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==Economy of Germany== | ==Economy of Germany== | ||
The German constitution, the Basic Law (Grundgesetz), guarantees the right to own property, freedom of movement, free choice of occupation, freedom of association, and equality before the law. However, the constitution modified the operation of the unfettered free market by means of its “social market economy” (Soziale Marktwirtschaft). With a “safety net” of benefits—including health protection, unemployment and disability compensation, maternity and child-care provisions, job retraining, pensions, and many others—paid for by contributions from individuals, employers, and public funds, Germany has an economic order supported by most workers and businesses. | |||
In the social market economy the government attempts to foster fair play between management and labour and to regulate the relationship between the capitalist participants in the market, particularly with regard to competition and monopolies. Works councils have been established, and workers have representation on the boards of businesses. The social market economy was created by policy makers with a vivid memory of market distortions and social tensions caused by the giant industrial trusts before 1939. Legislation against monopolies appeared in 1958 and has been criticized as ineffective. For example, it has proved impossible to restrict the indirect coordination, through which individuals, banks, and other financial institutions build up “diagonal” share holdings linking a range of firms that are nominally independent. Moreover, where a whole branch of industry has experienced difficulties (e.g., the Ruhr coal industry), even the federal government has encouraged concentration. The emergence of very large monopolistic firms has been unavoidable because, in an increasingly international economy, large firms that enjoy economies of scale are better positioned to survive. With globalization, governments are less able to regulate businesses at the national level or even at the transnational level of the EU. | |||
The social market economy is regulated not exclusively by the federal government but by a plurality of agencies. For example, there are numerous insurance institutions that deliver social benefits. The most important institution in post-World War II Germany is the Frankfurt-based Deutsche Bundesbank (German Federal Bank). With memories of the runaway inflation of 1922–23, the West German government decided that it should never again have a license to print money and that the central bank should be independent of political control. Consequently, Germany’s adoption of the euro, the EU’s single currency, in 1999 raised some concerns in the country that the European Central Bank would be subject to political influence and manipulation. The Chambers of Trade, at every level of the administrative hierarchy, are also influential, and the state governments play a significant economic role (e.g., the government of North Rhine–Westphalia is intimately concerned with the survival of the Ruhr coal industry). Federal and state governments also participate in the ownership of some enterprises, notably public utilities. The Basic Law, however, prevents the arbitrary intervention of the central government. | |||
As Germany has numerous economic actors, a high degree of coordination has been required to achieve adequate growth, balanced foreign trade, stable prices, and low unemployment. A variety of consultative bodies unite federal and state governments, the Deutsche Bundesbank, representatives of business and of the municipalities, and trade unions. The Board of Experts for the Assessment of Overall Economic Trends, established in 1963 and known as the “five wise men,” produces an evaluation of overall economic developments each year to assist in national economic decision making. Moreover, the federal government submits an annual economic report to the legislature that contains a response to the annual evaluation of the Board of Experts and an outline of the economic and financial policies it is pursuing. | |||
Although the free market operates in Germany, the federal government plays an important role in the economy. It is accepted as self-evident that it should underwrite the capital and operating costs of the economic and social infrastructure, such as the autobahn network, waterways, the postal system and telecommunications, and the rail system. The federal government, the states, and the cities also contribute to the regional and local rapid transit systems. Government collaborates with industry in bearing the costs of research and development, as, for example, in the nuclear power industry. Federal intervention is particularly strong in the defense industry. The coal industry is perhaps the most notable example of subsidization, and agriculture has traditionally been massively protected by the state, though the sector is now governed by EU institutions. Regional planning is another significant field of government intervention; the federal government fosters economic developments in rural and industrial “problem” regions. States and cities also intervene with schemes to foster regional or local development. | |||
Germany has a varied tax system, with taxes imposed at the national, state, and local levels. Because of the generous system of social services, tax rates on corporations, individuals, and goods and services are all relatively high in comparison with other countries. Germany employs a system of tax equalization, through which tax revenues are distributed from wealthier regions to less-prosperous ones. After unification these transfers were resented among many western Germans. | |||
Modern economic history: from partition to reunification | |||
'''THE WEST GERMAN SYSTEM''' | |||
After the devastation of World War II, West Germany rebounded with a so-called “economic miracle” that began in 1948. The subsequent combination of growth and stability made West Germany’s economic system one of the most respected in the world, though it began to suffer strains beginning in the 1990s, exacerbated by the costs of unification. Germany’s remarkable economic performance was largely a result of effective economic management, but temporary factors were especially important in spurring economic growth in the immediate post-World War II era. In particular, a large force of unemployed workers—returned servicemen and displaced persons—were available and eager to rebuild their own lives and willing to work hard at a rate of remuneration that left a considerable investment surplus in their employers’ hands. In addition, the country reaped benefits from the joint economic planning for the American, British, and French zones of occupation that culminated in the vital and essential currency reform that introduced the deutsche mark in June 1948 and the U.S.-financed Marshall Plan (1948–52), which helped to rebuild war-torn Europe. | |||
From 1951 to 1961 West Germany’s gross national product (GNP) rose by 8 percent per year—double the rate for Britain and the United States and nearly double that of France—and exports trebled. Despite some occasional economic downturns (e.g., during the oil crisis of 1973–74), West Germany’s economy followed an upward trend. Indeed, when East and West Germany reunited in 1990, West Germany’s economy was enjoying a cycle of business expansion that had lasted since the early 1980s and continued into 1992. By that time Germany had one of the largest economies in the world and was a leader in world trade. All this was achieved while maintaining low inflation. | |||
'''THE EAST GERMAN SYSTEM''' | |||
East Germany also had experienced an economic miracle of sorts. Unlike the other Soviet-style states of eastern Europe, East Germany had been part of an advanced capitalist economy before the war, which gave it a considerable advantage in reconstruction. Even though it had emerged from World War II and the postwar Soviet demolitions economically ravaged, its surviving industrial infrastructure, inherited skills, and high level of scientific and technical education enabled it to develop the economy and to advance the standard of living to a level markedly higher than those of most other socialist countries, though living standards were still well below those of western Europe. East Germany became the principal supplier of advanced industrial equipment to the communist countries, though it became apparent after unification that it produced poor quality goods and caused environmental devastation. | |||
East Germany had a command economy, in which virtually all decisions were made by the governing communist party, the Socialist Unity Party (SED). The system of planning was inflexible and eventually caused ruinous economic conditions. Power, influence, and personal connections (Beziehungen, or “vitamin B”) drove economic decisions, and all groups, including trade unions, were expected to collaborate to achieve the SED’s economic objectives. | |||
East Germany’s industrial sector lacked quality controls and technological innovation. The cynicism, apathy, and inertia that were common among workers and enterprise managers contributed to low rates of East German technological change. Despite excellent training, workers were not rewarded with increased earnings for ingenuity; the result was a general malaise. | |||
Supply and distribution were controlled by state-owned companies, and the centralized provision of services through nationalized concerns and local administrations was a generally recognized weakness. This was partially addressed by a “gray market” for goods and services in short supply (e.g., automobiles and automobile and house repairs), particularly when payment was made in hard currency; for example, repairmen offered much faster service for an extra fee or favours, and sales clerks also kept certain goods “under the counter.” By the 1970s and ’80s, particularly as contacts with the West increased, this gray market grew in significance. | |||
'''ECONOMIC UNIFICATION AND BEYOND''' | |||
The implementation of Mikhail Gorbachev’s glasnost (political liberalization) and perestroika (economic restructuring) policies in the Soviet Union fueled sentiment in Germany that reunification could become a reality, and the basic steps toward German economic unity were accomplished with astonishing speed. The unexpected opening of the frontier between East and West Germany and the breaching of the Berlin Wall on November 9, 1989, were a heavy blow to the East German economy, as the relatively small numbers of migrants, who in previous years had left the country by way of Hungary or Czechoslovakia, rose dramatically. Exacerbating the problem was the fact that most of those who left were the younger, more active members of the population and those with marketable skills. The economic unification, achieved by July 1, 1990, swept away all customs barriers and introduced the deutsche mark as the sole currency in Germany. | |||
Following Germany’s official reunification on October 3, 1990, the western German economy continued to grow rapidly until 1992, after which it began to experience an economic slowdown before growth resumed in the mid-1990s. During the decade following 1992, the German economy grew at an average annual rate of 1.4 percent—among the lowest rates in western Europe. Many economists attributed the slowdown to rigid labour policies, high taxes, marginal incentives for investment, and generous incentives for workers to retire, miss work, or be unemployed. The slowdown was also related to unification, which wholly revealed the economic deficiencies of East Germany—the extent of its technological backwardness, its low productivity, and the faltering state of its manufacturing plants. Disillusionment in eastern Germany rose sharply as manufacturing output and employment declined rapidly. The federal government’s insistence that eastern German firms compete immediately in the free market led to economic devastation in the east. By spring 1991, mass demonstrations against unemployment occurred regularly in Leipzig, and there was concern that economic despair would cultivate the rise of political extremism. Indeed, the Berlin office of the Treuhandanstalt (a government-owned but independent trust agency for the privatization of eastern German industry with wide powers of disposal) was firebombed, and in April 1991 its head was murdered by the West German Red Army Faction. | |||
The Deutsche Bundesbank believed that the government had introduced the deutsche mark into eastern Germany too precipitately, with practically no preparation or possibility of adjustment, and at too favourable a rate. The effect of currency conversion and subsequent wage pressure deprived industry in the east of one of its few advantages, low labour costs. The favourable exchange rate and relatively high wages and salaries did, on the other hand, help achieve a sociopolitical goal—encouraging eastern Germans to remain in the east rather than migrating to the west, where people feared being overwhelmed by migrants. There were commercial bankruptcies in eastern Germany, and the eastern economy was further decimated by the tendency of easterners to buy the better-presented and technically superior consumer goods from western Germany or abroad rather than the generally drab products of eastern German industry; by the end of the decade, however, high-quality goods produced in eastern Germany bolstered the economy, and there was a wave of regional consciousness that favoured the patronage of local products. | |||
Economic unification caused particularly severe hardships for eastern German workers; unemployment rose sharply and industrial output fell by two-thirds in the years after unification. Decline was greatest in the food-processing sector, metallurgy, building materials, machinery and vehicles, electronics and related equipment, and textiles. Eastern German agriculture also was devastated, with employment dropping by some three-fourths. Although the eastern economy later rebounded, at the beginning of the 21st century more than one-sixth of its labour force was unemployed—more than double the rate for western Germany. Unemployment also rose disproportionately for women. As a result of job losses, migration from east to west continued throughout the 1990s and into the early 21st century. | |||
The slowness of economic recovery in eastern Germany was the result of a variety of factors. The haste of change, especially regarding the currency conversion and the breakup of the great industrial combines, and the fact that East Germany had no effective government for a period of three months following the economic union in July 1990 hampered economic reconstruction efforts. Even after political unification, progress was disappointing. Firms removed from ministerial control and transformed into limited companies found themselves unable to compete in the free market, burdened not only with outdated plants but with debt, because the East German government had appropriated their profits while requiring them to borrow their capital. The federal government had assumed that the reconstruction of eastern German industry would essentially come about by the takeover of plants by Western, predominantly western German, firms. In reality, however, the Treuhandanstalt set up to dispose of some 10,000 formerly nationalized firms made extremely slow progress, partly as a result of an excessively legalistic approach and partly because of the shortage of experienced administrators afflicting the reconstituted public service in the east. Western German firms were under no great financial pressure to move in, and, with the help of the additional labour available from eastern German migrants, they expanded production at their existing plants without having to become involved in the difficulties of actually setting up a branch in the east. Protesters warned that eastern Germany was turning into an internal colony; however, this overly pessimistic outlook was exaggerated, and about 1992 some economic revival began to occur. | |||
Land ownership was a significant barrier to establishing plants in eastern Germany. Following the principles of the German constitution, after unification, former owners were assured that they could repossess their property or at least be compensated for their losses. However, this did not apply to property expropriated by the Soviet military administration (1945–47), including many large estates that not everybody would be happy to see returned to their original aristocratic owners. Where a plant had originally been owned by a family or firm in western Germany but had received additional investment from the East German government and had perhaps expanded over land originally in a number of hands, western German firms were deterred from moving in, there being a lack of clear title to ownership. | |||
The production-focused East German communist system had ignored environmental considerations. Firms seeking to take over electrical generation based on brown coal, any part of the chemical industry, or any other plant where dangerous chemicals had been used in processing faced enormous costs in attempting to meet federal government standards. Firms were also discouraged from taking over plants, because the inevitable reductions in surplus labour would involve the payment of unemployment compensation. As a result, the few western German firms setting up in the east preferred to establish a completely new plant on a green-field site, allowing them to avoid these excessive costs. | |||
The federal government initially believed that the costs of unification could be borne by borrowing and without increases in taxation. Despite these assurances by Chancellor Helmut Kohl at the 1990 all-German elections, by 1991 additional taxation was required. If people in the east were disillusioned by the economic results of union, those in the west grew increasingly resentful of the cost of paying for it. | |||
During the 1990s Germany made a number of dramatic changes in its energy sector—e.g., higher taxes, lower subsidies for coal mining, and privatization of huge eastern German energy firms. In 2002 the government passed legislation that stipulated the end of the nuclear power industry by 2022, though in 2010 it extended the deadline into the 2030s. In 2007 it also tentatively planned to phase out coal mining within about a decade. Massive reconstruction projects in the east (Aufbau Ost), funded largely by higher taxes in the west, helped to improve infrastructure in the eastern regions. Telecommunications systems were upgraded, and there were generous subsidies to encourage capital investment. | |||
Quite apart from the costs and problems associated with unification, Germany and its economy faced a number of interrelated problems at the beginning of the 21st century. High unemployment—which regularly exceeded four million people—became the chief political issue. Extremely high wages—among the world’s highest—generous social services, and high taxation also dampened the economy. Unification caused the public debt to grow dramatically, and at the beginning of the 21st century some one-fifth of the annual federal budget went toward interest payments on the accrued national debt. | |||
Although unification was more than a decade old, at the beginning of the 21st century its effects still weighed heavily on the German economy and its political institutions. However, in large measure unification gave way to other issues, such as globalization, the introduction of the euro as the single currency of the EU in 2002, and the enlargement of the EU to central and eastern Europe. Germany’s domestic economic problems and opportunities are complexly bound up with global and regional processes over which it has only varying levels of influence and control—a somewhat unsettling situation for a society that became very prosperous by following accustomed patterns and having firm control of the major levers of its own economy. | |||
*Agriculture, forestry, and fishing | |||
'''AGRICULTURE''' | |||
As in other sectors of the economy, the division of Germany was reflected in a dramatic divergence of agricultural development. West Germany remained essentially a country of small family farms; in the 1980s only about 5 percent of holdings had more than 124 acres (50 hectares), though they accounted for nearly one-fourth of the total agricultural area. By the beginning of the 21st century, however, large farms represented about half of the total agricultural area in western Germany and some two-thirds in eastern Germany. The change in western Germany is reflective of a rationalization of agriculture, with many small landholders leaving farming and the remaining farms often increasing in size. The larger farms in the west are mainly concentrated in Schleswig-Holstein and eastern Lower Saxony, with smaller groupings in Westphalia, the lowland west of Cologne, and southern Bavaria. Small farms predominated in the central and southern parts of West Germany. The process of steady enlargement decreased the total number of holdings by more than three-fourths from 1950 to the end of the 20th century. The number of people employed in agriculture also declined substantially, from about one-fifth of the total workforce in 1950 to less than 3 percent by the end of the 20th century. Wage labourers virtually disappeared from all but the largest farms, and smaller farms were cultivated on a part-time basis. | |||
By contrast, in the east, following conquest by the Soviet army at the end of World War II, many large estates were split up or retained as state farms. From 1952 to 1960 virtually all the small farms in East Germany were united, under strong political pressure, to form agricultural cooperatives. Agricultural production was increasingly concentrated into extremely large specialized units; by the mid-1980s state-run or cooperative crop-producing enterprises averaged more than 11,000 acres (4,450 hectares). Despite a marked decrease in agricultural employees, modern machinery and technological innovation led to increased production. After unification agricultural employment in eastern Germany plunged by about three-fourths. | |||
In areas of high natural fertility, wheat, barley, corn (maize), and sugar beets are the principal crops. The poorer soils of the North German Plain and of the Central German Uplands are traditionally used for growing rye, oats, potatoes, and fodder beets. Technological changes have altered much of the traditional spatial pattern of German agriculture. Sugar beets, formerly confined to deep fertile soils such as the loess lands on the northern fringe of the Central German Uplands, are now much more widespread. With the availability of chemical fertilizers, light soils have become more highly valued because of their suitability for machine cultivation; for example, fodder corn is now widely grown on the North German Plain, replacing potatoes. The two most widespread forms of agricultural land use are cereal cultivation (including corn for its grains) and permanent pasture; both are important sources of animal feed. Dairying formerly was concentrated in the area of mild climate in the northern coastal lowlands and in the Alpine foothills, but it is now widespread in all areas where small farms predominate. East Germany concentrated milk production into vast specialist holdings in arable areas where food was available and urban markets accessible. In both the western and eastern sectors, chickens, eggs, pigs, and veal calves are concentrated into large battery units, divorced from immediate contact with the soil. Besides concern for the plight of the animals under this system of concentrated production, Germans are distressed by the groundwater pollution associated with it. | |||
In the areas surrounding western German cities, crops such as fruits, vegetables, and flowers are grown. The warm lowlands of the southwest favour tobacco and seed corn. They also support vegetables, as do the Elbe marshes south of Hamburg and the marshy Spreewald south of Berlin. Fruit grows abundantly in southern Germany; other important areas of specialization include the “Altes Land” on the Elbe south of Hamburg, the Havel lake country near Potsdam, and the Halle area. Vineyards are located in the west, especially in or near the valleys of the Rhine, Moselle, Saar, Main, and Neckar rivers, although the slopes of the Elbe valley near Dresden also produce wine grapes. | |||
At the time of reunification, western Germany produced some four-fifths of its food requirements, and increased productivity and guaranteed prices resulted in vast surpluses (especially of butter, meat, wheat, and wine). At the beginning of the 21st century, Germany’s production of major agricultural products (e.g., grains, sugar, oils, milk and meat) exceeded domestic consumption, resulting in both exports and continued surpluses. | |||
'''FORESTRY''' | |||
Some three-tenths of Germany’s total land area is covered with forest. In the Central German Uplands and the Alps, forests are particularly plentiful, but they are notably absent from the best agricultural land, such as the loess areas of the North German Plain. The western part of the North German Plain also has little forest cover, but there are substantial wooded stretches farther east. Conifers predominate in the forest area; spruce now accounts for much of the plantings because of its rapid growth and suitability for building purposes and for the production of paper and chipboard. Domestic production covers about half of the demand for wood from temperate forests, but producers face severe competition from Austria, Scandinavia, and eastern Europe. The federal government, states, and municipalities own about half the forest in western Germany, with the remainder in private hands; eastern German forests are primarily publicly owned. | |||
'''FISHING''' | |||
Fishing in western Germany began to decline markedly from the 1970s because of overutilization of traditional fishing grounds and the extension of the exclusive economic zone to 200 miles (320 km) offshore. The greatly reduced deep-sea fleet now uses freezer vessels and accompanying catchers; Bremerhaven, Cuxhaven, and Hamburg are the home ports and processing centres. During the 1990s, high-seas catches by German fishermen declined by about half. The North Sea herring fishery has almost disappeared, and now the German appetite for pickled herring is satisfied mainly by imports. There are well over 100 fishing ports on the North Sea and Baltic coasts. Fishing for shrimp and mussels is important on the mud flats fringing the North Sea. Prior to unification East Germany had a substantial deep-sea fishing fleet, but most of it has since been scrapped; its shore base for fish processing was at Sassnitz on the island of Rügen. | |||
*Resources and power | |||
Germany, which has relatively few domestic natural resources, imports most of its raw materials. It is a major producer of bituminous coal and brown coal (lignite), the principal fields of the latter being west of Cologne, east of Halle, south and southwest of Leipzig, and in Lower Lusatia in Brandenburg. Other minerals found in abundance are salt and potash, mined at the periphery of the Harz mountains. The mining of most metallic minerals ceased for economic reasons in western Germany before unification; in the 1990s the centuries-old mining and processing of copper ores in the Mansfeld area of eastern Germany and the mining and processing of uranium ores for the benefit of the Soviet Union in the Ore Mountains also stopped. There are small reserves of oil and natural gas in northern Germany. | |||
As in all industrialized countries, water supply is a constant problem. The filtration of water on riverbanks (e.g., those of the Rhine) is one source. It is supplemented by reservoirs in the uplands. For example, the Harz mountains provide water to much of the North German Plain as far as Bremen, and the Ore Mountains supply the central German industrial region. | |||
Oil is Germany’s principal source of energy. As domestic production is quite limited, most crude oil is imported. Many petroleum products also are imported, transported from Rotterdam by product lines, barges, and rail. Until the mid-1950s the refining of oil took place at the coast, notably at Hamburg and Rotterdam; however, refineries have been developed at inland locations close to markets, mostly on rivers such as the Rhine and Danube, which are served by pipelines from Wilhelmshaven, Rotterdam (Netherlands), Lavéra (near Marseille, France), Genoa (Italy), and Trieste (Italy). Eastern Germany receives oil delivered by pipeline from Russia to a refinery at Schwedt on the Oder, which supplies the central German industrial region; there is also a pipeline from Rostock that provides industry with oil. German supplies of natural gas are significant, but most gas is imported. Principal sources are the Friesian and North Sea fields of the Netherlands and the Norwegian North Sea. Gas is imported from Russia via a pipeline from the Czech Republic, with a branch serving eastern Germany and Berlin. | |||
