Treuhand's President Strives to Keep Social Dimension in Focus

BIRGIT BREUEL took over the east German Treuhandanstalt in April after its second president in a year, Detlev Rohwedder, was assassinated by Red Army Faction guerrillas. She is currently in the United States to open Treuhand offices in New York and Washington. She spoke with the Monitor in Berlin Oct. 23. Excerpts follow:Is the Treuhand entering a new phase? We are certainly in a new phase. Simultaneous to building up the Treuhand, we had to make important decisions. A normal businessman [in this situation] would have closed his store for six months, thought about how he should organize it, and then begun to work. We didn't have that chance. Meanwhile, we've refined our procedures in essential ways. We're well-equipped with personnel and have assembled a know-how that's unique in the world. In this way, we've come into more navigable waters. We just need to watch out that in the present phase the can-do attitude and the sales mentality that were part of the first few months don't die out.

The Treuhand has been criticized for making bad decisions, perhaps even criminal ones. To what extent were mistakes made, and how serious were they?

Making mistakes in the build-up phase was unavoidable. We were practically without employees, without technical support, without files on the firms, yet every day we had to make decisions about firms and whether they should go into bankruptcy. No one knows yet if any kind of criminality came into play then. I can't give you any guarantee, but I'm tremendously impressed with what the Treuhand employees achieve, and I will not insinuate that anyone has [broken the law]. It's right that cases [that are under investigation] and which are being discussed in public result in pressure that then leads us to further control mechanisms. We constantly review our own control mechanisms. However, I'm a committed advocate of "operative" business, because it is essential for us to find, as soon as possible, new owners who can get the economy going.

The Treuhand is stepping up marketing, especially to foreign investors. Why is foreign investment important? Plenty of German firms appear interested.

That's true. We have enough potential investors. But we would like to have more foreign investors, because we believe the ability of this economy to compete is only secured when foreign firms invest here. At the beginning, we weren't active overseas because we simply weren't able to be. We needed six months just to gather the basic data [on the East German firms]. At that time, West German firms had an advantage, because they already knew the East German firms because they traded with them.

Why should a non-German firm invest here?

For a non-European firm, it's clear that they would get access to the European Community market. In addition - and that goes for European firms too - they have a very flexible negotiating partner in us, because we're trying to win investors. In a few years, investors here will have the most modern infrastructure in Europe because everything is being newly done. Investors will inherit a notable know-how over the East-bloc markets and a motivated and qualified work force.

Have negotiations and prices for businesses changed in the last year?

No. There's no established system of negotiating. There's a lot of flexibility. That goes for debt relief - we take over some of the old debts. That goes for the participation of the Treuhand in cleaning up old environmental damage, and that goes for the Treuhand's share in the costs of social programs. The crucial things [considered in a buyer] are the business plan and the price.

Does the Treuhand have the right mixture of social concern and business drive?

I can't tell you whether we have the right mixture, because every individual will consider this differently. We say a new owner is the best that can happen, also from the social point of view, because the business gets new structures, new perspectives. That doesn't change the fact that we committed ourselves socially. The social aspect enters into every decision we make, because we can't take firms that have no future and simply shut them down or let them go bankrupt. Instead, they are very slowly wound down.

Is the Treuhand a model for East European countries which also need to privatize?

It would be arrogant to say we're a model. But we are naturally ready to share our experience. A few days ago we had dinner with the ambassadors of the former Comecon states and agreed that at the beginning of next year, we will have a workshop that brings together their experts and our experts. I think some technical things [are copyable]. For instance, how you first look at the firms and gather basic data on them.

Is the old communist guard still present in these firms?

This is a very difficult issue which considerably burdens people emotionally. We have fired about 400 managers because they had a past which wasn't acceptable and because the work force refused to work with them.

You must know that the Treuhand is not very well loved, either by investors or east Germans. Do you think this will change?

The Treuhand will, in my opinion, never be loved, but respected. I can tell you why we can't be loved. All hard decisions must be made here. We have taken over the existing economy. We must shut down a lot of factories and lay a lot of people off. We have 40 years of a socialist economy to hollow out and that this isn't our fault.