Geoscience Reference
In-Depth Information
TABLE 6.4.
Incorporating the East: A Multidimensional Effort (*)
1991-1998
1991 1992 1993
1994 1995 1996 1997 1998
Transfers from the
Federal Budget
75
88
114
114
135
138
131
139
German Unity Fund
31
24
36.56
−−−−
EU
4
5
5
6
7
7
7
7
Unemployment Insurance
25
38
38
28
23
26
26
28
Pension Scheme
-
5
9
12
17
19
18
18
Transfers from Western
Lander/Gemeinden
5
5
10
14
10
11
11
11
TOTAL
140
165
212.5 210
192
201
193
203
* Figures in DM billion.
Source:
Antwort der Parlamentarishen Staatssekret arin (Hendriks, 03/28/2006)&Nebaumer
(1996,p.580).
early retirement policy/pensions, unemployment insurance, social assistance,
and subsidized public employment programs. The unsuccessful attempt to pur-
sue wage equalization and the new structure of political incentives demanded
a fast pace in the process of extending Western social insurance and welfare
systems toward the East. In fulfillment of provisions established in the Uni-
fication treaties, and with start-up financial resources channeled through the
German Unity Fund, unemployment insurance was extended as early as July
1990, whereas social assistance and public insurance pensions were open to
Eastern citizens as early as 1991 and 1992 respectively (Flockton
1999
: 33-51).
Table 6.4
provides a systematic overview of the incorporation effort.
Concerning direct interregional transfers, early efforts were dominated by
the German Unity Fund. The German Unity Fund was created in 1990. Much
like richer countries in the European Union, Western l ander were willing to
transfer resources interregionally to insure themselves against massive immi-
gration of dependents. The German Unity Fund consisted of an extra budgetary
provision of 115 DM billion (that actually increased to over 140 DM billion,
as reflected in
Table 6.3
). Out of this amount, 15% was dedicated to federal
spending in the new l ander and 85% was allocated to direct transfers to them
according to the number of inhabitants. These 140 DM billion were raised via
borrowing on credit markets and were to be paid in five years jointly by the
Bund and the western l ander (20 DM billion initially by the Bund and 47.5
DM billion by both the federation and Western l ander as debt services for five
years).
The flip-side of this effort, though, was the effective exclusion of the new
l ander from the formal system of interregional redistribution (FA) for a period
of five years, until the end of 1995. Furthermore, their inclusion in the Ver-
bundsystem was subject to a number of important exceptions (Biehl and Ungar
1991
: 39-65). The share of VAT was the most important one. As of 1990,
Eastern l ander would receive the equivalent of 55% of the share of the VAT
