East German Industries Catch Up To West

Twenty years after the Berlin Wall came down, economic output of eastern Germans has surpassed 70 percent of that of western Germans -- growing twice as fast as expected.

BERLIN (AP) -- Rotkaeppchen sparkling wine. Florena Cosmetics. Spee detergent. Zetti crunchy chocolate clusters.

The names may not mean much to people outside of Germany but they point to a remarkable trend in the 20 years since the Berlin Wall came down: All are familiar brands of the former Communist East that have found a niche in the West.

Many people feared it would take several decades for East to catch up with West after the wall collapsed on Nov. 9, 1989. But today, economic output of eastern Germans has surpassed 70 percent of that of western Germans -- up from one third in 1991. And, surprisingly, some East German industries have found a market in rich and finicky cities like Frankfurt, Hamburg and Munich.

"When East Germany joined the Federal Republic of Germany, its infrastructure was completely dilapidated, their state combine companies produced products that were unfit to be sold," said Michael Huether, the director of the German Economic Institute.

"Today the five eastern states can no longer be called an industrial wasteland."

Saxony-Anhalt-based Rotkaeppchen has become the nation's market leader, overtaking rivals produced in Germany's western wine-growing Rheingau region.

It has become a popular drink at restaurants and night clubs, enjoyed by both "Ossis" and "Wessis" -- the nicknames for those born and raised in the east and west respectively.

Hans-Joachim Prier, 71, said he and his wife still buy some of the brands they did when living in East Germany, including Rottkaeppchen, Florena and Spee.

"We don't buy products because they're from the East," Prier said. "For us, the quality has to be good, and the price has to be good. Beyond that, I don't look much further. When the price and the quality are the same, then I take the eastern product. Lots of people do it this way."

Supermarket chains in the West, from Cologne to Hamburg, carry typical East German products like the popular East German Bautzner Senf mustard and Spreewald Gurken pickles.

The popularity of East German products across the country comes amid a phenomenon in recent years known as "Ostalgie," or fascination with life in the former East Germany.

"Ostalgie" is a play on the German words for east and nostalgia, and it ranges from films celebrating life under Communism to a fascination with the Trabant, the tiny East German car, retro-chic Ossi furniture or East German motorcycles like the Schwalbe or the MZ.

East Germany's economy grew twice as fast in the last 20 years as had been estimated, according to the Cologne-based German Economic Institute. In 12 years, it projects, the eastern states will have caught up economically with the poorest western states.

But Huether warned that the eastern states would probably never reach the same level of economic performance as the west, because they don't have financial and industrial power-hubs such as Munich, Hamburg, or Frankfurt am Main.

"In the end, one will have to accept that there will be permanent regional differences," Huether said.

Since 1993, the federal government has invested billions of euros into the five former eastern states -- Brandenburg, Mecklenberg-Western Pomerania, Saxony, Saxony-Anhalt and Thuringia -- and West German tax payers have been contributing through so-called solidarity taxes that flow to the East.

From 1993-2004, the eastern states and communities received euro94.5 billion from the federal government and the western German states to build new roads and highways, modernize buildings and revive neglected city centers, among other initiatives.

Berlin has vowed to invest another euro105 billion through 2019 to ensure construction and redevelopment continues, along with an extra euro51 billion from the federal budget.

Not all western Germans are happy with the strides made by the east -- and what it's cost.

Patrick Rustler, a 25-year-old BMW AG worker in Frankfurt said that while unification made sense because the two German nations "belonged together," it has been expensive, collectively and personally.

"When you go over there (to the East), the cities sparkle, as opposed to over here. But despite the fact that they're sparkling, there's not much else to show for it," Rustler said.

East Germans, on the other hand, are also not overwhelmingly convinced that they have come out ahead. Only 38 percent see themselves as winners of the unification, while 30 percent say Germany's development since 1989 has brought them benefits as well as losses.

Twenty-three percent of East Germans say that the development of the last twenty years has made them the losers of the unification, according to a poll by the Sozialverbund Volkssolidaritaet that was conducted in June. The poll "20 Years of Peaceful Revolution from 1989 to 2009" questioned 1,900 eastern Germans. No margin of error was given.

Unemployment is one of the biggest problems that still plagues the East. Despite the better than expected economic upswing, unemployment in the East is still much higher than in the West — 11.8 percent compared to 7.7 percent.

However, eastern unemployment has declined dramatically since the 18.7 percent registered in 2005.

"Having achieved national unity, we must now work on completing social unity," Wolfgang Tiefensee, the former minister for integration of the former East German states, said while introducing the annual report on the state of the German unification in June.

Associated Press Writer Laura Stevens contributed.