS constituents. Kohl's coalition lost twice as many 
votes in the east as in the west, winning 49.9 percent of the vote 
in the west and 42.5 percent in the east. The SPD faces the 
challenge in the east of competing against two other parties of 
the left, the PDS and the Greens. When considering the success 
of the PDS, however, one must recall that 80 percent of eastern 
Germans did not vote for the former Communists. At present, 
PDS leaders are working to rid the party of its Stalinist heritage; 
if successful, the PDS would certainly have a broader appeal. 

As of mid-1995, right-wing extremist parties held seats in 
three of sixteen Land parliaments (Baden-Wurtemberg, Bre- 
men, and Schleswig-Holstein) and appeared to be fading from 
the German political landscape. The most significant of these 
parties, the Republikaner, with about 23,000 members, 
attracted support principally by criticizing a government policy 
that allowed hundreds of thousands of asylum-seekers into Ger- 
many. However, the Kohl government engineered a revision of 
the German constitution in 1992 that severely restricts the right 
to asylum (which had been the most liberal in Europe), thus 
largely calming public concerns. The far right has thereby lost 
its major platform and has been tainted by violent attacks 
against foreigners in Germany. In-fighting has also divided the 
party and resulted in the ouster of leader Franz Schonhuber, a 
former Waffen-SS member and the party's one nationally 
known figure (see The Republikaner and the German People's 
Union, this ch.). In the October 1994 election, with close to 80 
percent voter turnout, the Republikaner received only 1.9 per- 
cent of the national vote, thus once again failing to win repre- 
sentation in the Bundestag. This outcome cemented a 
downward trend, which had been evinced in the European Par- 
liament election and Land elections throughout the year. That 
downward trend is particularly notable in light of the fact that 
extreme right parties have met with considerable electoral suc- 


Government and Politics 

cess in several West European countries, such as France, Bel- 
gium, and Italy. 

A plethora of controversial issues has marked political 
debate in united Germany, for example, the right to political 
asylum, the upsurge in right-wing violence, and the tensions 
surrounding the unification process itself. The Basic Law origi- 
nally contained a liberal regulation on the right to asylum, and 
in 1992 a total of 438,191 asylum-seekers streamed into Ger- 
many — up from 256,112 in 1991. Most asylum-seekers were 
from Romania, the former Yugoslavia, and Bulgaria. Many Ger- 
mans complained that the German law permitted many people 
who were not political refugees, but rather economic migrants, 
to take advantage of the country's generous welfare system and 
compete with Germans for scarce housing. Extreme right-wing 
parties capitalized on this widespread resentment against asy- 
lum-seekers in April 1992 elections in two western Lander. 

On December 6, 1992, Kohl's governing coalition and the 
opposition Social Democrats agreed on a constitutional 
amendment to limit the right to asylum. The asylum compro- 
mise between the government and the opposition included sev- 
eral important changes. First, asylum-seekers from European 
Community (EC — see Glossary) states or states that accept the 
Geneva Convention on Refugees and the European Human 
Rights Convention have no right to asylum in Germany. Sec- 
ond, any refugee passing through "safe third countries," which 
include all of Germany's neighbors, is ineligible for asylum. An 
individual may appeal this decision but may not stay in Ger- 
many during the course of that appeal. In exchange for these 
concessions, the Social Democrats won agreements to place an 
annual limit of 200,000 on the immigration of ethnic Germans 
eligible for automatic German citizenship and to ease the 
terms of citizenship for longtime foreign residents of Germany 
(see Immigration, ch. 3). Parliament approved the new asylum 
law in late May 1993, and it took effect on July 1. About 10,000 
protesters surrounded the Bundestag on the day of the vote, 
but apparently about 70 percent of Germans approved the 
more restrictive asylum law. The number of foreigners seeking 
asylum in Germany has fallen substantially since the new law 
went into effect. 

Another pressing issue has been the escalation of right-wing 
violence. In 1992 right-wing extremists committed 2,584 acts of 
violence in Germany, an increase of 74 percent from 1991. Sev- 
enteen people were killed in the 1992 attacks, six in 1991. 


Germany: A Country Study 

About 60 percent of the attacks occurred in western Germany 
and 40 percent in eastern Germany — home to only 20 percent 
of the population. About 90 percent of the right-wing attacks in 
1992 were directed against foreigners — above all, at asylum- 
seekers and their lodgings. People under the age of twenty-one 
committed 70 percent of these attacks. 

In November 1992, three Turkish residents were killed in a 
firebombing in Molln in western Germany. Of the 80 million 
people living in Germany in 1993, about 1.8 million were 
Turks, making that ethnic group the country's largest minority. 
Two-thirds of those Turks had lived in Germany at least a 
decade. The overwhelming majority of Germans condemn 
xenophobia and neo-Nazism, and after the Molln attack, over 3 
million Germans demonstrated across the country against 
right-wing violence. Following the violence in Molln, the gov- 
ernment began a crackdown on far-right violence. The federal 
prosecutor took over for the first time the investigation of an 
antiforeigner attack. The decision was made to charge the per- 
petrators with murder, rather than manslaughter, as had been 
done following previous arson attacks leading to fatalities. In 
December 1993, a judge imposed maximum sentences on the 
two men convicted in the Molln killings. Other measures taken 
by the government included banning four small neo-Nazi orga- 
nizations and outlawing the sale, manufacture, and distribution 
of the music of several neo-Nazi rock bands. 

Despite the government's actions, the number of right-wing 
attacks increased in the first six months of 1993. The most seri- 
ous incident occurred on May 29, 1993, when right-wing youths 
firebombed a house in Solingen in western Germany, killing 
five Turks. In late December 1993, four right-wing youths were 
charged with murder in the Solingen attack. In late October 
1993, United States citizens for the first time became the target 
of right-wing violence. Two skinheads harassed African-Ameri- 
can members of the United States Olympic luge team, which 
was practicing at an eastern German training center. When a 
white luger intervened on his teammates' behalf, he was 
severely beaten by the skinheads. 

By the end of 1993, the surge in right-wing violence 
appeared to be abating. The federal police reported that, in 
the first eleven months of 1993, rightist crime dropped by 28 
percent compared with the same period in 1992. As of Decem- 
ber 2, 1993, eight people had died in rightist violence com- 
pared with seventeen in 1992. A police spokesman stated that 


An estimated 10,000 mourners, including Minister of Foreign Affairs 
Klaus Kinkel, paid their respects in Hamburg to the memory of three 
Turks killed in late 1992 by right-wing extremists. 
Courtesy German Information Center, New York 

the decline reflected decisive executive action, including faster 
police responses, tougher sentences, and bans on neo-Nazi 

Much of the public debate on how to address the causes of 
right-wing violence has focused on how better to integrate for- 
eigners into German society. Chancellor Kohl announced 
some steps to make it easier for foreigners to become German 
citizens. He stopped short, however, of advocating dual citizen- 
ship. Concern exists in law enforcement circles that neo-Nazis 
are building an underground network of small, organized cells 
patterned in part on those of the Red Army Faction (Rote 
Armee Fraktion — RAF), the far-left organization that carried 
out bombings, assassinations, and kidnappings in the 1970s 
and 1980s (see The Student Movement and Terrorism, ch. 2; 


Germany: A Country Study 

Dissidence and Terrorist Activity, ch. 9). The establishment of 
such 3. network would make it much more difficult for the 
authorities to monitor neo-Nazi activities. 

