The East German regime started to falter in May 1989, when the removal of Hungary's border fence opened a hole in the Iron Curtain. It caused an exodus of thousands of East Germans fleeing to West Germany and Austria via Hungary. The Peaceful Revolution, a series of protests by East Germans, led to the GDR's first free elections on 18 March 1990, and to the negotiations …show more content…
Initially, no timetable was proposed. However, events rapidly came to a head in early 1990. First, in March, the Party of Democratic Socialism—the former Socialist Unity Party of Germany—was heavily defeated in East Germany's first free elections. A grand coalition was formed under Lothar de Maizière, leader of the East German wing of Kohl's Christian Democratic Union, on a platform of speedy reunification. Second, East Germany's economy and infrastructure underwent a swift and near-total collapse. While East Germany had long been reckoned as having the most robust economy in the Soviet bloc, the removal of Communist hegemony revealed the ramshackle foundations of that system. The East German mark had been practically worthless outside of East Germany for some time before the events of 1989–90 further magnified the problem.
Economic …show more content…
On 18 May 1990, the two German states signed a treaty agreeing on monetary, economic and social union. This treaty is called Vertrag über die Schaffung einer Währungs-, Wirtschafts- und Sozialunion zwischen der Deutschen Demokratischen Republik und der Bundesrepublik Deutschland in German and came into force on 1 July 1990, with the Deutsche Mark replacing the East German mark as the official currency of East Germany. The Deutsche Mark had a very high reputation among the East Germans and was considered stable. While the GDR transferred its financial policy sovereignty to West Germany, the West started granting subsidies for the GDR budget and social security system. At the same time many West German laws came into force in the GDR. This created a suitable framework for a political union by diminishing the huge gap between the two existing political, social, and economic