Privatising East Germany: Re-unification and the Politics of Real Estate
Ben Gook (AU/DE)

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‘In our time,’ Fredric Jameson wrote in a 2015 essay, ‘all politics is about real estate.’ Jameson’s clear-eyed conclusion makes immediate sense, read from within the embassy – a patch handed to the Australian state, then back to the GDR, then to the Federal Republic of Germany (via the Treuhand, as explained below), then to private owners, real estate developers and jobbing artists. Jameson goes on to list the varieties of this politics of real estate, which reaches ‘from the loftiest statecraft to the most petty manoeuvring around local advantage. Postmodern politics is essentially a matter of land grabs, on a local as well as global scale. Whether you think of … Palestine or of gentrification and zoning in American small towns, it is that peculiar and imaginary thing called private property in land … at stake.’ Within capitalism, he continues, ‘the land is not only an object of struggle between the classes, between rich and poor; it defines their very existence and the separation between them. Capitalism began with enclosure and with the occupation of the Aztec and Inca empires; and it is ending with foreclosure and dispossession, with homelessness on the individual as well as the collective level, and with the unemployment dictated by austerity and outsourcing, the abandonment of factories and rustbelts.’

1989 marked an inflection point in these long-running capitalist Landnahmen. The European socialist states’ collapse meant that imposing the ‘peculiar and imaginary thing called private property in land’ became a necessary step in the ‘transition’ to capitalist formations. Privatisation in Germany after 1989 focused on everything from warehouses to forests to hospitals to apartment buildings to railways – to former embassies. It entailed both privatising land and introducing market-type mechanisms into firms and the new markets. German re-unification intensified a western German drift towards neoliberalised political economy – understood as introducing market-based forms of economisation, calculation, measurement and extrinsic valuation to ever more domains, always in the name of injecting competition at every level of social life. Individuals should compete, businesses should compete, nations should compete: each against all as private units. As in other states of competitive ‘workfare,’ re-unified Germany’s social policy was subordinated to the needs of labour market flexibility and ‘international competition’. In other words, the idea was to apply business strategy to the state and to punitively discipline citizen-subjects. This strategy has taken various paths since 1989 – capped wages, reduced public spending for the unemployed and increasingly ‘flexible’ workplace arrangements. All subjects in the re-unified German labour market have been left to self-manage their employability, debts, the income drop and the wastelands of reduced services. Privatisation is indeed the watchword of this postsocialist era – a term we can generalise to think about social life, not merely the economy or property relations. We have come to associate privatisation in this broad sense with neoliberal capitalism since 1989: the slow, selective rot of publicity – public spaces, public investment, public education and so on.

There were two critical loci of neoliberalism’s appearance in German transition policies: first, the Treuhandanstalt, the ‘Trust Agency’ responsible for privatising socialised East German assets, and, second, widespread unemployment and underemployment after 1990. The Treuhand was the agency responsible for offloading the GDR’s common assets. For a period, the Treuhand was the world’s largest industrial enterprise: responsible for selling state-owned GDR firms covering four million employees, plus agricultural land, forests, Stasi properties, public housing and medical facilities. The Treuhand was accountable for around 1,700,000 Ha of land. In total, the Treuhand held roughly 12,000 enterprises: it fully privatised 7853, of which 1600 went to their former owners, 261 transferred to local councils, 2700 to former employees or managers; and 3713 were shut.

