chapter  8
Rehabilitation versus Privatization: A Comparative Analysis
Pages 32

The primacy of privatization in the Treuhandanstalt’s business policy was the subject of a heated economic controversy. The issue was not the objective of privatization but the question whether the Treuhandanstalt should rehabilitate the firms it held before it sold them off. In the Treuhandgesetz, the law governing the Treuhandanstalt, the legislative chose to leave this question open.1 One camp, represented by the Sachverständigenrat (SVR 1990, §§517-519; 1991a, §§20-28; 1991b, §§485-496; 1992, §§303-304), the economic research institutes (Gemeinschaftsdiagnose 1990, 626; 1991a, 250; 1991b, 615; 1992a, 224-225; 1992b, 63-65; 1993a, 264), and numerous other economists (Lipp 1990, 11; Hax 1992, 149-151; Siebert 1992, 103111), called for a clear-cut priority for rapid privatization, demanding that the Treuhandanstalt refrained as far as possible from rehabilitating the firms it held. Their antipodes, represented chiefly by economists of the Memorandum-Gruppe, called for the Treuhandanstalt to rehabilitate resolutely the firms it held in order to preserve Eastern Germany’s industrial structure (Arbeitsgruppe Alternative Wirtschaftspolitik 1992, 129-130; Priewe/Hickel 1992, 183-184; Priewe 1991, 208-215).