epa07978598 German Chancellor Angela Merkel looks on as she attends a session of the German parliament Bundestag in Berlin, Germany, 07 November 2019. EPA/CLEMENS BILAN
epa07978598 German Chancellor Angela Merkel looks on as she attends a session of the German parliament Bundestag in Berlin, Germany, 07 November 2019. EPA/CLEMENS BILAN
epa07978598 German Chancellor Angela Merkel looks on as she attends a session of the German parliament Bundestag in Berlin, Germany, 07 November 2019. EPA/CLEMENS BILAN
epa07978598 German Chancellor Angela Merkel looks on as she attends a session of the German parliament Bundestag in Berlin, Germany, 07 November 2019. EPA/CLEMENS BILAN

Analysis: Divided perceptions haunt Germany 30 years after Berlin Wall fell


Damien McElroy
  • English
  • Arabic

In an interview to mark the 30th anniversary of the Berlin Wall, Angela Merkel, Germany's Chancellor, adamantly refused to enter into speculation on the alternative history had reunification not happened in the way it did in 1990.

Instead she pointed out that the different histories of German citizens could not be wished away.

"I have been chancellor of the Federal Republic of Germany for 14 years and am responsible for serving all people in Germany," she told Der Spiegel magazine.

"The assumption that I should prioritise the concerns of eastern Germans is thus wrong. The different life experiences in eastern and western Germany are a reality.

"We should talk more about that and try harder to understand each other.

"I am aware that for a certain generation of East Germans, even as their lives became free by virtue of the peaceful revolution, they did not always become easier.

"One thing that I find completely unacceptable: when people with West German backgrounds go to the East and claim that our current state is no better than the GDR. That is something that must be adamantly rejected."

As a female scientist who grew up in the former East and was 35 when the Wall came down, Mrs Merkel has a very personal perspective on how the country fared before and since.

Overall German unification has been a success, resetting itsplace in the world as Europe's most important nation and an economic superpower. What gets more attention is the pitfalls or continuing divides since unification.

Demographic trends show some parts of the old East Germany will see population drops of 20 per cent or more over the next few decades.

Mrs Merkel said not one leading university is led by a former easterner and less than 4 per cent of  top jobs are held by someone born on the wrong side of the Iron Curtain.

Divisions between East and West Germany pre-date Communism and are rooted in religious and cultural schisms of medieval times.

Konrad Adenauer, the first West German chancellor, welcomed the post-war split and referred to the East as a voyage to Asia.

After celebrating the fall of the Wall, West Germans were able to go to work the next day and live as they had done before. No East German had that luxury.

Mrs Merkel believes that while East Germans had learn to live in freedom, that did not mean they did not cherish aspects of their lives behind the Iron Curtain.

That discontent has seen populists and extremist gain far more support in East Germany than in western states.

To Mrs Merkel, the phenomenon of ostalgie (nostalgia for the former German Democratic Republic as the East was formally known) has a political edge.

"There is one thing that many West Germans have a hard time understanding, that even in a dictatorship it was possible to lead a successful life; that we had friends and family with whom we celebrated birthdays and Christmas or shared tragedies, despite the state – always, of course, with a certain wariness of the state," she said.

"Because this aspect of our individual lives in the GDR isn't understood, and is sometimes even ignored, by many West Germans, the reaction from many East Germans today is a kind of romanticisation, an attitude of 'nobody can take the lives we had away from us'."

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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