The Treuhand’s purpose morphed over the years. It was set up before re-unification, in March 1990, as a liberalising GDR government began to reorganise property rights, particularly in industry, finance and agriculture. Soon after the Wall fell, GDR economists, activists and politicians debated new economic approaches in a moribund economy. The late GDR state moved social property to a public trust overseen by this agency. They initially intended that the Treuhand would avoid functionaries selling or hoarding GDR assets for private gain in the post-Wall confusion – and this measure was particularly successful compared with other postsocialist nations. It was also meant to be more than that anti-corruption safeguarding device. Within the early Treuhand framework, various proposals were floated, including giving East German citizens an equal number of shares of this common property, as well as privatising some enterprises and transferring others to new state governments or foundations. Such proposals for ‘coupon privatisation’ were rejected by the last GDR socialist government, due to these approaches being unable to inject badly needed (foreign) capital into ailing state enterprises. Western bureaucrats took over the Treuhand after re-unification in October 1990, and its remit shifted: from a GDR trust to prevent the fire-sale of GDR assets to the federal agency of that fire-sale. By 1994, when the Treuhand was wound up, the enterprises’ new owners had made 2.5 million employees redundant. Public expenditure still accounted for 80% of the eastern economy in 1992–3 – a statistic suggesting political-ideological urgency prevailed over purely economic rationale in privatising so much of the former East. Benefits for unemployment, insurance and the labour market made up almost a fifth of eastern German income. From 1989 to 1993, privatisation saw a third of jobs gone. In manufacturing, this rose to three-quarters of all jobs shed. Open and hidden unemployment was around 30–35%, a statistic reminiscent of the Great Depression (or Greece circa 2013). The Treuhand, in other words, was the chief, albeit contentious, mechanism for shedding eastern labour.

Given the scale of job losses, privatisation across the former East produced opposition beyond the unions. The Treuhand chairman was assassinated in 1991. The assailant remains unknown, but many assume it to be an affiliate of the Red Army Faction or a former Stasi employee. These links may be apocryphal, but we can nevertheless read the assassination as a motivated response to some strong economic medicine in the former East. Workers there were subject to a labour market noticeably different from that of western Germany’s post-war, bargained corporatism: they were inducted into an economic experiment – neoliberalisation – that would soon make its way west. In recent years, the Arbeitsgruppe Alternative Wirtschaftspolitik, a group of heterodox German economists, declared the Treuhand to have accomplished ‘dispossession without compensation.’ It is still openly debated whether a new Mezzogiorno was created: some mainstream economists have recently proposed that western and eastern regions are so divergent, it may be erroneous to consider them a single German labour market.

The top-down, undemocratic process of privatisation introduced eastern Germans to the political economic rationality of (western) German capitalism. Germany’s recent approach to eurozone economics and EU governance has seen these strictures deployed further afield: namely, high unemployment as the ‘cost’ of economic discipline. From 2010, Germany and the ECB repeatedly demanded Greece and others privatise some of their land and government enterprises to repay public debt, despite the economic logic of such sales – ‘fiscal waterboarding’ in Varoufakis’ memorable phrase. In a particularly condescending episode, Josef Schlarmann, a senior CDU politician, and Frank Schaeffler, an FDP politician, suggested to the Bild newspaper that Greece should consider selling some of its islands, as well as the Acropolis and the Parthenon. The politics of real estate is nakedly expressed here, feeling no shame in anti-democratic outcomes that can even include hocking the symbols of democracy themselves.

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East Germany’s postsocialist transition bore similarities to those in other postsocialist nations but was distinct given West Germany’s role. The conjuncture of global and domestic politics during the Cold War’s final days was also a factor. The GDR was the only postsocialist nation to ‘transition’ to an existing capitalist state within its borders: an entire population was ushered into West Germany’s institutionalised social order built up after 1945. Whereas other postsocialist countries made capitalism without capitalists, eastern Germany saw a flood of western German technocrats flowing into its institutions. Its novelty lies, then, in the Institutionentransfer – transferring the extant West German institutional make-up, its distinctive normative topography, to the former East.

None of this was inevitable in 1989. As with other nations at its eastern border, the path away from waning East German socialism was unclear, and the full stakes of transition continue to be overlooked. Re-unification has taken on the appearance of fate, rather than the political contest it was at the time. The standard tale of the re-unification of the two Germanys – celebrated each October and November – sets out that the ‘transition’ from divided Germany to re-unified Germany saw the East’s archaic economy and ideologically closed society yielding, with western ‘expertise,’ to efficient markets and democracy. The reality is more mixed than this tale suggests. Persistent low productivity, enduring unemployment and repeated crises in the eastern states, self-serving western involvement and, above all, ideological experiments with human consequences – these were hardly the demands of East Germany’s mass movements in 1989. These persisting conditions have been demonstrably disappointing for those who went onto the streets to demand change.

