Monday, July 31, 2006
German families reducing their ownership roles (FT)
Germany's economically important family companies face a sweeping transformation, with only about a third of those changing ownership expected to stay in family hands, according to a survey.
Germany 'will make budget cuts priority for 30 years' (FT)
Germany's era of fiscal profligacy has come to an end and budget cuts will remain a priority for at least three decades, the most senior aide to Chancellor Angela Merkel has warned.
Thomas de Maizière, head of the chancellery and a close Merkel confidant, told the FT the government's efforts to bring the budget deficit back within the margins allowed by the constitution and the European Union's fiscal rules were "not the end of the road by a long stretch". "No matter how the economy turns out, my prediction is that fiscal consolidation will remain a priority of all governments for the next 30 years," he said. "For decades we have lived beyond our means and we will have to pay the price over decades."
After breaching the EU stability pact every year since 2002, Germany's public-sector deficit is set to fall back below 3 per cent of gross domestic product this year or next. The 2007 budget will also keep net borrowings under public investments, as mandated by the constitution, for the first time since 2002.
Mr de Maizière's comments should squelch any hopes within the business community that the government might reconsider its three-point rise in value-added tax next year given persistently feeble consumer spending and uncertainties regarding the solidity of the economic recovery.
Some economists also fear Ms Merkel's crackdown on deficits, could prove short-lived, as the government has favoured the immediate relief of tax rises over structural reforms that would bring longer-term savings.
They are concerned, too, about the government's ability to reverse spiralling spending on unemployment benefits after the failure of Hartz IV, for the long-term unemployed, caused a 71 per cent overrun last year.
Mr de Maizière rejected the suggestion that the government's consolidation drive would peter out in 2008 as it failed to address the structural deficit.
"We must keep reducing our net borrowing and our structural deficit, especially since we have now practically exhausted one-off revenues," he said. "Continuity and the long-term view are crucial. We cannot rule at the expense of future governments."
The comment was a thinly disguised swipe at Gerhard Schröder, Ms Merkel's predecessor, under whose second term the budget deficit ballooned, marking the first sustained break with the postwar German tradition of budgetary rectitude.
Mr de Maizière also defended the government's confrontational attitude towards the country's main lobbies, from business federations to trade unions and the myriad organisations that owe their existence to Germany's lavish social security system. "The lobbies have a legitimate right to represent their interests. They have a right to partisanship and one-sidedness," he said. "But we must treat them as such, which means we must always balance their interests against the common interest."
Draft reform of the statutory health insurance system has sparked an uproar among public-sector health insurers, prompting their seven representative bodies to announce an all-out public relations campaign against the project.
The federations are un-happy both about the draft, which they claim will send administrative cost in the statutory health insurance scheme rocketing, and about the government's failure to consult them.
"For a lobby group to conduct itself as though it were the parliamentary opposition reflects a fatal misunderstanding of the role of the lobbies," Mr de Maizière said.
Copyright The Financial Times Limited 2006
Thomas de Maizière, head of the chancellery and a close Merkel confidant, told the FT the government's efforts to bring the budget deficit back within the margins allowed by the constitution and the European Union's fiscal rules were "not the end of the road by a long stretch". "No matter how the economy turns out, my prediction is that fiscal consolidation will remain a priority of all governments for the next 30 years," he said. "For decades we have lived beyond our means and we will have to pay the price over decades."
After breaching the EU stability pact every year since 2002, Germany's public-sector deficit is set to fall back below 3 per cent of gross domestic product this year or next. The 2007 budget will also keep net borrowings under public investments, as mandated by the constitution, for the first time since 2002.
Mr de Maizière's comments should squelch any hopes within the business community that the government might reconsider its three-point rise in value-added tax next year given persistently feeble consumer spending and uncertainties regarding the solidity of the economic recovery.
Some economists also fear Ms Merkel's crackdown on deficits, could prove short-lived, as the government has favoured the immediate relief of tax rises over structural reforms that would bring longer-term savings.
They are concerned, too, about the government's ability to reverse spiralling spending on unemployment benefits after the failure of Hartz IV, for the long-term unemployed, caused a 71 per cent overrun last year.
Mr de Maizière rejected the suggestion that the government's consolidation drive would peter out in 2008 as it failed to address the structural deficit.
