ECONOMIC CRISES, STRUCTURAL CHANGE 125
improved the country’s foreign currency balance. On balance, this money
fl owed into interest payments and the repayment of outstanding loans. It
even completely covered the net interest payments for foreign currency
loans in some years; in others, it accounted for at least half of them.^83
Finally, it should also be pointed out that the West German Mark grad-
ually established itself as an illegal, yet tolerated, second currency in the
GDR; the East German society experienced what might be termed the “si-
lent victory of the D-Mark” even before 1989.^84 Despite the trends toward
stagnation in reciprocal trade, the GDR economy became increasingly
dependent on the Federal Republic in the 1980s. Thus, although the eco-
nomic reunifi cation of the two Germanies was not the only option avail-
able in the fall of 1989 when the SED leadership was looking bankruptcy
in the face, the existing interdependencies, as well as trends, seemed to
speak in favor of such a union.
Transformation and Continuities
The asymmetric and unequally interdependent relationship between East
and West Germany continued beyond 1989 to a certain extent. Initially,
this certainly applied to the government’s ability to guarantee the stan-
dard of living in the East as the government under Modrow expanded the
import of consumer goods from the West in order to stabilize the situa-
tion.^85 Furthermore, the extensive social transfers from the West that set
in shortly after the economic and currency union also boosted the level of
consumption in the new federal states.^86 East German exports to COME-
CON member countries were also supposed to be temporarily stabilized
by West German subsidies. By the time the council was dissolved in 1991,
however, these export fi gures had still declined by almost 60 percent.
Having already plummeted steeply in the second half of 1990, imports to
the new federal states coming from this region also amounted to less than
a fourth of the volume of 1989. East German exports to Western countries
and West Germany sank by about a third immediately following the cur-
rency union in mid-1990 because the competitive constraints caused by
the overvaluation of the GDR Mark could not be compensated by cutting
costs over the short term.^87
The further development of East and West German foreign trade oc-
curred within an extremely dynamic international context that is now
referred to as the breakthrough phase of globalization.^88 In the 1990s,
though, German foreign trade was still marked by a sustainable Euro-
peanization rather than by globalization per se, especially since a sig-
nifi cant portion of its export potential was directed initially toward the