This chapter explores how a specific constellation of Swiss consulting experts, financial advisors, and diplomats became involved in the economic restructuring of eastern Germany after November 1989. A nation of fewer than seven million, the Swiss topped the list of Treuhandanstalt (Treuhand) investors in the five states of eastern Germany and the eastern half of Berlin, surpassing the efforts of much larger and more influential competitors, including the enlarged Germany’s most important European Community (EC) partners, Britain and France (I address these two countries’ engagements in eastern Germany in Chapter 3). During the Treuhand era, Switzerland led the nations investing in eastern Germany, with 139 privatizations, followed by Britain (124), Austria (100), and the Netherlands (96).

Ties between East and West Germany help to explain how Switzerland became an important investor in the new federal states. Even more significant in accounting for Swiss successes were features of Switzerland’s own economy. The origins of Swiss engagements ultimately lay primarily in developments in Bern, Basel, and especially Zurich, and only secondarily in unifying Germany. A rapid post-Wall deepening of Swiss contacts with authorities of the German Democratic Republic helped pave the way for the involvement of Swiss consulting experts, financial professionals, and diplomats in the economic restructuring of eastern Germany as its economy simultaneously opened up and drastically contracted after November 1989. Chapter 1 illustrates that capital did not merely “flow” across unifying Germany’s borders, as many economists’ definitions of direct sales to foreigners suggest. When it came to the sale of assets to investors from Switzerland and other nations, historical relationships figured in significant ways that economic theory often neglects to consider.1  Facilitators within and beyond Germany actively promoted (and thwarted) investments. Well-placed individuals cashed in on ties forged in the 1980s with high-ranking East Germans. Nor was investment between firms—typically described by economists as private or external investment—decoupled from public debt.2  Rooted in commercial relationships between the two Germanys in the decade prior to the Treuhand-led privatization, Swiss approaches represent the obverse of Anglo-American-inspired consultancy models that granted limited attention to specific investment contexts.

Swiss investment successes flowed from many cultural similarities and a few key differences. The Alpine federation and West Germany shared much, notably a language (for two-thirds of Swiss citizens), a border, legal norms, and extensive economic and social contacts, including with the former East Germany.3  Even apparent imbalances in the relationship, such as the fact that the Federal Republic of Germany (FRG) was Switzerland’s most important trading partner and not vice versa and that Switzerland’s banks were far more successful than those in West Germany in securing the wealth of private individuals from around the world, point more to shared than to divergent interests.4 

Then as now, the importance of German economic ties for Swiss authorities can hardly be overstated. For all the similarities with West Germany’s economy, notably its own niche manufacturing enterprises like those typifying the Federal Republic’s Mittelstand, Switzerland differed from its powerful northern neighbor in significant ways. Prominent among these were its banking secrecy laws and its numerous “asset managers,” affiliates, brokerages, investment houses, consulting concerns, and private banks. Having played special roles in facilitating commerce between the postwar German states during the eras of détente, these actors’ engagement informed Swiss approaches immediately after the Wall fell.

A striking aspect of post-Wall economic developments in East and West Germany is the mediation of German-speaking investment promoters based in Switzerland. This chapter traces mediated Swiss engagements within eastern and western Germany in order to lay bare economic interactions among several Central European nations after November 9, 1989. Swiss intermediaries moved swiftly to exploit changing relations between industrial and political leaders of the two German states. The most important organization was a Swiss-German trade association known as the Handelskammer Deutschland-Schweiz (hereafter referred to as the Handelskammer). The Handelskammer faced internal competition within Switzerland, a fact that that strengthened the Alpine country’s initiatives to exploit rapidly changing relations between the two postwar German states vis-à-vis other European—and especially western German—competitors after November 9, 1989.