Bituminous coal, Germany’s second most important source of energy, is available from the Ruhr field and from the smaller Saar, Aachen, and Ibbenbüren fields, though extraction is costly and often subsidized. In the last half of the 20th century, however, output shrank by some two-thirds. Coal now has two major uses: the generation of electricity and the production of metallurgical coke. A striking feature of the German economy is the significance of brown coal (lignite). This low-grade, waterlogged fuel can be worked economically in vast open pits, which are mined with massive machines. About seven-eighths of all the coal is fed straight to electric-power generating stations that are situated on the field itself. A relatively small quantity of the coal is pressed into briquettes for domestic heating. Electricity generation is also the principal use of the main fields in eastern Germany; however, during partition lignite was a major basis of the chemical industry as well as a source of gas and briquettes for urban consumption. After unification many eastern German pits closed, particularly those producing the most sulfurous coal. The shortfall in energy output led the federal government to subsidize additional imports of gas from Russia. | |||
The largest producers of electric energy are the thermal plants that are located primarily in the Ruhr and the Rhenish brown-coal fields and in the brown-coal fields of the east, especially in Lower Lusatia. During partition all western German plants were required to significantly reduce the emissions of the dust, sulfur dioxide, and nitrogen oxide formerly emitted into the atmosphere. Plants in the east were not similarly regulated and thus contributed to general atmospheric pollution; after unification a number of them were closed and others were upgraded. | |||
Nuclear power plants rival thermal plants in significance. In western Germany they are typically located on the coast or on rivers far from the coalfields. Plants in eastern Germany, built on the Soviet (Chernobyl) model, were closed for safety reasons. At the turn of the 21st century the German government committed to phasing out all the country’s nuclear power plants. In 2010, however, claiming that nuclear plants would be necessary until renewable energy technologies became sufficiently productive, the government extended the life span of the country’s existing plants. That plan was quickly abandoned in the wake of the 2011 Fukushima nuclear accident in Japan, and Germany’s remaining plants were scheduled to be shut down by 2022. | |||
The canalization of such rivers as the Main, Neckar, and Moselle, together with hydroelectric power plants in the Alps, produce relatively minor amounts of electric power; pumped storage schemes in mountain areas are important in meeting peak electricity demands. Before unification, East and West Germany had distinct transmission grids without interconnection. The West German network was linked to that of neighbouring countries, allowing it to import surplus power from the French nuclear system and, during the Alpine snow melt, especially from Austria. West Berlin formerly was forced to generate its own power, adding to urban pollution. The eastern and western German grids were connected in the 1990s, and West Berlin was connected to the network in 1994. | |||
*Manufacturing | |||
Industrial employment in western Germany declined steadily from a postwar peak. However, deindustrialization was not as precipitous in Germany as it was in some other European countries. Western German industry benefited from the willingness of banks to take a long-term view on investment and of the federal government to underwrite research and development. German industrial products are viewed with great prestige on world markets and are in strong demand overseas. By contrast, unification revealed that most of eastern German industry was incapable of competing in a free market. | |||
Germany is one of the world’s leading manufacturers of steel, with production concentrated in the Ruhr region; however, since the peak output of the early 1970s, a number of plants have closed. (The steel industry in eastern Germany was largely abandoned after unification, though some production was reestablished at a renovated plant at Eisenhuettenstadt.) Germany’s principal industries include machine building, automobiles, electrical engineering and electronics, chemicals, and food processing. Automobile manufacturing is concentrated in Baden-Württemberg, Lower Saxony, Hessen, North Rhine–Westphalia, Bavaria, the Saarland, and Thuringia. Leading automobile manufacturers in Germany include Audi, BMW, Daimler AG (formerly Daimler-Benz and DaimlerChrysler), Ford, Opel, and Volkswagen. Following unification, production of the environmentally unfriendly Trabant and Wartburg cars in eastern Germany ceased. Volkswagen, Opel, and Daimler-Benz were quick to establish assembly or parts production in the east. Shipbuilding, once a major industry, has declined significantly. | |||
Since the late 19th century Germany has been a world leader in the manufacture of electrical equipment. As the home of internationally known firms such as Siemens, AEG, Telefunken, and Osram, Berlin was the industry’s principal centre until World War II, after which production was largely transferred to Nürnberg-Erlangen, Munich, Stuttgart, and other cities in southern Germany. The output of these centres made Germany one of the world’s leading exporters of electrical and electronic equipment. | |||
In East Germany electrical and electronic production was concentrated in East Berlin, with Dresden forming a second important centre. The country was a major supplier of equipment (e.g., computer-controlled robots) to the communist world. Although eastern German plants were outdated in comparison with those in the west, both Dresden and Erfurt achieved some success in developing microelectronics production following unification. | |||
With the discovery of synthetic dyestuffs in the late 19th century, Germany became a world leader in the chemical industry. Most of the western German chemical industry is concentrated along the Rhine or its tributaries, notably in Ludwigshafen, Hoechst (near Frankfurt), and Leverkusen (together with a row of other plants along the Rhine in North Rhine–Westphalia). Chemical plants also operate in the Ruhr region. The majority of East German chemical plants were on the two brown-coal fields of Lower Lusatia and Halle-Leipzig; after unification some plants were closed because of environmental reasons, and others were upgraded. | |||
Germany is also particularly strong in the field of optical and precision industries. The once-mighty textile industry has suffered from overseas competition but is still significant. Principal centres are in North Rhine–Westphalia (Mönchen-Gladbach, Wuppertal) and southern Germany. After unification many textile plants were closed in eastern Germany, where employment in the sector plunged by some nine-tenths. | |||
*Finance | |||
'''THE CENTRAL BANKING SYSTEM''' | |||
Germany’s central bank, the Deutsche Bundesbank, is headquartered in Frankfurt am Main, which is the country’s main financial centre and also the base of the European Central Bank, the EU’s chief financial institution. Before the circulation of the euro, the common currency of the EU, in 2002, the Bundesbank issued the deutsche mark (the country’s former currency) and oversaw its circulation. As the EU’s most powerful national central bank, the Bundesbank played a pivotal role in the planning of and preparation for the euro. One of its primary roles now is to implement the monetary policies of the European System of Central Banks to help maintain the euro’s stability. | |||
Upon the establishment of the Bundesbank, its preeminent characteristic was its independence from government control, instituted to prevent a recurrence of the severe inflation experienced in 1922–23, when the government resorted to the printing press for finance. The federal bank maintained a policy of careful control of credit and concern for the international exchange rate of the deutsche mark, which had made West Germany the leading financial power in post-World War II Europe. The Bundesbank demonstrated its genuine independence in 1991 when it insisted that additional government expenditure for the eastern sector be covered by unwelcome tax increases rather than by borrowing. Individual Land (state) central banks are the Bundesbank’s representatives at state level. | |||
'''THE PRIVATE BANKING SECTOR''' | |||
There are hundreds of commercial banks, of which the most important are the Deutsche Bank, the KfW Bankengruppe, and the Commerzbank, though mergers have tended to shrink the number of major banks. Apart from conducting normal banking business, German banks provide financing for private businesses. As a result, the stock exchanges in Frankfurt, Düsseldorf, and other cities are less influential in providing finance for industry than parallel institutions in other countries. | |||
'''PUBLIC AND COOPERATIVE INSTITUTIONS''' | |||
Germany has several types of public financial institutions, including credit and personal checking institutions and cooperative banks. Under public law, credit institutions operate as savings banks, and the state banks act as central banks and clearinghouses for the savings banks and focus on regional financing. The state-owned Kreditanstalt für Wiederaufbau (“Development Loan Corporation”) channels public aid to developing countries. | |||
The cooperative banks are headed by the DZ Bank (Deutsche Zentral-Genossenschaftsbank, or “German Central Cooperative Bank”), which serves as a central bank for some 1,500 industrial and agricultural credit cooperatives.There are also public and private mortgage banks, installment credit institutions, and the now-privatized postal check and postal savings systems, which were once operated by the federal postal service. | |||
In East Germany the state bank was subordinate to the Ministry of Finance and designed to be a tool of central planning. It was part of a unified system that embraced not only central and local government but also banks, insurance companies, and industries, all of which were directed in their use of funds. | |||
With economic union on July 1, 1990, East Germany came under the central banking system of the Deutsche Bundesbank, which effected the conversion of the eastern system to the West German mark. Progressively, the western German commercial banks, insurance companies, and all the other financial institutions moved in. The ruined East German economy, the unemployment assistance fund, and the bankrupt state and local administrations all required massive financial transfusions from the federal government and the West German states. In stages, consumer subsidies have been removed, while wages, social insurance payments, and taxes have been progressively raised toward western levels. | |||
*Trade | |||
One of the world’s leading exporters, Germany has consistently maintained a surplus with its trading partners. More than half of its trade is with members of the EU. Germany’s principal export markets are France, the United States, the United Kingdom, Italy, and the Netherlands. Trade with eastern and central Europe has increased, and Germany has replaced the former Soviet Union and Russia as the primary trading partner for most countries in the region. Major exports include transport equipment (including automobiles), electrical machinery, and chemicals, as well as some food products and wine. Imports fall into remarkably similar categories, but in addition they include raw materials and semifinished products for industry. Germany’s major sources of imports include France, the Netherlands, Italy, the United States, the United Kingdom, and Belgium. | |||
Before unification East Germany specialized as a supplier of advanced industrial equipment, electronics, ships, and rail rolling stock to the communist bloc countries. Following economic unification, the countries of the former communist bloc were virtually unable to pay for equipment in hard currency, with disastrous consequences for eastern German industry. However, unlike the other former communist countries, eastern Germany, as part of united Germany, automatically received the benefits of full EC membership, though its factories also immediately faced overwhelming competition from western producers. | |||
*Services | |||
As is the case in many other countries with an advanced economy, Germany’s service sector (i.e., trade, transport, banking, finance, and administration) is a leading employer. This is abundantly clear in urban centres throughout western Germany, with their concentration of retailing, banking, and insurance. The transformation of eastern Germany along these lines is in progress, and the sector’s importance has grown considerably there. For example, while the economies of most eastern and western German states were still dominated by manufacturing in the early 1990s, by the end of the decade a majority of states, and the country as a whole, had economies with a higher level of output by private firms providing services (even excepting trade and transport, which are categorized separately). In short, the German economy, for years one of the world’s most manufacturing-oriented economies, has become dominated by services. This is particularly well illustrated by Berlin, where manufacturing’s importance has declined sharply; indeed, the city has become an increasingly significant centre for both public and private international and national service-sector institutions. | |||
Although foreign tourism to Germany is substantial, receipts from German tourists abroad exceed the receipts from foreign visitors to the country. In comparison with many of its neighbours, Germany does not rely heavily on tourism for income. The Alps and the Rhine and Moselle valleys are leading destinations, though urban areas (e.g., Frankfurt, Munich, and Berlin) also attract many visitors, and local festivals in places such as Bayreuth also entice tourists. Tourism to eastern Germany, particularly to the beaches along the Baltic Sea, has increased significantly since unification. | |||
*Labour and taxation | |||
Germany’s highly urban and industrialized character is reflected in its employment patterns. Services, including trade and finance, account for the largest share of employment. At the turn of the 21st century, about one-fifth of workers were employed in manufacturing, and just over 2 percent were employed in agriculture-related industries. | |||
Prior to World War II most German labour unions were organized along partisan lines. After the war, however, trade unions were reconstituted to represent an entire industrial branch rather than simply a single trade or skill, thus avoiding interunion jostling within plants, and an independent German Trade Union Federation (Deutscher Gerwerkschaftsbund; DGB), which represents nearly all the country’s unionized industrial employees, was established. The federation is an agglomeration of mostly blue-collar unions (though there are some white-collar unions), the largest of which are the United Service Industries Union (Vereinte Dienstleistungsgewerkschaft), the Metalworkers’ Union (IG Metall), the Public Services and Transport Workers’ Union (Gewerkschaft Nahrung-Genuss-Gastätten), the Mining, Chemical, and Energy Union (Industriewerkschaft Bergbau, Chemie, Energie), and the Federation of Civil Servants (DBB–Beamtenbund und Tarifunion). | |||
Although Germany’s social economy allows collective bargaining, unions are generally viewed as partners rather than opponents of business. The common interests of management and labour are expressed in works councils. Labour also has a right of codetermination (Mitbestimmungsrecht) through representation on managerial boards. About one-third of all German workers belong to a trade union. German’s average labour costs are among the highest in the world. | |||
Taxes are the major source of revenue for all levels of government. Five types of taxes—value-added, wage, assessed income, energy, and corporate—account for nearly four-fifths of all revenues. The federal government and the states each receive more than two-fifths of the principal taxes, leaving the remainder for local councils. A host of lesser taxes are specific to either the federal level (such as the tax on tobacco and alcohol and customs duties), the states (tax on beer and motor vehicle licenses), or the local authorities (tax on real estate, trade, and public entertainment). The states also benefit from property taxes. Because the taxing potential of the states is unevenly distributed, the economically weaker or smaller states share in the tax revenue of the richer or more populous states through a process of “horizontal financial equalization,” which became an especially controversial matter after unification, when the poorer eastern German states became entitled to subsidies from western Germany. The federal corporate tax rate is about 25 percent, and, when local taxes are included, the overall tax burden reaches about 40 percent. Germany imposes a value-added tax of 16 percent to most goods and services. To spur economic growth, the German government reduced personal and business taxes in the late 1990s. | |||
The federal government is obligated to transmit certain revenues to the EU. Germany’s disproportionately large payments to the EU have become a significant domestic and EU-wide political issue. As one of the world’s richest countries, Germany feels obliged to supplement its regular contributions to the United Nations with complex international aid programs of its own. | |||
*Transportation and telecommunications | |||
Germany has a dense network of communication facilities. Its geographic location in the heart of Europe also makes Germany responsible for facilitating the transit traffic serving neighbouring countries. | |||
'''WATERWAYS''' | |||
The Rhine has the great advantage of having a remarkably even flow, with a spring-summer high water from the Alpine snowmelt supplemented by autumn-winter rains in the Central German Uplands. It is navigable from its mouth to above Basel, Switzerland, with the support in its upper course of the French Grand Canal d’Alsace. Typically, river transport is accomplished by using push units propelling several barges. Since World War II the Rhine tributaries have been opened up for travel and transport. Navigation on the Moselle has been improved to the Saar region and Lorraine, on the Neckar to Stuttgart, and on the Main to provide a major European link to the Danube. Canals through the Ruhr region allow access to the northern German ports of Emden, Bremen, and Hamburg; waterway connections eastward to Berlin were once inadequate, especially at the crossing of the Elbe, but are being improved. | |||
SEAPORTSHamburg, which handles some one-third of the overall tonnage by weight, is Germany’s principal port, accommodating the largest share of containers, as well as various ores and a wide range of general cargo. But because the largest tankers can no longer reach the Hamburg refining centre, Wilhelmshaven has become the prime destination for Germany’s oil imports, as well as a major port in general. The Weser ports (Bremen and Bremerhaven) also handle a significant amount of total tonnage and containers; Bremen has an important general cargo trade. Although Hamburg, the Weser ports, and Emden are able to transship heavy goods to the interior by waterway, they play a less important role in this area than Rotterdam (in the Netherlands) and other ports located at the mouth of the great Rhine waterway and closer to the Rhine-Ruhr area than the northern German ports are. Because the Elbe River leads to the port of Hamburg in what was West Germany and the Oder River to Szczecin (Stettin) in Poland, East Germany developed a new deep-sea port at Rostock, which was served by motorway and rail but had no waterway link. Some commodities needing fast service continued to arrive at special East German quays at Hamburg. Hamburg has regained much of its former Elbe trade since unification, but Rostock remains busy. Ferries for passengers, road vehicles, or railcars link Germany with Scandinavian destinations. | |||
'''RAILWAYS''' | |||
During the country’s partition, the rail system was divided as well. In West Germany the Deutsche Bundesbahn (German Federal Railroad) reconstructed the old system, converting it to electric and diesel traction. The configuration of the country placed the emphasis on north-south routes. The burdened Rhine valley lines and the difficult routes through Hessen were augmented by a superbly engineered (and extremely expensive) high-speed track that permitted speeds up to 155 miles (250 km) per hour. | |||
East Germany retained the old name of Deutsche Reichsbahn (“German Imperial Railroad”) for its system. Postwar reconstruction was slow, with efforts centring on rail links with the country’s eastern European neighbours and the port of Rostock. The once-important east-west routes across the inner-German boundary were either removed or neglected. The Berlin outer-ring railroad was completed, enabling mainline and local traffic to avoid West Berlin. Unification revealed the dilapidated state of the system. Within Berlin, the trains, buses, and trams of the public transport were totally divided. Yet, when the border reopened, both the S-Bahn (Stadtbahn), an elevated railway system, and the U-Bahn (Untergrundbahn), the subway, were immediately able to resume service from east to west. (Two U-Bahn lines had continued to cross through areas of East Berlin but were not permitted to make stops at intermediate stations.) | |||
A lengthy and costly process of fully restoring a unified system, both within Berlin and nationally, began in late 1989 and resulted in significant progress for eastern Germany’s railway network. Deutsche Bundesbahn and Deutsche Reichsbahn were officially merged under the name Deutsche Bahn in 1994. The railway operated under state ownership into the 21st century, although plans were made to privatize at least a portion of it. High-speed passenger rail service now links major German urban centres with one another and with other European destinations. | |||
'''HIGHWAYS''' | |||
Germany’s first high-speed roadway was actually a closed-circuit experimental racetrack that covered some 12 miles (19 km) near Berlin. Unveiled in 1921, this proto-autobahn inspired several other countries to follow with their own versions of high-speed expressways. In the 1930s Hitler exploited the autobahn for economic, military, and propaganda purposes, but during World War II this German innovation—regarded as a model for modern expressways—was battered. The West German government greatly extended the system from 700 miles (1,125 km) in 1950 to more than 5,000 miles (8,000 km) by the time of unification. With powerful German automobiles able to cruise at their top speeds without speed limits, the autobahn gained an aura of automobile-centred romanticism throughout the world in the second half of the 20th century. However, road construction has encountered serious opposition from the country’s environmentalist movement, and in inhabited areas the roads sometimes have been narrowed rather than widened to reduce traffic speed. Because the growth of the system has been slower than the growth of traffic, congestion is a serious problem, especially on motorways in industrial areas. Attempts to divert shipment of goods to the railways have not prevented a steady rise in the transport of goods by road. The current length of the entire network is more than 7,400 miles (12,000 km), making it the third largest system in the world, after those of the United States and China. Western German motorways have direct transfrontier connections with the similar systems of Denmark, the Netherlands, Belgium, France, and Austria. | |||
With a lower growth rate of motor traffic (and an official policy of giving preference to the railroads), postwar construction of motorways was less advanced in East Germany. There were some improvements in central Germany, and new links to the ports of Rostock and Hamburg were constructed. The Berliner Ring, a circle of expressways around the city, was completed in 1979. With reunification, many transboundary roads were reopened and road surfaces improved. However, the construction of new roads has been hindered by conflicts between those seeking greater accessibility for automobiles and those seeking to protect the landscape and reduce air pollution. | |||
'''AIR TRANSPORT''' | |||
Germany’s major long-distance airline is Lufthansa, though there also are a number of other carriers that service European and North American destinations. Frankfurt’s airport, one of the world’s busiest, is the country’s largest. Airports in Düsseldorf, Munich, and Berlin (Tegel) are also of major importance. During the period of partition, passenger traffic from West Germany to West Berlin was restricted to the airlines of France, the United Kingdom, and the United States. After unification Berlin was opened to German carriers and indeed to carriers of other countries. East Germany had discouraged internal air traffic and the growth of regional airports, using the rail and Berlin subway systems to serve its major international airport, Berlin-Schönefeld, south of the city. During the late 1990s, expansion of Schönefeld began. The expanded Schönefeld would, upon its completion, be renamed Berlin Brandenburg Airport. With the closing of Templehof Airport in 2008 and the planned closing of Tegel, Berlin Brandenburg was scheduled to become Berlin’s only commercial airport by 2011. However, planning errors, cost overruns, and mismanagement led to massive delays in the completion of Berlin Brandenburg, and the airport’s opening was pushed back to late 2017. Tegel remained open in the interim. | |||
'''TELECOMMUNICATIONS''' | |||
After World War II West Germany developed an advanced telecommunications system. By contrast, the East German telephone system was completely insufficient; people requesting a telephone often were faced with a wait of up to 12 years. The deficiencies of the telecommunications system were a major impediment to the restructuring of the administration and the economy following unification, but by the late 1990s rapid reconstruction of the system using current technology made eastern Germany a world leader in advanced telecommunications infrastructure. | |||
The leading German telecommunications company is Deutsche Telekom AG. During the late 1990s the entire sector was liberalized, increasing the number of telecommunications firms and competition for Deutsche Telekom from companies such as Vodafone and Telefónica Germany. The adoption of telecommunications services by German consumers has been widespread, particularly for cellular services. By the second decade of the 21st century, cellular subscriptions outnumbered people in Germany by a ratio of more than 1.25 to 1. By 2013 almost 85 percent of the population used the Internet regularly. | |||
==Government of Germany== | ==Government of Germany== | ||
Revision as of 14:46, 8 September 2015
Berlin • Hamburg • Munich • Cologne • Frankfurt • Dortmund • Stuttgart • Dusseldorf • Essen • Bremen • Hanover • Duisburg • Nuremberg • Leipzig • Dresden •
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THE GEMANY COAT OF ARMS
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 Location of Germany within the continent of Europe | |||
 Map of Germany | |||
 Flag Description of Germany:The Germany flag was officially adopted on May 23, 1949. It was used by West Germany when the country divided itself into East and West. Note that both were reunited into one nation in 1990. The tricolore flag was designed in 1832, and the black, red and gold colors were taken from the uniforms of German soldiers during the Napoleonic Wars. | |||
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Official name Bundesrepublik Deutschland (Federal Republic of Germany)
Form of government federal multiparty republic with two legislative houses (Bundesrat, or Federal Council [691]; German Bundestag, or Federal Assembly [6312])
Head of state President: Joachim Gauck
Head of government Chancellor: Angela Merkel
Capital Berlin3
Official language German
Official religion none
Monetary unit euro (€)
Population (2013 est.) 80,667,000COLLAPSE
Total area (sq mi) 137,879
Total area (sq km) 357,104
Urban-rural population Urban: (2008) 84.1%
Rural: (2008) 15.9%
Life expectancy at birth Male: (2008–2010) 77.9 years
Female: (2012) 82.6 years
Literacy: percentage of population age 15 and over literate Male: 100%
Female: 100%
GNI per capita (U.S.$) (2014 est.) 80,906,000
1All seats appointed by local government.
