On October 3, 1990, at midnight, the German Democratic Republic ceased to exist and its five states, its 16 million people and its territory became part of the Federal Republic of Germany. The flag went up at the Reichstag in Berlin that night. The Two Plus Four Treaty, signed in Moscow on September 12 by the two German states and the four occupying powers, had settled the external questions, and Germany became fully sovereign for the first time since 1945.
Nobody expected the speed. The wall had come down on November 9, 1989, after a misread announcement at a press conference in East Berlin let crowds through the checkpoints, and within a year the state that built it had voted itself out of existence. The first free East German election, in March 1990, was won by the Alliance for Germany, which had campaigned on fast unification, and the two states signed a treaty on monetary, economic and social union in May.
The mechanism chosen was Article 23 of the Basic Law, which let a German state accede to the Federal Republic, rather than Article 146, which would have required a new constitution drafted by a constituent assembly. That decision had consequences. It joined on Western terms, with the West German legal system, currency and administration, and the argument that a new constitution should have been written has never entirely gone away.
The currency union was the hard part. East German savings were converted at 1:1 up to a ceiling that varied by age and at 2:1 above it, and the revaluation made eastern industry uncompetitive almost overnight. Output in the five new states fell by roughly a third in the first two years. Unemployment in the east has been above the western average ever since.
The cost has been put at more than 1.5 trillion euros, moved through the solidarity surcharge, the pension and social insurance systems, and the Treuhand agency, which privatised or closed about 8,500 state enterprises. The government moved to Berlin. It has been there since 1999, and the solidarity surcharge on income tax, introduced in 1991 and revived in 1995, was still being collected in 2021.