A final issue dominating Germany's political scene has been 
the ongoing challenge of implementing unification. Among 
other things, the two Germanys have had to enact uniform leg- 
islation, decide on what city should serve as their capital, and 
bring the former leaders of East Germany to justice. 

Unification left Germany with a population possessing 
widely different views on matters such as the family, religion, 
and the work ethic. A particularly sensitive issue has been abor- 
tion. East Germany, which permitted free abortion on demand 
up to the twelfth week of pregnancy, had a markedly more lib- 
eral policy on abortion than did West Germany. In June 1992, 
the Bundestag, in an attempt to unify abortion policy, 
approved an abortion law — opposed by Chancellor Kohl — that 
granted a woman the right to an abortion up to the twelfth 
week of pregnancy, provided she accepted counseling first. 
Thirty-two of the 268 CDU legislators, primarily from eastern 
Germany, broke ranks with the party leadership and approved 
the bill. 

On August 4, 1992, the Federal Constitutional Court issued 
an injunction against the parliament's decision, and abortion 
continued to be available on demand in the east and largely 
prohibited in the west, pending a final court judgment. On 
May 28, 1993, the Federal Constitutional Court struck down 
the compromise law on the basis of the Basic Law's explicit pro- 
tection of the rights of the unborn child. The ruling held that 
abortion was no longer a criminal offense but that abortions 
would only be allowed in the first three months of pregnancy 
for women who first participated in a formal consultation pro- 
cess. Further, the ruling barred insurance funds from paying 
for abortions and Land hospitals from performing them. The 
ruling went into effect on June 16, 1993. Women's groups, 
opposition politicians from the west, and easterners from 
across the political spectrum expressed outrage at the court's 
decision. At some point in the future, the Bundestag is still 
expected to pass a uniform abortion law for the entire country. 

Another question that arose with unification was where to 
locate the new German capital. The Bundestag voted in June 
1991 to move the capital from Bonn to Berlin, fulfilling a long- 
standing promise of West German politicians across the board. 
The vote in favor of Berlin was surprisingly narrow, with 338 


Government and Politics 

legislators supporting Berlin and 320 supporting Bonn. Many 
of the parliamentarians who voted for Bonn spoke of the sym- 
bolic importance of the capital's geographical location, with 
Bonn bearing witness to the critical importance of the Atlantic 
Alliance and Germany's commitment to Western democracy. 
Many who supported Berlin saw their choice as a necessary act 
of conciliation toward eastern Germans and a necessary step 
toward Germany's return to the world stage as a "normal" 

The quick move to Berlin that many eastern Germans had 
hoped for was thwarted by a quiet, yet effective, campaign led 
by Bonn bureaucrats and certain key politicians who opposed 
the Bundestag decision on several grounds. First, members of 
this group cited the huge expense of moving the government, 
estimated at just under US$19 billion by the Ministry of 
Finance. Second, they argued that Berlin's historical associa- 
tions as the capital of a united Germany were negative and that 
Germany should avoid doing something to suggest to its neigh- 
bors a return to expansionist or aggressive tendencies. Third, 
many officials balked at the personal inconvenience of moving 
to Berlin if they owned homes in the Bonn area or otherwise 
faced having to uproot their families from the rather provincial 
Rhineland and relocate in a booming metropolis. 

After two years of indecision, the Kohl cabinet announced in 
October 1993 that the government would complete the move 
to Berlin by December 31, 2000; the move will begin in 1998. 
The opposition Social Democrats had threatened to make the 
government's reluctance to move an issue in the 1994 national 
election campaign. Foreign embassies and private companies 
had delayed their moves to Berlin while waiting for an official 
announcement of a timetable. The cabinet decision sent a 
decisive message to investors and property developers who 
believed the move would attract greater investment in the five 
eastern Lander. The Bonn lobby won certain important conces- 
sions as well: eight government ministries will keep their head- 
quarters in Bonn, and the remainder will retain offices there. 
Kohl received sharp criticism about the distant deadline from 
some commentators, who argued that the government's hesita- 
tion to complete the move was impeding the social and psycho- 
logical unification of east and west. 

Many Germans see the prosecution of former East German 
officials as a necessary part of coming to terms with divided 
Germany's past. On November 12, 1992, a trial opened in Ber- 


Germany: A Country Study 

lin involving six defendants, including former East German 
leader Erich Honecker, former minister of state security Erich 
Mielke, and former prime minister Willi Stoph. These men 
were put on trial for the killings of East Germans trying to cross 
the border to the west. Two days later, however, Mielke and 
Stoph were declared unfit to stand trial for health reasons. 
Charges were then dropped against Honecker because of his 
advanced cancer, and he was allowed to join his family in Chile 
in early 1993. The remaining three defendants — all former 
members of East Germany's National Defense Council — were 
convicted in September 1993, receiving prison sentences rang- 
ing from four-and-one-half years to seven-and-one-half years. 

From the start, the legal basis for the trials was questionable. 
German law does not apply to acts committed by East German 
citizens in a state that no longer exists. Thus, the defendants 
had to be prosecuted for transgressions of East German law, 
and East Germany's border law allowed guards to shoot anyone 
trying to flee. The Berlin prosecutors argued that the law was 
evil and ought not to have been obeyed, a form of reasoning 
with which the judges agreed. Many legal scholars believe that 
the convictions could be reversed on appeal, however. In part, 
the prosecution of these former East German leaders grew out 
of public indignation over the trials of border guards while 
senior policy makers were going free. By late 1993, ten border 
guards had stood trial. Nine received short, suspended sen- 
tences or acquittals; one received a sentence of six years for 
having shot and killed a fugitive who had already been caught 
and was under arrest. In the fall of 1993, the Bundestag 
extended the statute of limitations by three years for minor 
crimes by former East German officials and by five years for 
more serious crimes. 

Most observers of Germany believe the country will solve the 
economic and political challenges associated with the unifica- 
tion process. However, polls indicated that, as time passed, east- 
ern and western Germans seemed to see the gap between them 
widening rather than narrowing. In an April 1993 poll, when 
asked whether eastern and western Germans felt solidarity or 
antagonism toward one another, 71 percent in the west and 85 
percent in the east answered "antagonism." In the coming 
years, perhaps the greatest challenge to Germans of the east 
and west will be to master the task of achieving social harmony. 
Only then can they become one nation. 


Government and Politics 

* * * 

A rich literature on German government and politics is 
readily available in English. The Press and Information Office 
of the Federal Republic of Germany offers the public a wide 
range of documents, including the Basic Law, free of charge. 
That office also publishes the Week in Germany, which covers 
current events. The Financial Times and the International Herald 
Tribune provide good daily coverage of German news as well. 

English-language studies of the political system are pub- 
lished regularly. One of the most comprehensive and readable 
texts available is Politics in Germany by Russell J. Dalton. 
Another general volume providing valuable information is 
Developments in German Politics, edited by Gordon Smith, Will- 
iam E. Paterson, Peter H. Merkl, and Stephen Padgett. A more 
specialized, comparative parliamentary study is The United States 
Congress and the German Bundestag, edited by Uwe Thaysen, 
Roger H. Davidson, and Robert Gerald Livingston. The Consti- 
tution of the Federal Republic of Germany is a comprehensive exam- 
ination of the Basic Law by the noted constitutional scholar 
David P. Currie. Three journals — German Politics, German Politics 
and Society, and West European Politics — are useful sources of 
information as well. (For further information and complete 
citations, see Bibliography.) 