2Current number of seats; statutory number is 598.
3Some ministries remain in Bonn. The federal supreme court meets in Karlsruhe.
About Germany
As Europe's largest economy and second most populous nation (after Russia), Germany is a key member of the continent's economic, political, and defense organizations. European power struggles immersed Germany in two devastating World Wars in the first half of the 20th century and left the country occupied by the victorious Allied powers of the US, UK, France, and the Soviet Union in 1945. With the advent of the Cold War, two German states were formed in 1949: the western Federal Republic of Germany (FRG) and the eastern German Democratic Republic (GDR). The democratic FRG embedded itself in key Western economic and security organizations, the EC, which became the EU, and NATO, while the communist GDR was on the front line of the Soviet-led Warsaw Pact. The decline of the USSR and the end of the Cold War allowed for German unification in 1990. Since then, Germany has expended considerable funds to bring Eastern productivity and wages up to Western standards. In January 1999, Germany and 10 other EU countries introduced a common European exchange currency, the euro.
Germany also is officially Federal Republic of Germany, German Deutschland or Bundesrepublik Deutschland, country of north-central Europe, traversing the continent’s main physical divisions, from the outer ranges of the Alps northward across the varied landscape of the Central German Uplands and then across the North German Plain.
One of Europe’s largest countries, Germany encompasses a wide variety of landscapes: the tall, sheer mountains of the south; the sandy, rolling plains of the north; the forested hills of the urbanized west; and the plains of the agricultural east. At the spiritual heart of the country is the magnificent east-central city of Berlin, which rose phoenixlike from the ashes of World War II and now, after decades of partition, is the capital of a reunified Germany, and the Rhine River, which flows northward from Switzerland and is celebrated in visual art, literature, folklore, and song. Along its banks and those of its principal tributaries—among them the Neckar, Main, Moselle, and Ruhr—stand hundreds of medieval castles, churches, picturesque villages, market towns, and centres of learning and culture, including Heidelberg, the site of one of Europe’s oldest universities (founded in 1386), and Mainz, historically one of Europe’s most important publishing centres. All are centrepieces of Germany’s thriving tourist economy, which brings millions of visitors to the country each year, drawn by its natural beauty, history, culture, and cuisine (including its renowned wines and beers).
The name Germany has long described not a particular place but the loose, fluid polity of Germanic-speaking peoples that held sway over much of western Europe north of the Alps for millennia. Although Germany in that sense is an ancient entity, the German nation in more or less its present form came into being only in the 19th century, when Prussian Prime Minister Otto von Bismarck brought together dozens of German-speaking kingdoms, principalities, free cities, bishoprics, and duchies to form the German Empire in 1871. This so-called Second Reich quickly became Europe’s leading power and acquired colonies in Africa, Asia, and the Pacific. That overseas empire was dismantled following Germany’s defeat in World War I and the abdication of Emperor William II. Economic depression, widespread unemployment, and political strife that verged on civil war followed, leading to the collapse of the progressive Weimar Republic and the rise of the Nazi Party under Adolf Hitler. After gaining power in 1933, Hitler established the Third Reich and soon thereafter embarked on a ruinous crusade to conquer Europe and exterminate Jews, Roma (Gypsies), homosexuals, and others.
The Third Reich disintegrated in 1945, brought down by the Allied armies of the United States, the United Kingdom, the Soviet Union, France, and other countries. The victorious powers divided Germany into four zones of occupation and later into two countries: the Federal Republic of Germany (West Germany) and the German Democratic Republic (East Germany), separated for more than 40 years by a long boundary. In East Germany this boundary was, until the fall of its communist government in 1989, marked by defenses designed to prevent escape. The 185 square miles (480 square km) of the “island” of West Berlin were similarly ringed from 1961 to 1989 by the Berlin Wall running through the city and by a heavily guarded wire-mesh fence in the areas abutting the East German countryside. Although Berlin was a flashpoint between the United States and the Soviet Union during the Cold War, the city declined in national and international significance until 1989–90, when a popular and peaceful uprising toppled the East German government and soon after restored a united Berlin as the capital of a reunified Germany.
Since World War II, Germany has made great efforts to both commemorate the victims and redress the crimes of the Holocaust, providing strong material and political support for the state of Israel and actively prosecuting hate crimes and the propagation of neo-Nazi doctrine; the latter became an issue in the 1990s with the rise in Germany of anti-immigrant skinhead groups and the availability of Hitler’s Mein Kampf over the Internet. Clearly, modern Germany struggles to balance its national interests with those of an influx of political and economic refugees from far afield, especially North Africa, Turkey, and South Asia, an influx that has fueled ethnic tensions and swelled the ranks of nationalist political parties, particularly in eastern Germany, where unemployment was double that of the west.
The constitution of the republic, adopted in 1949 by West Germany, created a federal system that gives significant government powers to its constituent Länder (states). Before unification there were 11 West German Länder (including West Berlin, which had the special status of a Land without voting rights), but, with the accession of East Germany, there are now 16 Länder in the unified republic. The largest of the states is Bavaria (Bayern), the richest is Baden-Württemberg, and the most populous is North Rhine–Westphalia (Nordrhein-Westfalen).
Matters of national importance, such as defense and foreign affairs, are reserved to the federal government. At both the state and federal levels, parliamentary democracy prevails. The Federal Republic has been a member of the North Atlantic Treaty Organization (NATO) since 1955 and was a founding member of the European Economic Community (see European Union). During the four decades of partition, the Federal Republic concluded a number of agreements with the Soviet Union and East Germany, which it supported to some extent economically in return for various concessions with regard to humanitarian matters and access to Berlin. West Germany’s rapid economic recovery in the 1950s (Wirtschaftswunder, or “economic miracle”) brought it into a leading position among the world’s economic powers, a position that it has maintained.
Much of Germany’s post-World War II success has been the result of the renowned industriousness and self-sacrifice of its people, about which novelist Günter Grass, winner of the Nobel Prize for Literature in 1999, remarked, “To be a German is to make the impossible possible.” He added, more critically,
For in our country everything is geared to growth. We’re never satisfied. For us enough is never enough. We always want more. If it’s on paper, we convert it into reality. Even in our dreams we’re productive.
This devotion to hard work has combined with a public demeanour—which is at once reserved and assertive—to produce a stereotype of the German people as aloof and distant. Yet Germans prize both their private friendships and their friendly relations with neighbours and visitors, place a high value on leisure and culture, and enjoy the benefits of life in a liberal democracy that has become ever more integrated with and central to a united Europe.
Geography of Germany
Land
Germany is bounded at its extreme north on the Jutland peninsula by Denmark. East and west of the peninsula, the Baltic Sea (Ostsee) and North Sea coasts, respectively, complete the northern border. To the west, Germany borders The Netherlands, Belgium, and Luxembourg; to the southwest it borders France. Germany shares its entire southern boundary with Switzerland and Austria. In the southeast the border with the Czech Republic corresponds to an earlier boundary of 1918, renewed by treaty in 1945. The easternmost frontier adjoins Poland along the northward course of the Neisse River and subsequently the Oder to the Baltic Sea, with a westward deviation in the north to exclude the former German port city of Stettin (now Szczecin, Poland) and the Oder mouth. This border reflects the loss of Germany’s eastern territories to Poland, agreed to at the Yalta Conference (February 1945), mandated at the Potsdam Conference (July–August 1945) held among the victorious World War II Allies, and reaffirmed by subsequent governments.
The major lineaments of Germany’s physical geography are not unique. The country spans the great east-west morphological zones that are characteristic of the western part of central Europe. In the south Germany impinges on the outermost ranges of the Alps. From there it extends across the Alpine Foreland (Alpenvorland), the plain on the northern edge of the Alps. Forming the core of the country is the large zone of the Central German Uplands, which is part of a wider European arc of territory stretching from the Massif Central of France in the west into the Czech Republic, Slovakia, and Poland in the east. In Germany it manifests itself as a landscape with a complex mixture of forested block mountains, intermediate plateaus with scarped edges, and lowland basins. In the northern part of the country the North German Plain, or Lowland, forms part of the greater North European Plain, which broadens from the Low Countries eastward across Germany and Poland into Belarus, the Baltic states, and Russia and extends northward through Schleswig-Holstein into the Jutland peninsula of Denmark. The North German Plain is fringed by marshes, mudflats, and the islands of the North and Baltic seas. In general, Germany has a south-to-north drop in altitude, from a maximum elevation of 9,718 feet (2,962 metres) in the Zugspitze of the Bavarian Alps to a few small areas slightly below sea level in the north near the coast.
It is a common assumption that surface configuration reflects the underlying rock type; a hard resistant rock such as granite will stand out, whereas a softer rock such as clay will be weathered away. However, this assumption is not always borne out. The Zugspitze, for example, is Germany’s highest summit not because it is composed of particularly resistant rocks but because it was raised by the mighty earth movements that began some 37 to 24 million years ago and created the Alps, Europe’s highest and youngest fold mountains. Another powerful force determining surface configuration is erosion, mainly by rivers. In the Permian Period (some 290 million years ago) an earlier mountain chain—the Hercynian, or Variscan, mountains—had crossed Europe in the area of the Central German Uplands. Yet the forces of erosion were sufficient to reduce these mountains to almost level surfaces, on which a series of secondary sedimentary rocks of Permian to Jurassic age (about 300 to 145 million years old) were deposited. The entire formation was subsequently fractured and warped under the impact of the Alpine orogeny. This process was accompanied by some volcanic activity, which left behind not only peaks but also a substantial number of hot and mineral springs. Dramatic erosion occurred as the Alpine chains were rising, filling the furrow that now constitutes the Alpine Foreland. The pattern of valleys eroded by streams and rivers has largely given rise to the details of the present landscape. Valley glaciers emerging from the Alps and ice sheets from Scandinavia had some erosive effect, but they mainly contributed sheets of glacial deposits. Slopes outside the area of the actual ice sheets—those under tundra conditions and unprotected by vegetation—were rendered less steep by the periglacial slumping of surface deposits under the influence of gravitation. Winds blowing over unprotected surfaces fringing the ice sheets picked up fine material known as loess; once deposited, it became Germany’s most fertile soil-parent material. Coarser weathered material was carried into alluvial cones and gravel-covered river terraces, as in the Rhine Rift Valley (Rhine Graben).
The detailed morphology of Germany is significant in providing local modifications to climate, hydrology, and soils, with consequent effects on vegetation and agricultural utilization.
- Relief
- THE CENTRAL GERMAN UPLANDS
Geographically, the Central German Uplands form a region of great complexity. Under the impact of the Alpine orogeny, the planed-off remnants of the former Hercynian mountains were shattered and portions thrust upward to form block mountains, with sedimentary rocks preserved between them in lowlands and plateaus. The Central German Uplands may be divided into three main parts: a predominantly lowland country in the south, an arc of massifs and plateaus running from the Rhenish Uplands to Bohemia, and a fairly narrow northern fringe, composed of folded secondary rocks.
- SOUTHERN GERMANY
In southern Germany Hercynian massifs are of restricted extent. The Black Forest (Schwarzwald) was once continuous with the Vosges massif in what is now France, but they were broken apart through the sinking of a central strip to form the Rhine Rift Valley, which extends 185 miles (300 km) in length. The Black Forest reaches its greatest elevation at Mount Feld (Feldberg; 4,898 feet [1,493 metres]) in the south and declines northward beneath secondary sediments before rising to the smaller Oden Forest. For the most part, however, southern Germany consists of scarplands, mainly of Triassic age (about 250 to 200 million years old). The work of erosion on eastward-dipping strata has left the sandstones standing out as west- or northwest-facing scarps, overlooking valleys or low plateaus of clays or Muschelkalk (Triassic limestone formed from shells). The sequence of Triassic rocks ends south and east against the great Jurassic scarp of the Swabian Alp (Schwäbische Alb), rising to more than 3,300 feet (1,000 metres), and its continuation, the lower Franconian Alp (Fränkische Alb). Large parts of the plateaus and lowlands in the eastern region are covered with loess and are farmed, but the massive Bunter Sandstone fringing the Black Forest and the Keuper scarp are mainly wooded. West of the Rhine there are again wide stretches of forested Bunter Sandstone, with more open country in the Saar region and along the foot of the Hunsrück upland.
- THE BARRIER ARC
The open land of southern Germany ends against a great barrier arc of Hercynian massifs and forested sandstone plateaus. In the west the Rhenish Uplands (Rheinisches Schiefergebirge) consist mainly of resistant slates and shales. The complex block is tilted generally northwestward, with a steep fault-line scarp in the south. The intensely folded rocks are planed off by erosion surfaces that give the massif a rather monotonous appearance, broken only by quartzite ridges, especially in the south, where the Hunsrück rises to 2,684 feet (818 metres) and the Taunus to 2,884 feet (879 metres).
The valleys are quite different. They range from narrow forested slots—a great hindrance to passage—to the spectacular gorge of the Rhine, the most important natural routeway through the barrier arc. The most dramatic section of the gorge runs from Bingen to the vicinity of Koblenz; hilltop castles look down over vineyards to picturesque valley towns. In this section is the Lorelei rock, from which a legendary siren is said to have lured fishermen to their death on the rocks.
Until highways were constructed over the plateau tops, access to the uplands was difficult. The landscape gained some variety from past volcanic activity responsible for the eroded volcanic necks of the Siebengebirge (Seven Hills) near Bonn, the flooded craters and cinder cones of the Eifel Upland, and the sombre basalt flows of the Westerwald. Westward the Rhenish Uplands continue into Belgium as the Ardennes. In the Carboniferous Period (about 360 to 300 million years ago), when the Hercynian uplands were still young folded mountains, great deltaic swamps developed to the north and south; these were the basis of the great Ruhr coalfield and the smaller Aachen and Saar fields.
The eastern end of the barrier arc is buttressed by the great and complex Bohemian Massif, which Germany shares only marginally. On the southwestern fringe of the massif, German territory includes the remote and thinly populated Bohemian Forest and the Bavarian Forest. Along part of the Czech border are the Ore Mountains (Erzgebirge), where the centuries-old mining tradition still continued during the period of the German Democratic Republic before ending in the 1990s. The Bohemian Massif is prolonged northwestward by the long spur of the Thuringian Forest (Thüringer Wald), which separates the scarplands of northern Bavaria from the Thuringian Lowland. The barrier arc is completed by the great eroded cone of the Vogelberg, rising to 2,536 feet (773 metres), the volcanic Rhön mountains, and the forested Bunter Sandstone plateaus of northern Hessen. The Rhine Rift Valley continues northward through Hessen, with a series of discontinuous basins filled with sediments from the Paleogene and Neogene periods (i.e., about 65 to 2.6 million years ago) that allow a slightly difficult traverse to the North German Plain.
