This project has received funding from the European Research Council under the European Union’s Horizon 2020 research and innovation programme
(Grant Agreement n. 669194)
(Grant Agreement n. 669194)
The Socialist Unity Party of Germany (Sozialistische Einheitspartei Deutschlands or SED) had a monopoly over shaping the GDR’s economic policy and relations with the West. However, several state institutions were involved in the economic decision-making process and in charge of day-to-day business in relations with the West. Among the state actors, the State Planning Commission headed by Gerhard Schürer was most prominently involved in making economic policy, although its leverage had declined in comparison to the 1960s. Schürer’s early warnings about the consequences of growing debt fell on deaf ears and his efforts to join forces with leading economic functionaries in the SED bore no fruit. Towards the end of the decade he and others from the state apparatus increasingly turned to the Ministry of State Security and its economic department to channel their criticism. As a consequence, in late 1980 the economic experts in the Ministry of State Security even advocated a complete stop to all imports from the West that were not indispensable to keep production afloat.
The aggravating economic crisis resulted in a growing importance of other economic actors. The rise of the Commercial Coordination division (Bereich Kommerzielle Koordinierung, or KoKo) operating outside the plan is proof of the SED leadership’s acknowledgement that the economic policy did not work. Founded in 1966, KoKo was formally part of the Ministry of Foreign Trade, but in fact was closely connected to the Ministry of State Security and under the control of the party’s leading economic officials. The purpose of this institution, which was headed by Alexander Schalck-Golodkowski, was to earn convertible currency, make Western trade more flexible and solve financial crises. It gained importance during the 1970s and in the 1980s KoKo organised almost half of Western and intra-German trade. KoKo substantially contributed to enduring the acute payment crises of the early 1980s but in the long term its unplanned trade activities also increased the country’s level of indebtedness. It acted within the economic policy decreed by the SED, which was not put into question.
Neither KoKo nor the State Planning Commission played a crucial role in shaping the East German attitude towards the West or the European Economic Community (EEC). This role fell to the Ministries directly involved in dealing with the EEC, namely the Foreign Ministry and the Ministry of Foreign Trade. Neither challenged the overall policy of non-recognition decreed by the SED, but they contributed to altering it. The ministerial bureaucracy was among the first to move towards a more realistic assessment of the EEC as it had to deal with the repercussions of the progressive West European integration. In 1975, the Ministry of Foreign Trade successfully recommended the Politburo to authorise technical contacts with the EEC Commission. However, this did not mean that it pushed for closer relations with the EEC and abandoning the non-recognition policy. In 1978, when the EEC’s competence on steel required that sectoral agreements be negotiated with the EEC Commission for GDR exports to the Common Market, the Foreign Ministry regarded these necessary negotiations as technical contacts, but the Ministry of Foreign Trade held the view that sectoral agreements would go beyond technical contacts and should not be concluded. Deputy Minister of Foreign Trade Gerhard Beil, who was in charge of day-to-day business in trade with the West, played a crucial role in preventing economic repercussions by finding bilateral solutions with EEC member states. Despite this, he never became an advocate for a policy change and neither did he contribute to the more general East German debate about the EEC.
In the second half of the 1970s, particularly the Foreign Ministry held increasingly realistic views of the development of West European integration, the enlargement of the EEC and its growing economic role in the world. East German diplomats abroad understood the challenges and chances in dealing with the EEC. The commercial department of the GDR’s embassy in Brussels reported on the establishment of permanent working contacts by other socialist countries’ embassies with the EEC aimed at securing their states’ economic interests. However, this knowledge was only of limited use, given the party’s reluctance to change the GDR policy towards the EEC. The East German representation in Brussels also emphasised that sectoral agreements would be beneficial to the GDR’s exports to the EEC. In the early 1980s when the GDR increasingly faced EEC anti-dumping procedures, the Ministry of Foreign Trade decided to pursue technical contacts whenever it saw the chance of gaining an easing of the export requirements. However, despite the growing problems in day-to-day business and a realistic assessment of the situation, none of these state actors took the initiative to advocate for a change in the policy toward the EEC decreed by the party leadership.
* This text summarises some of the research findings of PanEur1970s team member Maximilian Graf, which are published as a chapter in PanEur1970s’ academic edited book. For a link to the e-book, please see the GDR’s “Overview” webpage of this map.
