Directing Foreign Investment to Eastern Germany after (and before) 1989

Employees (IfZ):   Keith R. Allen

Keith Allen's project investigates exchanges between key domestic and international actors during the economic upheaval following eastern Germany’s submersion into an enlarged federal republic and the European Community. I demonstrate that the work of the Treuhand was much more international than the relatively modest number of Treuhand enterprises sold to foreigners (6% in total) suggests. Within unifying Germany and well beyond, transnational financial actors exercised key roles in defining industrial policies. Their clients included GDR ministries and the Treuhand in (East) Berlin, as well as still more influential decision-makers in Bonn, Brussels, and London.

I substantiate my claims in four main ways. First, I reconstruct how the Treuhand came to rely heavily on foreign advisers and what relationships the privatization authority developed with foreign consulting firms and investment banks. Second, I explain how such contacts were geared toward raising foreign capital to finance the Treuhand itself, not merely the more than ten thousand firms under the Treuhand’s wing. Third, I explicate how socialist era ties informed foreign investors’ involvement in the new federal states of eastern Germany. Fourth, I trace the multinational character of selected German attempts to restructure enterprises in industries as diverse as microelectronics and steelmaking.

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