Thesen *

Privatization of public property is a difficult venture

1. The German reunification is to be seen as a special case in a political transformation sense, because the citizens of the GDR always had the possibility to emigrate to the FRG after the opening of the border in 1989, where they were Germans in the sense of the constitution. These circumstances quickly led to a monetary union with drastically negative consequences for the economy of the GDR and the formation of the Teuhand-Gesellschaft to privatize the public property of the GDR.
2. 2. The Treuhand strategy of privatization, in combination with the conditions of the economic framework, was a shock therapy for the GDR-economy, which the majority of the nationally owned companies did not survive. In comparison to privatization in other East European countries, the sale of public property in East-Germany happened without the participation of its citizens. East-German investors were systematically disadvantaged. Industrial-political regulations to ensure the preservation of companies and businesses and thereby communities came too late. Instead, companies were often taken over by West-German investors, who closed them immediately to avoid the development of East-German competition.
3. The social consequences of the economic transformation in East-Germany only could be compensated through enormous welfare spending. Psychologically, the activity of the Treuhand-Gesellschaft led to a large loss of trust in the East-German population. Even now the privatization of the nationally owned East-German companies is, in many cases, considered as an example of West-German arrogance and paternalism
4. The strategies of privatization in former socialist countries created different structures of property and economy. In East-Germany strong industrial centers are missing. Smaller companies are dominant, the majority of which were established in the short timeframe at the beginning of the 1990s. Although about two thirds of this industrial middle-class is managed by East-Germans, they are often only minority shareholders. A more intensively controlled privatization on the other hand led in other East European countries to oligarchic structures or a continuance of companies that were state owned. Dependent market economies can be observed as well, in which the influence of foreign capital is very strong.
   Based on our results, the following conclusions can be drawn for a desired reunification of Korea.
5. Strategies of privatization should be planned well, if possible. An early and comprehensive impact assessment would be recommendable. Aspects like the participation of citizens, comprehensible criteria for the selection of investors and the consideration of community preservation should also play a role in the process. Like the East-German example shows, is it impossible to realize the projected revenues through hasty privatization. Instead, substantial economic distortions and a profound loss of trust in the affected population can be observed.

Genesis of the results of the Collaborative Research Center 580 *

The theses mentioned above are related to the following research projects of the
Collaborative Research Center 580: