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The Economic Rebuilding of the East under Fire (June 28, 2004)

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(5) This course correction has consequences for financing the economic buildup of the East. The financing volume hitherto planned for in Solidarity Pact II* is apparently the upper limit; it must not be reduced, nor should too much be used for state consumption. And there must not be any reduction in the obligations of the Shared Task of Economic Promotion [Gemeinschaftsaufgabe Wirtschaftsförderung (GA)]. The funds for investment subsidies, whose elimination is being proposed, should be incorporated into GA funding.

(6) The reallocation of funds from any infrastructure project that is no longer absolutely essential to direct support for business and research can make possible the above-mentioned shift in focal points. To that end, beginning immediately, all infrastructure projects must be strictly reviewed as to their importance for business development. In the future, only absolutely essential projects should be carried out.

(7) A successful economic structure presupposes a regional concentration and aggregation of branches in the East as well. This must be done in close joint cooperation with the business sector, the scientific community, and the state. However, identifying growth clusters for purposes of support can only be successful across states if the federal government is given a decisive participatory voice in decision-making; this must be worked out with the Länder in a binding agreement.

(8) The concentration on growth regions demands a reasonable incorporation of the weaker growth regions into transportation planning.

(9) As a result of the enlargement of the EU, special provisions must be drawn up for the border regions.

(10) The future regional and substantive strategy for economic rebuilding must be brought together in a regional master plan (growth clusters: infrastructure; business; science; agriculture and food production; rural areas). The plan serves to coordinate economic measures for the growth clusters and should be agreed upon, continually revised, and eventually reworked by the federal government and the Länder.

(11) A successful development must realistically begin with the current economic structure in the New Länder. In the industrial sphere, that structure is characterized by mostly small enterprises with weak market positions, inadequate research potential, but also low equity bases and nearly insurmountable problems in procuring loans.

It is therefore essential to redefine the cooperation between the KfW** and the principal banks – taking into account risk and cost – so as to facilitate the business sector’s access to development loans and capital.




* In 2001, the federal government and the federal states agreed to continue special financial support for the federal states in the former GDR. The so-called Solidarity Pact II covers the period 2005-2019; the total volume of special transfer subsidies amounts to 156 billion Euro – eds.
** The KfW banking group is jointly owned by the federal government (80%) and the federal states (20%). It was founded in 1948 as the Kreditanstalt für Wiederaufbau (KfW) [Credit Institute for Reconstruction] – eds.

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