By In June 1987, United States President Ronald Reagan beseeched, “Mr. Gorbachev, tear down this wall!”, calling for the Soviet leader to open the Berlin Wall. Just a couple of months later, in January 1989, Erich Honecker, leader of socialist East Germany, declared that the wall “will be standing in 50 and even in 100 years”.
We all know the ending, Reagan’s appeal was heard, the wall fell in November 1989 – but Honecker might have been not as notoriously wrong as it seems at first glance.
While the physical barrier separating East and West has disappeared, many Germans to this day perceive an invisible border shaping economic opportunity, regional identity and voting behaviour. As the country faces new global challenges and internal shifts, the legacy of reunification remains unfinished—and deeply relevant.
Rebuilding Eastern Germany’s Economy
After reunification, the primary goal was to rebuild East Germany, which materialised in the plan to raise economic indicators of the “new federal states” to those of the “old” ones. Far-reaching privatisation was followed by equalising political measures such as massive tax breaks and subsidies. While 10 years later, the “Aufbau Ost” (reconstruction East) project proved successful – GDP per capita in the East had risen from 35 percent to 65 percent of that in the West – we have since seen slow improvements and stagnation: even 35 years after the fall of the Wall, this figure remains at 75 percent.
The fundamental reason for the stagnant GDP is the lack of productivity of East German companies, which on its own can be traced back to several causes.
The “Treuhand privatisation” of over 8500 previously state-owned companies with around four million workers was conducted presumably too rushed, leading to the closing of 3700 companies and enormous job losses. Secondly, the decision to convert the GDR mark to the Deutschmark at a 1:1 exchange rate led to a revaluation shock, which, despite resulting in higher wages for East Germans, negatively affected indebted households and companies. The latter regulations also caused a plummeting in the price competitiveness of East German products. Another consequence is the remarkably high number of 1.9 million immigrants from Eastern to Western federal states between 1989 and 2013, among whom highly skilled workers were a majority. This slowed down the development of a strong service sector, a field that had not properly evolved under the GDR’s strong state policies. And yet, it was also the reunified state itself that impeded the rise of the service sector by artificially keeping inefficient structures in Eastern Germany’s industrial base alive with high subsidies.
To this day, Eastern German regions lack young, innovative startups that challenge incumbent firms.
On a more hopeful note, cities like Leipzig, Dresden and Jena, however, demonstrate that strategic investment and innovation can prove successful in the East. The urban reconstruction program “Stadtumbau Ost”, launched in 2002, focused on stabilising the housing market by demolishing vacant flats no longer in demand and upgrading districts and city centers worthy of preservation. A criticism worth mentioning is that the characteristic “Plattenbauten” as symbols of socialist cities to be demolished, were especially targeted, even though they offered better comfort conditions and were less affected by housing vacancy than old houses.
The Economic Divide Today
Whilst the aforementioned GDP indicator is indeed a key benchmark in economic policy, used to measure and compare different regions’ performance and to calculate subsidies at both EU and national levels, it is not ideal. The indicator is prone to distortion, and measures total goods and services produced, not providing information about individual purchasing power and quality of life.
The median gross pay indicator, on the other hand, looks directly at the income distribution, and its analysis shows that the Eastern German districts are catching up across the board. It is not a surprise that workers in boom regions in western Germany, such as Munich, Stuttgart and Frankfurt, earn more in absolute terms than those in eastern Germany, like Leipzig, Dresden and Berlin. However, regions that are lagging behind or stagnating are also significantly more common in the “old states”, which suggests that the economic situation is more balanced across regions in Eastern Germany.
Another economic indicator worth taking a look at is the unemployment rate. For the majority of rural districts in the new federal states, the unemployment rate has been decreasing since 2013, which is generally a signal for catch-up processes. Yet at the same time, it might also be due to the outflow of workers mentioned before – a phenomenon that has declined, but not stopped.