- THE NORTHERN FRINGE OF THE CENTRAL GERMAN UPLANDS
North of the upland barrier there are a number of regions, generally of folded limestones, sandstones, and clays, that mark the transition to the expanse of the North German Plain. Balanced on either side of the plateau of Hessen are two basins of subdued scarpland relief, the Westphalian Basin to the northwest and the Thuringian Basin to the southeast, both partially invaded by glacial outwash from the North German Plain. Hessen and the Westphalian Basin are succeeded northward by the hills of Lower Saxony. The breakthrough of the Weser River into the North German Plain at the Porta Westfalica, south of Minden, is overlooked by the giant monument of Emperor William I (built in 1896). North of the Thuringian Basin is one of the smaller Hercynian massifs, the Harz, which reaches an elevation of 3,747 feet (1,142 metres) in the Brocken.
- THE NORTH GERMAN PLAIN
Less than 90 miles (145 km) wide in the west, the North German Plain, or Lowland, broadens eastward across the whole of northern Germany. Although relief is subdued everywhere, the landscape is varied and beautiful. Unconsolidated Paleogene and Neogene deposits, gravels, sands, and clays, with overlying glacial drift, have buried the previous landscape of secondary rocks. These make only two brief appearances, in the chalk cliffs of the island of Rügen in the Baltic Sea and in the cliffs of Triassic Bunter Sandstone of the island of Helgoland, located some 40 miles (65 km) northwest of Cuxhaven in the North Sea. In the Paleogene and Neogene periods large swamps developed, and the underlying deposits of lignite (brown coal) are mined in Saxony, in Lower Lusatia (Niederlausitz), and west of the city of Cologne.
The North German Plain is divided into contrasting eastern and western portions, the division marked approximately by the Elbe valley. The northern and eastern regions were molded by southward-moving ice sheets in the last (Weichsel, or Vistula) glaciation. The advancing ice sheets pushed up material that remains today as terminal moraines, stretching across the country in a generally southeast-to-northwest direction and rising to some 500 feet (150 metres) above the general level. Within the terminal moraines the decay of the ice sheets typically left behind sheets of till (ground moraine). They are studded with ponds, often resulting from the decay of buried “dead ice,” and littered with boulders of all sizes brought by the ice from Scandinavia. In a region otherwise lacking in stone, these boulders were used as building material and are to be found forming the walls of the oldest churches. Outside the moraines, meltwater laid down sheets of outwash sands, which, offering poorer soils, are frequently forested. In the moraine country there are large, long, and branching lake systems, usually believed to have been formed by water moving under the ice sheets.
The unique character of the region east of the Elbe is further enhanced by the fact that the ice sheets of the last glaciation coming from the north blocked the river’s natural flow to the Baltic, forcing it to escape laterally around the margin of the ice toward the North Sea; the river cut a deep trench as it did so. The landscape in the western portion of the plain tends to be monotonous. Much of it was formerly heath; the few patches that have escaped afforestation, agricultural improvements, or damage caused by military training have a wistful beauty, especially when the heather is in bloom. At 554 feet (169 metres), Wilseder Hill (Wilseder Berg), a fragment of a former moraine, is the highest elevation in theLüneburg Heath (Lüneburger Heide), a plateau extending on a morainic belt between Hamburg and Hannover. Toward the maritime northwest, large areas of peat bogs have been reclaimed for agriculture. The southern edge of the plain extending to the Thuringian Basin is marked by a belt of mainly loess, which supports highly productive agricultural activity.
- THE COASTS
The western and eastern coastlines vary considerably in their forms. The coast of the North Sea continues the type familiar in the northern Netherlands; an offshore bar, crowned with sand dunes, has been shattered and left as the chain of the East Frisian Islands off the coast of Lower Saxony and the North Frisian Islands off the Schleswig-Holstein portion of the Jutland peninsula. These islands form a favourite vacation area in summer. The sea has encroached upon the land behind the islands, forming tidal flats (known as Wattenmeer), which become exposed at low tide. The coast is broken by the estuaries of the Elbe, Weser, and Ems rivers and by drowned inlets such as the Jade and Dollart bays. Much of this area is now protected within three adjoining national parks (Schleswig-Holstein, Hamburg, and Lower Saxony Wadden Sea national parks).
Along the Baltic coast, the boulder-clay plains shelve rather tamely beneath the sea. However, the typically varied relief of minor moraines, depressions, and other glacial features gives diversity to the coastline. In Schleswig-Holstein long inlets (fjords), carved by water moving beneath the ice sheets, extend to the sea. Farther east the coast gains in complexity; there are peninsulas and sea inlets known as Bodden, and sandy beach bars dominate the landscape. Several islands line the shore, including Usedom, Hiddensee, Poel, and Rügen, Germany’s largest island.
- THE ALPS AND THE ALPINE FORELAND
Very small portions of the outer limestone (or calcareous) Alps extend from Austria into Germany. From west to east these are the Allgäuer Alps, the Wetterstein Alps—with Germany’s highest mountain, the Zugspitze—and the Berchtesgadener Alps. Like the North German Plain, the Alpine Foreland is fundamentally a depression filled with Paleogene and Neogene gravels, sands, and clays, which are derived from the Alpine orogeny. In contrast to the North German Plain, however, the Paleogene and Neogene deposits are more visible on the surface. Along the foot of the limestone Alps but particularly in the Allgäuer Alps in the west, the older Paleogene and Neogene deposits (flysch, molasse) were caught up in the later stages of the Alpine folding, forming a pre-Alpine belt of hills and low mountains consisting mainly of sandstone. The Paleogene and Neogene sands and clays also emerge at a much lower elevation in the northeast, forming a subdued landscape.
Glaciers emerging from the main Alpine valleys formed lobes stretching some 20 to 35 miles (30 to 55 km) into the plain. Crescentic moraines mark the points where the lobes came to rest; within the moraines are irregular deposits of till and many lakes. Outside the moraines, floodwaters deposited sheets of outwash gravel, which extend as river terraces along the courses of tributaries flowing north to the Danube. The Alps and the Bavarian lakes are among Germany’s most favoured tourist areas.
- Drainage
Most German rivers follow the general north-northwestward inclination of the land, eventually entering the North Sea. The major exception to the rule is the Danube, which rises in the Black Forest and flows eastward, marking approximately the boundary between the Central German Uplands and the Alpine Foreland. The Danube draws upon a series of right-bank Alpine tributaries, which, through reliance on spring and summer snowmelt, make its regime notably uneven. Further exceptions are the Altmühl and the Naab, which follow a southerly direction until becoming north-bank tributaries of the Danube, and the Havel, which flows south, west, and north before emptying into the Elbe River. River flow relates mainly to climate, albeit not in a simple way; for example, in all but Alpine Germany, maximum river flow occurs in winter when evaporation is low, though in the lowlands the peak rainfall is in summer.
The most majestic of the rivers flowing through Germany is the Rhine. It has its source in east-central Switzerland and flows west through Lake Constance (Bodensee), skirting the Black Forest to turn northward across the Central German Uplands. Below Bonn the Rhine emerges into a broad plain, and west of Emmerich it enters The Netherlands to issue into the North Sea. The Rhine belongs to two types of river regimes. Rising in the Alps, it profits first from the extremely torrential Alpine regime, which causes streams to be swollen by snowmelt in late spring and summer. Then, by means of its tributaries—the Neckar, Main, and Moselle (German Mosel)—the Rhine receives the drainage of the Central German Uplands and the eastern part of France, which contributes to a maximum flow during the winter. As a result, the river has a remarkably powerful and even flow, a physical endowment that caused it to become the busiest waterway in Europe. Only in occasional dry autumns are barges unable to load to full capacity to pass the Rhine gorge.
The Weser and Elbe rise in the Central German Uplands, crossing the North German Plain to enter the North Sea. The northward-flowing Oder (with its tributary, the Neisse) passes through the northeastern part of the country and a small section of Poland before emptying into the Baltic Sea. The navigation of these rivers is often adversely affected in the summer by low water and in the winter by ice, which increases eastward.
River courses in the northern lowlands have a notably trellised pattern—rivers follow the ice-margin stream trenches (Urstromtäler) carved outside the fringes of the retreating ice sheets before breaking through the next moraine ridge to the north. This pattern greatly facilitated the cutting of canals linking the Rhine River with Berlin and the Elbe and Oder rivers.
Germany has relatively few lakes. The greatest concentration comprises the shallow lakes of the postglacial lowland of the northeast. The largest natural lake in the region is Lake Müritz (44 square miles [114 square km]) in the Weichsel glacial drift of Mecklenburg–West Pomerania. In addition to Dümmer and Steinhude in Lower Saxony, a few small lakes of glacial origin dot Schleswig-Holstein. The remainder of Germany’s lakes are concentrated at the extreme southeastern corner of Upper Bavaria, many of these in outstandingly beautiful surroundings. Germany shares Lake Constance, its largest lake (having the proportions of an inland sea), with Switzerland and Austria.
- Soils
Most of Germany has temperate brown and deep brown soils. Their formation is dependent on relief, hydrologic conditions, vegetation, and human intervention.
Germany’s finest soils are developed on the loess of the northern flank of the Central German Uplands, the Magdeburg Plain, the Thuringian Basin and adjoining areas, the Rhine valley, and the Alpine Foreland. They range from black to extremely fertile brown soil types, and most of them are arable land under cultivation. The till (ground moraine) of the North German Plain and Alpine Foreland has heavy but fertile soil. Other productive soils include those based on fluvial deposits in river valleys (e.g., those in the Rhine floodplain from Mainz to Basel, Switzerland). Brown soil covers much of the Central German Uplands and is used for agriculture and grazing. With increasing elevation, soils are suitable only for grazing or forestation. In the northern plains the soil types are sand, loam, and brown podzols, which are heavily leached of mineral matter and humus by deforestation and grazing. Along the North Sea littoral in the northwest there are some extensive areas of sand, marsh, and mudflats that are covered with rich soil suitable for grazing and growing crops.
Because of the preponderance of mountainous and forested areas, the remainder of German soil types range from sand to loam, from loam to clay, and from clay to rocky outcrops. Timber production thrives where the land is all but unarable, and viticulture in the southern hill regions flourishes in an otherwise inhospitable type of soil.
- Climate
Germany is favoured with a generally temperate climate, especially in view of its northerly latitudes and the distance of the larger portions of its territory from the warming influence of the North Atlantic Current. Extremely high temperatures in the summer and deep, prolonged frost in the winter are rare. These conditions, together with a more-than-abundant and well-distributed amount of rainfall, afford ideal conditions for raising crops. As throughout western Europe in general, however, Germany’s climate is subject to quick variations when the moderate westerly winds from the Atlantic Ocean collide with the cold air masses moving in from northeastern Europe. Whereas in the open coastlands near the North and Baltic seas the maritime component prevails, continental elements gain in importance moving toward the east and southeast.
Seasonal weather is subject to great variations from year to year. Winters may be unusually cold or prolonged, particularly in the higher elevations in the south, or mild, with the temperatures hovering only two or three degrees above or below the freezing point. Spring may arrive early and extend through a hot, rainless summer to a warm, dry autumn with the threat of drought. In other years, spring—invariably interrupted by a frosty lapse in May, popularly known as die drei Eisheiligen (“the three ice saints”)—may arrive so late as to be imperceptible and be followed by a cool, rainy summer. One less-agreeable feature of the German climate is the almost permanent overcast in the cool seasons, only infrequently accompanied by precipitation; it sets in toward the latter part of autumn and lifts as late as March or April. Thus, for months on end, little sunshine may appear.
Despite the country’s generally temperate climate, there are specific regional patterns associated with temperature, frequency of sunshine, humidity, and precipitation. Germany’s northwestern and lowland portions are affected chiefly by the uniformly moist air, moderate in temperature, that is carried inland from the North Sea by the prevailing westerly winds. Although this influence affords moderately warm summers and mild winters, it is accompanied by the disadvantages of high humidities, extended stretches of rainfall, and, in the cooler seasons, fog. Precipitation diminishes eastward, as the plains open toward the Eurasian interior and the average temperatures for the warmest and coldest months become more extreme. The hilly areas of the central and southwestern regions and, to an even greater degree, the upland and plateau areas of the southeast are subject to the more pronounced ranges of hot and cold from the countervailing continental climate. The mountains have a wetter and cooler climate, with westward-facing slopes receiving the highest rainfall from maritime air masses. The Brocken in the Harz mountains receives annual precipitation of some 60 inches (1,500 mm) at an altitude in excess of 3,700 feet (1,100 metres). The sheltered lee slopes and basins have, by contrast, rainfall that is extremely low—Alsleben receives about 17 inches (432 mm) annually—and hot summers—July mean temperatures above 64 °F (18 °C)—that necessitate crop irrigation. Southeastern Germany may intermittently be the coldest area of the country in the winter, but the valleys of the Rhine, Main, Neckar, and Moselle rivers may also be the hottest in the summer. Winters in the North German Plain tend to be consistently colder, if only by a few degrees, than in the south, largely because of winds from Scandinavia. There is also a general decrease of winter temperature from west to east, with Berlin having an average temperature in January of 31.5 °F (−0.3 °C).
One anomaly of the climate of Upper Bavaria is the occasional appearance of warm, dry air passing over the northern Alps to the Bavarian Plateau. These mild winds, known as foehns (Föhn), can create an optical phenomenon that makes the Alps visible from points where they normally would be out of sight, and they also are responsible for the abrupt melting of the snow.
Annual mean precipitation varies according to region. It is lowest in the North German Plain, where it fluctuates from 20 to 30 inches (500 to 750 mm); in the Central German Uplands it ranges from nearly 30 to about 60 inches (750 to 1,500 mm) and in the Alpine regions up to and exceeding 80 inches (2,000 mm).
- Plant and animal life
Since Germany is a somewhat arbitrary south-north slice across central Europe, it does not have vegetation and animal life greatly different from that of neighbouring countries. Before being settled, Germany was almost totally forested, except for a few areas of marsh. There is now little truly natural vegetation; both the cultivated areas and the country’s extensive forests, which account for about one-fifth of the total land area, are man-made.
- PLANTS
After the Ice Age the loess areas were covered by oak and hornbeam forests, which are now largely gone. The sandy areas of the North German Plain were originally covered by a predominantly mixed oak-birch woodland. They were cleared and replaced by heather (Calluna vulgaris) for sheep grazing, with associated soil erosion. In the 19th century artificial fertilizer was introduced to improve some of this land for agriculture, and large stretches were forested, mainly with Scotch pine (Pinus sylvestris). The Central German Uplands are traditionally the domain of the beech (Fagus sylvatica), a tree with a leaf canopy so dense that few plants can survive beneath it. Although beech trees survive well on the poor soils covering the limestones and the Bunter Sandstone, many have been replaced by pine in the lowlands and spruce in the uplands. Other conifers, such as the Douglas and Sitka spruces, Weymouth pine, and Japanese larch, also have been introduced. In the highest elevations of the Alps, mixed forests and pasture provide grazing for cattle. German forests have suffered greatly from acid rain pollution, generally blamed on emissions (of sulfur dioxide and nitrogen oxide) from power plants, industrial operations, and motor-vehicle emissions. Damage has also been severe in southeastern Germany near the Ore Mountains, which border on the Czech Republic and its lignite-burning industries.
- ANIMALS
The vast tracts of forest and mountainous terrain, with only scattered habitation, contribute to a surprising variety of wildlife. Game animals abound in most regions—several varieties of deer, quail, and pheasant and, in the Alpine regions, the chamois and ibex—and their numbers are protected by stringent game laws. The wild boar population, which soared after World War II because of restrictions on hunting, has now been reduced so that it no longer represents a danger to people or crops. The hare, a favoured game animal, is ubiquitous. Although the bear and wolf are now extinct in the wild, the wildcat has had a resurgence since World War II, especially in the Eifel and Hunsrück regions and in the Harz mountains. The lynx reappeared in the areas near the Czech border, and the elk and wolf are occasional intruders from the east. The polecat, marten, weasel, beaver, and badger are found in the central and southern uplands, and the otter and wildcat are among the rarer animals of the Elbe basin. Common reptiles include salamanders, slow worms, and various lizards and snakes, of which only the adder is poisonous.
Germany has several internationally recognized bird reserves. The tidal flats of Lower Saxony (Niedersächsisches Wattenmeer) and Schleswig-Holstein along the North Sea coast, the lakes of the Mecklenburg plains, and glacially formed lakes of the North German Plain are vital areas for the European migration of ducks, geese, and waders. The nature protection park at Lüneburg Heath is a haven for various species of plants, birds, insects, and reptiles. The rare white-tailed eagle can be found in the lakes of the North German Plain, whereas the golden eagle can be seen in the Alps. White storks have decreased in number, but they can still be seen, perched on enormous piles of sticks on chimneys or church towers in areas where unpolluted and undrained marsh is still found. One newly designated reserve area is now within a national park in the lower Oder River valley, which is flooded annually. The park was established as part of an effort to preserve Germany’s unique ecosystem and its hundreds of species of native birds and plants.
Demography of Germany
People
The German-speaking peoples—which include the inhabitants of Germany as well as those of Austria, Liechtenstein, and the major parts of Switzerland and Luxembourg; small portions of France, Belgium, The Netherlands, and Italy; and the remnants of German communities in eastern Europe—are extremely heterogeneous in their ethnic origins, dialectal divisions, and political and cultural heritage, in which the split between Protestantism and Roman Catholicism has played a significant role since the Protestant Reformation and Catholic Counter-Reformation in the 16th century.
Throughout its history Germany has been characterized by a lack of clearly defined geographic boundaries. Both the area occupied by the German peoples and the boundaries of the German state (at such times as it existed) have fluctuated constantly. The German people appear to have originated on the coastal region of the Baltic Sea and in the Baltic islands in the Bronze and early Iron ages. From about 500 bc they began to move southward, crushing and absorbing the existing Celtic kingdoms; from 58 bc they clashed with Rome along the line of the Rhine and Danube rivers. With the fall of the Roman Empire, German peoples, predominantly under Frankish tribal leadership, closely settled a large area west of the Rhine River in what is still German territory; they also penetrated deeply into Belgium and areas that later became France. The Merovingian and Carolingian empires made no distinction between what are now France and western Germany, and thus it is understandable that Charlemagne (Karl der Grosse) is recognized as an important figure in the history of both countries.
The weakness of Charlemagne’s successors was revealed in their inability to handle the waves of invaders that poured into the empire at the end of the 9th century. In despair, people turned to local leaders able to offer protection. In the German heartland the old tribal divisions still retained their validity, and the tribes looked for defense to an army of their own people, led by a duke. Indeed, the names of these dukedoms are still used for some of the German states (Länder), notably Bavaria, Thuringia, and (Lower) Saxony. In the 10th and 11th centuries they were brought under the power of a single monarch, but this precocious centralization did not survive. The dukedoms were progressively subdivided until Germany became notorious for its Kleinstaaterei—its swarm of frequently tiny states, each with its court borne on the backs of the peasantry. The states, and particularly their boundaries, were of considerable social and economic significance, introducing contrasts that are still somewhat perceptible.
The rise of France extinguished most of Germanic control west of the Rhine, a process facilitated by German divisions; German dialects remain in use in France only in Alsace and parts of Lorraine. However, driven by population pressure during the Middle Ages, Germans cleared large areas of forest for the expansion of cultivation and extended their settlements far to the east. From about 800 in the south and about two centuries later in the centre and north, the Germans moved east in an advance that divided into three prongs: down the Danube through Austria, north of the Central German Uplands through Silesia, and along the Baltic shore. Between the prongs were the partially isolated Slavic areas of Bohemia and Poland; this development held the potential for conflict that lasted into the 20th century. Islands of German people were at various times established beyond the continuously settled area as far as the Volga. Many of their descendants later moved farther east into Asia under harsh decrees and policies instituted by Soviet leader Joseph Stalin. Over the centuries these groups tenaciously retained their German language and culture.