Personal memorandum on the consultations of the SED Politburo on 09.08.1983
BArch, DE 1/58704 | Bl. 272–277
In this meeting of the “small circle” after the first “Strauß loan,” Honecker remarked: “The Milliardenkredit is not here to bridge gaps in the plan. No minister can rely on this. We have to act as if we would not have the money.” He pointed to the necessity of reducing short- and medium-term loans as well as continuity in the policy of reducing imports and increasing exports. Honecker was fully aware that the prolongation of the extreme foreign trade strategy would face opposition in the West, however, at that time there was still no alternative to reducing imports and selling oil on the world market. Nevertheless, pointing to developments in other Socialist countries, Honecker stated: “I want to put on record, that our economic system is altogether in best order. It just depends on using the advantages of socialism properly. I am saying this, because there is talk about reforms in many countries.” Even tough, the GDR had just prevented bankrupty, there was no intention to change the failed economic policy. The leadership opted for a continuous muddling-through. - Available only in the archive: https://www.bundesarchiv.de |
Memorandum on the discussion of the draft of the five-year plan 1976–1980 presided by Honecker
BArch-DDR, DE 1/58633
In this meeting of the “small circle” in November 1976 dealing with the next five-year plan the Chairman of the State Planning commission, Gerhard Schürer, stated: “The gap between imports and exports has widened further but it has to be closed by all means. That is a fateful question for the GDR.” In the following discussion some thought about rigorous import cuts, others reasoned about the causes within the CMEA and problems on the Western sales markets. Nevertheless, Günter Mittag and Erich Honecker also highlighted positive examples of trade relations with the West and the growing Western acceptance of countertrades. Honecker concluded that the plan 1976–1980 is shaped by the enforcement of the “Unity of Economic and Social Policy,” which he did not intend to change. Honecker did not expect any progress in CMEA integration, expressed his worries about the balance of payments, and advocated increasing exports to the West and developing countries as well as cooperation on third markets if they earned hard currency. - Available only in the archive: https://www.bundesarchiv.de |
Current status of the GDR’s balance of payments with the West in 1978/79
BArch-DDR, DL 226/1248 | Bl. 220–238,
This assessment of the GDR's balance of payments produced by the Chairman of the State Planning commission, the Minister of Finance and the country's leading bankers analyzed the causes and consequences of East Germany's growing indebtedness since the early 1970s. Their conclusion stated the obvious: “This spiral cannot be prolonged.” It was entirely clear that “without the willingness of foreign, and especially capitalist banks to provide further loans in the amount needed, the planned imports and the due payment obligations cannot be realized.” Without a fundamental turnaround in the GDR’s trade balance with the West, debt was expected to skyrocket until the mid-1980s. - Available only in the archive: https://www.bundesarchiv.de |
Letter by Horst Tschanter to Paul Verner
SAPMO-BArch, DY 30/IV 2/2.036/71 | Bl. 93–94
In the late 1970s, Horst Tschanter was frustrated about the CMEA’s inability to negotiate a treaty with the EEC and recommended a reevaluation of the GDR's position toward the EEC. - Available only in the archive: https://www.bundesarchiv.de |
Decision on negotiations with the EC on an agreement on fisheries
SAPMO-BArch, DY 30/J IV 2/2/1659 | Bl. 3, 39–42
In 1977, the implementation of the EEC’s common fishery policy induced Poland, the USSR and the GDR to direct negotiations with the Commission. Since a substantial economic interest of the GDR was impaired, the Politburo agreed on 01.03.1977 to negotiate with the Commission but insisted that this would not imply recognition of the EEC. - Available here |
Politburo Template. Decision on the estabishment of technical contacts between companies and institutions of the GDR with EEC organs
SAPMO-BArch, DY 30/J IV 2/2A/1864 | Bl. 65–75
When the EEC's Common commercial Policy went into effect, it immediately showed repercussions on East German exports to the common Market. Against this backdrop, on 11.03.1975 the Politburo reluctantly agreed to commence "technical contacts" with the EEC Commission as suggested by the proposal originally developed in the Ministry of Foreign Trade. - Available only in the archive: https://www.bundesarchiv.de The decision of the Politburo is available in the digitalized final version of the protocol.
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Horst Sölle to Erich Honecker, Information on a meeting of the ministers during the fifty-first session of the CMEA Executive commitee's Standing Commission on Foreign Trade
SAPMO-BArch, DY 3023/1276 | Bl. 199–203
In December 1977, the European Council had decided that all countries exporting steel to the Common Market had to conclude bilateral agreements so that the EEC could impose price discipline. The GDR held the view that these sectoral agreements on quotas and minimum prices would go beyond “technical contacts.” Again, East Berlin hoped for concerted action by the CMEA members. At the next meeting of the CMEA Executive Committee’s Standing Commission on Foreign Trade, Foreign Trade Minister Horst Sölle proposed to consider if the threat or actual shifting of the CMEA’s steel imports from the Common Market to other suppliers could be used as a means of commercial policy. - Available only in the archive: https://www.bundesarchiv.de [Maybe digitalized in the future] |