German reunification

German reunification (Deutsche Wiedervereinigung) took place on October 3, 1990, when the areas of the former German Democratic Republic (GDR, in English often called "East Germany") were incorporated into the Federal Republic of Germany (FRG, or "West Germany"). After the GDR's first free elections on 18 March 1990, negotiations between the GDR and FRG culminated in a Unification Treaty, whilst negotiations between the GDR and FRG and the four occupying powers produced the so-called "Two Plus Four Treaty" granting full independence to a reunified German state. The reunified Germany remained a member of the European Community (later European Union) and NATO. The term "reunification" is used in contrast with the initial unification of Germany in 1871.

Effects of reunification

The cost of reunification has been a heavy burden to the German economy and has contributed to Germany's slowed economic growth in recent years. The costs of reunification are estimated to amount to over 1.5 trillion Euro (statement of Freie Universität Berlin) (1.9 trillion U.S. Dollars). This is more than the national debt of the German state http://www.steuerzahler.de/. The primary cause of this was the severe weakness of the East German economy, especially vis-à-vis the West German economy, combined with (politically motivated) conversion rates from East German Mark to the Deutschmark that did not reflect this economical reality, resulting in a very sudden (usually fatal) loss of competitiveness of East German industries, making them collapse within very short time. Today, there are still special transfers of more than 100 billion euros every year to ?rebuild? the eastern part of Germany. Providing goods and services to East Germany strained the resources of West Germany. Money-losing industries formerly supported by the East German government had to be privatized.

Related Topics:
German economy - Euro - U.S. Dollars - Conversion rate - Deutschmark - 1980s

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As a consequence of the reunification, most of the former GDR has been deindustrialized, causing an unemployment rate of about 20 %. Since then, hundreds of thousands of former East Germans have continued to migrate to western Germany to find jobs, resulting in the loss of significant portions of population, especially in highly trained professions.

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