"We must keep reducing our net borrowing and our structural deficit, especially since we have now practically exhausted one-off revenues," he said. "Continuity and the long-term view are crucial. We cannot rule at the expense of future governments."
The comment was a thinly disguised swipe at Gerhard Schröder, Ms Merkel's predecessor, under whose second term the budget deficit ballooned, marking the first sustained break with the postwar German tradition of budgetary rectitude.
Mr de Maizière also defended the government's confrontational attitude towards the country's main lobbies, from business federations to trade unions and the myriad organisations that owe their existence to Germany's lavish social security system. "The lobbies have a legitimate right to represent their interests. They have a right to partisanship and one-sidedness," he said. "But we must treat them as such, which means we must always balance their interests against the common interest."
Draft reform of the statutory health insurance system has sparked an uproar among public-sector health insurers, prompting their seven representative bodies to announce an all-out public relations campaign against the project.
The federations are un-happy both about the draft, which they claim will send administrative cost in the statutory health insurance scheme rocketing, and about the government's failure to consult them.
"For a lobby group to conduct itself as though it were the parliamentary opposition reflects a fatal misunderstanding of the role of the lobbies," Mr de Maizière said.
Copyright The Financial Times Limited 2006
Sunday, July 30, 2006
Merkel aide sees 30 years of budget cuts (FT)
Germany’s era of fiscal profligacy has come to an end and budget cuts will remain a priority for at least another three decades, the most senior aide to chancellor Angela Merkel has said.
Friday, July 28, 2006
Germany wants G8 focus to return to economy (FT)
Germany is to lead the Group of Eight leading industrialised nations away from its focus on development issues when it takes over the rotating presidency next year.
Instead, Angela Merkel, chancellor, wants next year's summit to focus on economic issues - not least the issue of global imbalances. She believes the G8's agenda has become too broad. In recent years it has focused on poverty in the developing world, climate change and pandemics.
Instead, Angela Merkel, chancellor, wants next year's summit to focus on economic issues - not least the issue of global imbalances. She believes the G8's agenda has become too broad. In recent years it has focused on poverty in the developing world, climate change and pandemics.
German consumer confidence rising (FT)
German consumer confidence will hit a five-year high next month, a survey predicted yesterday, as shoppers see the advantage of making big purchases ahead of January's planned three percentage points rise in VAT rates.
Monday, July 10, 2006
Germany's top CEOs are united on the touchline (FT)
Forget Davos or any industry meetings - if you wanted to find the biggest possible gathering of German, and global, chief executives this year look no further than last night's World Cup final between Italy and France.
The heads of groups from Adidas and Deutsche Bank to Bayer and Deutsche Telekom were in Berlin's Olympic Stadium, perhaps as much to see each other as the Azzurri take on Les Bleus. Even Carlos Ghosn, Renault and Nissan's boss, was there, taking a break from trying to form an alliance with General Motors.
Hubertus von Grünberg, chairman of Continental, a German car-part supplier and World Cup sponsor, said: "I'm not particularly interested in football but I like going to games like this because you meet such interesting people."
The relaxed atmosphere is one advantage and, unlike other events where they might bump into each other, the focus here is football - not business.
"It is a networking event outside the normal meeting places we have in a very special atmosphere," said Hakan Samuelsson, chief executive of MAN, a German truck maker, who also admitted to not being a "big football fan".
The Swede even supported Germany when his home country met them in the competition, joking that as business and consumer confidence improved in the host country with each win. "I was thinking about thesales of trucks," he said.
Rainer Schmückle, chief operating officer at Mercedes, a division of car-maker DaimlerChrysler, said: "Watching football is much more personable than Davos."
Wulf von Schimmelmann, head of Postbank, Germany's largest retail bank, said: "In the middle is the game and all the emotions that go with it and that makes for a much richer experience. It is a way to deepen business contacts without really talking about business."
For many executives Italy versus France was a chance to watch the World Cup live after a busy few weeks.
Klaus Kleinfeld, chief executive of Siemens, the German conglomerate, was forced to work through the Germany-Sweden match on a Saturday, only turning round each time the noise from the television told him a goal had been scored.
His invited guest for the opening game, Werner Wenning, Bayer's chief executive, was even more unfortunate having to cancel at the last minute as Merck, a rival drug company, looked like scuppering his takeover of Schering. "He was almost in tears when he had to cancel," said Mr Kleinfeld. But Mr Wenning made it to Berlin last night.