The German Empire created in 1871 did not include all German-speaking peoples. In particular, the Germans of the Austro-Hungarian Empire were excluded from the new Reich, and Switzerland, with its majority of German speakers, retained its independence. After World War I large numbers of Germans who had lived under German or Austrian rule found themselves under French rule—Alsace and Lorraine, German since 1871, were returned to France—or in the states created by the Treaty of Versailles in 1919, notably Poland and Czechoslovakia. The presence of German ethnic minorities in these countries was later used by Adolf Hitler as a pretext for military occupation. After World War II the German populations were largely expelled from Czechoslovakia and Poland, making the distribution of German-speaking people more nearly coincidental with the boundaries of the German state, although Austria and German-speaking Switzerland still remained outside.
- Ethnic groups
The Germans, in their various changes of territory, inevitably intermingled with other peoples. In the south and west they overran Celtic peoples, and there must at least have been sufficient communication for them to adopt the names of physical features such as rivers and hills; the names Rhine, Danube, and Neckar, for example, are thought to be of Celtic origin. Similarly, in occupying the Slavic lands to the east, Germans seem to have taken over and reorganized the Slavs along with their established framework of rural and urban settlements, many of which, along with numerous physical features, still bear names of Slavic origin. The same is true of family names. In addition, large numbers of immigrants added to the mixture: French Huguenots at the end of the 16th century, Polish mine workers in the Ruhr at the end of the 19th, White Russians in Berlin after the communist revolution of 1917, and stateless “displaced persons” left behind by World War II.
Prior to the 1950s there were few ethnic minorities in Germany, except Jews, whose population was decimated during the Holocaust. A population of Slavic-speaking Sorbs (Wends), variously estimated at between 30,000 and an improbable 100,000, have survived in the Lusatia (Lausitz) area, between Dresden and Cottbus, and a small number of Danish speakers can still be found in Schleswig-Holstein, even after the Versailles boundary changes there. Of the so-called “guest workers” (Gastarbeiter) and their families who immigrated to Germany beginning in the mid-1950s, the largest group is of Turkish ancestry. Distinct both culturally and religiously, they are scattered throughout German cities. Even more culturally distinct groups have been added by asylum seekers from countries such as Sri Lanka and Vietnam, and the opening of the eastern frontiers brought many more immigrants, including several thousand Jews seeking religious and ethnic tolerance and economic opportunity. By the beginning of the 21st century nearly one-tenth of the population—some eight million people—were non-Germans.
- Languages
The dialectal divisions of Germany, once of conspicuous significance for the ethnic and cultural distinctions they implied, persist despite leveling and standardizing influences such as mass education and communication and despite internal migration and the trend among the younger, better-educated, and more-mobile ranks of society to speak a standard, “accentless” German. The repository of dialectal differences now lies more with the rural populace and the longtime native inhabitants of the cities.
Standard German itself is something of a hybrid language in origin, drawn from elements of the dialects spoken in the central and southern districts but with the phonetic characteristics of the north predominating. Indeed, the pronunciation of standard German is an arbitrary compromise that gained universal currency only in the late 19th century. Even today the most “accent-conscious” of the well-educated speak with the coloration of their native district’s dialect, especially so if they are from the southern regions.
The three major dialectal divisions of Germany coincide almost identically with the major topographic regions: the North German Plain (Low German), the Central German Uplands (Central German), and the southern Jura, Danube basin, and Alpine districts (Upper German). Of the Upper German dialects, the Alemannic branch in the southwest is subdivided into Swabian, Low Alemannic, and High Alemannic. Swabian, the most widespread and still-ascending form, is spoken to the west and south of Stuttgart and as far east as Augsburg. Low Alemannic is spoken in Baden-Württemberg and Alsace, and High Alemannic is the dialect of German-speaking Switzerland. The Bavarian dialect, with its many local variations, is spoken in the areas south of the Danube River and east of the Lech River and throughout all of Austria, except in the state of Vorarlberg, which is Swabian in origin.
The Central German, or Franconian, dialect and the Thuringian dialect helped to form the basis of modern standard German. The present-day influence of Thuringian is of greatest significance in Thuringia, Saxony, and Saxony-Anhalt states. East Franconian is spoken in northern Bavaria, South Franconian in northern Baden-Württemberg. The Rhenish Franconian dialect extends northwest from approximately Metz, in French Lorraine, through the states of Rhineland-Palatinate and Hessen. Moselle Franconian extends from Luxembourg through the Moselle valley districts and across the Rhine into the Westerwald. Ripuarian Franconian begins roughly near Aachen, at the Dutch-Belgian border, and spreads across the Rhine between Düsseldorf and Bonn into the Sauerland.
The dialect known as Low German, or Plattdeutsch, historically was spoken in all regions occupied by the Saxons and spread across the whole of the North German Plain. Although it has been largely displaced by standard German, it is still widely spoken, especially among elderly and rural inhabitants in the areas near the North and Baltic seas, and is used in some radio broadcasts, newspapers, and educational programs. Tiny pockets of Frisian, the German dialect most closely related to English, persist. Foreign immigration, more widespread education, the influence of the United States, and globalization also have helped create a polyglot of languages in major German cities.
- Religion
The Reformation initiated by Martin Luther in 1517 divided German Christians between Roman Catholicism and Protestantism. The Peace of Augsburg (1555) introduced the principle that (with some exceptions) the inhabitants of each of Germany’s numerous territories should follow the religion of the ruler; thus, the south and west became mainly Roman Catholic, the north and east Protestant. Religious affiliation had great effect not only on subjective factors such as culture and personal attitudes but also on social and economic developments. For example, the willingness of Berlin to receive Calvinist religious refugees (Huguenots) from Louis XIV’s France meant that by the end of the 17th century one-fifth of the city’s inhabitants were of French extraction. The Huguenots introduced numerous new branches of manufacture to the city and strongly influenced administration, the army, the advancement of science, education, and fashion. The Berlin dialect still employs many terms of French derivation.
Population movements during and after World War II brought many Protestants into western Germany, evening the numbers of adherents of the two religions. In the former West Germany most people, whether or not they attended church, agreed to pay the church tax levied with their income tax; the revenue from this tax has been used to support community centres, hospitals, senior citizens’ centres and group homes, and the construction of church buildings in the former East Germany. The centrality of religion in Germany has meant that religious leaders, especially the Roman Catholic hierarchy, sometimes exercise considerable influence on political decisions on social issues such as abortion.
In East Germany Protestants outnumbered Roman Catholics about seven to one. Although the constitution nominally guaranteed religious freedom, religious affiliation was discouraged. Church membership, especially for individuals who were not members of the ruling Socialist Unity Party (SED), was a barrier to career advancement. Similarly, youth who on religious grounds did not join the Free German Youth (Freie Deutsche Jugend) lost access to recreational facilities and organized holidays and found it difficult, if not impossible, to secure admission to universities. Not surprisingly, formal church affiliation was relatively low, amounting to only about half the population, compared with nearly seven-eighths in West Germany. However, Protestant (Lutheran) churches did act as rallying points for supporters of unofficial protest groups, leading ultimately to the demonstrations that toppled the communist government in 1989.
Lutherans and Roman Catholics in Germany now are about equal in number. Small percentages of Germans belong to what are known as the free churches, such as Evangelical Methodists, Calvinists, Old Catholics, Jehovah’s Witnesses, and (by far the largest) Eastern Orthodox. The number of people professing no religion (Konfessionslose) has sharply increased and now represents about one-fifth of all Germans. Because of large-scale Turkish immigration, Muslims now account for some 5 percent of the total population. Only a few thousand German Jews survived the Holocaust. During the 1990s, however, Germany’s Jewish population quadrupled, the result of significant immigration from eastern Europe (especially Russia). There are now some 100,000 Jews in the country, and Berlin, with Germany’s largest concentration of Jews, has experienced a modest rebirth of its once thriving Jewish community.
- Settlement patterns
- RURAL SETTLEMENT
The most striking feature of the rural settlement pattern in western Germany is probably the concentration of farmyards into extremely large villages, known as Haufendörfer. These villages are surrounded by unenclosed fields divided into often hundreds of striplike units. The Haufendorf is particularly characteristic of Hessen and southwestern Germany, areas that have a tradition of partible inheritance. During periods of population pressure, land holdings—as well as farmhouses and farmyards—were repeatedly divided on inheritance, becoming progressively smaller and more fragmented. As a result, villages became increasingly huddled and chaotic. In areas with a tradition of undivided inheritance (e.g., Bavaria and Lower Saxony), the holdings—the individual field parcels and the farmhouses—remained larger.
During the period of high medieval prosperity in the 11th to 13th centuries, population pressure brought about the advance of peasant settlements into the forests, where isolated farms and hamlets were the usual settlement form, and the colonization of the predominantly Slavic lands beyond the line of the Elbe and Saale rivers. Because this was an organized colonization under the control of the lords and their agents, the haphazard structure of the western Haufendorf could be streamlined into a few well-planned forms. Thus farmhouses in the eastern regions were customarily arranged along either a single village street (Strassendorf) or an elongated green, on which stood the church (Angerdorf); long unfenced strips of land were allotted at right angles to the road or green.
The evolution of rural settlement has not been uniform. Instead, there have been phases of advance and retreat. In particular, the decline of medieval prosperity, accompanied by the Black Death that decimated much of Europe’s population in the 14th century, led to a stage of retreat, in which many hundreds of villages—the so-called “lost villages”—were abandoned in western Germany. In eastern Germany lords often appropriated deserted farms and added them to their own land, thus initiating that characteristic feature of the area beyond the Elbe, the large Junker estate farm (Gut).
The organization of agriculture and settlement in eastern and western Germany diverged considerably after World War II. In western Germany federal and state governments provided large subsidies to improve the existing structure. Land consolidation created larger holdings, and in some places farmers were moved to new farmsteads dispersed outside the villages. An increased average size of holding was associated with a massive movement of people out of agriculture. But instead of leaving for the cities, as occurred in the 19th century, people mostly remained in their existing homes and commuted to work. Part-time “Sunday” farming remained, but on a reduced scale. Land was actually left uncultivated by the new urban workers (social fallow). Some of this land was cultivated by the few remaining full-time farmers, but marginal areas were abandoned, being either afforested or reverting to rough grass and scrub.
In East Germany the Junker estates were confiscated and either divided among peasants or turned into state farms. This development was only the first stage in a process of collectivization; from 1958 to 1960, private holdings were regrouped under heavy political pressure into vast “cooperative” farms. New buildings marked the introduction of mechanized cultivation or large-scale animal husbandry, and multistory apartments and community centres reflected a politically inspired attempt to create a new concept of rural life. After unification rural settlement patterns and agriculture were once again transformed in eastern Germany, with a decline of about three-fourths in agricultural employment. Few private farms were reestablished, however, and very large areas were fallowed.
- URBAN SETTLEMENT
Since medieval times Germany has been politically fragmented, with numerous states competing with one another to develop lucrative market centres and to create capitals, large and small. As a result, the country inherited a profusion of towns and cities. Most of these remained frozen within their circuit of walls until the 19th century, with only the larger princely capitals (e.g., Berlin and Munich) developing distinctive government quarters in the early modern period. The great urban explosion came late in the 19th century. Because industrialization was linked largely to the development of the railways, urban expansion was not confined to areas near the coalfields, such as the Ruhr region, but was distributed among many cities. Typically, the new urban workers were herded into dismal five-story apartment blocks built on a monotonous grid of straight-line streets. Today, especially in eastern Berlin and cities such as Dresden, Halle, and Leipzig, these blocks present an urgent problem of urban renewal.
World War II was followed by a period of rapid urban growth as evacuees returned to the bombed cities. After 1949, however, contrasting government policies led to divergent urban development in eastern and western Germany. In West Germany many people abandoned the old city cores in favour of suburbs and urbanized villages within commuting range. Thus, in many agglomerations, notably in the Ruhr region, population loss was associated with peripheral gain. By contrast, the East German government pursued a policy of population concentration, whereby people were moved into concentrated peripheral settlements of 50,000 to 100,000, consisting of uniform prefabricated high-rise housing blocks built at the immediate outskirts of larger towns and cities. Economic growth and change in postwar Germany led to the loss of a considerable heritage of historic buildings, compounding the losses suffered during the war. However, during the last decades of the 20th century, virtually all western German towns and cities began to restore historic buildings from a variety of eras and architectural styles. The same process occurred much more slowly in the east prior to unification, but preservation efforts increased beginning in the 1990s.
- Demographic trends
- IMMIGRATION
After World War II Germany received more than 12 million refugees and expellees from former German territory east of the Oder and from areas with substantial German ethnic populations in central and eastern Europe. These numbers were swollen by the ranks of “displaced persons”—non-Germans unwilling to return to their former homelands. After Germany was partitioned in 1949, the demographic histories of the two parts of the country diverged, with West Germany becoming the prime target of continuing migration flows. Although immigrants, principally ethnic Germans, continued to drift in from the east, their numbers were overshadowed by a mass desertion of some two million people from East Germany. Because these immigrants from East Germany were mostly young and highly skilled, their arrival was a major gain to the booming West German economy but a grievous loss to the much smaller East Germany. In 1961 the East German government blocked further desertion of its people by building strong defenses along the inner-German border and around West Berlin (including the Berlin Wall). East Germany enjoyed relative demographic tranquillity for most of the following three decades. After the disintegration of communist regimes throughout central and eastern Europe, however, the population of West Germany began to surge again, because of flows first from newly liberalized Hungary and Czechoslovakia and then from East Germany after the inner-German boundary was opened and the Berlin Wall fell on November 9, 1989. In 1989–90 alone nearly 700,000 East Germans poured into West Germany; thereafter the stream continued, though from 1994 to 1997 net immigration occurred at a sharply reduced rate before increasing again because of ongoing economic problems in eastern Germany.
The arrival of these new migrants caused some resentment among western Germans because of the pressures placed on an already overburdened housing market and on social services. Because the new arrivals were mainly young and skilled, they fueled a postunification boom in western Germany and continued to drain the economy and society in the east, which still faces economic and social problems. Several hundred thousand eastern Germans also commuted to jobs in western Germany.
To spur economic growth, West Germany began as early as the mid-1950s to encourage workers to migrate from other countries. At first these migrants were to be “guest workers,” coming to work for a limited period of time only, but increasingly they sent for their families; thus, even when economic recession occurred in 1973 and the further immigration of workers was discouraged, the number of foreign residents continued to grow, reaching more than seven million people—nearly one-tenth of the total—by the beginning of the 21st century. Because of higher birth rates among the foreign-born population, non-Germans have accounted for a majority of natural population growth since the 1950s. The Turks represent the largest group of foreign residents, followed by Yugoslavs (Serbs and Montenegrins), Italians, Greeks, Poles, Croats, Austrians, and Bosnians. Immigrants typically were employed in the heaviest, dirtiest, and least-remunerative jobs, and in times of economic difficulty they generally were the first to lose their jobs and the last to be reemployed. Their children—of whom more than four-fifths have been born in Germany—are among the last to be considered for an apprenticeship or training place. Immigrants also inhabit the least-desirable housing. Turks, in particular, have formed distinctive quarters in the poorest “inner city” areas. Although the East German state prided itself on its nonreliance on guest workers, some Poles, Vietnamese, Angolans, Cubans, and Mozambicans were imported, ostensibly for “education and training.”
With the opening of the eastern frontiers and a more liberal attitude of the Soviet Union toward emigration, the influx of ethnic Germans became a veritable flood. Nearly 400,000 came in 1989, followed by more than 200,000 annually between 1991 and 1995; subsequently the number of immigrants fell but remained substantial. These new immigrants were less easily assimilated into western German culture than those from eastern Germany; many had difficulties with the German language and lacked marketable skills. With some apprehension, united Germany realized that a further million ethnic Germans could arrive from eastern Europe in the future, and there was a further fear that the freedom to travel and political or economic problems might produce a flow of untold millions of non-German residents of the former Soviet Union. Partially in response to these concerns, Germany’s relations with Russia focused on attempting to improve the lot of ethnic Germans living in Russia, thereby diminishing the likelihood of mass emigration to Germany.
West Germany’s constitution guaranteed the right of asylum to those forced to flee their native countries because of political oppression. This privilege was regarded as compensation for the asylum granted to 800,000 German victims of political and ethnic persecution during World War II. Criticism of this constitutional provision mounted in the 1980s with the arrival of asylum seekers from non-European countries such as Sri Lanka, Iran, Lebanon, Ghana, and India, together with stateless Palestinians; it was difficult to distinguish those hoping to better themselves economically or to avoid compulsory military service from genuine victims of oppression. The issue of asylum became even more pressing when the eastern borders were opened, admitting a flood of foreigners—most prominently Poles, Romanian Roma (Gypsies), and Bosniacs (Bosnian Muslims). Between 1990 and 1993, one million people sought asylum in Germany, and, as antagonism toward immigrants increased, there was a surge of violent attacks against foreigners. Although the government and citizen groups condemned such xenophobic sentiment and behaviour, foreigners continued to be subjected to discrimination and sporadic violence. Beginning in 1991, legislation brought Germany in line with the more restrictive policies practiced by other members of the European Community (since 1993 the European Union) regarding immigration from outside the Community. But while cooperation with neighbouring states reduced the flow of illegal immigrants and somewhat abated the problem, Germany nevertheless became embroiled in a domestic debate over the rights of noncitizen residents, including the right to naturalization, which had become somewhat easier for long-term residents in the late 1990s.
- POPULATION STRUCTURE
Germany is the most populous European country west of Russia. Its population density is high in comparison with most other European countries, though it is exceeded by Belgium and The Netherlands. Germany has one of the world’s lowest birth rates, and its life expectancy—some 75 years for males and 80 for females—is among the world’s highest. Over the last several decades Germany has witnessed years of both positive and negative population growth. From the mid- 1970s to the mid-1980s the country’s population dropped; however, Germany experienced significant population growth—largely because of immigration—over the following decade. Thereafter the country’s population growth was slight. To stem long-term population decline, governments at all levels have attempted to develop policies aimed at encouraging an increase in the birth rate, in particular by subsidizing child care and providing benefits and other tax incentives to families.
As in most industrialized countries, the proportion of the population under age 15 is quite low, accounting for about one-sixth of the total; in contrast, the proportion of those over age 60 has increased dramatically, representing more than one-sixth of the population. That women predominate in the older population is largely a reflection of their higher life expectancy and of the significant losses of men during World War II, but the discrepancy has become less pronounced with time. In eastern Germany the disproportion of elderly citizens increased significantly after the desertion of the young before the erection of the Berlin Wall and after its destruction in 1989.
- POPULATION DISTRIBUTION
Because Germany has for centuries had a profusion of states (each with towns and cities), its population is more widely dispersed than that of countries, such as France, in which centralization occurred early. It is possible, however, to discern two major population axes. The main axis runs from the Rhine-Ruhr region southward through the Rhine-Main (Frankfurt) and Rhine-Neckar (Heidelberg-Mannheim-Ludwigshafen) agglomerations, the great cities of southern Germany, and to Basel (Switzerland) and the Alpine passes. This is the main axis not only for Germany but also the European Union (EU). The second axis runs from the Rhine-Ruhr region eastward north of the Central German Uplands through Hannover, Braunschweig, and Magdeburg to the great urban concentration of Saxony. Some major cities stand in isolation outside the two axes, notably Augsburg and Nürnberg to the south and Bremen, Hamburg, and the capital city of Berlin, the last three forming islands in the thinly populated North German Plain. Before unification, population redistribution from the agglomeration cores in western Germany was accompanied by a marked drift of population from the north to the booming cities and attractive environment of southern Germany. In eastern Germany, early gains by migration were experienced in areas of planned industrial development (Eisenhüttenstadt, Rostock, Schwedt, Hoyerswerda). After initial postwar recovery, the cities of the south lost population, reflecting industrial decline, rationalization of production, and unattractive environments. East Berlin and its satellite towns were the principal targets of migration until western Germany became accessible in 1989.