Germany’s current divisions run along several faultlines clustered around ‘real estate,’ including increasing income and asset inequality, as well as regional distinctions. The western German social (market) economy is, today, a self-satisfied political myth: measures of inequality suggest Germany is now among the most unequal in Europe. Germany’s ‘powerhouse’ status in the EU’s political economy masks its weakness. Even in western Germany, between 1993 and 2010, the labour market went from shrinking with increasing real wages to growing employment (particularly in part-time jobs) with falling real wages. In 2013, the Federal Institute for Employment Research recorded that 25% of German workers earned less than €9 per hour, a salary less than two-thirds of the national average. In this context, the geographical unevenness of economic change across the period since 1990 is striking. In 2015, according to studies from Der Paritätische Gesamtverband, poverty levels in the eastern states were all above the national average of 15.7%. The handful of manufacturing complexes of western German or European firms in the East today (only 5% of the 700 biggest German companies are headquartered there) are run by western German managers with an ageing ex-GDR and job-agency EU workforce. The same is true of staffing in eastern universities, which are now stacked with western-trained professors, with clear consequences on the range of acceptable approaches. Social displacement has been a considerable burden for eastern Germans – entailing dislocation from work, social bonds and homes.

By late 1993, just 29% of those employed in November 1989 were still with the same company – a shock for eastern communities in which workplaces, via socialist work brigades and so on, had been a significant site of sociability and leisure. Displacement was particularly acute for women: within four years of re-unification, women’s unemployment was double men’s. This shift in workplaces had other consequences. One-time eastern Gastarbeiter, typically drawn from other socialist states (e.g., Cuba, Vietnam, Angola), faced deportation, changed residence and working status shortly after re-unification. Xenophobia was unleashed at work and on streets within a rapidly changing social landscape and a threatening scramble for work. By its internal logics, then, the Treuhand was incredibly successful, with the GDR transforming from a state-owned to a predominately privately-owned economy in just a few years. However, considering social consequences and economic sustainability, it failed drastically – and its effects are arguably showing up politically today.

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Following the Treuhand’s closure in 1994, unresolved assets were passed into the Bundesanstalt für vereinigungsbedingte Sonderaufgaben and administered from 2008 by, among other bodies, the Bundesanstalt für Immobilienaufgaben (BiMA / Institute for Federal Real Estate). This traces the shift from state-owned housing and industry to privatised real estate and the increasing role of housing as ‘bank’ for capital switching. The BiMA privatised the former Australian embassy in 2010.

The embassy’s surrounds in Pankow have been caught the politics of real estate – namely, the recent gentrification spiral. Waves of exiles have swept into Pankow’s villas and Altbaus from neighbouring areas such as Prenzlauer Berg, Wedding and Friedrichshain. A host of local activist groups have been fighting subsidised building modernisation programmes and rental increases, including the Pankow-based political party the Mieterpartei (Renter’s Party). The district’s shift towards Alternative für Deutschland (AfD) in recent elections constitutes a different response to this new phase in Pankow’s histories: it remains one of the most ethnically homogenous enclaves in the city, perhaps easily spooked into xenophobia amid an ‘influx’ of new social and economic forces. For decades Pankow housed many regime loyalists, who once voted for the nominally anti-capitalist Die Linke and subscribed to the GDR’s anti-imperialist agenda. Many of these voters, research has shown, have transferred to AfD’s bricolage of ‘good old days’ Heimat fantasia and anti-establishment bravado. The support for the AfD is subtended by some anti-capitalist resonances that the far-right party exploits in the former East. In just a few years, the AfD’s core programme has morphed from a nationalist response to the financial crisis and the EU, to an increasingly hateful politics after the asylum-seeker decisions of 2015. This shift at once dragged the AfD’s early adopters further right, while it sought new forms of electoral opportunity.

Pankow’s complexities suggest that, rather than a simple ‘xenophobic’ Ossi stereotype, peddled by western-oriented analysts, a full analysis needs to at least account for various dimensions. First, the way both post-war states in a divided Germany mobilised fantasies about Nazism being on the other side of the Wall. Second, the patchy distribution of re-unification’s dividends and long-standing eastern criticisms of the ostensible pairing of capitalism and democracy. Third, neoliberalism’s disenchantment of politics by economics, which seeks to displace all political questions by economic means, an anti-political measure that has redoubled eastern alienation from parliamentary capitalist democracy. This depoliticisation of the economy has also brought ‘cultural’ chauvinism (‘we don’t want their way of life here’) to the fore as the terrain of reactionary politics.