Not all businessmen are there for the networking opportunities. Some, such as Heinrich von Pierer, Siemens' chairman, are big football fans.
For Dieter Zetsche, DaimlerChrysler's chief executive, a reception with Angela Merkel, the German chancellor, before Germany's last game on Saturday was in stark contrast to how he watched the semi-finals. "It is certainly more pleasant than seeing it in a Tokyo hotel room at 4am," he said.
Copyright The Financial Times Limited 2006
The heads of groups from Adidas and Deutsche Bank to Bayer and Deutsche Telekom were in Berlin's Olympic Stadium, perhaps as much to see each other as the Azzurri take on Les Bleus. Even Carlos Ghosn, Renault and Nissan's boss, was there, taking a break from trying to form an alliance with General Motors.
Hubertus von Grünberg, chairman of Continental, a German car-part supplier and World Cup sponsor, said: "I'm not particularly interested in football but I like going to games like this because you meet such interesting people."
The relaxed atmosphere is one advantage and, unlike other events where they might bump into each other, the focus here is football - not business.
"It is a networking event outside the normal meeting places we have in a very special atmosphere," said Hakan Samuelsson, chief executive of MAN, a German truck maker, who also admitted to not being a "big football fan".
The Swede even supported Germany when his home country met them in the competition, joking that as business and consumer confidence improved in the host country with each win. "I was thinking about thesales of trucks," he said.
Rainer Schmückle, chief operating officer at Mercedes, a division of car-maker DaimlerChrysler, said: "Watching football is much more personable than Davos."
Wulf von Schimmelmann, head of Postbank, Germany's largest retail bank, said: "In the middle is the game and all the emotions that go with it and that makes for a much richer experience. It is a way to deepen business contacts without really talking about business."
For many executives Italy versus France was a chance to watch the World Cup live after a busy few weeks.
Klaus Kleinfeld, chief executive of Siemens, the German conglomerate, was forced to work through the Germany-Sweden match on a Saturday, only turning round each time the noise from the television told him a goal had been scored.
His invited guest for the opening game, Werner Wenning, Bayer's chief executive, was even more unfortunate having to cancel at the last minute as Merck, a rival drug company, looked like scuppering his takeover of Schering. "He was almost in tears when he had to cancel," said Mr Kleinfeld. But Mr Wenning made it to Berlin last night.
Not all businessmen are there for the networking opportunities. Some, such as Heinrich von Pierer, Siemens' chairman, are big football fans.
For Dieter Zetsche, DaimlerChrysler's chief executive, a reception with Angela Merkel, the German chancellor, before Germany's last game on Saturday was in stark contrast to how he watched the semi-finals. "It is certainly more pleasant than seeing it in a Tokyo hotel room at 4am," he said.
Copyright The Financial Times Limited 2006
Sunday, July 09, 2006
Merkel’s marriage of convenience looks shaky (FT)
Last week, something profound happened in Germany. A large number of Germans lost faith – not in their spirited football team, but in their spiritless government. The trigger was a shocking healthcare reform package, which Angela Merkel, the German chancellor, hailed as a big step forward. Some political commentators joked that Jürgen Klinsmann, the national football coach, might make a more effective political leader.
Ms Merkel’s star has tumbled over the past week as the government’s reform agenda has come unstuck. Only seven months ago she enjoyed the highest popularity ratings ever recorded by a postwar chancellor. Today it looks as if the grand coalition of Social Democrats and Christian Democrats is failing to deliver change. Der Spiegel, the influential German news magazine, last week asked whether she might end up as a less successful chancellor than Gerhard Schröder, her not very successful predecessor.
How could the public’s opinion of Ms Merkel and her government change in such a short time? Looking at Germany from the outside, Ms Merkel appears to be a modern, dynamic leader. She has transformed the country’s foreign policy. She managed to mend relations with George W. Bush, US president, with whom she has established a good personal rapport. She was instrumental in the difficult negotiations over the European Union’s budget. Under her leadership, Germany has become a more reliable and effective player in EU politics. After seven years of Mr Schröder’s national corporatism, Ms Merkel seemed like a breath of fresh air. What happened?
The basic problem with Ms Merkel is her evident lack of a coherent domestic policy agenda. She is respected for her intelligence and efficiency. But as chancellor of a grand coalition, she seems to value the fact of a compromise more than its content. When in opposition, she went out of her way to associate herself with radical reform ideas such as a flat income tax. In government, she appears to have made a Faustian pact with the enemies of reform.
