Privatization in Eastern Germany: The Never-Ending Story of the Treuhand

The Treuhandanstalt—abbreviated the Treuhand—was the privatization agency for eastern Germany. At the end of 1994 it officially ended its operations. This was accompanied by celebration and documentation that claimed the agency had fulfilled its task of privatizing the former East German economy. The president of the agency declared it had achieved its goal of making itself superfluous within the shortest time possible. Unfortunately, the above success story tells only part of what actually happened. It is correct that the Treuhand no longer exists. However, this does not mean that all the Treuhand bureaucrats suddenly lost their jobs. Effective January 1, 1995, the Treuhand was renamed the Bundesanstalt fur vereinigungsbedingte Sonderaufgaben (Federal Agency for Unification Tasks), BvS for short. This agency is responsible for the management of the privatization contracts, many of which are being renegotiated, and for the remaining privatizations and liquidations. Moreover, the reorganization of the Treuhand’s activities has led to a new disaggregated institutional setup (Table 1; for more details, see Appendix).