Postwar: A History of Europe Since 1945

by Tony Judt

The absorption of the eastern Länder into a unified Germany had cost the Federal Republic more than one thousand billion euros in transfers and subsidies between 1991 and 2004. But far from catching up to the West, the eastern region of Germany by the late Nineties had actually begun to fall further behind. Private German firms had no incentive to locate in the East—in Saxony or Mecklenburg—when they could find better workers for lower wages (as well as a superior transportation infrastructure and local services) in Slovakia or Poland. Ageing populations, poor education, low purchasing power, the westward departure of skilled workers and an entrenched hostility to foreigners on the part of those left behind meant that eastern Germany was distinctly unappealing to outside investors who now had many other options. In 2004, unemployment in the former West Germany was 8.5 percent; in the east it exceeded 19 percent. In September of that year the neo-Nazi National Democratic Party won 9 percent of the vote and returned twelve deputies to the parliament of Saxony.