Healthcare reform should have been the defining issue for this grand coalition. Ms Merkel said so herself many times. The problem with the German system is not its quality, but how it is financed. Germany has a compulsory insurance scheme, paid for by employers and employees in equal measure. It is not the only country in the world facing rising healthcare costs, but in Germany those costs are linked to wages. Without structural reform, the rise in healthcare costs will lead directly to a loss in competitiveness.
The compromise Ms Merkel tried to sell to the German public last week failed the main test – to break the link between health costs and wages. Nor did it include market-based mechanisms that would put a lid on overall spending on healthcare. Its main element was an increase in user charges. What Ms Merkel calls reforms in reality amount to little more than a hike in insurance rates. The main structural change is a new layer of bureaucracy to shuffle money between patients and the various health insurance companies.
The irony here is that the Christian Democrats and Social Democrats each started out with workable proposals. It is the compromise between the two that does not work. The SPD wanted a tax-based health insurance system with some similarities to Britain’s National Health Service. The CDU favoured a system with greater market freedoms. Both proposals would have led to a gradual delinking of healthcare costs from wages. Both would have restrained total healthcare spending, albeit through different mechanisms. If they had not been stuck in this wretched grand coalition, either party might have delivered a better system on its own.
Until last week, the public and the business community gave Ms Merkel and her coalition the benefit of the doubt. The country had been enjoying a cyclical boom. It seemed the wrong time to spoil the party when the economy appeared to be doing so well. But it was becoming increasingly obvious that this was a fool’s paradise. When the cycle turns down, as it eventually will, the country’s old economic problems will resurface, unless the government implements economic reforms. So far, the government has wasted precious time.
Last week, the critics finally came out from their hiding places. Rarely have German political commentators used such vituperative prose as they did last week. The style of debate is getting rougher even within the grand coalition itself. Its leaders spent the last few days openly trading insults, accusing each other of a breach of trust. After seven months, this is the first genuine coalition bust-up.
Grand coalitions are marriages of convenience. They are not meant to last forever in a modern democracy. The healthcare debacle has shown that this particular marriage is not nearly as convenient as it first appeared. Do not expect any upheavals in the short term. There is at the moment no alternative to this grand coalition. But it is far from certain that it will last the full term.
wolfgang.munchau@ft.com
Ms Merkel’s star has tumbled over the past week as the government’s reform agenda has come unstuck. Only seven months ago she enjoyed the highest popularity ratings ever recorded by a postwar chancellor. Today it looks as if the grand coalition of Social Democrats and Christian Democrats is failing to deliver change. Der Spiegel, the influential German news magazine, last week asked whether she might end up as a less successful chancellor than Gerhard Schröder, her not very successful predecessor.
How could the public’s opinion of Ms Merkel and her government change in such a short time? Looking at Germany from the outside, Ms Merkel appears to be a modern, dynamic leader. She has transformed the country’s foreign policy. She managed to mend relations with George W. Bush, US president, with whom she has established a good personal rapport. She was instrumental in the difficult negotiations over the European Union’s budget. Under her leadership, Germany has become a more reliable and effective player in EU politics. After seven years of Mr Schröder’s national corporatism, Ms Merkel seemed like a breath of fresh air. What happened?
The basic problem with Ms Merkel is her evident lack of a coherent domestic policy agenda. She is respected for her intelligence and efficiency. But as chancellor of a grand coalition, she seems to value the fact of a compromise more than its content. When in opposition, she went out of her way to associate herself with radical reform ideas such as a flat income tax. In government, she appears to have made a Faustian pact with the enemies of reform.
Healthcare reform should have been the defining issue for this grand coalition. Ms Merkel said so herself many times. The problem with the German system is not its quality, but how it is financed. Germany has a compulsory insurance scheme, paid for by employers and employees in equal measure. It is not the only country in the world facing rising healthcare costs, but in Germany those costs are linked to wages. Without structural reform, the rise in healthcare costs will lead directly to a loss in competitiveness.
The compromise Ms Merkel tried to sell to the German public last week failed the main test – to break the link between health costs and wages. Nor did it include market-based mechanisms that would put a lid on overall spending on healthcare. Its main element was an increase in user charges. What Ms Merkel calls reforms in reality amount to little more than a hike in insurance rates. The main structural change is a new layer of bureaucracy to shuffle money between patients and the various health insurance companies.
