Unity Report Highlights Progress, Problems

On Oct. 3, Germany will mark the 15th anniversary of reunification. But politicians and social scientists agree equal living conditions in both halves of the once-divided country remain wishful thinking.

Only a few of them would say so openly ahead of the polls on Sunday, however. And German Transport Minister Manfred Stolpe (SPD), who has special responsibility for eastern Germany's economic development, stressed the positive in a report on the state of German unity Tuesday.

In his report, Stolpe said the inner-German unification process had made big strides under the ruling coalition government of Social Democrats and Greens. He pointed to an ultra-modern telecommunications infrastructure in the East, and added that two-thirds of 17 huge road modernization and expansion schemes had already been completed.

Seeking financial independence

The more than 15 billion euros ($18 billion) spent on road infrastructure improvement in the post-Communist eastern federal states amounted to no less than 40 percent of overall federal investments there, Stolpe said.

"We want to see to it that by 2020 the eastern German economy is competitive enough to advance independently from financial transfers," Stolpe said.

"That would be a major achievement in itself. I hasten to add that we’ll still have regional differences, concerning economic performance. But then such differences are also in evidence among the western federal states."

Top-notch investors

Stolpe emphasized that eastern regions and communities enjoy a good deal of planning security, with a so-called interstate Solidarity Pact having been prolonged until 2019. Under this pact, the East -- particularly the most depressed regions there -- will receive about 150 billion euros in federal funds for modernization projects.

A program to promote small and medium sized enterprises in the East is beginning to yield tangible results, Stolpe said. He also noted that the East had managed to attract a number of top-notch investors, including carmaker BMW, postal courier DHL, and microchip producer AMD.

Stolpe did acknowledge continued problems in the labor market. "Where industrial locations survived in the east, we’ve seen an accompanying process of modernization and rationalization to enhance competitiveness," he said. "But this also means that one such unit is now doing what seven units did before, resulting in a massive loss of jobs."

High unemployment

Indeed, Stolpe’s predominantly positive assessment of the progress in eastern German can be put into jarring perspective by a look at unemployment statistics. The number of jobless in the East is still twice as high as that in the more affluent West. As a result, well over two million easterners have moved westward in pursuit of jobs since 1991.

A panel of experts last year called economic development in the East "an unmitigated disaster," as astronomic sums had, in its view, been spent indiscriminately. The panel still believes Germany’s eastern half should be turned into a special economic zone, offering lower taxes and a greater degree of labor market deregulation to attract more investors.

However, minister Stolpe on Tuesday reiterated his view that such a move would be counter-productive, as structural problems were now also increasingly occurring in various areas in the west of the country.