Birgit Breuel Sells State Assets of Former East Germany

GERMAN REPORT

A GROUP of visiting Americans arrives late for a meeting with Birgit Breuel, one of the new Germany's human dynamos.We hurry up the steps of what was once Hermann Goering's air ministry building in the middle of Berlin but is now the headquarters of the Treuhandanstalt, or Trustee Agency, which is handling the dismantling of the state-owned businesses in the former East German state. Since all but the smallest kinds of shops were eventually taken over by the Communists, the Treuhand has the enormous task of selling off virtually all the working assets of a former country. After the assassination of the former head of the Treuhand last April, Birgit Breuel was elevated to head position. Ms. Breuel is the daughter of Alwin Munchmeyer, founder of one of postwar Germany's largest private banking houses. Married to a businessman, Breuel entered politics in Hamburg in 1966 as a Christian Democratic Union member of the Hamburg legislature. At the time she left her latest government post to come with the Treuhand, she was handling the financial affairs of the state government of Lower Saxony, in Hannover. Does she care to make an opening statement about the Treuhand? she is asked. "No, why should I?" she freshly responds. There are no wasted words or time with this woman. So the questions are fired and the answers fired back. The Treuhand took over some 9,000 businesses, she says. At first it didn't know how many it had or even all their addresses. In the short time it has been in existence, some 3,000 of these have been sold, reducing the number to 7,800. Why the discrepancy? Because many of the businesses they are still responsible for are the former combines of the communist state. Treuhand has been breaking them up into smaller chunks - easier to run and easier to sell. The number may climb even more, she says, even as th e number that are privatized also keeps increasing. Currently the Treuhand is privatizing about 20 companies a day. Some of the visitors have heard complaints that potential American investors are not being given equal treatment with the Germans. Not true, she says. Then she lists the criteria that are used in judging among competing buyers: price, the amount of investment promised in the future, the transfer of technology offered by the buyer, and, finally, the disposition of the existing labor force. Clearly, all these elements are important ones. The Treuhand has realized 12.5 billion deutsche marks (US$7.47 billion) so far from the sale of existing businesses, but the new owners are also pledged to put 70 billion marks into those businesses over the next few years. The preservation of jobs is also important, although most of the firms taken over had superfluous labor. In the 3,000 firms sold thus far, some 600,000 jobs have been saved. Of these 3,000 firms, 500 have been management buyouts. Of the remaining 2,500, 90 percent of the sales have been to West Germans. The Treuhand would like to see more management buyouts, Breuel says. But the entrepreneurial spirit barely exists in the new states, she notes. The skills of the labor force, however, are much higher than had been expected, and on the whole employees in the new states are willing to work harder than today's typical West German workers. The Treuhand itself is staffed by some 3,000 workers, two-thirds of them former East Germans. Former membership in the Communist Party does not disqualify anyone from employment, but any former connection with the Stasi (secret police) does. Breuel says that competing claims to the ownership of property have been removed as an obstacle to privatization. The Bonn government has taken over the liability to pay former owners. Breuel clearly has a tiger by the tail. Even a brief meeting with her makes one believe she has the capacity for the job and the daily tough decisions it involves. What she is trying to do is being closely watched by the other former communist states. This conversion from a command economy to one where the decisions are made by each manager working within a competitive market needs to to work in eastern Germany - where so much help is forthcoming from its richer partner - if a similar transition is to have much chance of working elsewhere in Eastern Europe.