ABSTRACT

East Germany’s economic transformation process rested in the control of a government agency, the Treuhandanstalt. East Germany’s ‘new’ economic system was to be modelled after West Germany’s, and the Treuhandanstalt was the vehicle chosen to enact the government’s privatisation policy. The reformers envisaged that the Treuhandanstalt would transform the assets of the German Democratic Republic into a new economic and social system. The Trustee Act redefined the mission of the Treuhandanstalt as ‘privatisation of firms being indispensable for the transition into a market economy’. Considering the immensity of the Treuhan's task, this conflict of privatisation over restructuring could have been avoided if the agency had been given a precisely defined mandate. The work was divided to facilitate the privatisation process. The Treuhand head office in Berlin had responsibility for policy making, for large-sized privatisation projects and for complex cases. Privatisation has long been popular in western economies as a means of improving efficiency and creating a more enterprising business climate.