Hans-Dietrich Genscher, minister of foreign affairs, 1974-92 

GERMANYS FOREIGN POLICY faces formidable challenges 
and difficult decisions. For forty years, Germany was divided 
between East and West, its border the focus of a nuclear stand- 
off. On October 3, 1990, the two German states, the Federal 
Republic of Germany (FRG, or West Germany) and the Ger- 
man Democratic Republic (GDR, or East Germany), were 
united under one democratic government. As Germany begins 
to search for a new voice abroad, some circles fear that the 
country might once again come to dominate the continent. 

After unification, the country was beset by difficult domestic 
problems. Integration of Germany's five new eastern states 
{Lander; sing., Land) proved more costly and time consuming 
than experts had originally estimated. In addition, there was 
persistent friction between the former West Germans ( Wessis in 
colloquial German) and the former East Germans (Ossis). This 
friction often centered on the costs and burdens of unification. 
A spate of right-wing radicalism and violence also erupted 
throughout Germany, primarily directed against foreign work- 
ers and refugees. Between 1990 and mid-1995, Germany had 
taken in more asylum-seekers than all other European Union 
(EU — see Glossary) members combined, a fact that angered 
some Germans because of the expense this humanitarian 
action entailed. Finally, there was a debate on the competitive- 
ness of the German economy. West German workers had come 
to enjoy some of the highest wages and most extensive benefits 
among workers anywhere in the industrialized world. As a 
result of high labor costs, however, companies had begun to 
downsize, and many were relocating production facilities 
abroad. Unemployment was increasing throughout Germany. 

In this context of domestic preoccupation, Germany began 
to confront disorienting external circumstances as well. The 
European Community (EC — see Glossary) had embarked on a 
process of profound change as it considered its course toward 
political and economic union. In December 1991, the EC's 
twelve members signed the Treaty on European Union (com- 
monly known as the Maastricht Treaty — see Glossary), creating 
the EU, a blueprint for unifying the continent. The United 
States, previously West Germany's most important ally, began to 
rethink its own European role as it adapted to the new 
post-Cold War environment and its own domestic challenges. 


Germany: A Country Study 

Russia and the other states of the former Soviet bloc entered 
into an uncertain relationship of dependence on Germany, the 
country that led the international aid effort for the emerging 
democracies of the new Europe. 

Meanwhile, Operation Desert Storm in the Persian Gulf, the 
humanitarian mission of the United Nations (UN) in Somalia, 
and war in the former Yugoslavia created significant challenges 
for German foreign policy. Germany's policy makers were con- 
fronted with the question of whether or not their country's par- 
ticipation in multilateral actions sanctioned by the UN would 
be restricted to nonmilitary or peacekeeping roles. Would Ger- 
many be able to overcome internal legal obstacles and psycho- 
logical inhibitions stemming from its turbulent twentieth- 
century history of militarism to participate in peace-enforcing 
combat missions? 

Despite initial reluctance and arduous debate, Germany's 
foreign policy planners began to accept a new role with regard 
to Germany's military, and incremental steps were taken to nor- 
malize the use of the country's armed forces. The German navy 
patrolled the eastern Mediterranean off the coasts of Egypt 
and Syria during the Persian Gulf War in 1991. From May 1991 
to October 1993, German military personnel served with UN 
forces in Cambodia. In March 1994, German troops joined the 
UN's operation in Somalia. German Alpha Jets were deployed 
in eastern Turkey to help enforce the UN's Kurdish safe zone 
in northern Iraq. And German pilots flew North Atlantic 
Treaty Organization (NATO — see Glossary) missions over Bos- 
nia as part of the UN's "Deny Flight" operation. By the 
mid-1990s, the chief legal obstacles to the deployment of Ger- 
man armed forces abroad had been overcome, but the "nor- 
malization" of German foreign policy, it had become clear, 
would still take some time. 

Once unified, Germany struggled to think clearly about its 
national priorities. For Germans, unification meant new bor- 
ders, new resources, and a return to the center of the conti- 
nent, or Mittellage. It also meant new responsibilities and new 
expectations. Historically, Germany had often been either too 
strong or too weak to be accepted by its neighbors. 

Germany's return to the center of Europe entailed for the 
country's foreign policy establishment the beginnings of a sub- 
tle recalculation of the country's national interests and a grad- 
ual reexamination of its relationship to a number of 
international bodies. Those bodies included NATO, the EU, 


Foreign Relations 

the Western European Union (WEU — see Glossary); the Con- 
ference on Security and Cooperation in Europe (CSCE — see 
Glossary) — which was renamed the Organization for Security 
and Cooperation in Europe (OSCE — see Glossary) in January 
1995 — and the UN. In the early post-Cold War years, Germany 
had assumed a leading role in advocating the expansion of 
NATO and the EU to include emerging democracies of Central 
and Eastern Europe. 

Although German foreign policy remains deeply influenced 
by patterns of behavior developed during the Cold War, uni- 
fied Germany's major foreign policies and goals are evolving. 
During the unification process, Germany had reaffirmed its 
pledge not to acquire weapons of mass destruction. But post- 
unification Germany also made clear its interest in obtaining a 
permanent seat on the UN Security Council. Foreign observers 
and Germans alike had begun the search for answers to emerg- 
ing questions. What will it mean for Germany to be a "sover- 
eign nation" again? Will German attempts of the past four 
decades to develop a postnational, European identity begin to 
fade, or will they be reinforced in this postunification era? 
What role will Germany play in Europe as well as globally? Will 
Germany dominate Europe again, and, if so, in what way? How 
will the new Germany, still carrying burdens from the past, 
define its national interest in the future? 

Major Foreign Policy Goals and Strategies 

Early Developments 

Imperial Germany's foreign policy, from Otto von Bismarck's 
founding of the empire in 1871 until the empire's collapse at 
the end of World War I, was influenced by the country's 
exposed geographical situation, Germany's Mittellage, as well as 
by domestic difficulties. Looking abroad, German policy mak- 
ers were often obsessed with the threat of encirclement (Ein- 
kreisung) by hostile neighbor states. Thus, after 1871 German 
foreign policy objectives centered on two principal tasks: to 
keep France, Germany's historical rival and enemy, isolated; 
and to balance the other major powers of the day in order to 
ensure that no single power would be able to exert pressure or 
militarily confront the newly united German state. 

"Modern Germany was born encircled," writes David P. Cal- 
leo, a noted foreign affairs specialist. Indeed, German leaders 
of the late nineteenth and early twentieth centuries were often 


Germany: A Country Study 

concerned with their country's vulnerability. They were preoc- 
cupied with national frontiers and responded to this preoccu- 
pation with a heavy emphasis on military power. Yet the 
international policy, or Weltpolitik, of Bismarck (1862-90) and 
Kaiser Wilhelm II (r. 1888-1918) differed little from that of 
other major European powers of the day, such as Britain or 
France. But Germany would come to fight and lose two world 
wars in the first half of the twentieth century. And the disas- 
trous consequences of German militarism and the barbaric 
actions of Nazi Germany, in particular, had a profound impact 
on the development of West Germany's foreign policy between 
1949 and 1989. 

At first glance, the situation facing united Germany in the 
1990s resembles the situation faced by imperial Germany, inso- 
far as Germany has reclaimed a Mittellage and has returned geo- 
graphically to the heart of the continent (surrounded by nine 
immediate neighbors). Yet the parallel ends there. Peaceful 
relations exist between Germany and bordering states. Like 
Germany, the country's neighbors are democratic. Relations 
between Germany and these neighbors are characterized not 
by confrontation but by economic cooperation and interde- 
pendence. In the first years following unification, there was no 
dispute about continued German membership in NATO. And 
Germany remains a faithful member of the EU — even as Ger- 
man policy makers have begun to reexamine their country's 
foreign policy and to search for a new hierarchy of German 
interests in Europe. 

Postwar Developments 

In the postwar period, the Federal Republic became known 
as "an economic giant" and a "political dwarf." During the Cold 
War, German foreign policy had been formulated under 
extraordinary circumstances. After World War II, the country 
was divided, and its sovereignty was limited. As a member of the 
Warsaw Pact (see Glossary), communist East Germany's foreign 
policy was closely aligned with that of the Soviet Union. West 
Germany's foreign policy became characterized by a penchant 
for political and economic power over military power, by its 
preference for multilateralism over the exercise of unilateral 
actions, and by its concentration on European rather than glo- 
bal policy issues. 

The characteristics of West Germany as a civilian European 
power wedded to multilateral structures stood in stark contrast 


Foreign Relations 

to German colonialism of the late nineteenth and early twenti- 
eth centuries and the military expansion pursued by Germany 
under Adolf Hitler's National Socialist rule from 1933 to 1945. 
In fact, the patterns of West Germany's foreign policy were very 
much a direct consequence of military defeat and occupation 
by the Allied Powers at the end of World War II. In reaction to 
the excesses of the past, the Federal Republic's foreign policy 
establishment developed a clear and strong aversion to power 
politics and remained reluctant to draw on populist, national 
sentiment in support of foreign policy goals. 

Emblematic of West Germany's foreign policy was Bonn's 
Ostpolitik — the opening to the east that became a continuous, 
albeit varied, thread in the policies practiced by both center- 
left and center-right governments in Bonn over the two 
decades preceding the collapse of the Soviet bloc. Ostpolitik 
began in 1969, when Germany's coalition formed by the Social 
Democratic Party of Germany (Sozialdemokratische Partei 
Deutschlands — SPD) and the Free Democratic Party (Freie 
Demokratische Partei — FDP) first took office. Ostpolitik was 
the result of a concept known as Wandel durch Anndherung, or 
change through rapprochement, created by Chancellor Willy 
Brandt (1969-74) and his close adviser, Egon Bahr. 

Ostpolitik was Bonn's policy of detente toward communist 
Europe. It rested on two assumptions: that the Federal Repub- 
lic, despite the crimes subsequently committed by communist 
regimes, had a special responsibility to compensate Eastern 
Europe for the aggression and atrocities carried out by Nazi 
Germany; and that a web of treaties and agreements with the 
Soviet bloc would improve human rights for the citizens of 
these neighboring communist states, while creating a 
peace-inducing dialogue with communist regimes. Conse- 
quently, Ostpolitik consisted of three components: West Ger- 
many's relations with the Soviet Union, its ties to East Germany, 
and its dealings with the rest of Eastern Europe. In the case of 
East Germany, Ostpolitik represented Bonn's attempt through 
dialogue and cooperation with communist rulers to help over- 
come some of the burdens of Germany's division. 


On November 28, 1989, three weeks after the breach of the 
Berlin Wall, Chancellor Helmut Kohl (1982- ) presented to the 
Bundestag (the lower house of West Germany's parliament) his 
Ten-Point Plan outlining his proposal for the incremental cre- 


Germany: A Country Study 

ation of a confederation between the two German states. Kohl 
believed at the time — an overly optimistic assessment as history 
would soon show — that the process of internal economic unifi- 
cation could be achieved in three to four years. 

There was much talk at the time that in presenting his 
Ten-Point Plan Chancellor Kohl was engaging in an overly 
assertive style of diplomacy because he had failed to adequately 
consult his partners within the governing coalition as well as 
the Western Allies. A number of leading members of the oppo- 
sition SPD, moreover, rejected the idea of unification, viewing 
moves toward unity as a threat to the postwar order of peace 
and stability in Europe. The initial push by the Kohl govern- 
ment toward unification was driven by a number of consider- 

Kohl feared that if Bonn were not able to immediately set 
the terms and course of international discussion about events 
in East Germany, other European countries, particularly the 
Soviet Union and France, might seek a new variation on the 
most recent solution of the "German Question," namely, 
arranging for the containment of Germany within Europe's 
international order by dividing it into two. French president 
Francois Mitterrand's announcement of his intention to visit 
East Berlin just days prior to Kohl's Bundestag speech, for 
instance, fueled fears in Bonn that anxious neighbors might 
attempt to stabilize East Germany's fragile communist regime 
and its hemorrhaging economy. 

There were domestic considerations for West Germany's 
chancellor as well. Kohl worried that if his party, the Christian 
Democratic Union (Christlich Demokratische Union — CDU), 
did not seize the issue of unification and articulate a bold plan 
of action, political opponents might step in to fill the vacuum. 
Kohl's rivals included the SPD, but also the FDP, the junior 
partner in Kohl's coalition government, in power since late 
1982. West Germany's federal president, Richard von 
Weizsacker (1984-94), a member of Kohl's party, feared that 
the right-wing radical Republikaner (Die Republikaner) could 
make the issue their own in the upcoming national election 
campaign if the CDU did not preempt it. 

It also had become clear within weeks of Kohl's proposed 
Ten-Point Plan that governing elites would be forced to 
respond to overwhelming pressure from the streets of East Ger- 
man cities and towns. The ways in which Kohl later defended 
the terms and timing of economic and monetary union with 


Foreign Relations 

East Germany illustrate this fact. He often reminded his critics 
that if Bonn were not prepared to bring the deutsche mark to 
East Germany, the East Germans would surely come to the 
deutsche mark, an allusion to the growing tide of East-West 
migration during the first six months of 1990. 

Chancellor Kohl's Ten-Point Plan sought to intensify rap- 
prochement with East Germany. The ten points consisted of 
calling for immediate measures to provide aid; cooperation 
with the GDR on an economic and cultural level; fundamental 
political and economic change in the GDR; a close-knit net- 
work of agreements; confederative structures, with the goal of 
forming a federation in Germany; a future structure of Ger- 
many that would fit into the future architecture of Europe as a 
whole; the power of attraction of the EC to remain a constant 
feature; the continuation of the CSCE process as a crucial part 
of the total European architecture, but with the possibility of 
new institutional forms; disarmament and arms control to keep 
step with political developments; and freedom within Europe 
to be maintained in such a way that the German people could, 
via self-determination, restore their unity. The reattainment of 
German state unity by peaceful means remained the political 
goal of the federal government. 

In fact, East Germany disintegrated at an astonishing pace, 
and German foreign policy from late 1989 throughout 1990 
was driven by concerns directly related to the unification pro- 
cess. In February 1990, East Germany's communist party, the 
Socialist Unity Party of Germany (Sozialistische Einheitspartei 
Deutschlands — SED), transformed itself into the Party of Dem- 
ocratic Socialism (Partei des Demokratischen Sozialismus — 
PDS). East Germany's new prime minister, Hans Modrow, 
insisted that the reformed PDS would be able to find a "third 
way" between capitalism and socialism, permitting the GDR 
another life as a separate independent German state. Democ- 
ratization and elections in May 1990 would legitimate the PDS's 
leading role in this process, Modrow believed, and would pro- 
vide a new basis for relations between East Germany and West 

The plans of East German reform communists were derailed 
in a matter of months, however. Discredited SED officials were 
publicly harassed and in some cases arrested for abuse of 
power and privilege. The leading role of the communist party 
was revoked from the GDR's constitution, and offices of the 
State Security Service (Staatssicherheitsdienst, commonly 


Germany: A Country Study 

referred to as Stasi), the despised secret police, were occupied 
by citizens groups at sites throughout the country. Of the SED's 
2.3 million members, nearly 1.6 million had deserted by early 

By the end of January 1990, a deteriorating economy, sus- 
tained demonstrations throughout the country, and the daily 
exit of some 2,000 East German citizens for West Germany 
compelled opposition leaders who made up the Round Table, 
an interim "government," to convince Modrow to advance the 
date of East German elections from May 6 to March 18. By late 
spring, most observers agreed that the elections would no 
longer be a referendum on communist rule (opinion polls sug- 
gested that the communists would be defeated in fair, free elec- 
tions), but rather on the terms and timing of German 

Confronted by this reality, Soviet leader Mikhail Gorbachev, 
having previously insisted that Moscow would not accept aboli- 
tion of the East German state, retreated from this hard-line 
position. Although Gorbachev had renounced the Soviet 
Union's right to determine the national policies of Warsaw Pact 
members during the years and months prior to the breach of 
the Berlin Wall, the Soviet leadership had remained steadfastly 
committed to the overall status quo in Europe and to Ger- 
many's division into two states. 

As the Berlin Wall collapsed and Kohl announced his 
Ten-Point Plan, the Soviet leadership delivered a number of 
statements and gestures that made it clear that Moscow had no 
intention of relinquishing its East German ally. Reasserting 
occupation rights, the Soviet Union called for a meeting of the 
ambassadors of the World War II Allies, which took place on 
December 11 at the Allied Control Council building in Berlin. 
A stream of Kremlin advisers insisted in interviews that unifica- 
tion was neither desirable nor feasible. 

Nevertheless, on January 30 Prime Minister Modrow flew to 
Moscow for a meeting with Gorbachev, after which Gorbachev 
consented in principle to Germany's self-determination. When 
Modrow returned to East Berlin, he announced his own plan 
for inner-German rapprochement, a "Declaration on the Way 
to German Unity." The plan envisaged a confederation 
between the two German states, leading eventually to an 
all-German federation. According to the plan, both Bonn and 
East Berlin would gradually distance themselves from their 
respective alliance commitments. 


Foreign Relations 

In a speech delivered in West Berlin on December 12, 
United States secretary of state James Baker, echoing the posi- 
tion outlined by United States president George Bush in a 
meeting with Chancellor Kohl earlier that month, had already 
tacitly given Washington's green light for German unity. 
Although the French and British gradually overcame initial 
misgivings, Baker, and later Kohl and West German minister of 
foreign affairs Hans-Dietrich Genscher, visited Gorbachev in 
February to further assuage Soviet security concerns. In a 
meeting with Gorbachev, Baker formally presented what 
became known as the Nine Assurances, a collection of various 
Western guarantees provided to the Soviet Union to make the 
process of German unification more palatable. 

Meanwhile, pressured by fears that East Germany might col- 
lapse (and by the conviction that the opportunity to unite the 
two German states would exist only as long as Gorbachev 
remained in power), the Kohl government began to push dip- 
lomatic negotiations toward a speedy solution of the German 
Question. Kohl's Ten-Point Plan was being overtaken by events. 

Already in the beginning of February, discussions had begun 
about the introduction of West Germany's currency into East 
Germany. Also as a result of the quickened pace of events, the 
foreign ministers of the four World War II Allies and of the two 
German states agreed in mid-February to begin formal talks on 
German unity (the Two-Plus-Four Talks). The external condi- 
tions for unification were put into place. 

The Two-Plus-Four Talks were intended to provide an instru- 
ment with which to shape German unification and hence the 
new post-Cold War world in Europe without excluding key 
players from the process. There were fears, in particular in 
Washington and Bonn, that a bitter sense of defeat and exclu- 
sion in Moscow might engender a climate analogous to that 
which had developed in Germany after the Treaty of Versailles 
and that had characterized the Weimar period. The existence 
of a humiliated and vanquished power that might later seek to 
forcibly reshape the European order (as Hitler's Germany had 
sought to do) was to be precluded at all costs. More immedi- 
ately, United States, German, and other West European diplo- 
mats wanted to avoid creating a domestic crisis for Gorbachev, 
to whom most Western leaders had tied their hopes for a sus- 
tained liberal posture of the Soviet Union. 

Free and fair elections for East Germany's Volkskammer 
(People's Chamber) were held on March 18, 1990. The result 


Germany: A Country Study 

was a victory for the CDU-led Alliance for Germany, which 
received a plurality of the vote. The alliance and the other par- 
ties that supported unification (the SPD, the Alliance of Free 
Democrats, and the German Social Union) received the votes 
of roughly three-fourths of the East German electorate. Opin- 
ion polls underscored the same message expressed in the elec- 
tion results. The vast majority of the population in the GDR 
rejected communism, reformed or otherwise, and supported 
unification with the Federal Republic. 

East Germany's first (and last) democratically elected prime 
minister, Lothar de Maiziere, promptly fulfilled his mandate. 
On April 19, he announced that he would seek unity with West 
Germany as soon as possible. As a first step, East Berlin's new 
government agreed with Bonn on economic and monetary 
union, which took place on July 1. 

The external conditions governing Germany's unification 
had meanwhile been in process. Following the first Two-Plus- 
Four meeting in mid-February, subsequent meetings were held 
in March, June, July, and September 1990. In late June, the 
national legislatures in East Berlin and in Bonn approved a res- 
olution recognizing the inviolability of Poland's borders as 
determined after World War II, confirming the Oder-Neisse 
rivers as the permanent border between Poland and the future 
united Germany. On August 31, 1990, the Unification Treaty 
was signed in East Berlin by officials of both German states. 
The treaty stipulated that the five newly reconstituted Lander in 
the GDR would accede to the Federal Republic on October 3, 
1990, as provided for under Article 23 of the Basic Law. 

The remaining external aspects relating to German unifica- 
tion were quickly settled. After having consented to unification, 
Gorbachev and his foreign minister, Eduard Shevardnadze, 
had at first insisted that united Germany accept a demilita- 
rized, neutral status. When this was rejected by West Germany, 
they then argued that Germany should remain in both NATO 
and the Warsaw Pact for a transitional period. In this context, 
GDR minister of national defense Admiral Theodor Hoffmann 
proposed in late February 1990 the creation of a joint army for 
united Germany (a force that would be reduced to less than 
one-third the combined size of the armed forces of the FRG 
and the GDR) . He also proposed that, pending elections and 
further negotiations, both states continue to belong to their 
respective alliances. 