Economy of Germany
The German constitution, the Basic Law (Grundgesetz), guarantees the right to own property, freedom of movement, free choice of occupation, freedom of association, and equality before the law. However, the constitution modified the operation of the unfettered free market by means of its “social market economy” (Soziale Marktwirtschaft). With a “safety net” of benefits—including health protection, unemployment and disability compensation, maternity and child-care provisions, job retraining, pensions, and many others—paid for by contributions from individuals, employers, and public funds, Germany has an economic order supported by most workers and businesses.
In the social market economy the government attempts to foster fair play between management and labour and to regulate the relationship between the capitalist participants in the market, particularly with regard to competition and monopolies. Works councils have been established, and workers have representation on the boards of businesses. The social market economy was created by policy makers with a vivid memory of market distortions and social tensions caused by the giant industrial trusts before 1939. Legislation against monopolies appeared in 1958 and has been criticized as ineffective. For example, it has proved impossible to restrict the indirect coordination, through which individuals, banks, and other financial institutions build up “diagonal” share holdings linking a range of firms that are nominally independent. Moreover, where a whole branch of industry has experienced difficulties (e.g., the Ruhr coal industry), even the federal government has encouraged concentration. The emergence of very large monopolistic firms has been unavoidable because, in an increasingly international economy, large firms that enjoy economies of scale are better positioned to survive. With globalization, governments are less able to regulate businesses at the national level or even at the transnational level of the EU.
The social market economy is regulated not exclusively by the federal government but by a plurality of agencies. For example, there are numerous insurance institutions that deliver social benefits. The most important institution in post-World War II Germany is the Frankfurt-based Deutsche Bundesbank (German Federal Bank). With memories of the runaway inflation of 1922–23, the West German government decided that it should never again have a license to print money and that the central bank should be independent of political control. Consequently, Germany’s adoption of the euro, the EU’s single currency, in 1999 raised some concerns in the country that the European Central Bank would be subject to political influence and manipulation. The Chambers of Trade, at every level of the administrative hierarchy, are also influential, and the state governments play a significant economic role (e.g., the government of North Rhine–Westphalia is intimately concerned with the survival of the Ruhr coal industry). Federal and state governments also participate in the ownership of some enterprises, notably public utilities. The Basic Law, however, prevents the arbitrary intervention of the central government.
As Germany has numerous economic actors, a high degree of coordination has been required to achieve adequate growth, balanced foreign trade, stable prices, and low unemployment. A variety of consultative bodies unite federal and state governments, the Deutsche Bundesbank, representatives of business and of the municipalities, and trade unions. The Board of Experts for the Assessment of Overall Economic Trends, established in 1963 and known as the “five wise men,” produces an evaluation of overall economic developments each year to assist in national economic decision making. Moreover, the federal government submits an annual economic report to the legislature that contains a response to the annual evaluation of the Board of Experts and an outline of the economic and financial policies it is pursuing.
Although the free market operates in Germany, the federal government plays an important role in the economy. It is accepted as self-evident that it should underwrite the capital and operating costs of the economic and social infrastructure, such as the autobahn network, waterways, the postal system and telecommunications, and the rail system. The federal government, the states, and the cities also contribute to the regional and local rapid transit systems. Government collaborates with industry in bearing the costs of research and development, as, for example, in the nuclear power industry. Federal intervention is particularly strong in the defense industry. The coal industry is perhaps the most notable example of subsidization, and agriculture has traditionally been massively protected by the state, though the sector is now governed by EU institutions. Regional planning is another significant field of government intervention; the federal government fosters economic developments in rural and industrial “problem” regions. States and cities also intervene with schemes to foster regional or local development.
Germany has a varied tax system, with taxes imposed at the national, state, and local levels. Because of the generous system of social services, tax rates on corporations, individuals, and goods and services are all relatively high in comparison with other countries. Germany employs a system of tax equalization, through which tax revenues are distributed from wealthier regions to less-prosperous ones. After unification these transfers were resented among many western Germans.
Modern economic history: from partition to reunification
THE WEST GERMAN SYSTEM
After the devastation of World War II, West Germany rebounded with a so-called “economic miracle” that began in 1948. The subsequent combination of growth and stability made West Germany’s economic system one of the most respected in the world, though it began to suffer strains beginning in the 1990s, exacerbated by the costs of unification. Germany’s remarkable economic performance was largely a result of effective economic management, but temporary factors were especially important in spurring economic growth in the immediate post-World War II era. In particular, a large force of unemployed workers—returned servicemen and displaced persons—were available and eager to rebuild their own lives and willing to work hard at a rate of remuneration that left a considerable investment surplus in their employers’ hands. In addition, the country reaped benefits from the joint economic planning for the American, British, and French zones of occupation that culminated in the vital and essential currency reform that introduced the deutsche mark in June 1948 and the U.S.-financed Marshall Plan (1948–52), which helped to rebuild war-torn Europe.
From 1951 to 1961 West Germany’s gross national product (GNP) rose by 8 percent per year—double the rate for Britain and the United States and nearly double that of France—and exports trebled. Despite some occasional economic downturns (e.g., during the oil crisis of 1973–74), West Germany’s economy followed an upward trend. Indeed, when East and West Germany reunited in 1990, West Germany’s economy was enjoying a cycle of business expansion that had lasted since the early 1980s and continued into 1992. By that time Germany had one of the largest economies in the world and was a leader in world trade. All this was achieved while maintaining low inflation.
THE EAST GERMAN SYSTEM
East Germany also had experienced an economic miracle of sorts. Unlike the other Soviet-style states of eastern Europe, East Germany had been part of an advanced capitalist economy before the war, which gave it a considerable advantage in reconstruction. Even though it had emerged from World War II and the postwar Soviet demolitions economically ravaged, its surviving industrial infrastructure, inherited skills, and high level of scientific and technical education enabled it to develop the economy and to advance the standard of living to a level markedly higher than those of most other socialist countries, though living standards were still well below those of western Europe. East Germany became the principal supplier of advanced industrial equipment to the communist countries, though it became apparent after unification that it produced poor quality goods and caused environmental devastation.
East Germany had a command economy, in which virtually all decisions were made by the governing communist party, the Socialist Unity Party (SED). The system of planning was inflexible and eventually caused ruinous economic conditions. Power, influence, and personal connections (Beziehungen, or “vitamin B”) drove economic decisions, and all groups, including trade unions, were expected to collaborate to achieve the SED’s economic objectives.
East Germany’s industrial sector lacked quality controls and technological innovation. The cynicism, apathy, and inertia that were common among workers and enterprise managers contributed to low rates of East German technological change. Despite excellent training, workers were not rewarded with increased earnings for ingenuity; the result was a general malaise.
Supply and distribution were controlled by state-owned companies, and the centralized provision of services through nationalized concerns and local administrations was a generally recognized weakness. This was partially addressed by a “gray market” for goods and services in short supply (e.g., automobiles and automobile and house repairs), particularly when payment was made in hard currency; for example, repairmen offered much faster service for an extra fee or favours, and sales clerks also kept certain goods “under the counter.” By the 1970s and ’80s, particularly as contacts with the West increased, this gray market grew in significance.
ECONOMIC UNIFICATION AND BEYOND
The implementation of Mikhail Gorbachev’s glasnost (political liberalization) and perestroika (economic restructuring) policies in the Soviet Union fueled sentiment in Germany that reunification could become a reality, and the basic steps toward German economic unity were accomplished with astonishing speed. The unexpected opening of the frontier between East and West Germany and the breaching of the Berlin Wall on November 9, 1989, were a heavy blow to the East German economy, as the relatively small numbers of migrants, who in previous years had left the country by way of Hungary or Czechoslovakia, rose dramatically. Exacerbating the problem was the fact that most of those who left were the younger, more active members of the population and those with marketable skills. The economic unification, achieved by July 1, 1990, swept away all customs barriers and introduced the deutsche mark as the sole currency in Germany.
Following Germany’s official reunification on October 3, 1990, the western German economy continued to grow rapidly until 1992, after which it began to experience an economic slowdown before growth resumed in the mid-1990s. During the decade following 1992, the German economy grew at an average annual rate of 1.4 percent—among the lowest rates in western Europe. Many economists attributed the slowdown to rigid labour policies, high taxes, marginal incentives for investment, and generous incentives for workers to retire, miss work, or be unemployed. The slowdown was also related to unification, which wholly revealed the economic deficiencies of East Germany—the extent of its technological backwardness, its low productivity, and the faltering state of its manufacturing plants. Disillusionment in eastern Germany rose sharply as manufacturing output and employment declined rapidly. The federal government’s insistence that eastern German firms compete immediately in the free market led to economic devastation in the east. By spring 1991, mass demonstrations against unemployment occurred regularly in Leipzig, and there was concern that economic despair would cultivate the rise of political extremism. Indeed, the Berlin office of the Treuhandanstalt (a government-owned but independent trust agency for the privatization of eastern German industry with wide powers of disposal) was firebombed, and in April 1991 its head was murdered by the West German Red Army Faction.
The Deutsche Bundesbank believed that the government had introduced the deutsche mark into eastern Germany too precipitately, with practically no preparation or possibility of adjustment, and at too favourable a rate. The effect of currency conversion and subsequent wage pressure deprived industry in the east of one of its few advantages, low labour costs. The favourable exchange rate and relatively high wages and salaries did, on the other hand, help achieve a sociopolitical goal—encouraging eastern Germans to remain in the east rather than migrating to the west, where people feared being overwhelmed by migrants. There were commercial bankruptcies in eastern Germany, and the eastern economy was further decimated by the tendency of easterners to buy the better-presented and technically superior consumer goods from western Germany or abroad rather than the generally drab products of eastern German industry; by the end of the decade, however, high-quality goods produced in eastern Germany bolstered the economy, and there was a wave of regional consciousness that favoured the patronage of local products.
Economic unification caused particularly severe hardships for eastern German workers; unemployment rose sharply and industrial output fell by two-thirds in the years after unification. Decline was greatest in the food-processing sector, metallurgy, building materials, machinery and vehicles, electronics and related equipment, and textiles. Eastern German agriculture also was devastated, with employment dropping by some three-fourths. Although the eastern economy later rebounded, at the beginning of the 21st century more than one-sixth of its labour force was unemployed—more than double the rate for western Germany. Unemployment also rose disproportionately for women. As a result of job losses, migration from east to west continued throughout the 1990s and into the early 21st century.
The slowness of economic recovery in eastern Germany was the result of a variety of factors. The haste of change, especially regarding the currency conversion and the breakup of the great industrial combines, and the fact that East Germany had no effective government for a period of three months following the economic union in July 1990 hampered economic reconstruction efforts. Even after political unification, progress was disappointing. Firms removed from ministerial control and transformed into limited companies found themselves unable to compete in the free market, burdened not only with outdated plants but with debt, because the East German government had appropriated their profits while requiring them to borrow their capital. The federal government had assumed that the reconstruction of eastern German industry would essentially come about by the takeover of plants by Western, predominantly western German, firms. In reality, however, the Treuhandanstalt set up to dispose of some 10,000 formerly nationalized firms made extremely slow progress, partly as a result of an excessively legalistic approach and partly because of the shortage of experienced administrators afflicting the reconstituted public service in the east. Western German firms were under no great financial pressure to move in, and, with the help of the additional labour available from eastern German migrants, they expanded production at their existing plants without having to become involved in the difficulties of actually setting up a branch in the east. Protesters warned that eastern Germany was turning into an internal colony; however, this overly pessimistic outlook was exaggerated, and about 1992 some economic revival began to occur.
Land ownership was a significant barrier to establishing plants in eastern Germany. Following the principles of the German constitution, after unification, former owners were assured that they could repossess their property or at least be compensated for their losses. However, this did not apply to property expropriated by the Soviet military administration (1945–47), including many large estates that not everybody would be happy to see returned to their original aristocratic owners. Where a plant had originally been owned by a family or firm in western Germany but had received additional investment from the East German government and had perhaps expanded over land originally in a number of hands, western German firms were deterred from moving in, there being a lack of clear title to ownership.
The production-focused East German communist system had ignored environmental considerations. Firms seeking to take over electrical generation based on brown coal, any part of the chemical industry, or any other plant where dangerous chemicals had been used in processing faced enormous costs in attempting to meet federal government standards. Firms were also discouraged from taking over plants, because the inevitable reductions in surplus labour would involve the payment of unemployment compensation. As a result, the few western German firms setting up in the east preferred to establish a completely new plant on a green-field site, allowing them to avoid these excessive costs.
The federal government initially believed that the costs of unification could be borne by borrowing and without increases in taxation. Despite these assurances by Chancellor Helmut Kohl at the 1990 all-German elections, by 1991 additional taxation was required. If people in the east were disillusioned by the economic results of union, those in the west grew increasingly resentful of the cost of paying for it.
During the 1990s Germany made a number of dramatic changes in its energy sector—e.g., higher taxes, lower subsidies for coal mining, and privatization of huge eastern German energy firms. In 2002 the government passed legislation that stipulated the end of the nuclear power industry by 2022, though in 2010 it extended the deadline into the 2030s. In 2007 it also tentatively planned to phase out coal mining within about a decade. Massive reconstruction projects in the east (Aufbau Ost), funded largely by higher taxes in the west, helped to improve infrastructure in the eastern regions. Telecommunications systems were upgraded, and there were generous subsidies to encourage capital investment.
Quite apart from the costs and problems associated with unification, Germany and its economy faced a number of interrelated problems at the beginning of the 21st century. High unemployment—which regularly exceeded four million people—became the chief political issue. Extremely high wages—among the world’s highest—generous social services, and high taxation also dampened the economy. Unification caused the public debt to grow dramatically, and at the beginning of the 21st century some one-fifth of the annual federal budget went toward interest payments on the accrued national debt.
Although unification was more than a decade old, at the beginning of the 21st century its effects still weighed heavily on the German economy and its political institutions. However, in large measure unification gave way to other issues, such as globalization, the introduction of the euro as the single currency of the EU in 2002, and the enlargement of the EU to central and eastern Europe. Germany’s domestic economic problems and opportunities are complexly bound up with global and regional processes over which it has only varying levels of influence and control—a somewhat unsettling situation for a society that became very prosperous by following accustomed patterns and having firm control of the major levers of its own economy.
- Agriculture, forestry, and fishing
AGRICULTURE
As in other sectors of the economy, the division of Germany was reflected in a dramatic divergence of agricultural development. West Germany remained essentially a country of small family farms; in the 1980s only about 5 percent of holdings had more than 124 acres (50 hectares), though they accounted for nearly one-fourth of the total agricultural area. By the beginning of the 21st century, however, large farms represented about half of the total agricultural area in western Germany and some two-thirds in eastern Germany. The change in western Germany is reflective of a rationalization of agriculture, with many small landholders leaving farming and the remaining farms often increasing in size. The larger farms in the west are mainly concentrated in Schleswig-Holstein and eastern Lower Saxony, with smaller groupings in Westphalia, the lowland west of Cologne, and southern Bavaria. Small farms predominated in the central and southern parts of West Germany. The process of steady enlargement decreased the total number of holdings by more than three-fourths from 1950 to the end of the 20th century. The number of people employed in agriculture also declined substantially, from about one-fifth of the total workforce in 1950 to less than 3 percent by the end of the 20th century. Wage labourers virtually disappeared from all but the largest farms, and smaller farms were cultivated on a part-time basis.
By contrast, in the east, following conquest by the Soviet army at the end of World War II, many large estates were split up or retained as state farms. From 1952 to 1960 virtually all the small farms in East Germany were united, under strong political pressure, to form agricultural cooperatives. Agricultural production was increasingly concentrated into extremely large specialized units; by the mid-1980s state-run or cooperative crop-producing enterprises averaged more than 11,000 acres (4,450 hectares). Despite a marked decrease in agricultural employees, modern machinery and technological innovation led to increased production. After unification agricultural employment in eastern Germany plunged by about three-fourths.
In areas of high natural fertility, wheat, barley, corn (maize), and sugar beets are the principal crops. The poorer soils of the North German Plain and of the Central German Uplands are traditionally used for growing rye, oats, potatoes, and fodder beets. Technological changes have altered much of the traditional spatial pattern of German agriculture. Sugar beets, formerly confined to deep fertile soils such as the loess lands on the northern fringe of the Central German Uplands, are now much more widespread. With the availability of chemical fertilizers, light soils have become more highly valued because of their suitability for machine cultivation; for example, fodder corn is now widely grown on the North German Plain, replacing potatoes. The two most widespread forms of agricultural land use are cereal cultivation (including corn for its grains) and permanent pasture; both are important sources of animal feed. Dairying formerly was concentrated in the area of mild climate in the northern coastal lowlands and in the Alpine foothills, but it is now widespread in all areas where small farms predominate. East Germany concentrated milk production into vast specialist holdings in arable areas where food was available and urban markets accessible. In both the western and eastern sectors, chickens, eggs, pigs, and veal calves are concentrated into large battery units, divorced from immediate contact with the soil. Besides concern for the plight of the animals under this system of concentrated production, Germans are distressed by the groundwater pollution associated with it.
In the areas surrounding western German cities, crops such as fruits, vegetables, and flowers are grown. The warm lowlands of the southwest favour tobacco and seed corn. They also support vegetables, as do the Elbe marshes south of Hamburg and the marshy Spreewald south of Berlin. Fruit grows abundantly in southern Germany; other important areas of specialization include the “Altes Land” on the Elbe south of Hamburg, the Havel lake country near Potsdam, and the Halle area. Vineyards are located in the west, especially in or near the valleys of the Rhine, Moselle, Saar, Main, and Neckar rivers, although the slopes of the Elbe valley near Dresden also produce wine grapes.
At the time of reunification, western Germany produced some four-fifths of its food requirements, and increased productivity and guaranteed prices resulted in vast surpluses (especially of butter, meat, wheat, and wine). At the beginning of the 21st century, Germany’s production of major agricultural products (e.g., grains, sugar, oils, milk and meat) exceeded domestic consumption, resulting in both exports and continued surpluses.
FORESTRY
Some three-tenths of Germany’s total land area is covered with forest. In the Central German Uplands and the Alps, forests are particularly plentiful, but they are notably absent from the best agricultural land, such as the loess areas of the North German Plain. The western part of the North German Plain also has little forest cover, but there are substantial wooded stretches farther east. Conifers predominate in the forest area; spruce now accounts for much of the plantings because of its rapid growth and suitability for building purposes and for the production of paper and chipboard. Domestic production covers about half of the demand for wood from temperate forests, but producers face severe competition from Austria, Scandinavia, and eastern Europe. The federal government, states, and municipalities own about half the forest in western Germany, with the remainder in private hands; eastern German forests are primarily publicly owned.
FISHING
Fishing in western Germany began to decline markedly from the 1970s because of overutilization of traditional fishing grounds and the extension of the exclusive economic zone to 200 miles (320 km) offshore. The greatly reduced deep-sea fleet now uses freezer vessels and accompanying catchers; Bremerhaven, Cuxhaven, and Hamburg are the home ports and processing centres. During the 1990s, high-seas catches by German fishermen declined by about half. The North Sea herring fishery has almost disappeared, and now the German appetite for pickled herring is satisfied mainly by imports. There are well over 100 fishing ports on the North Sea and Baltic coasts. Fishing for shrimp and mussels is important on the mud flats fringing the North Sea. Prior to unification East Germany had a substantial deep-sea fishing fleet, but most of it has since been scrapped; its shore base for fish processing was at Sassnitz on the island of Rügen.
