East-West divide

According to the IW German economic research institute, standards of living in the east have soared so much that the German Solidarity Pact may not be needed after its scheduled expiry date in 2019. Under that pact, Germans pay an income-dependent amount of their earnings towards improving infrastructure in the East.

Klaus Heiner Roehl, a regional policy analyst at the Cologne-based institute, said this is partly a matter of statistics and the ironic fact that the global economic crisis has hit Germany's western states harder than its eastern states.

"Of course the economic crisis has affected eastern Germany too, but to a smaller extent than western Germany," he told Deutsche Welle. "This is because the big export companies are located in the western part of the country and this year, the convergence will be even faster than in the last year because the western German economy will shrink about 5 percent while with the eastern German economy, the negative growth is about 3 percent."

The institute's study shows that the eastern states lose half a percent of their population to western states each year, a fact that is often overlooked. Despite this however, annual growth in the eastern states is half a percent higher than growth in the western states.

East-West divide

These findings contradict the more populist belief that, even after 19 years of reunification, eastern Germany is floundering not only economically but also psychologically.

Reiner Eckert, director of the Forum of Contemporary History in Leipzig, told Deutsche Welle that the peaceful revolution of the late '80s had achieved its ideals of democracy, freedom and unity in a reunited Germany, but that problems remained between the two halves.

"The cities have adapted well and have developed their infrastructure, but there are still deficits, and in some ways, some of the pride in the peaceful revolution has evaporated," he said. "Basically this has to do with the fact that amongst Germans living in the eastern states, there is a feeling that they have not yet ‘arrived' and are still perceived as second-class citizens."

East catching up

Although there are stark differences between development in cities and rural areas in the eastern states, Roehl said that statistics for the East as a whole indicate that per capita gross domestic product (GDP) could reach 80 percent of those in the West of the country by 2020.

This means that by then, some of the wealthiest eastern states could have overtaken some of their poorest western counterparts, another indicator that the time of the solidarity pact may have passed.

"The solidarity pact will continue to 2019 but from this (year) onwards … the amount of money is reduced year per year," said Roehl. "And it is quite right to do it that way and we think it is also right that the solidarity pact will end in 2019."

Roehl added that the IW Institute's findings could lead to increased resentment amongst many Germans in the western part of the country at having to pay the solidarity tax.

"There is always some resentment on the side of the paying state, and also some resentment in the East that the solidarity pact will end," he said.

Author: Tanya Wood/dfm

Editor: Deanne Corbett