Although the GDR was one of the more dynamic economies among the Warsaw Pact, it was far from an economic powerhouse on the global stage. In fact, the economy of the GDR by the 1980s was mixture of sputtering and stagnation. The planned economy produced persistent shortages both in terms of domestic production, but its export sector was mediocre and weakening. GDR industrial plant remained inefficient and mired in Taylorist management strategies.

These deep-seated structural problems were compounded by a number of short-sighted economic moves by the SED that further constricted the GDR economy. The GDR's nascent high-tech sector was an example of this type of short-sighted thinking. Rather than build up the complete human and physical infrastructure for semiconductors, the SED thought it could use its existing large espionage and intelligence services to leap-frog into competitive computer production. But while it was easy to steal microchips from the West, replicating semiconductor foundries and other production facilities. Thus by the time GDR electronics firms like Robotron could produce their ill-gotten chips in quantifiable numbers, Moore's law had meant these semiconductors were near obsolete.

Even worse than sate-funded industrial espionage was the GDR's penchant for running up foreign debts. Starting in the era of Detente and Ostpolitik, the SED used its increased contacts with the West for trade deals to make up for the persistent shortages in the domestic economy. While this worked for the short-term and the early seventies were among one of the more stable for the GDR, this was not a viable long-term strategy. As Jonathan Zatlin memorably put it:

“the GDR was not simply living beyond its means, but consuming its future—eating oranges instead of buying capital equipment to boost exports and pay for the oranges.

Foreign debts had increased some twenty-five fold over the 1970s, making it a major problem the SED did not want to solve. Adding to the SED's woes, the collapse in oil prices meant that the USSR could no longer afford to subsidize the Eastern bloc at 1970s levels. Try as it did to hide the dire economy, it was becoming clear to many that the SED's planned economy was a house of cards in the 1980s and many braced for its collapse.

This is not to say that the economy was the sole reason for the Wende of 1989, but rather was part and parcel of a wider weakening of SED authority and legitimacy. In the latter case, the SED had never been a truly popular government among its populace, but the crisis years of the 1980s meant that a number of dissidents and disaffected GDR citizens recognized state weaknesses. Moreover, shortages and poor state responses to it allowed discontent to grow at an alarming rate. For example, the cutbacks of Soviet oil forced the GDR to rely upon brown coal for power, and the resulting pollution gave the nascent GDR environmental movement an issue to attack the state. Moreover, there was a growing divide between the have and have-nots in GDR society, with many of the haves being closely associated with state corruption. Dresden, for example, was one of the hotbeds for dissident activity in the mid-1980s and many Dresdeners resented the largess the state lavished on Berlin, where a good deal of the SED's bureaucracy existed. Glasnost and other Gorbachev initiatives also signaled to the wider GDR public that the "Freinds" would not necessarily support the Stalinist-style SED if it decided to crackdown on its population.

All this meant that the GDRhad to confront multiple crises in 1989 and its leadership was more reactive to events than proactive. The flight of tens of thousands of East Germans into West Germany created a crisis of legitimacy for the GDR. The out of control situation gave political reformers within the SED ammunition to unseat its General Secretary Erich Honecker and replace him with Egon Krenz. Ironically, Krenz was Honecker’s own “crown prince” and was the Honecker’s own hand-picked successor. The problem was that Krenz had to deal with a series of broad-seated problems that were pervasive within the GDR and had a very limited time in which to accomplish these goals. The SED leadership in the Politburo had planned for a more organized and straight-forward series of gradual reforms, but events forced them to rush through and extemporize what was supposed to be a measured process that would retain the GDR as an independent political entity.

Adding further pressure to Krenz and the reformist SED was the increasing presence of the East German street calling for greater transparency, open elections, and a massive overhaul of the SED state. These demonstrations snowballed once it became clear that the 1989 was not going to repeat 1953, when the SED had sent in tanks to crush demonstrators. The general flat-footedness and in coherency of the post-Honecker SED is demonstrated by the series of decisions that led to the collapse of the Berlin Wall. On 9 November 1989, there was a live press conference held by the SED’s propaganda chief and Politburo member Günter Schabowski and an Italian journalist asked him a question on the new travel restrictions in the GDR. Schabowski, who was out of the loop for the Politburo meetings on travel restrictions, improvised an answer that asserted that the GDR was going to implement regulations allowing GDR citizens to leave any of its border crossings and when pressed, he indicated they would be immediately implemented. This led to a massive influx of Berliners congregating at the Wall and the border guards simply opening the gates when they could not receive any clear orders to do so.

The impotence of Krenz and the SED gave Helmut Kohl a golden opportunity to pursue unification and he and the CDU took it. This was actually not as easy of a process as one might assume. Both France and the UK were highly skeptical of German unification being within the larger interests of Europe. Part of Kohl’s canniness was that he recognized that the SED’s impotence gave him much greater latitude on the international stage. Kohl had developed a degree of contacts within both the USSR and the US and was able to sell both Bush and Gorbachev on the idea and popularity of German unification. Kohl gambled that if put to a vote, the citizens of the GDR would vote for unification. This gamble was correct and Kohl was able to present German unification as a fait accompli. Gorbachev had to recognize it in part because opposing it would be apparently standing against the tides of history and reform.

It should be noted that neither the SED nor the USSR ever intended for the GDR to dissolve and hoped that it had enough time to reform itself. Their perception was that the SED would be able to navigate into a "third-way" that would create a reformed socialist Germany. This was not an entirely illogical assumption. The idea of German unification had been something of a dead issue since Brandt’s Ostpolitik had formally established a degree of recognition to the GDR. Unification had to pass over the significant stumbling block of memory of the Third Reich and the spectre that German unification would lead to a renewed German drive for hegemony. This was a popular concern within most European states and built on both right-wing nationalist fears and some among Europe’s left-wing that perceived the CDU as possessing strong ideological continuities with the Third Reich (the logic here is that it Adenauer’s soft denazification policies had led to individual Nazis taking up positions of power within the FRG’s government and industry). Kohl was able to push for unification and twist or spin votes against the SED as a vote for a swift unification. While there was a sizable majority of East Germans who were for unification, there were quite a few East Germans who were also quite upset over their stagnant economy and hoped that a vote for Allianz bloc would economically integrate East Germany into the West and recreate the Economic Miracle of the Adenauer era.

Sources

Jarausch, Konrad Hugo. The Rush to German Unity. New York: Oxford University Press, 1994.

Kotkin, Stephen, and Jan Tomasz Gross. Uncivil Society 1989 and the Implosion of the Communist Establishment. New York: Modern Library, 2009.

Steiner, André. The Plans That Failed: An Economic History of the GDR. New York: Berghahn Books, 2010.

Zatlin, Jonathan R. The Currency of Socialism: Money and Political Culture in East Germany. New York, NY: Cambridge Univ. Press, 2007.