- Resources and power
Germany, which has relatively few domestic natural resources, imports most of its raw materials. It is a major producer of bituminous coal and brown coal (lignite), the principal fields of the latter being west of Cologne, east of Halle, south and southwest of Leipzig, and in Lower Lusatia in Brandenburg. Other minerals found in abundance are salt and potash, mined at the periphery of the Harz mountains. The mining of most metallic minerals ceased for economic reasons in western Germany before unification; in the 1990s the centuries-old mining and processing of copper ores in the Mansfeld area of eastern Germany and the mining and processing of uranium ores for the benefit of the Soviet Union in the Ore Mountains also stopped. There are small reserves of oil and natural gas in northern Germany.
As in all industrialized countries, water supply is a constant problem. The filtration of water on riverbanks (e.g., those of the Rhine) is one source. It is supplemented by reservoirs in the uplands. For example, the Harz mountains provide water to much of the North German Plain as far as Bremen, and the Ore Mountains supply the central German industrial region.
Oil is Germany’s principal source of energy. As domestic production is quite limited, most crude oil is imported. Many petroleum products also are imported, transported from Rotterdam by product lines, barges, and rail. Until the mid-1950s the refining of oil took place at the coast, notably at Hamburg and Rotterdam; however, refineries have been developed at inland locations close to markets, mostly on rivers such as the Rhine and Danube, which are served by pipelines from Wilhelmshaven, Rotterdam (Netherlands), Lavéra (near Marseille, France), Genoa (Italy), and Trieste (Italy). Eastern Germany receives oil delivered by pipeline from Russia to a refinery at Schwedt on the Oder, which supplies the central German industrial region; there is also a pipeline from Rostock that provides industry with oil. German supplies of natural gas are significant, but most gas is imported. Principal sources are the Friesian and North Sea fields of the Netherlands and the Norwegian North Sea. Gas is imported from Russia via a pipeline from the Czech Republic, with a branch serving eastern Germany and Berlin.
Bituminous coal, Germany’s second most important source of energy, is available from the Ruhr field and from the smaller Saar, Aachen, and Ibbenbüren fields, though extraction is costly and often subsidized. In the last half of the 20th century, however, output shrank by some two-thirds. Coal now has two major uses: the generation of electricity and the production of metallurgical coke. A striking feature of the German economy is the significance of brown coal (lignite). This low-grade, waterlogged fuel can be worked economically in vast open pits, which are mined with massive machines. About seven-eighths of all the coal is fed straight to electric-power generating stations that are situated on the field itself. A relatively small quantity of the coal is pressed into briquettes for domestic heating. Electricity generation is also the principal use of the main fields in eastern Germany; however, during partition lignite was a major basis of the chemical industry as well as a source of gas and briquettes for urban consumption. After unification many eastern German pits closed, particularly those producing the most sulfurous coal. The shortfall in energy output led the federal government to subsidize additional imports of gas from Russia.
The largest producers of electric energy are the thermal plants that are located primarily in the Ruhr and the Rhenish brown-coal fields and in the brown-coal fields of the east, especially in Lower Lusatia. During partition all western German plants were required to significantly reduce the emissions of the dust, sulfur dioxide, and nitrogen oxide formerly emitted into the atmosphere. Plants in the east were not similarly regulated and thus contributed to general atmospheric pollution; after unification a number of them were closed and others were upgraded.
Nuclear power plants rival thermal plants in significance. In western Germany they are typically located on the coast or on rivers far from the coalfields. Plants in eastern Germany, built on the Soviet (Chernobyl) model, were closed for safety reasons. At the turn of the 21st century the German government committed to phasing out all the country’s nuclear power plants. In 2010, however, claiming that nuclear plants would be necessary until renewable energy technologies became sufficiently productive, the government extended the life span of the country’s existing plants. That plan was quickly abandoned in the wake of the 2011 Fukushima nuclear accident in Japan, and Germany’s remaining plants were scheduled to be shut down by 2022.
The canalization of such rivers as the Main, Neckar, and Moselle, together with hydroelectric power plants in the Alps, produce relatively minor amounts of electric power; pumped storage schemes in mountain areas are important in meeting peak electricity demands. Before unification, East and West Germany had distinct transmission grids without interconnection. The West German network was linked to that of neighbouring countries, allowing it to import surplus power from the French nuclear system and, during the Alpine snow melt, especially from Austria. West Berlin formerly was forced to generate its own power, adding to urban pollution. The eastern and western German grids were connected in the 1990s, and West Berlin was connected to the network in 1994.
- Manufacturing
Industrial employment in western Germany declined steadily from a postwar peak. However, deindustrialization was not as precipitous in Germany as it was in some other European countries. Western German industry benefited from the willingness of banks to take a long-term view on investment and of the federal government to underwrite research and development. German industrial products are viewed with great prestige on world markets and are in strong demand overseas. By contrast, unification revealed that most of eastern German industry was incapable of competing in a free market.
Germany is one of the world’s leading manufacturers of steel, with production concentrated in the Ruhr region; however, since the peak output of the early 1970s, a number of plants have closed. (The steel industry in eastern Germany was largely abandoned after unification, though some production was reestablished at a renovated plant at Eisenhuettenstadt.) Germany’s principal industries include machine building, automobiles, electrical engineering and electronics, chemicals, and food processing. Automobile manufacturing is concentrated in Baden-Württemberg, Lower Saxony, Hessen, North Rhine–Westphalia, Bavaria, the Saarland, and Thuringia. Leading automobile manufacturers in Germany include Audi, BMW, Daimler AG (formerly Daimler-Benz and DaimlerChrysler), Ford, Opel, and Volkswagen. Following unification, production of the environmentally unfriendly Trabant and Wartburg cars in eastern Germany ceased. Volkswagen, Opel, and Daimler-Benz were quick to establish assembly or parts production in the east. Shipbuilding, once a major industry, has declined significantly.
Since the late 19th century Germany has been a world leader in the manufacture of electrical equipment. As the home of internationally known firms such as Siemens, AEG, Telefunken, and Osram, Berlin was the industry’s principal centre until World War II, after which production was largely transferred to Nürnberg-Erlangen, Munich, Stuttgart, and other cities in southern Germany. The output of these centres made Germany one of the world’s leading exporters of electrical and electronic equipment.
In East Germany electrical and electronic production was concentrated in East Berlin, with Dresden forming a second important centre. The country was a major supplier of equipment (e.g., computer-controlled robots) to the communist world. Although eastern German plants were outdated in comparison with those in the west, both Dresden and Erfurt achieved some success in developing microelectronics production following unification.
With the discovery of synthetic dyestuffs in the late 19th century, Germany became a world leader in the chemical industry. Most of the western German chemical industry is concentrated along the Rhine or its tributaries, notably in Ludwigshafen, Hoechst (near Frankfurt), and Leverkusen (together with a row of other plants along the Rhine in North Rhine–Westphalia). Chemical plants also operate in the Ruhr region. The majority of East German chemical plants were on the two brown-coal fields of Lower Lusatia and Halle-Leipzig; after unification some plants were closed because of environmental reasons, and others were upgraded.
Germany is also particularly strong in the field of optical and precision industries. The once-mighty textile industry has suffered from overseas competition but is still significant. Principal centres are in North Rhine–Westphalia (Mönchen-Gladbach, Wuppertal) and southern Germany. After unification many textile plants were closed in eastern Germany, where employment in the sector plunged by some nine-tenths.
- Finance
THE CENTRAL BANKING SYSTEM
Germany’s central bank, the Deutsche Bundesbank, is headquartered in Frankfurt am Main, which is the country’s main financial centre and also the base of the European Central Bank, the EU’s chief financial institution. Before the circulation of the euro, the common currency of the EU, in 2002, the Bundesbank issued the deutsche mark (the country’s former currency) and oversaw its circulation. As the EU’s most powerful national central bank, the Bundesbank played a pivotal role in the planning of and preparation for the euro. One of its primary roles now is to implement the monetary policies of the European System of Central Banks to help maintain the euro’s stability.
Upon the establishment of the Bundesbank, its preeminent characteristic was its independence from government control, instituted to prevent a recurrence of the severe inflation experienced in 1922–23, when the government resorted to the printing press for finance. The federal bank maintained a policy of careful control of credit and concern for the international exchange rate of the deutsche mark, which had made West Germany the leading financial power in post-World War II Europe. The Bundesbank demonstrated its genuine independence in 1991 when it insisted that additional government expenditure for the eastern sector be covered by unwelcome tax increases rather than by borrowing. Individual Land (state) central banks are the Bundesbank’s representatives at state level.
THE PRIVATE BANKING SECTOR
There are hundreds of commercial banks, of which the most important are the Deutsche Bank, the KfW Bankengruppe, and the Commerzbank, though mergers have tended to shrink the number of major banks. Apart from conducting normal banking business, German banks provide financing for private businesses. As a result, the stock exchanges in Frankfurt, Düsseldorf, and other cities are less influential in providing finance for industry than parallel institutions in other countries.
PUBLIC AND COOPERATIVE INSTITUTIONS
Germany has several types of public financial institutions, including credit and personal checking institutions and cooperative banks. Under public law, credit institutions operate as savings banks, and the state banks act as central banks and clearinghouses for the savings banks and focus on regional financing. The state-owned Kreditanstalt für Wiederaufbau (“Development Loan Corporation”) channels public aid to developing countries.
The cooperative banks are headed by the DZ Bank (Deutsche Zentral-Genossenschaftsbank, or “German Central Cooperative Bank”), which serves as a central bank for some 1,500 industrial and agricultural credit cooperatives.There are also public and private mortgage banks, installment credit institutions, and the now-privatized postal check and postal savings systems, which were once operated by the federal postal service.
In East Germany the state bank was subordinate to the Ministry of Finance and designed to be a tool of central planning. It was part of a unified system that embraced not only central and local government but also banks, insurance companies, and industries, all of which were directed in their use of funds.
With economic union on July 1, 1990, East Germany came under the central banking system of the Deutsche Bundesbank, which effected the conversion of the eastern system to the West German mark. Progressively, the western German commercial banks, insurance companies, and all the other financial institutions moved in. The ruined East German economy, the unemployment assistance fund, and the bankrupt state and local administrations all required massive financial transfusions from the federal government and the West German states. In stages, consumer subsidies have been removed, while wages, social insurance payments, and taxes have been progressively raised toward western levels.
- Trade
One of the world’s leading exporters, Germany has consistently maintained a surplus with its trading partners. More than half of its trade is with members of the EU. Germany’s principal export markets are France, the United States, the United Kingdom, Italy, and the Netherlands. Trade with eastern and central Europe has increased, and Germany has replaced the former Soviet Union and Russia as the primary trading partner for most countries in the region. Major exports include transport equipment (including automobiles), electrical machinery, and chemicals, as well as some food products and wine. Imports fall into remarkably similar categories, but in addition they include raw materials and semifinished products for industry. Germany’s major sources of imports include France, the Netherlands, Italy, the United States, the United Kingdom, and Belgium.
Before unification East Germany specialized as a supplier of advanced industrial equipment, electronics, ships, and rail rolling stock to the communist bloc countries. Following economic unification, the countries of the former communist bloc were virtually unable to pay for equipment in hard currency, with disastrous consequences for eastern German industry. However, unlike the other former communist countries, eastern Germany, as part of united Germany, automatically received the benefits of full EC membership, though its factories also immediately faced overwhelming competition from western producers.
- Services
As is the case in many other countries with an advanced economy, Germany’s service sector (i.e., trade, transport, banking, finance, and administration) is a leading employer. This is abundantly clear in urban centres throughout western Germany, with their concentration of retailing, banking, and insurance. The transformation of eastern Germany along these lines is in progress, and the sector’s importance has grown considerably there. For example, while the economies of most eastern and western German states were still dominated by manufacturing in the early 1990s, by the end of the decade a majority of states, and the country as a whole, had economies with a higher level of output by private firms providing services (even excepting trade and transport, which are categorized separately). In short, the German economy, for years one of the world’s most manufacturing-oriented economies, has become dominated by services. This is particularly well illustrated by Berlin, where manufacturing’s importance has declined sharply; indeed, the city has become an increasingly significant centre for both public and private international and national service-sector institutions.
Although foreign tourism to Germany is substantial, receipts from German tourists abroad exceed the receipts from foreign visitors to the country. In comparison with many of its neighbours, Germany does not rely heavily on tourism for income. The Alps and the Rhine and Moselle valleys are leading destinations, though urban areas (e.g., Frankfurt, Munich, and Berlin) also attract many visitors, and local festivals in places such as Bayreuth also entice tourists. Tourism to eastern Germany, particularly to the beaches along the Baltic Sea, has increased significantly since unification.
- Labour and taxation
Germany’s highly urban and industrialized character is reflected in its employment patterns. Services, including trade and finance, account for the largest share of employment. At the turn of the 21st century, about one-fifth of workers were employed in manufacturing, and just over 2 percent were employed in agriculture-related industries.
Prior to World War II most German labour unions were organized along partisan lines. After the war, however, trade unions were reconstituted to represent an entire industrial branch rather than simply a single trade or skill, thus avoiding interunion jostling within plants, and an independent German Trade Union Federation (Deutscher Gerwerkschaftsbund; DGB), which represents nearly all the country’s unionized industrial employees, was established. The federation is an agglomeration of mostly blue-collar unions (though there are some white-collar unions), the largest of which are the United Service Industries Union (Vereinte Dienstleistungsgewerkschaft), the Metalworkers’ Union (IG Metall), the Public Services and Transport Workers’ Union (Gewerkschaft Nahrung-Genuss-Gastätten), the Mining, Chemical, and Energy Union (Industriewerkschaft Bergbau, Chemie, Energie), and the Federation of Civil Servants (DBB–Beamtenbund und Tarifunion).
Although Germany’s social economy allows collective bargaining, unions are generally viewed as partners rather than opponents of business. The common interests of management and labour are expressed in works councils. Labour also has a right of codetermination (Mitbestimmungsrecht) through representation on managerial boards. About one-third of all German workers belong to a trade union. German’s average labour costs are among the highest in the world.
Taxes are the major source of revenue for all levels of government. Five types of taxes—value-added, wage, assessed income, energy, and corporate—account for nearly four-fifths of all revenues. The federal government and the states each receive more than two-fifths of the principal taxes, leaving the remainder for local councils. A host of lesser taxes are specific to either the federal level (such as the tax on tobacco and alcohol and customs duties), the states (tax on beer and motor vehicle licenses), or the local authorities (tax on real estate, trade, and public entertainment). The states also benefit from property taxes. Because the taxing potential of the states is unevenly distributed, the economically weaker or smaller states share in the tax revenue of the richer or more populous states through a process of “horizontal financial equalization,” which became an especially controversial matter after unification, when the poorer eastern German states became entitled to subsidies from western Germany. The federal corporate tax rate is about 25 percent, and, when local taxes are included, the overall tax burden reaches about 40 percent. Germany imposes a value-added tax of 16 percent to most goods and services. To spur economic growth, the German government reduced personal and business taxes in the late 1990s.
The federal government is obligated to transmit certain revenues to the EU. Germany’s disproportionately large payments to the EU have become a significant domestic and EU-wide political issue. As one of the world’s richest countries, Germany feels obliged to supplement its regular contributions to the United Nations with complex international aid programs of its own.
- Transportation and telecommunications
Germany has a dense network of communication facilities. Its geographic location in the heart of Europe also makes Germany responsible for facilitating the transit traffic serving neighbouring countries.
WATERWAYS
The Rhine has the great advantage of having a remarkably even flow, with a spring-summer high water from the Alpine snowmelt supplemented by autumn-winter rains in the Central German Uplands. It is navigable from its mouth to above Basel, Switzerland, with the support in its upper course of the French Grand Canal d’Alsace. Typically, river transport is accomplished by using push units propelling several barges. Since World War II the Rhine tributaries have been opened up for travel and transport. Navigation on the Moselle has been improved to the Saar region and Lorraine, on the Neckar to Stuttgart, and on the Main to provide a major European link to the Danube. Canals through the Ruhr region allow access to the northern German ports of Emden, Bremen, and Hamburg; waterway connections eastward to Berlin were once inadequate, especially at the crossing of the Elbe, but are being improved.
SEAPORTSHamburg, which handles some one-third of the overall tonnage by weight, is Germany’s principal port, accommodating the largest share of containers, as well as various ores and a wide range of general cargo. But because the largest tankers can no longer reach the Hamburg refining centre, Wilhelmshaven has become the prime destination for Germany’s oil imports, as well as a major port in general. The Weser ports (Bremen and Bremerhaven) also handle a significant amount of total tonnage and containers; Bremen has an important general cargo trade. Although Hamburg, the Weser ports, and Emden are able to transship heavy goods to the interior by waterway, they play a less important role in this area than Rotterdam (in the Netherlands) and other ports located at the mouth of the great Rhine waterway and closer to the Rhine-Ruhr area than the northern German ports are. Because the Elbe River leads to the port of Hamburg in what was West Germany and the Oder River to Szczecin (Stettin) in Poland, East Germany developed a new deep-sea port at Rostock, which was served by motorway and rail but had no waterway link. Some commodities needing fast service continued to arrive at special East German quays at Hamburg. Hamburg has regained much of its former Elbe trade since unification, but Rostock remains busy. Ferries for passengers, road vehicles, or railcars link Germany with Scandinavian destinations.
RAILWAYS
During the country’s partition, the rail system was divided as well. In West Germany the Deutsche Bundesbahn (German Federal Railroad) reconstructed the old system, converting it to electric and diesel traction. The configuration of the country placed the emphasis on north-south routes. The burdened Rhine valley lines and the difficult routes through Hessen were augmented by a superbly engineered (and extremely expensive) high-speed track that permitted speeds up to 155 miles (250 km) per hour.
East Germany retained the old name of Deutsche Reichsbahn (“German Imperial Railroad”) for its system. Postwar reconstruction was slow, with efforts centring on rail links with the country’s eastern European neighbours and the port of Rostock. The once-important east-west routes across the inner-German boundary were either removed or neglected. The Berlin outer-ring railroad was completed, enabling mainline and local traffic to avoid West Berlin. Unification revealed the dilapidated state of the system. Within Berlin, the trains, buses, and trams of the public transport were totally divided. Yet, when the border reopened, both the S-Bahn (Stadtbahn), an elevated railway system, and the U-Bahn (Untergrundbahn), the subway, were immediately able to resume service from east to west. (Two U-Bahn lines had continued to cross through areas of East Berlin but were not permitted to make stops at intermediate stations.)
A lengthy and costly process of fully restoring a unified system, both within Berlin and nationally, began in late 1989 and resulted in significant progress for eastern Germany’s railway network. Deutsche Bundesbahn and Deutsche Reichsbahn were officially merged under the name Deutsche Bahn in 1994. The railway operated under state ownership into the 21st century, although plans were made to privatize at least a portion of it. High-speed passenger rail service now links major German urban centres with one another and with other European destinations.
HIGHWAYS
Germany’s first high-speed roadway was actually a closed-circuit experimental racetrack that covered some 12 miles (19 km) near Berlin. Unveiled in 1921, this proto-autobahn inspired several other countries to follow with their own versions of high-speed expressways. In the 1930s Hitler exploited the autobahn for economic, military, and propaganda purposes, but during World War II this German innovation—regarded as a model for modern expressways—was battered. The West German government greatly extended the system from 700 miles (1,125 km) in 1950 to more than 5,000 miles (8,000 km) by the time of unification. With powerful German automobiles able to cruise at their top speeds without speed limits, the autobahn gained an aura of automobile-centred romanticism throughout the world in the second half of the 20th century. However, road construction has encountered serious opposition from the country’s environmentalist movement, and in inhabited areas the roads sometimes have been narrowed rather than widened to reduce traffic speed. Because the growth of the system has been slower than the growth of traffic, congestion is a serious problem, especially on motorways in industrial areas. Attempts to divert shipment of goods to the railways have not prevented a steady rise in the transport of goods by road. The current length of the entire network is more than 7,400 miles (12,000 km), making it the third largest system in the world, after those of the United States and China. Western German motorways have direct transfrontier connections with the similar systems of Denmark, the Netherlands, Belgium, France, and Austria.
