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 Within months of the Berlin Wall being pulled down in 1989, what
had been the center of East Germany's toy industry was in crisis.
Unable to compete on a global market, factories were being shut down
while buildings were falling to pieces and unemployment queues were
growing rapidly.
But just as western Germany achieved an economic miracle in the
decades after World War Two, Sonneberg offers hope that the east can
complete its recovery from the collapse of communism and narrow the
gap with west even further.
As the 25th anniversary of the fall of the Wall approaches on Nov.
9, Germans still express frustration at how far behind the eastern
economy remains. But Sonneberg, which nestles in the forested hills
of Thuringia about 320 km (200 miles) southwest of Berlin,
contradicts many assumptions.
During the 1960s and early 1970s, even East Germans had difficulty
visiting Sonneberg as the authorities feared they might try to
escape across the nearby border with West Germany, lined with
fences, watch towers and minefields.
But since 1990 and the end of the centrally-planned economy about
100 firms have flocked to the town of 24,000 people. Economic output
has grown more than fourfold and unemployment, which hit almost 13
percent by 1997, has dropped to 3.5 percent, the lowest in the east
and rivaling even the most prosperous areas of western Germany.
 This, says Sonneberg's mayor Sibylle Abel, is evidence that the
"flourishing landscapes" - promised in 1990 to the eastern states by
the first chancellor of the reunited Germany, Helmut Kohl - are
within arm's reach.
"Back in 1990 the streets of Sonneberg were in a state of disrepair,
the houses in the town center were crumbling and some firms weren't
economically viable. That has all been remedied now and there are
hardly any differences when compared with a town in the former West
Germany," she said.
Chancellor Angela Merkel, who was brought up in East Germany,
believes Kohl's promise has been fulfilled, albeit a long time after
he had envisaged. "Today we have the flourishing landscapes that
Helmut Kohl once talked about," she said in a podcast, adding that
mass emigration from the east had ceased and people were starting to
move back.
Sonneberg is not yet typical, as it has grown far faster than the
rest of eastern Germany. Per capita tax revenues of the federal
states that once formed East Germany were only around half the west
German level last year. None of the 30 top German companies in the
DAX stock index is based there.
Unemployment in some eastern towns is above 12 percent, pay is lower
and opinion polls suggest easterners are unhappier than westerners.
This may have contributed to a surge in support for the Alternative
for Germany, a eurosceptic protest party, in recent elections in
three eastern states.
But overall, the east is gradually catching up. Gross domestic
product (GDP) per capita has reached two thirds of the western
level, up from one third in 1991, according to KfW state development
bank. This is no small feat for a region that was on the brink of
bankruptcy at reunification.
Its economy has grown faster than countries in eastern Europe such
as Poland and lies in the European mid-field in terms of GDP per
capita, well above Greece and only just below major euro zone
members such as Italy and Spain, KfW says.
Karl Brenke, an economist at the DIW think-tank, said eastern
Germany even compares favorably with France on some measures because
it has re-industrialized. It creates 3,400 euros of industrial
revenue per inhabitant a year compared with 2,900 in France, he
said. It also beats Britain on this measure.
"After reunification, eastern Germany experienced a huge industrial
crash and people worried it would de-industrialize," Brenke said.
"That happened for a while but then they really ramped up industrial
production, whereas in France there has been a sort of creeping
decline for around 20 years."
 TOYS TO TOYOTA
Sonneberg, which before World War One produced a fifth of the
world's toys, quickly saw reunification as an opportunity. It
secured subsidies to improve its infrastructure and built five
industrial parks, four of which are full.
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Alongside a small number of surviving toy firms, the town is full of
factories processing plastic, metal and ceramics and making machines
and car parts.
On the outskirts lies a complex of factory and warehouse buildings
run by Mann+Hummel, the area's biggest industrial employer.
Originally opened in 1903, this factory later churned out clothes
pegs, plates and car parts under the communists. After reunification
Mann+Hummel bought it in one of the many takeovers of eastern
enterprises by western firms. Today it supplies components to big
names in the auto industry such as BMW, Daimler and Toyota. Staff
have grown from 100 in 1991 to 450. "Since reunification we've
made a huge leap forward technologically and in terms of our
buildings and the qualifications of our employees, so you can
certainly say we've got a good basis for 'flourishing landscapes'
here now," said Thomas Lange-Stalinski, head of Mann+Hummel's
Sonneberg factory.
All that remains of the factory's East German past are a few workers
employed before reunification and a traditional sausage barbecue for
staff every Friday morning.
Another example of Sonneberg's success is PIKO, a model railway
maker set up in 1949 as the then Soviet military administration
tried to boost morale in the eastern bloc. It was taken over by a
westerner in 1992 and has increased its staff from 90 to 550, spread
between Sonneberg and China.
Sales to markets including Russia, the United States and western
Europe have roughly doubled in the last 10 years. Marketing director
Jens Beyer said the transition from state-run firm to private
company was tough but ultimately successful.
"It was important to restructure production and make it more
efficient, improve processes and of course increase production, and
it was especially important to crank up marketing and to present the
product accordingly," he said.
GOODBYE LENIN
Such examples of prospering firms in eastern Germany strengthen
KfW's argument that the transformation is "an unparalleled success
story".
Westerners have long grumbled about having to subsidize their fellow
citizens in the east, particularly through a "solidarity" surcharge
on their income tax bills.
But the Sunday edition of the Frankfurter Allgemeine newspaper
recently went against the grain by saying "Danke, Ossis!" ("Thanks
Easties!") in a headline. In the accompanying article, it argued
that the burden of rebuilding the east had forced Germany to reform
its economy long before other euro zone countries. This in turn had
helped Germany to avoid the worst of the bloc's crisis in the past
five years.
The eastern states are now 76 percent as productive as their western
counterparts, up from 35 percent in 1991. While unemployment is
higher, the gap has narrowed to 4.2 percentage points from 10.1 in
2003. In real terms, easterners' disposable income has reached 89
percent of the west German level.
"In many ways it's astonishing that East Germany has managed to
reinvent itself and re-industrialize in a relatively short time
after 40 years of being a planned economy," said DIW.
Back at Sonneberg town hall no one has much time for "Ostalgie", a
nostalgia for the communist state officially called the German
Democratic Republic (GDR) that was explored in the 2003 hit movie
"Goodbye Lenin".
"We've really benefited from reunification; we wouldn't want to have
the GDR back," said Mayor Abel.
(Writing by Michelle Martin; Editing by Stephen Brown and David
Stamp)
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