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An end to solidarity?

March 26, 2012

More than 20 years after reunification, a number of western German municipalities want to end their solidarity pledge to the East. Their argument: finances in many cities in the West are much worse off than in the East.

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Broken window in an abandoned western German house
Image: dapd

Caroline and Fabian look a bit disappointed as they stand in front of the entrance to a swimming pool in the western German town of Waltrop. The gate is closed, and the little pool is only open to swimming clubs. There is no other place for kids to swim in the town of 30,000 residents in the Ruhr Valley, ever since the only public swimming pool closed a couple of years ago.

"I used to take swimming lessons there, and I think it's dumb that we don't have a pool anymore. Hopefully that'll change," said 11-year-old Fabian.


But few Waltrop residents imagine that will happen. Like many of its neighbors, the town is deep in debt. The city's balance sheets show a hole of about 164 million euros ($218 million), more than twice its total annual budget.

District authorities were so alarmed about Waltrop's finances in 2008 that they commissioned a consultant to work with the town's mayor, Anne Heck-Guthe, to come up with a joint plan for saving money.

"We wanted to help balance our finances without resorting right away to debt discharges but by avoiding new debts," said Heck-Guthe. "Our goal was to do so by way of selling off property, including our swimming pools and sports facilities."


Solidarity spells debt

A department store closes its doors in Oberhausen
A department store in Oberhausen prepares to closeImage: picture-alliance/dpa
A calculator on top of euro notes
Loans to make solidarity payments are going too far, say officialsImage: fotolia/Gina Sanders

Many towns and cities in the Ruhr Valley, once a bustling center of the coal and steel industries, face similar problems. Where riches once flowed, the unemployment rate now hovers around 20 percent in some areas, a figure nearly three times that of the country-wide average.

Cities are rushing to close theaters, youth institutions and swimming pools, while still facing uncertainty about how to make interest payments, not to mention tackle the debts themselves. The Ruhr region cities of Oberhausen and Dortmund owe nearly 2 billion euros each, the highest debts in western Germany.

"We just don't know what to do," said Oberhausen Mayor Klaus Wehling, of the Social Democrats (SPD). Together with fellow mayors throughout the region, he is sounding alarms and demanding an end to so-called solidarity programs with the states that once belonged to the communist German Democratic Republic (GDR).

The legislation on solidarity packages requires German cities and districts in the West to pay sums of around 10 billion euros annually to the East. The goal of the funds, which go foremost for expansions and repairs on streets and train tracks, is to balance out the infrastructure and living conditions between the once-divided regions of the country.

Agreed until 2019

The original solidarity pact was reached in 1995. When figures showed in 2004 that the economic output of the former East was far from the levels in its western counterpart, the federal government reached an agreement with states and localities to extend the pact until 2019, resulting in a volume of 156 billion euros.

That's money that many districts in the West desperately need, said Jörg Stüdemann, Dortmund's city manager, who called the solidarity pact an "absurd system." Stüdemann added that his city is only able to live up to its part of the pact by taking out loans.

"For us, the pact is not at an end in 2019. We're going to be paying off these loans for decades," he explained. "We need to have a political discussion about the finances of cities and districts, including in the Ruhr Valley. Many swimming pools are already closed, and streets are not being repaired. Where are we heading with all of this?"

Overflowing coffers

View of the city of Jena
Expecting to be debt-free by 2025 - Jena doesn't need the pactImage: picture-alliance/dpa

The numbers speak for themselves. While a number of western German communities add to their debts each year, district coffers in the former East are overflowing. Germany's Federal Statistics Office reported that in 2010, the balance sheets of eastern German municipalities were in the black by 393 million euros. The eastern city of Jena announced recently that it hopes to be completely debt-free by 2025.

"We really don't need the solidarity pact," admits Jena's treasurer, Götz Blankenburg. "We've had a strong focus on science and research by establishing the Friedrich Schiller University here, and there are a number of mid-sized businesses that fill the city's treasury through taxes."

Rejection from Berlin

But Jena is an exception. A number of state premiers in the region have reacted with disgust at the campaign launched by debt-ridden western communities.

"The average unemployment rate here is nearly twice as high as in the West, and the taxpaying capacity is just 55 percent compared with the West," said Reiner Haseloff, state premier of Saxony-Anhalt . Erwin Sellering, state premier of Mecklenburg-Vorpommern, agreed, stressing there is "no reason to shake up the solidarity package."

It's unlikely that municipalities in the Ruhr Valley will meet success with their campaign. Finance Minister Wolfgang Schäuble of the Christian Democrats (CDU) has dismissed the idea of an early end to the solidarity package.

It's equally unlikely that a legislative change to the pact could come from parliament. Sigmar Gabriel, chair of the opposition party SPD, has also rejected ending the solidarity pledge.

"It would be wrong to pit East and West against each other," Gabriel said.

Author: Friederike Schulz / gsw
Editor: Martin Kuebler

German Finance Minister Wolfgang Schäuble
Schäuble told Ruhr municipalities to end their campaignImage: dapd