Theo Waigel

'Reunification Imposed Huge Costs'

Theo Waigel oversaw the economic unification of East and West. Source: Thorsten Jochim for Handelsblatt
Theo Waigel oversaw the economic unification of East and West.
  • Why it matters

    Why it matters

    As West Germany’s finance minister in 1989, Theo Waigel had a front seat during the historic period of reunification and the birth of the euro.

  • Facts


    • Theo Waigel was finance minister in Helmut Kohl’s West German government when the Berlin Wall fell in 1989.
    • He served as German finance minister from 1989 to 1998, and negotiated the economic and monetary union of the former East and West Germanys.
    • Mr. Waigel is considered one of the key architects of the euro zone.
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Theo Waigel missed the fall of the Berlin Wall on November 9, 1989. The then-finance minister in the West German government was at a political function in Bavaria when he heard the historic news from Berlin. Mr. Waigel immediately cancelled all his appointments and flew the next morning to the city that was no longer divided.

Mr. Waigel, you are regarded as one of the fathers of the euro. Was the common European currency the price for German unity?

No, no one could have promised during the reunification that the euro would come in 1998. Neither the finance minister nor the chancellor. You needed a two-thirds majority in the Bundestag and Bundesrat, the lower and upper houses of parliament, for that.

However, the decision to introduce the euro was almost contemporaneous with the fall of the Berlin Wall. Was that really a coincidence?

The most important decisions for the euro were already made in 1988 at the European summit in Hanover.  A committee was appointed that was supposed to examine the introduction of an economic and currency union in Europe. We could not cancel those talks during reunification. Then all the other Europeans would have said: Now Germany is going on its own unique national path again.

So then there was, in fact, a connection between the euro and unification?

We did both things in parallel. When the chance for German unification arose, we took it and proceeded with the talks for a common economic and currency union.

Would the euro also have come into being if there had been no German unification?

Of course! Everything was heading that way.

When did you start to believe that unification could really happen?

When I participated in the first events for free elections over there, I was supposed to speak in Leipzig. Before that, I went for a little walk and thought: This will be a middling flop. Who is going to come at 5 p.m. on a weekday?

And, who came?

And then suddenly 60,000 people were on the square. That is the crazy thing about democracy! Finance ministers are, after all, not usually particularly popular. And then I saw a banner at the back: Exchange the East German mark and Luft (Christa Luft was the East German finance minister at the time. Eds.) for the D-mark and Waigel. Then I felt: Something is happening.

What moved you most during the reunification period?

The withdrawal of the Soviet soldiers. Within the small area of East Germany there were 500,000 soldiers, thousands of tanks and nuclear weapons. A military potential of enormous magnitude. We paid 12 million deutsche marks for the withdrawal of the Soviet soldiers. That is about half as much as the restructuring of a regional bank costs.

Why do the Soviets come to mind when you think about reunification?

Because it was so moving, as the last commander-in-chief of the Soviet soldiers in Germany, General Burlakov, handed me the key from Karlshorst, the main headquarters of the Soviet troops in Germany, in 1994. They withdrew to the accompaniment of a song, which they sang in German and Russian.

What song was that?

They sang: “Germany, we give you our hand and return to our homeland. The homeland is ready, we remain friends for all times. We want to build our future in peace, friendship and trust.”

East and West German GPD-Economic-Growth-01


What was the hardest task at the time?

We had no idea what awaited us in terms of the East German economy. Everything was the most arbitrary socialism. No single business could present an honest balance sheet.

Detlev Karsten Rohwedder, the former manager of the Treuhand, the agency which privatized East German enterprises, said at the beginning: “The whole lot is worth 600 billion deutsche marks”…

… and relied on the figures of Hans Modrow, the then premier of East Germany. A few months later, he had already realized that it was not correct.

He was not the only one who had thoroughly miscalculated.

You should look up what the German economic institutes had to say on the issue. Some said that the reunification cost 40 billion deutsche marks, other said 100 billion deutsche marks, but definitely not more. You won’t find me quoted anywhere naming a figure.

The Treuhand alone, which privatized state-owned enterprises, spent hundreds of billions of deutsche marks.

One can talk a lot about the Treuhand. But one should just take a moment to consider what it achieved in a few years: It privatized thousands of enterprises and closed on 100,000 property contracts. That is a Herculean task.

Shouldn’t we have taken more time after the fall of the Wall to allow the two halves of Germany to align economically?

To produce more Trabants and Volgas? There was no market for such stinkers. For most businesses, investors had to be found that brought markets with them. Naturally, that cost a lot of money.

Even today, the unification still costs money because of the solidarity tax, a 5.5 percent tax on income and investment income throughout Germany to support the reconstruction of the former East. Isn’t it time to finally eliminate the tax?

I don’t think that the federal government will give up that source of income. Or else it will presumably replace it with a higher income tax.

If Korea were ever to be reunited and the Koreans asked you for advice, what would you recommend?

One cannot give any country a blueprint. North Korea must however first set up a market economy system. One cannot do that with a graduated plan and simultaneously open the borders.

So your advice would be to do things exactly as was done with German reunification?

I once asked my former deputy, Gert Haller, what mistakes did we make? He said, Mr. Waigel, we did almost everything right. One is always asked, which mistakes one would avoid today.

Wolfgang Schäuble, the current finance minister, has presented a balanced budget for 2015. You once said: You could have done that already in 1990 – but then decided against it after all, because of reunification. Are you envious?

Not at all. Each minister of finance hopes for that. But for most of them, it happened as to Moses: You are allowed to see the holy land, but not set foot on it. I could have done it in 1989 and 1990. But the reunification imposed huge costs on us. Under those circumstances, a balanced budget was not possible.

So no envy at all?

I am only envious of Mr. Schäuble on one point: during reunification, I had to pay an interest rate of over 8 percent – and he gets the money for free.

Mr. Waigel, thank you very much for the interview.


The interview was conducted by Jan Mallien, political editor for Handelsblatt Online. To contact the author:


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