Treuhandanstalt

Treuhandanstalt headquarters at Alexanderplatz, Berlin

The Treuhandanstalt ("Trust agency"), colloquially referred to as Treuhand, was an agency established by the government of the German Democratic Republic to privatize East German enterprises, Volkseigene Betriebe (VEBs), prior to the unification of Germany. Created by the Volkskammer on June 17, 1990, it oversaw the restructuring and selling of about 8500 state-owned companies with over four million employees. At that time it was the world's largest industrial enterprise, controlling everything from steel works to the Babelsberg Studios.

Responsibilities

The Treuhand was responsible for more than just the 8500 state-owned enterprises (Volkseigene Betriebe). It also took over around 2.4 million hectares of agricultural land and forests; the property of the former Stasi; large parts of the property of the former National People's Army, large-scale public housing property, as well as the property of the state pharmacy network.

On the day of the German reunification, 3 October 1990, it also took over the property of the political parties and the mass organisations of the German Democratic Republic.

Opposition

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

Its operations drew criticism from some quarters for unnecessarily closing allegedly profitable businesses, misuse and waste of funds and layoffs that were claimed to be unnecessary. It also drew substantial protests from the workforces affected, as 2.5 million employees in state-owned enterprises (out of 4m in total) were laid off in the early 1990s. Supporters argued that not placing the former state-owned enterprises into private hands would have caused the loss of many more jobs and slowed down economic recovery.

On 1 April 1991 the chairman of the Treuhand, Detlev Karsten Rohwedder, was shot dead 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 270 billion DM in debt.

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, but 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 1.5 billion euros, it was managing 1500 properties worth 1.4 billion euros. The planned privatisation of TLG itself was put on hold in July 2008 because of adverse economic conditions.

In July 2008, the BVVG announced total privatization receipts of 3.5 billion euros since its establishment in 1992, which it had gained through the sale of around 525,000 ha 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 ha of agricultural land and just under 100,000 ha of forest land.

Further reading

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