Further, the cultural politics of Germany remains divided. Easterners, who lack cultural power and are distant from its centres, are often marked as ‘provincials.’ The AfD’s apparently appealing route to gaining forms of national sovereignty – which they describe as lost to the EU and out-of-touch German elites – is a nativist fantasy of strong borders, ethnic fixity, direct democracy and economic restructuring. All this is a means of bringing true Germans back to the core of cultural and political power. A truly unified community, or so the story goes, cannot be gained until ‘the nation’ is free from Islamic and other influences. In the eastern regions, this is undoubtedly, in part, a displaced attempt to overcome a feeling of social and political impotence – and this includes wresting back control from property developers, speculators and the technocrats typically hailing from western Germany. The processes introduced by these outsiders, the story goes, always seem to favour ‘newcomers’ in whatever imagined form they take (so-called ‘economic migrants’, wine bars, Muslims, Americans, start-ups etc).

In this light, those among Pankow’s current and long-standing residents with sympathies for the AfD appear to be disaffected from re-unified Germany and Berlin capitalism’s embrace of real estate speculation, privatisation, choked infrastructure investment, labour market ‘liberalisation’ – in short, the unevenness of Germany and Berlin’s modest but real economic windfall since re-unification. Within the politics of real estate, it’s also worth remembering that the years since 1989 saw a thoroughgoing financialisation of the economy – a shift in regulatory regimes of the financial sector that saw much global money flush into German banks and assets. Germany may pride itself – and may be envied by outsiders – as being a nation of renters, rather than a nation of home-owners; as thrifty savers rather than profligate loan-takers. But the politics of real estate has arrived here too in Berlin, as the spatial and property logics of capitalism demand it must: such is the conclusion of the privatisation programme begun in 1990.

At the time of writing, the embassy site until recently seemed damned to a future existence as luxury designer apartments – the apotheosis of contemporary urban real estate, the proliferating antechambers of ossified social relations and aesthetic good taste, the favoured parking spots for global capital. A heritage listing and proposed purchase by the Berlin Senate may save it from this fate, delivering it instead to the least-worst outcome of a state-sanctioned cultural institution. But the outlook in Berlin remains, at best, uncertain and, at worst, bleak. Long-term, only an alternative political economic programme can shift it in another direction. Short-term, practices of subversion, occupation and obstinacy can continue to hold on to other potentials.


Ben Gook (AU/DE) is an Alexander von Humboldt Foundation Postdoctoral Fellow at Humboldt Universität, Berlin. He also holds an honorary position at the University of Melbourne, as a Fellow in the School of Social and Political Sciences. He received his PhD in Social Theory and Cultural Studies from the University of Melbourne in 2014. He researches contemporary politics, economy and culture, with a focus on social change after the Fall of the Berlin Wall. His first book is Divided Subjects, Invisible Borders: Re- unified Germany after 1989 (London: Rowman & Littlefield, 2015). He has also written on Australian culture, including “Australian Postcolonial Trauma and Silences in Samson and Delilah,” (Scars and Wounds: Trauma on Film in National and International Contexts, 2017) and “…With Ears for Landscape: Australian Soundscapes,” Crossings (2006). His essay “Lest we Forget; Let us Forget” (2013) responded to Nothing to See Here by Amy Spiers and Catherine Ryan at Sydney’s Underbelly Arts Festival.