With a lower growth rate of motor traffic (and an official policy of giving preference to the railroads), postwar construction of motorways was less advanced in East Germany. There were some improvements in central Germany, and new links to the ports of Rostock and Hamburg were constructed. The Berliner Ring, a circle of expressways around the city, was completed in 1979. With reunification, many transboundary roads were reopened and road surfaces improved. However, the construction of new roads has been hindered by conflicts between those seeking greater accessibility for automobiles and those seeking to protect the landscape and reduce air pollution.
AIR TRANSPORT
Germany’s major long-distance airline is Lufthansa, though there also are a number of other carriers that service European and North American destinations. Frankfurt’s airport, one of the world’s busiest, is the country’s largest. Airports in Düsseldorf, Munich, and Berlin (Tegel) are also of major importance. During the period of partition, passenger traffic from West Germany to West Berlin was restricted to the airlines of France, the United Kingdom, and the United States. After unification Berlin was opened to German carriers and indeed to carriers of other countries. East Germany had discouraged internal air traffic and the growth of regional airports, using the rail and Berlin subway systems to serve its major international airport, Berlin-Schönefeld, south of the city. During the late 1990s, expansion of Schönefeld began. The expanded Schönefeld would, upon its completion, be renamed Berlin Brandenburg Airport. With the closing of Templehof Airport in 2008 and the planned closing of Tegel, Berlin Brandenburg was scheduled to become Berlin’s only commercial airport by 2011. However, planning errors, cost overruns, and mismanagement led to massive delays in the completion of Berlin Brandenburg, and the airport’s opening was pushed back to late 2017. Tegel remained open in the interim.
TELECOMMUNICATIONS
After World War II West Germany developed an advanced telecommunications system. By contrast, the East German telephone system was completely insufficient; people requesting a telephone often were faced with a wait of up to 12 years. The deficiencies of the telecommunications system were a major impediment to the restructuring of the administration and the economy following unification, but by the late 1990s rapid reconstruction of the system using current technology made eastern Germany a world leader in advanced telecommunications infrastructure.
The leading German telecommunications company is Deutsche Telekom AG. During the late 1990s the entire sector was liberalized, increasing the number of telecommunications firms and competition for Deutsche Telekom from companies such as Vodafone and Telefónica Germany. The adoption of telecommunications services by German consumers has been widespread, particularly for cellular services. By the second decade of the 21st century, cellular subscriptions outnumbered people in Germany by a ratio of more than 1.25 to 1. By 2013 almost 85 percent of the population used the Internet regularly.
Government of Germany
Federal republic.
Culture Life of Germany
History of Germany
The Celts are believed to have been the first inhabitants of Germany. They were followed by German tribes at the end of the 2nd century B.C. German invasions destroyed the declining Roman Empire in the 4th and 5th centuries A.D. One of the tribes, the Franks, attained supremacy in western Europe under Charlemagne, who was crowned Holy Roman Emperor in 800. By the Treaty of Verdun (843), Charlemagne's lands east of the Rhine were ceded to the German Prince Louis. Additional territory acquired by the Treaty of Mersen (870) gave Germany approximately the area it maintained throughout the Middle Ages. For several centuries after Otto the Great was crowned king in 936, German rulers were also usually heads of the Holy Roman Empire.
By the 14th century, the Holy Roman Empire was little more than a loose federation of the German princes who elected the Holy Roman Emperor. In 1438, Albert of Hapsburg became emperor, and for the next several centuries the Hapsburg line ruled the Holy Roman Empire until its decline in 1806. Relations between state and church were changed by the Reformation, which began with Martin Luther's 95 theses, and came to a head in 1547, when Charles V scattered the forces of the Protestant League at Mühlberg. The Counter-Reformation followed. A dispute over the succession to the Bohemian throne brought on the Thirty Years' War (1618–1648), which devastated Germany and left the empire divided into hundreds of small principalities virtually independent of the emperor.
- The Rise of Bismarck and the Birth of the Second German Reich
Meanwhile, Prussia was developing into a state of considerable strength. Frederick the Great (1740–1786) reorganized the Prussian army and defeated Maria Theresa of Austria in a struggle over Silesia. After the defeat of Napoléon at Waterloo (1815), the struggle between Austria and Prussia for supremacy in Germany continued, reaching its climax in the defeat of Austria in the Seven Weeks' War (1866) and the formation of the Prussian-dominated North German Confederation (1867). The architect of this new German unity was Otto von Bismarck, a conservative, monarchist, and militaristic Prussian prime minister. He unified all of Germany in a series of three wars against Denmark (1864), Austria (1866), and France (1870–1871). On Jan. 18, 1871, King Wilhelm I of Prussia was proclaimed German emperor in the Hall of Mirrors at Versailles. The North German Confederation was abolished, and the Second German Reich, consisting of the North and South German states, was born. With a powerful army, an efficient bureaucracy, and a loyal bourgeoisie, Chancellor Bismarck consolidated a powerful centralized state.
Wilhelm II dismissed Bismarck in 1890 and embarked upon a “New Course,” stressing an intensified colonialism and a powerful navy. His chaotic foreign policy culminated in the diplomatic isolation of Germany and the disastrous defeat in World War I (1914–1918). The Second German Empire collapsed following the defeat of the German armies in 1918, the naval mutiny at Kiel, and the flight of the kaiser to the Netherlands. The Social Democrats, led by Friedrich Ebert and Philipp Scheidemann, crushed the Communists and established a moderate state, known as the Weimar Republic, with Ebert as president. President Ebert died on Feb. 28, 1925, and on April 26, Field Marshal Paul von Hindenburg was elected president. The majority of Germans regarded the Weimar Republic as a child of defeat, imposed on a Germany whose legitimate aspirations to world leadership had been thwarted by a worldwide conspiracy. Added to this were a crippling currency debacle, a tremendous burden of reparations, and acute economic distress.
- Adolf Hitler and WWII
Adolf Hitler, an Austrian war veteran and a fanatical nationalist, fanned discontent by promising a Greater Germany, abrogation of the Treaty of Versailles, restoration of Germany's lost colonies, and the destruction of the Jews, whom he scapegoated as the reason for Germany's downfall and depressed economy. When the Social Democrats and the Communists refused to combine against the Nazi threat, President von Hindenburg made Hitler the chancellor on Jan. 30, 1933. With the death of von Hindenburg on Aug. 2, 1934, Hitler repudiated the Treaty of Versailles and began full-scale rearmament. In 1935, he withdrew Germany from the League of Nations, and the next year he reoccupied the Rhineland and signed the Anti-Comintern pact with Japan, at the same time strengthening relations with Italy. Austria was annexed in March 1938. By the Munich agreement in Sept. 1938, he gained the Czech Sudetenland, and in violation of this agreement he completed the dismemberment of Czechoslovakia in March 1939. His invasion of Poland on Sept. 1, 1939, precipitated World War II.
Hitler established death camps to carry out “the final solution to the Jewish question.” By the end of the war, Hitler's Holocaust had killed 6 million Jews, as well as Gypsies, homosexuals, Communists, the handicapped, and others not fitting the Aryan ideal. After some dazzling initial successes in 1939–1942, Germany surrendered unconditionally to Allied and Soviet military commanders on May 8, 1945. On June 5 the four-nation Allied Control Council became the de facto government of Germany.
(For details of World War II and of the Holocaust, see Headline History, World War II .)
- Post-War Germany Is Disarmed, Demilitarized, and Divided
At the Berlin (or Potsdam) Conference (July 17–Aug. 2, 1945) President Truman, Premier Stalin, and Prime Minister Clement Attlee of Britain set forth the guiding principles of the Allied Control Council: Germany's complete disarmament and demilitarization, destruction of its war potential, rigid control of industry, and decentralization of the political and economic structure. Pending final determination of territorial questions at a peace conference, the three victors agreed to the ultimate transfer of the city of Königsberg (now Kaliningrad) and its adjacent area to the USSR and to the administration by Poland of former German territories lying generally east of the Oder-Neisse Line. For purposes of control, Germany was divided into four national occupation zones.
The Western powers were unable to agree with the USSR on any fundamental issues. Work of the Allied Control Council was hamstrung by repeated Soviet vetoes; and finally, on March 20, 1948, Russia walked out of the council. Meanwhile, the U.S. and Britain had taken steps to merge their zones economically (Bizone); on May 31, 1948, the U.S., Britain, France, and the Benelux countries agreed to set up a German state comprising the three Western zones. The USSR reacted by clamping a blockade on all ground communications between the Western zones and West Berlin, an enclave in the Soviet zone. The Western allies countered by organizing a gigantic airlift to fly supplies into the beleaguered city. The USSR was finally forced to lift the blockade on May 12, 1949.
- Federal Republic of Germany
The Federal Republic of Germany was proclaimed on May 23, 1949, with its capital at Bonn. In free elections, West German voters gave a majority in the constituent assembly to the Christian Democrats, with the Social Democrats largely making up the opposition. Konrad Adenauer became chancellor, and Theodor Heuss of the Free Democrats was elected the first president.
- Democratic Republic of Germany
The East German states adopted a more centralized constitution for the Democratic Republic of Germany, put into effect on Oct. 7, 1949. The USSR thereupon dissolved its occupation zone but Soviet troops remained. The Western allies declared that the East German Republic was a Soviet creation undertaken without self-determination and refused to recognize it. Soviet forces created a state controlled by the secret police with a single party, the Socialist Unity (Communist) Party.
Agreements in Paris in 1954 giving the Federal Republic full independence and complete sovereignty came into force on May 5, 1955. Under the agreement, West Germany and Italy became members of the Brussels treaty organization created in 1948 and renamed the Western European Union. West Germany also became a member of NATO. In 1955, the USSR recognized the Federal Republic. The Saar territory, under an agreement between France and West Germany, held a plebiscite, and despite economic links to France, elected to rejoin West Germany on Jan. 1, 1957.
The division between West Germany and East Germany was intensified when the Communists erected the Berlin Wall in 1961. In 1968, the East German Communist leader, Walter Ulbricht, imposed restrictions on West German movements into West Berlin. The Soviet-bloc invasion of Czechoslovakia in Aug. 1968 added to the tension. West Germany signed a treaty with Poland in 1970, renouncing force and setting Poland's western border at the Oder-Neisse Line. It subsequently resumed formal relations with Czechoslovakia in a pact that “voided” the Munich treaty that gave Nazi Germany the Sudetenland. By 1973, normal relations were established between East and West Germany and the two states entered the United Nations.
West German chancellor Willy Brandt, winner of a Nobel Peace Prize for his foreign policies, was forced to resign in 1974 when an East German spy was discovered to be one of his top staff members. Succeeding him was a moderate Social Democrat, Helmut Schmidt. Schmidt staunchly backed U.S. military strategy in Europe, staking his political fate on placing U.S. nuclear missiles in Germany unless the Soviet Union reduced its arsenal of intermediate missiles. He also strongly opposed nuclear-freeze proposals.
- Berlin Wall Falls, Germany Reunifies
Helmut Kohl of the Christian Democrat Party became chancellor in 1982. An economic upswing in 1986 led to Kohl's reelection. The fall of the Communist government in East Germany left only Soviet objections to German reunification to be dealt with. On the night of Nov. 9, 1989, the Berlin Wall was dismantled, making reunification all but inevitable. In July 1990, Kohl asked Soviet leader Gorbachev to drop his objections in exchange for financial aid from (West) Germany. Gorbachev agreed, and on Oct. 3, 1990, the German Democratic Republic acceded to the Federal Republic, and Germany became a united and sovereign state for the first time since 1945.
A reunited Berlin serves as the official capital of unified Germany, although the government continued to have administrative functions in Bonn during the 12-year transition period. The issues of the cost of reunification and the modernization of the former East Germany were serious considerations facing the reunified nation.
- Centrist Gerhard Schroder Elected Chancellor
In its most important election in decades, on Sept. 27, 1998, Germans chose Social Democrat Gerhard Schröder as chancellor over Christian Democrat incumbent Helmut Kohl, ending a 16-year-long rule that oversaw the reunification of Germany and symbolized the end of the cold war in Europe. A centrist, Schröder campaigned for “the new middle” and promised to rectify Germany's high unemployment rate of 10.6%.
Tension between the old-style left-wing and the more pro-business pragmatists within Schröder's government came to a head with the abrupt resignation of finance minister Oskar Lafontaine in March 1999, who was also chairman of the ruling Social Democratic Party. Lafontaine's plans to raise taxes—already nearly the highest in the world—on industry and on German wages went against the more centrist policies of Schröder. Hans Eichel was chosen to become the next finance minister.
Germany joined the other NATO allies in the military conflict in Kosovo in 1999. Before the Kosovo crisis, Germans had not participated in an armed conflict since World War II. Germany agreed to take 40,000 Kosovar refugees, the most of any NATO country.
In Dec. 1999, former chancellor Helmut Kohl and other high officials in the Christian Democrat Party (CDU) admitted accepting tens of millions of dollars in illegal donations during the 1980s and 1990s. The enormity of the scandal led to the virtual dismemberment of the CDU in early 2000, a party that had long been a stable conservative force in German politics.
In July 2000, Schröder managed to pass significant tax reforms that would lower the top income-tax rate from 51% to 42% by 2005. He also eliminated the capital-gains tax on companies selling shares in other companies, a measure that was expected to spur mergers. In May 2001, the German Parliament authorized the payment of $4.4 billion in compensation to 1.2 million surviving Nazi-era slave laborers.
Schröder was narrowly reelected in Sept. 2002, defeating conservative businessman Edmund Stoiber. Schröder's Social Democrats and coalition partner, the Greens, won a razor-thin majority in Parliament. Schröder's deft handling of Germany's catastrophic floods in August and his tough stance against U.S. plans for a preemptive attack on Iraq buoyed him in the weeks leading up to the election. Germany's continued reluctance to support the U.S. call for military action against Iraq severely strained its relations with Washington.
- Germany's Unemployment Rate Reaches 12%
Germany's recession continued in 2003: for the previous three years, Europe's biggest economy had the lowest growth rate among EU countries. In Aug. 2003, Schröder unfurled an ambitious fiscal-reform package and called his proposal “the most significant set of structural reforms in the social history of Germany.” Schröder's reforms, however, did little to rejuvenate the economy and angered many Germans, accustomed to their country's generous social welfare programs. His reforms reduced national health insurance and cut unemployment benefits at a time when unemployment had reached an alarming 12%.
National elections in Sept. 2005 ended in a deadlock: the conservative CDU/CSU and its leader, Angela Merkel, received 35.2% and Gerhard Schröder's SPD garnered 34.3%. After weeks of wrangling to form a governing coalition, the first left-right “grand coalition” in Germany in 36 years was cobbled together, and on Nov. 22, Merkel became Germany's first female chancellor. During her first year, Merkel showed strong leadership in international relations, but her domestic economic reform agenda has stalled. Her first major initiative, reforming the health care system, was widely viewed as ineffectual.
- Germany Takes Major Role in Managing Euro Debt Crisis
Germany was hit hard by the global financial crisis in late 2008 and 2009. In October 2008, the government financed a $68 billion bailout of one of the country's largest banks, Hypo Real Estate, to prevent it from collapse. That was followed in February 2009 with a $63 billion stimulus package to help lift the battered economy out of recession.
Merkel earned another four-year term as chancellor in September 2009 elections. Her party, the Christian Democrats, formed a governing coalition with the pro-business Free Democrats. President Kohler was reelected in 2009. He resigned in May 2010 after his statement that a country of Germany's size sometimes must justify troop deployment abroad to protect its economic interests sparked controversy and outrage. He was replaced by Christian Wulff.
Germany learned during the debt crisis of 2010 and 2011 that responsibility comes with holding the mantle as Europe's largest economy. Indeed, Merkel faced criticism in early 2010 for her delay in seeking parliamentary approval of a bailout package for Greece, which was teetering on the brink of financial collapse. International observers remarked that she should have acted sooner; she was criticized by voters for coming to the rescue of another country. Nevertheless, parliament approved a 22.4 billion euro bailout for Greece in May 2010. Voters expressed their displeasure with Germany's contribution at the polls—Merkel lost her majority in the upper house of parliament in May when her coalition lost regional elections in North-Rhine Westphalia. That defeat was followed by another in March 2011 in Baden-Wuerttemberg.
Germany's parliament approved a plan to increase the euro-zone's bail-out fund in September 2011, and that was followed in late October with the agreement by the leaders of the euro zone of a wider package meant to bring Europe's debt crisis under control.
Christian Wulff resigned as president in February 2012 to face a corruption inquiry. Despite objections by Merkel, Parliament approved Joachim Gauck, a Lutheran pastor from East Germany, as his successor. Gauck was the preferred candidate of the opposition and one of Merkel's coalition partners, the Free Democratic Party. His election was seen as a rebuke to the chancellor.
- New Island Emerges Off the Coast
A new island has emerged from the North Sea, off the coast of Germany, located sixteen miles from the German state, Schleswig Holstein. The 34 acre island has been named Norderoogsand, but it is being referred to as Bird Island because many birds, including sea gulls, grey geese, ducks, and peregrine falcons have been found there nesting or feeding. Forty-nine plant species have also been found on the island.
The island appeared slowly over a ten year period from 2003 through 2013. The land mass emerged due to tidal action, not global warming. The island’s appearance surprised scientists because that area of the North Sea has strong winds and shifting tides.
- Merkel Elected to a Third Term; Spying Scandals Sour Relationship with U.S.
Merkel was elected to a third four-year term in September 2013. Her performance at the polls exceeded expectations. Her center-right Christian Democrats and sister party Christian Social Union in Bavaria won 311 seats out of 630 in the lower house of parliament—the best showing since unification. The resounding victory confirmed Merkel's position as the strongest leader in Europe. Another coalition partner, the Free Democrats, however, was ousted from parliament, garnering less than 5% of the vote. After five weeks of talks, the chancellor's Christian Democrats formed a grand coalition with the center-left Social Democrats in November. Together they will hold 80% of the seats. As part of the negotiations, the Christian Democrats adopted policies to the left of the party's. For example, they agreed to lower the retirement age from 67 to 63 for some workers and implement the country's first national minimum wage of €8.50 ($11.50). Germany had allowed unions and companies negotiate and set wages by industry.
In October, NSA documents leaked to the media by Edward Snowden revealed that the agency had tapped Merkel's cellphone for about 10 years, beginning in 2002. Outraged, she called U.S. president Barack Obama, who apologized and promised that such activity would not continue. The incident soured the relationship between the normally close allies. Ties were further strained in July 2104, amid reports that the U.S. hired a clerk at Germany's intelligence agency to steal hundreds of documents. Days later, German officials announced they believe they had uncovered a second spy working for the U.S. In response, Germany expelled the CIA station chief from Berlin.
The tables were turned in August 2014, when news reports said Germany has made a practice of spying on Turkey. Turkey demanded an explanation. Germany neither confirmed nor denied the allegation.
Disclaimer
This is not the official site of this country. Most of the information in this site were taken from the U.S. Department of State, The Central Intelligence Agency, The United Nations, [1],[2], [3], [4], [5],[6], [7], [8], [9], [10], [11], [12], [13], [14],[15], [16], [17], [18], [19], [20], [21], [22], [23], [24],[25], [26], [27], [28], [29], [30],[31], [32], [33], [34], and the [35].
Other sources of information will be mentioned as they are posted.