How Perception Plays Into the Demographic Situation
A low fertility rate is an East and West German problem, but the particularly alarming situation in the new federal states is still due to domestic emigration. The reason for this might be only in part, the objectively better income prospects, but also the perception of the situation.
Despite objective improvements, surveys conducted by the Institute of German Economy (IW) show that many East Germans are sceptical about the growth of the labour market.
Irrespective of objective indicators, which would give reason for optimism in East Germany, a significant proportion of the population in East Germany classifies their region as stagnating or declining.
East Germany’s labour market is also lacking immigration from abroad. In 2023, 32.9 percent of the population in Western Germany had a migrant background – this proportion was 11.4 percent in the new states. This lack of immigration is certainly partially due to less attractive job opportunities, may also be because of the lack of a welcoming culture in the society.
One can conclude that the disproportionate deterioration of the demographic situation in the East is closely linked to the perception of economic situation.
Next to the detachment between objective metrics and personal experience regarding economic and infrastructural progress, cultural and identity differences remain too.
The phenomenon “Ostalgie” (neologism for East nostalgia) describes nostalgia for aspects of life in the German Democratic Republic. A poll conducted in 2023 shows that 40 percent of former East Germans identified as East German – a surprisingly high percentage in itself, but also because only 18 percent of West Germans identify along the lines of their pre-reunification state.
Political Preferences
The aforementioned study from IW also discovered that in regions with a more pessimistic perception of economic development, a higher tendency to support political extremes can be measured. This might be an important reason for the particular popularity of the far-right Alternative for Germany (AfD) in Eastern Germany: except for Berlin, which tends to vote at the left end of the political spectrum, it achieved an average of more than 40 percent and was therefore by far the most successful party. The pro-Russian Bündnis Sahra Wagenknecht (BSW), founded in 2024, is becoming increasingly important in the new federal states as well. In the 2024 state elections in Thuringia, Saxony and Brandenburg, AfD and BSW together could account for more than 40 percent each, making it more difficult to form traditional coalitions.
Even in the West, the days are long gone when the former “parties of the centre”, the social democratic SPD and the Christian democratic CDU/CSU, together gained more than 70 percent of the votes, and a change in the party landscape does not mean anything anti-democratic in principle.
But speaking of anti-democratic, the Federal Constitutional Court categorised the AfD as a right-wing extremist party just last week, sparking renewed debate about its possible banning. However, this requires an application for review, submitted by the legislative powers or the federal government to the Federal Court, and it remains to be seen whether this will obtain majority.
German news outlets often discuss the question of representation of East Germans, who make up around 18 percent of the whole population.
A ratio of 15 percent in the German Parliament, the Bundestag, does not seem tragic; the problem is rather the underrepresentation in political leadership positions, which is documented by a strikingly low ratio of ministers from East Germany, no matter which government one takes a look at. The position of the Commissioner for Eastern Germany was intended to guarantee representation, but many officeholders fail to fulfil this task. For instance, the former office bearer Marco Wanderwitz was the subject of criticism for having accused East Germans of “not having arrived in democracy after 30 years.” Wanderwitz was also known for advocating a legal banning of the AfD – a position that rather conceals than addresses the issue.
However, politics and justice are two different things for a reason, so the debate about the “firewall” may come as a surprise to some. It refers to the clear demarcation and unwillingness of democratic parties to co-operate with the AfD at local, state and federal levels. In practice, however, the firewall is coming under pressure, particularly in eastern German municipalities and states, but is still being upheld at federal level. With almost half of all eastern German members of the Bundestag belonging to the AfD, this reinforces Eastern German voters’ resentment against old political parties.
The “firewall” invoked today to guard democracy against extremism evokes that older wall – meant to protect, but ultimately symbolic of something deeper: fear, failure to connect, and the cracks in a unified narrative.
For Germany to move forward, it must look past moralistic slogans and confront the hard questions:
Why have so many East Germans turned away from traditional parties? And what story of unity is truly being told? If a new wall is rising – not in bricks, but in belief – then the call of this decade might no longer be to “tear down this wall”, but rather to understand why it was rebuilt.