Frederic Jameson, ‘The Aesthetics of Singularity,’ New Left Review, no. 92 (2015): 130.
This definition of neoliberalism draws on William Davies, The Limits of Neoliberalism: Authority, Sovereignty and the Logic of Competition (London: Sage, 2014). I have written about this at more length and with full references elsewhere: Ben Gook, ‘Backdating German Neoliberalism: Ordoliberalism, the German Model and Economic Experiments in Eastern Germany after 1989,’ Journal of Sociology 54, no. 1 (2018).
Arbeitsgruppe Alternative Wirtschaftspolitik, Deutsche Zweiheit—Oder: Wie viel Unterschied verträgt die Einheit? Bilanz der Vereinigungspolitik (St Katharinen: PapyRossa, 2010).
www.bild.de/politik/wirtschaft/griechenland-krise/regierung-athen-sparen-verkauft-inseln-pleite-akropolis-11692338.bild.html
Gil Eyal, Iván Szelényi, and Eleanor R. Townsley, Making Capitalism without Capitalists: Class Formation and Elite Struggles in Post-Communist Central Europe (London: Verso, 1998).
Gareth Dale, The East German Revolution of 1989 (Manchester: Manchester University Press, 2006); First the Transition, Then the Crash: Eastern Europe in the 2000s (London: Pluto Press, 2011).
Der Paritätische Gesamtverband, Menschenwürde ist Menschenrecht: Bericht Zum Armutsentwicklung in Deutschland 2017 (Berlin: Der Paritätische Gesamtverband, 2017).
Brigitte Young, Triumph of the Fatherland: German Unification and the Marginalization of Women (Ann Arbor: The University of Michigan Press, 1999).
Jonathan Olsen, ‘The Left Party and the AfD: Populist Competitors in Eastern Germany,’ German Politics and Society 36, no. 1 (2018).
On disenchantment, see Davies. On German’s ongoing division, see Ben Gook, Divided Subjects, Invisible Borders: Re-Unified Germany after 1989 (London: Rowman & Littlefield International, 2015). On divided Germany’s reckoning with Nazism and the GDR’s founding fantasies, see Julia Hell, Post-Fascist Fantasies: Psychoanalysis, History, and the Literature of East Germany (Durham: Duke University Press, 1997).
The governing political party of the GDR (German Democratic Republic).
Led by architect Horst Bauer, who also designed Berlin’s iconic Café Moskau.
Tobias Doll, Elisabeth Eulitz, Karla Schäffner. Berlin- Pankow: Sozialistische Botschaftsbauten Städtebauliche Dokumentation – Freiraumplanung – Typenbauten. Masterarbeit im Masterstudium Denkmalpflege der TU Berlin, Wintersemester 2012-13.
One key architect involved in the urban planning of Marzahn, Wolf-Rüdiger Eisentraut, was in 1996 to renovate the embassy itself when it was transformed, briefly, into a medical laboratory.
A 1970 ‘Neues Deutschland’ article compared Australia to ‘neo-colonialist’ South Africa, citing its ambitions towards regional dominance, its racist ‘White Australia’ policy and ‘arch-reactionary’ denigration of Aboriginal people. See: Walter Kocher, ‘Der folgsame Vetter des Uncle Sam’, Neues Deutschland, 12.7.1970, 6.
The site was rented from the GDR by Australia, however operations were prematurely closed down in 1986. Held by the public hand for a time, the site subsequently hosted a kindergarten, the Deutsche Industrie- und Handelsbank AG, and the medical laboratory bioscientia Institut f. Laboruntersuchungen Ingelheim GmbH, before being privatised by the BImA) (Institute for Federal Real Estate) to investor Lars Dittrich, hosting the media start-up tape.tv, being resold to real estate developer Prexxot GmbH and now: hosting the artist studio complex Atelierhaus Australische Botschaft Ost, who are currently attempting to extract the building from the speculative real estate bubble, looking towards collective ownership formats.
Doreen Massey, For Space, (SAGE Publications, 2005) 70-71.
Monteath, Peter (2008) ‘The German Democratic Republic and Australia’ in Debatte: Journal of Contemporary Central and Eastern Europe, 16:2, 213-235, siehe auch: Schedvin, Boris (2008) Emissaries of Trade: A history of the Australian trade commissioner service, Canberra: WHH Publishing, 279-280.
Daley, Paul (2018), ‘Revealed: how Australian spies filmed Indigenous activists during the cold war’ in The Guardian, 13/02/2018. Artikel online aufrufbar hier.
Monteath Peter & Munt, Valerie (2015), Red Professor: The Cold War Life of Fred Rose, South Australia: Wakefield Press, 275.