Foreign Relations 

That same month, however, following a meeting at Camp 
David, Chancellor Kohl and President Bush had reemphasized 
their commitment to unified Germany's full membership in 
NATO. They stressed that East Germany would initially enjoy a 
special military status in deference to security concerns of the 
Soviet Union. To this end, West German minister of foreign 
affairs Genscher, especially attuned to Soviet sensitivities, had 
formulated a plan to assuage Soviet concerns. According to 
Genscher's plan, NATO forces would not be moved to the terri- 
tory of the former GDR. 

In the early weeks of the spring of 1990, Soviet resistance to 
united Germany's full membership in NATO, particularly in 
light of the GDR's elections in March, became increasingly 
untenable. Finally, in mid-July, consultations among Kohl, 
Genscher, and Gorbachev in the Caucasian town of Stavropol 
secured Soviet permission for Germany to enjoy full sover- 
eignty and remain in NATO. 

A communique issued by NATO from London the previous 
week had helped to facilitate the reversal of the Soviet position 
as did West German largesse to the Soviet Union in the form of 
aid and credits. The London declaration announced that 
NATO had become "an indispensable factor of stability" for 
Europe's profound transition and hence would seek to extend 
the Alliance's "hand of friendship" to its former enemies in the 
Soviet Union and Eastern Europe. 

Kohl and Genscher agreed that united Germany would 
recommit to earlier pledges to renounce production and pos- 
session of nuclear, biological, and chemical weapons. Both Ger- 
man states also declared on August 30, 1990, at the Conven- 
tional Forces in Europe (CFE) talks in Vienna, that the united 
country would reduce its armed forces to 370,000 within three 
to four years. West Germany's leadership also guaranteed that 
NATO's military organization would not be extended to GDR 
territory as long as Soviet forces remained stationed there. In 
return, Kohl obtained from Gorbachev agreement that the 
roughly 400,000 Soviet troops stationed in East Germany would 
be withdrawn by the end of 1994. The Kohl government also 
pledged financial assistance for the repatriation of the Soviet 

The Kohl-Gorbachev agreements paved the way for signing 
the Treaty on the Final Settlement with Respect to Germany, 
or, as it is more commonly known, the Two-Plus-Four Treaty, on 
September 12, 1990. Within this framework, the two German 


Germany: A Country Study 

states, together with the United States, the Soviet Union, 
France, and Britain, were able to confirm the unification of 
Germany as consisting of the GDR, the FRG, and Berlin. In 
addition, the Federal Republic and the Soviet Union signed a 
Treaty on Good-Neighborliness, Partnership, and Cooperation 
in September 1990. That same month, the GDR's minister of 
defense and disarmament and the commander in chief of the 
Warsaw Pact's armed forces concluded an agreement that pro- 
vided for the GDR's immediate withdrawal from the Warsaw 

Bonn and Warsaw also concluded a separate treaty that took 
into account the special concerns Poland had about its security. 
For a period of time, the topic of the German-Polish border 
had proved a controversial and divisive issue for coalition poli- 
tics in Bonn and for the unification process in general. Kohl's 
reluctance to declare the issue settled, stemming from legal 
concerns as well as domestic political considerations, fueled 
anxieties in Poland and elsewhere in Europe about the course 
of a united Germany. On June 21, 1990, however, both German 
parliaments had passed resolutions recognizing Poland's west- 
ern border as final, stipulating that a separate treaty between 
Poland and a united Germany would formally consummate 
this understanding. 

On October 1, 1990, all Four-Power rights in Germany and 
Berlin ended when representatives of the four victorious coun- 
tries in World War II signed a document in New York recogniz- 
ing full German sovereignty. On October 3, the Unification 
Treaty went into effect, and the five new Lander formed in the 
territory of the former GDR acceded to the Federal Republic 
as provided for under Article 23 of the Basic Law. 

Foreign Reaction to Unification 

German unification upset the political equilibrium in many 
of Western and Eastern Europe's political establishments. 
Although French public opinion had tended to support Ger- 
man unity, French leaders feared that a resurgent united Ger- 
many would dominate Europe and usurp their aspirations to 
play a leading role on the continent. President Mitterrand's 
trip to the GDR in December 1989, when he cautioned the East 
Germans against hasty unification, illustrated this sentiment. 

In Britain, Prime Minister Margaret Thatcher's government 
harbored fears that German unification would accelerate Euro- 
pean unification, quickening and deepening the gap between 


The departure of the United States, British, and French city 

commanders from Berlin in 1991 
Joyous crowds at the Brandenburg Gate in Berlin in November 1989 
Courtesy German Information Center, New York 


Germany: A Country Study 

London and the continent. Nicholas Ridley, an official in the 
Thatcher government, was forced to step down in the summer 
of 1990 in the wake of impolitic remarks he made about Euro- 
pean economic union's being a German design for the domi- 
nation of Europe. Thatcher, for her part, initially urged 
Chancellor Kohl's government to be patient on unification and 
only with reluctance later joined the United States in its pro- 
unity stance. 

In the former Soviet bloc, aside from the Soviet Union, 
Poland sheltered the greatest distrust and suspicion of develop- 
ments in Germany. These anxieties accounted for the separate 
treaty signed between united Germany and Poland in Novem- 
ber 1990. The treaty confirmed the border (stipulated in the 
Two-Plus-Four Talks) and also outlined principles for 
good-neighborliness and cooperation between Warsaw and 

From the United States perspective, after offering Germany 
support for unification, President Bush promptly sought to 
reshape the German-United States alliance from a relationship 
in which West Germany had served as a junior partner to a 
more equal status in which Germany would become a "partner 
in leadership." Germany's changing relationship with the 
United States was in fact already evident. For example, it was 
without prior consultation with Washington that Chancellor 
Kohl and Soviet president Gorbachev had reached their agree- 
ment on the limit of 370,000 troops for Germany's armed 
forces, the Bundeswehr (West Germany had roughly 495,000 
troops under arms in 1990; the GDR, 170,000) and the exclu- 
sion of NATO troops from the territory of eastern Germany. 

Postunification Developments 

United Germany, a state with 80 million inhabitants and an 
area bordering nine countries in Central Europe, confronted a 
daunting array of responsibilities and expectations with regard 
to its international role in the early 1990s. Following unifica- 
tion, its government adopted a policy aimed at fully integrating 
the newly enlarged Federal Republic into the primary instru- 
ments of international cooperation: the EC, NATO, the WEU, 
and the CSCE. In a deliberate effort to further assuage the con- 
cerns of its neighbors about German dominance on the conti- 
nent, Bonn worked assiduously to bolster its multilateralist 


Foreign Relations 

President von Weizsacker, Chancellor Kohl, and Minister of 
Foreign Affairs Genscher all went to great lengths to stress Ger- 
many's intention to renounce the power politics of past eras in 
favor of a "policy of responsibility." In the German view, this 
meant, on the one hand, a continuation of West German for- 
eign policy based on the use of nonmilitary instruments. On 
the other hand, it meant a higher international profile in eco- 
nomic, human rights, and environmental issues. With the end 
of the Cold War, economic power, in the view of many officials 
and policy experts in Europe, had superseded military power 
in terms of political influence. Germans, above all, adhered to 
this belief. 