The irony here is that the Christian Democrats and Social Democrats each started out with workable proposals. It is the compromise between the two that does not work. The SPD wanted a tax-based health insurance system with some similarities to Britain’s National Health Service. The CDU favoured a system with greater market freedoms. Both proposals would have led to a gradual delinking of healthcare costs from wages. Both would have restrained total healthcare spending, albeit through different mechanisms. If they had not been stuck in this wretched grand coalition, either party might have delivered a better system on its own.
Until last week, the public and the business community gave Ms Merkel and her coalition the benefit of the doubt. The country had been enjoying a cyclical boom. It seemed the wrong time to spoil the party when the economy appeared to be doing so well. But it was becoming increasingly obvious that this was a fool’s paradise. When the cycle turns down, as it eventually will, the country’s old economic problems will resurface, unless the government implements economic reforms. So far, the government has wasted precious time.
Last week, the critics finally came out from their hiding places. Rarely have German political commentators used such vituperative prose as they did last week. The style of debate is getting rougher even within the grand coalition itself. Its leaders spent the last few days openly trading insults, accusing each other of a breach of trust. After seven months, this is the first genuine coalition bust-up.
Grand coalitions are marriages of convenience. They are not meant to last forever in a modern democracy. The healthcare debacle has shown that this particular marriage is not nearly as convenient as it first appeared. Do not expect any upheavals in the short term. There is at the moment no alternative to this grand coalition. But it is far from certain that it will last the full term.
wolfgang.munchau@ft.com
Friday, July 07, 2006
Germany presses on with contentious law (FT)
Germany is to press ahead with a contentious law despite claims by Brussels that the legislation would protect Deutsche Telekom from competition.
The proposed measure could allow Deutsche, Europe's biggest phone company, to restrictrival operators' access to the €3.3bn ($4.2bn) broadband network that it is building.
But after a meeting in Berlin with EU telecoms chief Viviane Reding, Michael Glos, economy minister, yesterday insisted that the legislation would meet European rules and spur investment.
Sarah Laitner, Brussels
Copyright The Financial Times Limited 2006
The proposed measure could allow Deutsche, Europe's biggest phone company, to restrictrival operators' access to the €3.3bn ($4.2bn) broadband network that it is building.
But after a meeting in Berlin with EU telecoms chief Viviane Reding, Michael Glos, economy minister, yesterday insisted that the legislation would meet European rules and spur investment.
Sarah Laitner, Brussels
Copyright The Financial Times Limited 2006
Wednesday, July 05, 2006
Germany ‘on course to meet EU fiscal rules’ (FT)
Germany’s public finances have been brought under control, setting the country on course to comply with European Union fiscal rules for the first time in five years, the government declared on Wednesday. The brighter outlook for Europe’s largest economy was also boosted by data suggesting the football World Cup was helping the upswing.
Peer Steinbrück, finance minister, said Germany was returning to its “responsible role” in EU fiscal affairs, with the budget deficit likely to fall to 3 per cent of gross domestic product this year and to 2.5 per cent in 2007.
The budget turnround reflected the strength of German growth, which could approach 2 per cent this year – high by the country’s recent standards – but could slow the pace of expansion in months ahead. “It is a good year, yes, but the degree of fiscal tightening is enormous,” said Jörg Krämer, economist at Commerzbank.
Over the past five years, Berlin has clashed repeatedly with Brussels over its budget deficit. Mr Steinbrück expected the European Commission would soon drop any formal steps against Germany.
France has also reported progress in restoring its fiscal record.
Separately the German minister said his planned corporate tax reforms would in the long term cut companies’ overall tax bills by up to €5bn ($6.4bn £3.4bn) a year.
The reform aims to cut average nominal tax rates by nine percentage points to around 30 per cent from 2008.
Mr Steinbrück’s comments came as figures showed German service sector growth had accelerated sharply last month.
NTC Economics said the “business activity” index it publishes with the Royal Bank of Scotland was at the highest since the survey began in June 1997.
The jump was attributed largely to the World Cup, which boosted activity in sectors such as hotels and transport.
Across the eurozone, service sector growth was at a six-year high, confirming the robustness of the economic recovery in the 12-country region.