Hurley, Andrew Wright (2015), ‘No Fixed Address, but currently in East Berlin: The Australian bicentennial, Indigenous protest and the Festival of Political Song 1988’ in Perfect Beat, 15:2, 129-148.
Krätzer, Tobias (1998), Botschaften und Konsulaten in Berlin: Eine stadtpolitische Analyse, Berlin Verlag, 132.
Morris Cohen and C.B. Macpherson, ‘Property and Sovereignty’, Property: Mainstream and Critical Perspectives (University of Toronto Press, 1978).
Kevin Gray, ‘Property in Thin Air’, Cambridge Law Journal, 50 (1991), 252–307.
Kevin Gray, The Legal Order of the Queue, 2007.
James E. Penner, The Idea of Property in Law (Clarendon Press, 1997); Cohen and C.B. Macpherson.
Nicholas Blomley, ‘Law, Property, and the Geography of Violence: The Frontier, the Survey and the Grid’, Annals of the Association of American Geographers, 93 (2003), 121–141.
Cohen and C.B. Macpherson.
Cheryl Harris, ‘Whiteness as Property’, Harvard Law Review, 106(8) (1993), 1721.
Aileen Moreton-Robinson, The White Possessive: Property, Power and Indigenous Sovereignty (University of Minnesota Press, 2015).
Ibid, Harris.
Davina Cooper, Governing Out of Order: Space, Law and the Politics of Belonging (Rivers Oram Press, 1998).
Emily Grabham, ‘”Flagging” the Skin: Corporeal Nationalism and the Properties of Belonging’, Body & Society, 15 (2009), 63–82.
Ibid, Cooper 629.
Ibid, Cooper 636.
Aileen Moreton-Robinson, ‘Imagining the Good Indige-nous Citizen’, Cultural Studies Review, 15(2), (2009), 61-80.
Here, there is a need to need to point towards – while refusing to appropriate – narratives of Aboriginal resistance to the settler state. A few key dates: In 1972, Aboriginal activists established the Aboriginal Tent Embassy on the lawns of Parliament House, the seat of government in Canberra, which carved out a physical, social and political space of belonging in the Australian capital until today, subverting the version of Australia that parliamentarians wish to portray to diplomatic visitors, and in constant struggle with the colonial state. In 1973 the White Australia policy, which had effectively barred non-European immigrants from moving to Australia, was disbanded with a series of legal amendments prohibiting racial discrimination from being formally included in immigration law. In 1976, following a ten-year strike by the Gurindji people, led by Vincent Lingiari, the Aboriginal Land Rights Act (Northern Territory) became the first ever Australian law to ‘grant’ land rights to Aboriginal people. The lie of terra nullius remained part of Australian common law until it was overturned in Mabo v The State of Queensland in 1992; a later Labor government reneged on the promise of federal land rights, creating a post-Mabo legislative framework for ‘native title,’ as a weaker and more limited set of rights. See Andrew Schaap, Gary Foley and Edwina Howell, The Aboriginal Tent Embassy: Sovereignty, Black Power, Land Rights and the State (Routledge 2013).
Doreen Massey, ‘Power-geometry and a Progressive Sense of Place’, in Tim Putnam, Lisa Tickner, Jon Bird Barry Curtis (Eds.), Mapping the Futures: Local Cultures, Global Change (Routledge, 1993).
Sarah Keenan, Subversive Property: Law and the Production of Spaces of Belonging (Routledge, 2015).
Glen Coulthard, Red Skin White Masks: Rejecting the Colonial Politics of Recognition (University of Minessota Press, 2014).
Ibid, Coulthard.
Matthis Berndt, Britta Grell, Andreas Holm et al, The Berlin Reader, (transcript, 2013), 14-15.
Dallas Rogers, The geopolitics of real estate : reconfiguring property, capital and rights (Rowman and Littlefield, 2016).
Sabrina Apicella et al, “In the eye of the storm. Urban Transformations in Berlin: Realities of Crisis and Perspectives for Social Struggles”, in Teaching the Crisis (Group research project, Summer school program, 2013). See also http://teachingthecrisis.net/in-the-eye-of-the-storm-urban-transformations-in-berlin-realities-of-crisis-and-perspectives-for-social-struggles/
‘German Democratic Republic’, NAA: A1838/272 30/1/3 Part 3, German Democratic Republic – Relations with Australia, 318.
‘German Democratic Republic’, NAA: A1838/272 30/1/3 Part 3, German Democratic Republic – Relations with Australia, 316.
Monteath and Munt, Red Professor, 275.