Dow Chemical Co.'s ambitious plan to restore a massive petrochemical complex in the former East Germany with a huge government subsidy has understandably provoked controversy in Europe. The arrangement calls for Germany to give Dow nearly $7 billion to rebuild BSL Polyolefinverbund GmbH, a complex involving three cities at the heart of what once was recognized as the chemical center of the communist bloc.
Privatization of the facility is an important step toward reviving the distressed economy in the region, where nearly one of every three workers is unemployed. In return for government support, Dow has pledged, among other things, to maintain 2,200 jobs at facilities in Schkopau, Buhlem and Merseburg, site of a polyethylene plant. The agreement stipulates that the Midland, Mich., firm will pay a substantial financial penalty if employment drops below 1,800. For the tens of thousands of workers who still will not have a job, the multibillion-dollar package provokes anger and bitterness. Both are primarily the product of fear and frustration among people whose old life at least provided them with a sense of security derived from a job supplied by the government.
The collapse of communism destroyed an orderly, if harsh world, for millions of East Germans. Politically and socially separated at birth from fellow Germans, the integration process now is painfully complex. For Eastern Europeans, they must not only navigate change but adapt to an economic system they previously were taught was unacceptable and should distrust.
Changing a culture of dependency crafted by a government to ensure domestic obedience is difficult. The Bonn government, as do others in the West, knows that privatization programs, while initially disruptive, help speed change and offer the greatest potential for providing work.
For its part, Dow can expect to earn large profits. It received a generous financial package, with all the political support a near $7 billion subsidy guarantees, to help ensure success. The company immediately gains valuable assets that can be upgraded, plus personnel with the skills necessary to effectively do business in Eastern Europe. Moreover, Dow is getting a prime - if environmentally blemished - location from which to develop a potentially huge market for its products.
It is a good deal for Dow - and the German republic.