Thus there was no question that Germany must be demilitarized and her war industries destroyed. Those primarily responsible for unleashing the Second World War and for perpetrating war crimes were to be brought to justice. All other Germans were to be de-Nazified. The Allies also agreed that Austria, Poland and Czechoslovakia were to be reconstituted as sovereign states.
In the winter of 1945-46, the once-great city of Berlin was beginning its long climb from the ruin of war. Under terms of the Yalta Agreement, Germany had been divided among the three victorious Allies with an area assigned to the French taken from the American Zone of Occupation in western Germany. Similarly, Berlin was divided into four sectors for each of the occupying powers(US, France, Great Britain, URSS). However, this division was not able to prevent further conflict. For example the East Germany wasn't enjoining the same high standard of living as the West Germany. When the U.S. initiated the Marshall Plan in 1947, to improve Europe's market strength, it offered to extend it to Eastern Europe as well as Western Europe. The Soviets viewed this as a propaganda ploy and would not allow any East European countries to join.
In 1949 the Soviets decided to blockade any land routes to West Berlin to prevent any goods from arriving there. The Soviets ended their blockade in May 1949. In 1961, the Soviet and East German leaders decided to build a HYPERLINK "https://www.foothill.fhda.edu/divisions/unification/wall.html" wall around East Berlin and ultimately a HYPERLINK "https://www.foothill.fhda.edu/divisions/unification/borderdiagram.html" fortified border between the two German states. According to East German officials, this was done to protect East Germany from the West, but the fortification also made it impossible for East Germans to go to the West.
So the two Germany were now officially divided and were viewed as separate entities. Since now on (until 1990 when the unification of Germany was done) they had to go on different roads.
In 1949 the East Germany had to face reconstruction. The reconstruction followed the Soviet model; industry was accounted for by nationalized enterprises, the banking and insurance were taking over by the state. From the Soviet model they established five year plans were they would invest in heavy industry. The pensions were minimum. In 1954 the consumption of basic food stuffs regained their initial levels but they still lacked resources to economically expand. They also established a "new economic system" where the factory managers had a greater independence, there was a more flexible pricing system, and the workers participation in management was limited. But in 1970 the whole policy collapsed. By 1980 the GDR was financially dependent on loans from FRG.
In 1947 the U.S. government initiated the European Recovery Program, commonly called the Marshall Plan, which offered generous investment loans to all European countries that had been devastated by the war. Under the stewardship of economics minister Ludwig Erhard, the Marshall Plan helped launch a 20-year economic expansion in West Germany that raised living standards and industrial production above prewar levels. West Germany's economic achievement was impressive; the gross national product (GNP) rose by 8 percent per year from 1951 to 1961. In 1945 West Germany Economy was so great that the term "economic miracle" was used to describe it. Western Germany possessed a series of inherited advantages which helped it to take advantage of the great economic upturn of the 1950: a high proportion of the German Workforce was skilled and Germany had a strong scientific and technical tradition; despite the bombing much of its industrial equipment survived. In 1966 the inflation rate was creeping up to an annual rate of 4%. In 1969 the economy of the FRG grew by 5.6% and inflation dropped to 1.5.All due to the fact that the Great Coalition increased the government's power to intervene through 2 important measures:
It gained power trough the Stabilization Law to "steer" the economy in times of recession by raising loans, increasing taxes, and investing money in job creation projects.
In December a further law was passed in the Budestang which gave the central government the power to plan financially 5 years ahead and to coordinate the spending of the Lander and the cities with the overall federal budget.
In 1985 the world trading conditions moved in favor of the FRG (they escaped the collapse in oil prices)and over the next 5 years West German exporters build up a large trade surplus but unemployment still remained at over 2 million.
In the Federal Republic of Germany there were three major parties: CDU (Christian democratic union), KDP (communist party) SPD (socialist party).
One of the major issues of the government was to maintain democracy and not to be authoring. On the other hand, East Germany was under the strict supervision of USSR; they would have only one main party( SED).GDR were basically imitating the USSR ,as part as the Eastern Bloc states: they would have a different way of electing then in West Germany(public could vote against candidates) and they would possessed a secret police who was maintaining the power. While the politic in GDR was pretty "clean" (only one party),in FRG every single party had a different view on the state future; for example SED wanted a democratic order while CDU a state control of industry. But in the same time FRD were still dealing with major problems as the inflation, the unemployment, the flood of refuges, the reconstruction of the state, and the fear of communism.
The Social Democratic Party that operated in the Western zones was, in contrast to the Eastern SPD, markedly anticommunist (see Social Democratic Party of Germany, ch. 7). This attitude reflected a continuation of its bitter hostility to the Communist s during the Weimar Republic. The reestablished party, headed by Kurt Schumacher and, after his death, by Erich Ollenhauer, could look back on a distinguished history of creating better living conditions for the working class within the context of parliament entire democracy. Although anticommunist, the SPD's leadership still regarded the party as Marxist and remained committed to working for a socialist economy. As such, the SPD envisioned a neutral socialist Germany located between the capitalist economies of the West and the Soviet dictatorship of the East. The SPD was able to build on its extensive working-class membership, which predated Hitler's seizure of power in 1933.
The foreign policys for the two Germanys were mainly divided trough the relations with their "protectors"and the relations with the west for FRG and east(GDR) world. In September 1973, both Germanies were admitted to membership in the United Nations (UN), and East Germany has been active ever since in advancing Soviet and East European positions in that international forum. During the same period, it also became active in the developing world, particularly Africa.
