3.6. Summary
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its outputs to the Soviet Union as trade within the bloc had the highest priority. Thus, East Germany did not enjoy any right of self-determination With the split of the German state, in both areas new factories were needed as there was no access to the ones from the other part. The respective central banks managed to service internal German trade, facilitating transactions with “Swings” and interest-free overdraft. Furthermore, it was agreed that trade between the German states should not be considered as foreign trade and should be custom-free. However, the traded volume never achieved the volume before the split, mainly due to East Germany’s obligation towards the USSR. Hence, the interest-free overdraft was generally used by the German Democratic Republic. After the re-unification, the German Democratic Republic accepted the currency of the Federal Republic of Germany and agreed to adopt the economic, monetary and social legislation. However, East German producers not only struggled to keep up with the West German standards because of outdated production processes but also lost their main trading partner. The German state is characterised by federalism as indicated in its official name Federal Republic of Germany, which means that separate states are united but are granted autonomy to maintain their own integrity. This mode goes back to the time when Germany was divided into occupation zones. The Western Allied powers agreed on this concept for two reasons. Firstly, it was easier for them to maintain the required administration by making decisions based on local needs and requirement. Secondly, German people have always had a dual sense of belonging as the German state has been formed out of various ethnicities. However, the split was executed in an arbitrary way without considering the historical context. After the re-integration of East Germany into the Federal Republic of Germany, the question arose whether the East German states were treated equally, especially since the disproportions in wealth between the West and the East were visible. Switching to the legal context, the distribution of power between the federal and federal state level is regulated in the German Grundgesetz (Basic Law). Matters regarding currency, trading areas, trade treaties, free movement of goods, and the exchange of goods including customs belong to the scope of the Federal Republic, however federal states have concurrent legislative power regarding trade. Furthermore, they are responsible for their own budgeting and need to take care of the “economic equilibrium”. Generally, the distribution of powers cannot be assigned to one specific party and depends on the case under consideration.