At times, however, German foreign policy was self-centered. 
Squabbling over German interest rates (both in Europe and in 
the United States) in the autumn of 1992 underscored what 
many perceived as a new tilt toward German self-absorption 
and unilateralism that had been established the previous win- 
ter through Germany's policy toward the Balkans. Until the 
summer of 1991, Germany's policy toward Yugoslavia had mir- 
rored the thinking in Washington and European capitals, 
namely, that Yugoslav unity should be preserved. For a number 
of domestic reasons, however, Bonn began to shift away from 
this policy, finally deciding on unilateral recognition of Croatia 
and Slovenia in December 1991. 

In general, united Germany's foreign policy followed the res- 
olutely multilateral stance developed in the postwar period. 
The German government played an enthusiastic role in the 
environmental summit in Rio de Janeiro in June 1992, empha- 
sizing the importance it attached to international ecological 
concerns in its foreign policy. In the area of international aid, 
Bonn established criteria for developmental assistance based 
on a recipient country's respect for human rights, commitment 
to democracy and a market economy, and responsibility in 
arms development and procurement. 

In the first years after the collapse of the Soviet bloc, Ger- 
many led the international aid effort for the former Soviet 
Union and for the countries of Central and Eastern Europe. 
Aid to Russia was paramount for policy makers in Bonn for a 
variety of reasons, including the desire to expedite the with- 
drawal of Soviet troops from eastern Germany and the wish to 
enhance Germany's security by promoting democracy and a 
market economy in Eastern Europe and in the Soviet Union's 
successor states. 


Germany: A Country Study 

Because of these vital concerns, the German government 
emerged as an important champion of aid to the former Soviet 
bloc. Chancellor Kohl repeatedly prodded his Western part- 
ners toward what he often termed "fair international 
burden-sharing" with regard to aid for the emerging democra- 
cies in the former Soviet bloc. The US$24 billion aid package 
of the Group of Seven (G-7 — see Glossary) for Russia in April 
1992 had come about to a large extent as a result of German 
insistence. In April 1993, the G-7 announced an additional aid 
package for Russia totaling approximately US$50 billion. By 
this time, German aid to the successor states of the Soviet 
Union totaled more than DM90 billion (for value of the deut- 
sche mark — see Glossary). According to Chancellor Kohl, this 
amount represented more than half of all Western contribu- 
tions since 1989. German aid to the Commonwealth of Inde- 
pendent States (CIS — see Glossary) included export credit 
guarantees for long-term loans; sustained support for the with- 
drawal and reintegration of CIS troops stationed in eastern 
Germany; financial help to aid the CIS in its development of 
market institutions and infrastructure; and more than DM100 
million in bilateral and multilateral aid to improve safety stan- 
dards in Soviet-designed nuclear power plants. 

Part of German aid to the CIS was to provide for the material 
well-being of the estimated 2 million ethnic Germans who still 
resided in former Soviet republics. This aid was designed to 
offer incentives for ethnic Germans to remain in Russia and in 
other CIS states rather than to emigrate to Germany, where 
they had the right to become citizens of the Federal Republic 
and receive significant amounts of help in becoming inte- 
grated into the homeland of their ancestors (see Immigration, 
ch. 3). The German government has even discussed with Rus- 
sian representatives the possibility of restoring the "Volga 
Republic" disbanded by Joseph Stalin in 1941 as a possible area 
of settlement for ethnic Germans in Russia. 

Elsewhere in Eastern Europe, the subject of ethnic German 
minorities has played a role in German foreign policy. By the 
mid-1990s, German-Czech relations, for example, still had not 
been fully normalized, to a large extent because expellee 
groups in the Federal Republic continued to lobby for restitu- 
tion or compensation for property owned by Germans in the 
former Czechoslovakia and confiscated after World War II. The 
German-Czech Friendship Treaty was signed in 1992, but it 


Foreign Relations 

failed to address the question of compensation for Czech vic- 
tims of Nazism. 

Foreign Policy Formulation 

Institutional Framework 

Structural weaknesses of the German central government 
were deliberately crafted during the years of Allied occupation 
(1945-49) to preclude the possibility that extremists could 
once again return to government (see Constitutional Frame- 
work, ch. 7) . The chancellor, the cabinet, and the legislature all 
contribute to the policy-making process. Moreover, power is 
divided between the federal and Land governments. Foreign 
policy is the prerogative of the federal government, but Lander 
are permitted to conclude agreements with foreign countries; 
such agreements in turn are subject to approval by the federal 

Article 65 of the Basic Law stipulates that the federal chan- 
cellor is responsible for general policy, and the Federal Chan- 
cellery (the chancellor's office) serves as the center for policy 
review and coordination. The chancellor's direct executive role 
is limited, however. Although he or she has wide powers to 
name political appointees in government, the chancellor does 
not enjoy complete freedom in making appointments to cabi- 
net posts. Political necessity demands, for instance, the guaran- 
tee of a number of cabinet posts to coalition partners. In 1995, 
for example, important portfolios, such as economics and for- 
eign affairs, were controlled by the FDP, Helmut Kohl's junior 
coalition partner. The resulting diversity of views at the highest 
level of government accounts for sustained policy splits and a 
process in which it is at times difficult to resolve particularly 
contentious issues. 

The Ministry of Foreign Affairs is the central department for 
planning and implementing foreign policy. Like the United 
States, Germany has a corps of professional diplomats. Those 
wishing to join Germany's foreign service may file their applica- 
tion once a year. Successful candidates undergo a two-year 
training program. About one-third of Germany's diplomats are 

The Ministry of Foreign Affairs shares responsibility for for- 
eign economic policy with the Ministry for Economics and the 
Ministry of Finance; security policy is coordinated with the 
Ministry of Defense. Although the executive branch generally 


Germany: A Country Study 

takes the initiative in foreign affairs, the Bundestag (the lower 
house of parliament) and the Bundesrat (the upper house of 
parliament) are involved in the policy-making process. These 
bodies ratify foreign treaties and approve most legislation and 
budgetary provisions. Parliamentary groups (Fraktionen; sing., 
Fraktiori) in the Bundestag and various committees pertaining 
to foreign affairs provide organizational structure for the pol- 
icy-making process. 

Domestic Influences on Foreign Policy 

Foreign Policy Positions of the Political Parties 

Members of Kohl's CDU and its Bavarian sister party, the 
Christian Social Union (Christlich-Soziale Union — CSU), 
assert that transatlantic links should be given priority over 
more European-dominated organizations such as the CSCE, 
especially in the discussion of security matters. They also stress 
that assumption of responsibility in international affairs would 
necessarily demand a resolution of the "out-of-area M debate, 
that is, whether Germany would be allowed to participate 
alongside Alliance partners in future military operations. 

The CSU has distinguished itself from the CDU by pushing a 
slightly more confident tone regarding what its members per- 
ceive as German national interests. Notable in this regard were 
CSU demands that Bonn and Prague renegotiate a friendship 
treaty to give greater emphasis to property claims of ethnic 
Germans (living mostly in Bavaria) who had emigrated or been 
expelled from Czechoslovakia after World War II. In May 1992, 
the CSU announced that it would vote against the German- 
Czechoslovak friendship treaty in the Bundesrat. 

