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The Work of the Treuhand in Retrospect (2005)

As part of a series of interdisciplinary lectures at Humboldt University in Berlin in the summer semester of 2003, representatives from politics and business were asked to take a critical look at the work of the Treuhand. The revised contributions were collected in a book. Birgit Breuel, president of the Treuhandanstalt [Truesteeship Agency] from 1991 to 1994, defended the privatization strategy of the time, though she did not shrink from addressing the problems entailed by the pace and cost of privatizing East Germany.

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For all the known difficulties and mistakes, the introduction of free market conditions in the former GDR is regarded as the central success of the transformation, as something unparalleled in world history. Despite all the concerns about the speed and costs of privatizing East Germany, it is indisputable that privatization made possible an irreversible step in the direction of a market economy. The central responsibility for this task was borne by the Treuhandanstalt [Trusteeship Agency]. It carried out the privatization of East Germany so rapidly and consistently that there was hardly any time for the reflection needed to render a judgment on the Treuhandanstalt model. Today there is disagreement about the successes and failures of the model.

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Taking Stock of the Treuhand’s Achievements

The day-to-day work of the Treuhandanstalt was not as orderly and schematic as one might be led to suspect from what has been said before. We had to deal with many areas all at once: push ahead with the actual privatization deals, install controls, establish an administration for personnel and data, and draft regulatory codes and guidelines. It was a time of learning by doing in its purest form.

When the Treuhandanstalt ceased its work on December 31, 1994, it had

• carried out 15,102 privatizations;
• reprivatized 4,358 enterprises, returning them to their former owners or the descendants thereof;
• municipalized 310 enterprises or placed them under the care of local communities;
• phased out and shut down 3,718 businesses after partial privatization and outsourcing. The successor to the Treuhand, the BvS*, assumed the remaining stock of 192 enterprises, especially in management KGs [limited partnerships];
• found new owners for around 25,000 small stores, shops, restaurants, and pharmacies. The real estate administration of the Treuhand (TLG) sold 36,800 properties; the Treuhand itself sold about 9,700.

In less than five years, a total of about 85,000 individual privatization contracts were signed; they affected all areas of business and enterprises of all sizes – from pubs to land for residential building or industrial use, all the way to integrated steel plants.

* BvS is the acronym for Bundesanstalt für vereinigungsbedingte Sonderaufgaben [Federal Agency for Special Tasks resulting from Unification]

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