Treuhand

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The Treuhand (Treuhandanstalt or Treuhand agency) was the agency that privatized the East German enterprises, Volkseigener Betrieb (VEBs), owned as public property. Created by the Volkskammer on June 17, 1990, it oversaw the restructuring and selling of about 8,500 firms with initially over 4 million employees. At that time it was the world's largest industrial enterprise, controlling everything from steel works to the Babelsberg Studios.

[edit] Responsibilities

The Treuhand was responsible for more than just the 8500 state-owned enterprises (Volkseigener Betriebe or VEBs). It also took over around 2.4m hectares of agricultural land and forests; the property of the former Stasi; large parts of the property of the former National People's Army, largescale public housing property as well as the property of the state pharmacy network. At reunification on 3 October 1990 it also took over the property of the political parties and mass organisations of the German Democratic Republic.^[1]

[edit] Opposition

Steel workers protest in Berlin in front of the Treuhand, December 1990

Its operations drew criticism from some quarters for unnecessarily closing of profitable businesses, misuse and waste of funds and unnecessary layoffs. It also drew substantial protests from the workforces affected, as 2.5m employees in state-owned enterprises (out of 4m in total) were laid off in the early 1990s. The then chairman of the Treuhand, Detlev Karsten Rohwedder was shot on 1 April 1991 by an unknown assassin (possibly the Red Army Faction). He was succeeded by Birgit Breuel.

When its operations ended in 1994, it had amassed 260 to 270b DM in debt. Supporters argued that without placing the former state-owned enterprises into private hands, job losses would have been much higher, and economic recovery slower.^[2]

[edit] Successors

Total land sales by the BVVG amounted to around half the area of the state of Saxony-Anhalt

Although the Treuhand closed operations in 1994, it still retained much property and some other legal responsibilities. These were transferred to 3 successor agencies:

• the Bundesanstalt für vereinigungsbedingte Sonderaufgaben, BvS (Federal Agency for Unification-derived Special Tasks), which managed remaining state-owned enterprises;
• the Treuhandliegenschaftsgesellschaft (now TLG Immobilien GmbH), which manages the remaining state-owned urban and industrial real estate;
• the Bodenverwertungs- und -verwaltungs GmbH (BVVG), a subsidiary of the Treuhand created in 1992, which manages the state-owned agricultural land, forest lands, and related real estate.

The BvS ceased operations at the end of 2000; although it remains legally in existence, its remaining tasks are all delegated to other bodies. TLG and BVVG remain the largest real estate owners in the new federal states. In 2000 TLG was reoriented from focussing on privatisation of its assets to "active portfolio management" with a view to making profits for the German federal government. By 2007, having sold 45,000 properties in 6 years and reinvested EUR1.5bn, it was managing 1500 properties worth EUR1.4bn.^[3] The planned privatisation of TLG itself was put on hold in July 2008, due to adverse economic conditions.^[4]

In July 2008 the BVVG announced total privatization receipts of EUR3.5bn since its establishment in 1992, which it had gained through the sale of around 525,000 hectares of agricultural land, with a similar amount of forest land and a small amount of other land. Total land sales amounted to around half the area of the state of Saxony-Anhalt. At the end of 2007 it still owned over 500,000 hectares of agricultural land, and just under 100,000 of forest land. ^[5]

[edit] References

• Mark Cassell, How Governments Privatize: the Politics of Divestment in the United States and Germany, Georgetown University Press, 2002.