Minister of Foreign Affairs Genscher's party, the FDP, is per- 
haps the least nationalistic and the most multilateral in philoso- 
phy of the German political parties when it comes to the 
subject of foreign policy. Although FDP voters, like those of the 
CDU, strongly favor membership in NATO and rapid Euro- 
pean unification, FDP supporters have stressed to a greater 
extent than the other parties the importance of CSCE institu- 
tions and policies aimed at arms control and arms reductions. 
Holding views markedly different in this regard than those 
held by the CDU/CSU, FDP voters place far less emphasis on 
the participation of German soldiers in peacekeeping and 
peacemaking missions under UN auspices. 


Germany's Minister of Foreign Affairs Hans-Dietrich Genscher with 
Britain's Secretary of State for Foreign and Commonwealth Affairs 
Douglas Hurd during the Two-Plus-Four Talks in Bonn in May 1990 
Courtesy German Information Center, New York 

On foreign policy issues, the SPD is distinct in a number of 
ways from the ruling coalition government in Bonn. Like the 
FDP, the SPD is a strong supporter of the CSCE but favors 
greater restrictions on out-of-area missions for the Bundeswehr. 
Although fundamentally multilateralist in sentiment (the SPD 
supports a United States of Europe and more responsibility for 
the UN in collective security), the SPD is apt to express its 
desire that Germany play a singular and special role in interna- 
tional relations because of its recent troubled history. A survey 
taken in the early 1990s found that 35 percent of SPD voters 
preferred a neutral status for united Germany Of the major 
political parties, the SDP is the biggest supporter of neutrality 
and on balance offers the lowest support for NATO. 


Germany: A Country Study 

The Greens (Die Grunen), a western German environmen- 
talist party, united in 1993 with an eastern German political 
group, Alliance 90 (Bundnis 90), to form Alliance 90/The 
Greens, commonly called the Greens. Surveys from the early 
1990s found that one-third of the traditionally pacifist Green 
voters supported continued membership in NATO. Nearly 50 
percent backed European unity. Although the Greens ada- 
mantly opposed German participation in Operation Desert 
Storm, some members have begun to call for a multilateral mil- 
itary intervention in the Balkan war. However, they either 
eschew the question of or oppose German involvement. 

Other small parties, such as the PDS and the right-wing radi- 
cal Republikaner (Die Republikaner — REP), are either 
opposed to or reluctant to support German membership in 
NATO and reject European integration (according to the 
Republikaner) as subordinating German interests to a 
pan-European bureaucratic architecture. Neither the PDS nor 
the Republikaner played a significant role in mainstream 
debate during the first several years following unification. 

Public Opinion 

After unification, Germany soon became confident about its 
greater responsibility in international relations. According to a 
1991 Rand Corporation survey, 62 percent of the population 
said they thought that Germany should pursue a more active 
international role. Some 77 percent voiced the opinion that 
their country was best suited to play the leading foreign policy 
role in Europe. There were even signs that Germans were com- 
ing to terms with the idea of international military interven- 
tion. In 1992 about 53 percent of Germans (compared with 43 
percent the previous year) said they believed that the use of 
military force is justified when principles of international law 
and human rights are violated. 

The reluctance of Germans to think in terms of their coun- 
try's involvement in multilateral military actions remained 
high, however. Although 53 percent supported participation of 
the Bundeswehr in peacekeeping operations after unification, 
barely 33 percent favored German military involvement in 
NATO operations outside of German territory. Only 20 per- 
cent were sympathetic to the idea of German forces participat- 
ing in collective security actions such as Operation Desert 
Storm. A 1994 follow-up study by the Rand Corporation found 
increasing support in German public opinion for a German 


Foreign Relations 

defense role beyond the country's borders. But data also 
reflected uncertainty about what that role should entail. 

In the aftermath of communism's demise, Germans, espe- 
cially Germans living in the old Lander, continued to believe 
that NATO was essential to their security. They did so even 
though the contours of a distinct threat had not emerged and 
even though Germany's new international role remained very 
much in question. A 1990-91 study by the Rand Corporation 
commissioned by the United States Air Force discovered that 
85 percent of the German populace supported membership in 
international alliances in general, with two out of three western 
Germans considering NATO essential for their security. (A 
West German Emnid poll in the autumn of 1988 had shown 86 
percent favoring NATO membership.) By contrast, only 35 per- 
cent of eastern Germans considered NATO indispensable. The 
fact that western Germans made up roughly four-fifths of 
united Germany's population and that western Germans domi- 
nated the united country's policy establishment led most ana- 
lysts to conclude that the addition of eastern Germany would 
have a minimal impact on the Federal Republic's foreign pol- 

The German position on the presence of United States 
troops remains one of ambivalence. According to the Rand 
study, 57 percent supported a complete withdrawal of United 
States troops from the territory of the Federal Republic. West- 
ern Germans were divided in their view — 43 percent favoring 
and 49 percent rejecting the sustained presence of these 
troops. Eastern Germans demonstrated greater consensus on 
the issue of United States troops, with 84 percent opposing a 
future United States military presence. 

When asked why one should support NATO in the post-Cold 
War era, western Germans gave as the primary reason the fact 
that the defense organization had become a fixture on the 
political landscape over the course of previous decades and 
had done a good job in maintaining peace on the continent. 
Few respondents felt that NATO should have more military 
responsibilities, however. In fact, 42 percent voiced apprehen- 
sion that NATO could be used in the future to draw Germany 
into conflicts where its interests were not represented. The 
impressions from these results were roughly aligned with the 
findings from polls conducted by German institutes during the 
same time frame. In 1991 a majority of Germans regarded Swit- 
zerland — a neutral although not demilitarized state — as an 


Germany: A Country Study 

appropriate model for the new Germany's role in international 

The Out-of-Area Debate 

Immediately after unification, the prevailing interpretation 
of the Basic Law allowed for the Federal Republic's participa- 
tion in systems of collective security but precluded its armed 
forces from any activity not specifically attributable to the coun- 
try's defense, unless explicitly authorized elsewhere in the con- 
stitution. Article 26 of the Basic Law forbids any act of war or 
aggression, and Article 87 stipulates that German military 
forces are permitted to become involved only in defense 
actions. The question of German participation in out-of-area 
operations played an important role in German foreign policy 
debates of the early 1990s. 

The interpretation that combat missions outside the tradi- 
tional area covered by NATO are not permitted under the con- 
stitution had been ratified by a decision by the SPD-led 
government of Chancellor Helmut Schmidt (1974-82) in April 
1981. This view was reconfirmed in 1983 by the new Kohl gov- 
ernment soon after it took power. 

The debate on out-of-area operations during the Persian 
Gulf War led to a consensus by the major political parties — 
although for varying reasons — that rather than reinterpreta- 
tion, the constitution was in need of amendment to allow Ger- 
man forces to assume a new role in collective security. 
Amending the constitution requires a two-thirds majority in 
both the Bundestag and the Bundesrat. Conflict arose, first 
because the opposition SPD rejected the idea of an amend- 
ment, then later because neither the SPD nor the other parties 
could agree on the precise provisions of such an amendment. 

The SPD insisted that an amendment to the constitution 
allow for German participation in UN peacekeeping opera- 
tions only. This position was reached after heated debate at the 
party's convention in May 1991, and even then, only with the 
strong push of SPD leader Bjorn Engholm and the party's mod- 
erate faction. The measure passed by the relatively small mar- 
gin of 230 to 179. The SPD stopped short of supporting 
German participation in combat missions sa