Whose House Is This Anyway?

By Barbara Rudolph

Amid the run-down villas in East Berlin's once genteel Pankow district, the lovely stucco house at Am Iderfenngraben 23 looks decidedly out of place. The wrought-iron gate is freshly painted; the clay roof shingles gleam in the afternoon sun. Rudolf Musch, a construction engineer, has spent most of his savings renovating the 1920s home since his family moved in eleven years ago. But the Musches, who pay $92 a month in rent for their 1,658-sq.-ft. space, may soon find themselves on the street. Hilmar Schneider, the owner of the house, who left the East in 1961 and lives in Kiel, wants to reclaim his home -- and perhaps sell it. He has agreed to let the Musches stay on for now but has rejected their offer to buy the place for $89,000 -- barely half the estimated market value. "In the long run," concedes Musch, "I don't think I have a chance of staying here."

The Musch vs. Schneider confrontation is one of many such struggles over property in East Germany today. They all turn on the question of who owns what. What does a 1930s deed mean in a country where almost everything has been Volkseigentum, or property of the people, for the past 40 years? Who is entitled to a house built on land confiscated by the state? What are the rights of longtime renters? The All-German Institute, a West German authority, estimates that West Germans have claims to more than 1 million homes, factories and parcels of land in the East. So sensitive is the issue of ownership that it was left out of the state treaty that went into effect last Sunday.

Ibrahim Bohme, the former chairman of the East German Social Democrats, calls the struggle over ownership a "latent civil war." The problem dates back to the founding of the G.D.R. in 1949, when the government began confiscating most land and businesses. During the following four decades, the regime also borrowed against some of the seized properties.

In some cases, former owners have in fact been compensated. Since the late 1940s, the West German government has paid the equivalent of $5.4 billion in 535,000 settlements for left or lost property in East Germany. The average recipient pocketed just a few thousand marks. Under West German law, those who were compensated still have the right to regain property -- as long as they repay the money they received.

The most politically sensitive question concerns the millions of East Germans who rent. Wolfgang Ullmann, deputy president of the Volkskammer, the East German parliament, argues that renters should be compensated for improvements they have made to properties. Says he: "For years Western owners didn't care, and now they're back at the doorstep. Those people fled to prosperity."

Real estate is not the only battleground. A law passed in March stipulates that former owners may reclaim businesses seized by the Communists; about 50,000 petitions are expected. State-owned enterprises have been placed under the control of a new government authority, the Treuhandanstalt, which will liquidate uneconomic plants and shift viable businesses toward private enterprise. So far, however, only a fraction of the 9,000 or so targeted firms have been privatized.

One major obstacle: determining the real value of businesses. Says Wolfgang Nagel, a member of the West Berlin state government: "Compensating all these claims could lead to economic, political and social catastrophe in East Germany." Says Richard Motzsch, an expert on East German property claims at the West German Ministry for Inter-German Affairs: "Emotions are running very high on this issue, but we must be careful not to commit new injustices while trying to correct old ones."

With reporting by James L. Graff/Berlin