ECONOMIC CRISES, STRUCTURAL CHANGE 127
unions. But it was not long before it became quite apparent that pri-
vatization, specifi c cost issues, and the reorganization of associational
life defi nitely aff ected the changes taking place in the entire country.
This certainly held true for the sale of major East German enterprises to
non-German concerns, such as Elf Aquitaine or Arcelor, or the erosion of
the collective wage agreement that had already begun in the metal indus-
try in the new federal states in 1992, which had been actively fostered by
the Treuhandanstalt, a “trust agency” that had been established to man-
age privatization. The shrinking importance of principle banks in corpo-
rate fi nance and the organizational and instrumental reforms pertaining
to the fi nancing of public budgets via the international capital market also
pointed to overall changes.^92
At the same time, the restructuring of the East put a heavy strain on
the West German economy and the public budgets that relied on it. These
budgets started off in good shape, but the fi nal accounts of the Treuhand
revealed that the privatization of the East German industry had not gen-
erated a profi t of about 600 billion D-Mark for the coff ers of the federal
government as had been projected, but rather resulted in losses amount-
ing to 264 billion.^93 This situation was further exacerbated by the social
welfare costs associated with high unemployment, the fi nancial strain put
on the Western German welfare state through the integration of the new
federal states, and the great need to modernize the East German infra-
structure. Moreover, the costs of unifi cation managed to nullify the con-
solidation of state fi nances that had been undertaken in the 1980s. The
fi nancing of public expenditures through credit once again increased,
and the share of public debt in the gross domestic product (GDP) rose
sharply. In reaction to these issues, the privatization of federal and state
property increased at such a rapid pace in the 1990s that the sales of
public property in the decades prior paled in comparison. Alongside the
liberalization of the fi nance sector, the split-up and partial privatization
of the Deutsche Bundespost (German federal post offi ce) was also quite
spectacular, especially since it was accompanied by the opening of the
market for mail delivery and telecommunications. The Bundesbahn (the
federal railway company) that merged with its GDR counterpart, the
Deutsche Reichsbahn, adopted a private legal form, but it remained the
property of the state.^94
However, privatization and liberalization were not just reactions to the
tight budgetary situation; rather, they were also linked to the demands for
reform voiced in the 1980s that had never proceeded much beyond a rhe-
torical level. In the age of global competition, greatly accelerated fl ows
of information, and increasingly international and fl exible job markets, it
was easier to justify and actually implement measures to eliminate real