Study shows high cost of German reunification: report

BERLIN Sat Nov 7, 2009 11:30am EST

1 of 4. Domino pieces are lined up in front of the Brandenburg Gate in Berlin November 7, 2009.

Credit: Reuters/Pawel Kopczynski

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BERLIN (Reuters) - As Germany prepares to celebrate the 20th anniversary of the fall of the Berlin Wall, a new study shows that some 1.3 trillion euros ($1.9 trillion) have been transferred from the west to rebuild the east, a newspaper reported on Saturday.

The report by the Halle-based IWH research institute showed the net transfers from west to east -- a sum equivalent to over half Germany's total economic output in 2008 -- had "risen significantly" in the past decade, weekly Welt am Sonntag said.

Monday will be the 20th anniversary of the fall of the Wall, which the once-divided city will mark by toppling 1,000 brightly colored dominoes that were being erected on Saturday along a 1.5 kilometer stretch of the Cold War barrier's original path.

The east has cast off many shackles from its Communist past, thanks partly to the transfers, but unemployment remains nearly double that of the west and economists say it is still years away from catching up with the richer part of the country.

The unpublished IWH report was originally commissioned by the government in 2006 but the finance ministry later withdrew its name from the project because of differences of opinion about how the figures were calculated, the newspaper said.

The Cologne-based IW economic research institute said this week eastern output per capita would rise to around 80 percent of western levels from 70 percent now over the next decade. Eastern output was around 33 percent of the west in 1991.

German Chancellor Angela Merkel will meet world leaders past and present to mark the historic event on Monday, when speeches are due be held in Berlin by Russian President Dmitry Medvedev and British Prime Minister Gordon Brown, among others.

In her weekly podcast, Merkel, who was working as a scientific researcher in east Berlin at the time, said the fall of the Wall was the "the happiest day in recent Germany history."

She added she went off to the sauna "as usual on Thursdays" when she heard the East-West border was about to open, an event which proved a watershed in 20th Century history.

(Reporting by Dave Graham; editing by Chris Pizzey)

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