The European Central Bank will be watched closely on Thursday for signals about expected further rises in interest rates, although its main rate is expected to be left unchanged at 2.75 per cent.
The precise economic impact of the World Cup on Germany remains unclear – especially after its national team lost to Italy on Tuesday night. Chris Williamson, economist at NTC Economics, said some activities such as home improvements would “be affected by people’s obsession with football”.
A sharp fall in German high street sales in May – in the run-up to the World Cup – largely explained unexpectedly weak eurozone retail sales figures on Wednesday, which were 0.6 per cent lower than in April.
Copyright The Financial Times Limited 2006
Peer Steinbrück, finance minister, said Germany was returning to its “responsible role” in EU fiscal affairs, with the budget deficit likely to fall to 3 per cent of gross domestic product this year and to 2.5 per cent in 2007.
The budget turnround reflected the strength of German growth, which could approach 2 per cent this year – high by the country’s recent standards – but could slow the pace of expansion in months ahead. “It is a good year, yes, but the degree of fiscal tightening is enormous,” said Jörg Krämer, economist at Commerzbank.
Over the past five years, Berlin has clashed repeatedly with Brussels over its budget deficit. Mr Steinbrück expected the European Commission would soon drop any formal steps against Germany.
France has also reported progress in restoring its fiscal record.
Separately the German minister said his planned corporate tax reforms would in the long term cut companies’ overall tax bills by up to €5bn ($6.4bn £3.4bn) a year.
The reform aims to cut average nominal tax rates by nine percentage points to around 30 per cent from 2008.
Mr Steinbrück’s comments came as figures showed German service sector growth had accelerated sharply last month.
NTC Economics said the “business activity” index it publishes with the Royal Bank of Scotland was at the highest since the survey began in June 1997.
The jump was attributed largely to the World Cup, which boosted activity in sectors such as hotels and transport.
Across the eurozone, service sector growth was at a six-year high, confirming the robustness of the economic recovery in the 12-country region.
The European Central Bank will be watched closely on Thursday for signals about expected further rises in interest rates, although its main rate is expected to be left unchanged at 2.75 per cent.
The precise economic impact of the World Cup on Germany remains unclear – especially after its national team lost to Italy on Tuesday night. Chris Williamson, economist at NTC Economics, said some activities such as home improvements would “be affected by people’s obsession with football”.
A sharp fall in German high street sales in May – in the run-up to the World Cup – largely explained unexpectedly weak eurozone retail sales figures on Wednesday, which were 0.6 per cent lower than in April.
Copyright The Financial Times Limited 2006
Monday, July 03, 2006
Germany's World Cups: less cold war, more commerce than in 1974 (FT)
Few people are in a better position than Bernd Bransch to welcome as a "refreshing change for Germany" the flag-waving that is accompanying the national team's progress through the football World Cup.
The imposing defender who captained communist East Germany's team in the 1974 cup - the last time the competition was staged in Germany - remembers no displays of "such relaxed patriotism" back then, in either the west or the east.
"Things were much more restrained back then" as memories of the country's Nazi past were still relatively fresh, he recalls in an interview at his home football ground in Halle, south-west of Berlin.
As for Mr Bransch, Germany's success so far in this year's tournament has for many of his compatriots revived memories of 1974. Now as the team prepares for tomorrow's semi-final match against Italy in the western industrial city of Dortmund, many Germans in both the east and west are recognising anew the radical changes the country has gone through over these three decades.
The fall of the Berlin Wall and the euphoria of unification of east and west in 1990, and Germany's emergence as a "normal" European country that has become a vital player on the world stage, are just some of the staging-posts of the last 16 years.
In Angela Merkel, Germany has its first female chancellor. She is also the first leader from the former East Germany - a personal history she shares with Michael Ballack, captain of the national team.
Some trace the overwhelmingly positive atmosphere in Germany since the tournament opened last month at least in part to these historic transformations.
"The whole background to the [German] bid for the World Cup was to show the world that Germany has changed. The warm welcome [this month] for the foreign fans, and the flags waved by ordinary Germans, suggests this is working," says Ulrich Hesse-Lichtenberger, author of a social history of German football.
For Mr Bransch, it was the "cold war atmosphere" of the 1974 tournament that stands out in contrast with today. In particular, West Germany was "absolutely convinced" they would thrash his eastern team. In fact East Germany shocked the sporting and political world with a 1-0 victory.
The communist regime "used the victory to score points in the class war with the west", he says. The historic match was the only time the West and East German sides met for a full international game. Despite the defeat in the tournament's qualifying stage, West Germany went on to beat Holland in the final.
Mr Hesse-Lichtenberger says there are parallels in the security worries in both 1974 and 2006. The 1974 event came only two years after Palestinian terrorists killed Israeli hostages at the Munich Olympics, while al-Qaeda - and football hooligans - are the main threat today.
Yet politics aside, the focus in the 1974 tournament "was really on the matches, on football. In contrast, in this year's competition that is only one of many considerations [for the organisers]", he says, pointing for instance, to the central role of business and of Germany's image campaign in shaping the event.
For Jürgen Croy, East Germany's goalkeeper in 1974, the turning point in this transformation process was the fall of the Berlin Wall in 1989.
In frequent job changes that mirror broader patterns in eastern Germany since unification, he has turned to business and politics, working at times for Puma, the sports goods maker, and as mayor of Zwickau, his home town south of Leipzig. "I've been glad to meet new challenges," he says.
Mr Bransch is pleased history appears to be coming full circle. The German football association has given East Germany's 1974 team free tickets for some World Cup matches, and Mr Bransch is attending tomorrow's semi-final.
He hopes for a win, of course - but knows that, even if Germany lose, he will have his own, rather special memories to hang on to.
Copyright The Financial Times Limited 2006
The imposing defender who captained communist East Germany's team in the 1974 cup - the last time the competition was staged in Germany - remembers no displays of "such relaxed patriotism" back then, in either the west or the east.
"Things were much more restrained back then" as memories of the country's Nazi past were still relatively fresh, he recalls in an interview at his home football ground in Halle, south-west of Berlin.
As for Mr Bransch, Germany's success so far in this year's tournament has for many of his compatriots revived memories of 1974. Now as the team prepares for tomorrow's semi-final match against Italy in the western industrial city of Dortmund, many Germans in both the east and west are recognising anew the radical changes the country has gone through over these three decades.
The fall of the Berlin Wall and the euphoria of unification of east and west in 1990, and Germany's emergence as a "normal" European country that has become a vital player on the world stage, are just some of the staging-posts of the last 16 years.
In Angela Merkel, Germany has its first female chancellor. She is also the first leader from the former East Germany - a personal history she shares with Michael Ballack, captain of the national team.
Some trace the overwhelmingly positive atmosphere in Germany since the tournament opened last month at least in part to these historic transformations.
"The whole background to the [German] bid for the World Cup was to show the world that Germany has changed. The warm welcome [this month] for the foreign fans, and the flags waved by ordinary Germans, suggests this is working," says Ulrich Hesse-Lichtenberger, author of a social history of German football.
For Mr Bransch, it was the "cold war atmosphere" of the 1974 tournament that stands out in contrast with today. In particular, West Germany was "absolutely convinced" they would thrash his eastern team. In fact East Germany shocked the sporting and political world with a 1-0 victory.
The communist regime "used the victory to score points in the class war with the west", he says. The historic match was the only time the West and East German sides met for a full international game. Despite the defeat in the tournament's qualifying stage, West Germany went on to beat Holland in the final.
Mr Hesse-Lichtenberger says there are parallels in the security worries in both 1974 and 2006. The 1974 event came only two years after Palestinian terrorists killed Israeli hostages at the Munich Olympics, while al-Qaeda - and football hooligans - are the main threat today.
Yet politics aside, the focus in the 1974 tournament "was really on the matches, on football. In contrast, in this year's competition that is only one of many considerations [for the organisers]", he says, pointing for instance, to the central role of business and of Germany's image campaign in shaping the event.
For Jürgen Croy, East Germany's goalkeeper in 1974, the turning point in this transformation process was the fall of the Berlin Wall in 1989.
In frequent job changes that mirror broader patterns in eastern Germany since unification, he has turned to business and politics, working at times for Puma, the sports goods maker, and as mayor of Zwickau, his home town south of Leipzig. "I've been glad to meet new challenges," he says.
Mr Bransch is pleased history appears to be coming full circle. The German football association has given East Germany's 1974 team free tickets for some World Cup matches, and Mr Bransch is attending tomorrow's semi-final.
He hopes for a win, of course - but knows that, even if Germany lose, he will have his own, rather special memories to hang on to.
Copyright The Financial Times Limited 2006
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