♪♪
The enemies weren't always what they seem.
They were prepared to work and collaborate with one another
if it suited their interests.
And they were prepared to lie to us.
To tell us that they were never collaborating:
That they were involved in a war for our collective freedoms,
whoever "we" were at that point in history.
I think it's such a clear indication
of duplicity on all sides.
♪♪
NARRATOR: The world seemed straightforward in 1986.
It was divided into superpowers.
On the one hand were the Communists.
On the other, their enemies:
The capitalists.
But this was only half the truth.
Long live East Germany!
We've been duped. I think, as people across the world.
We were fed a particular history.
NARRATOR: The Communists considered capitalism evil,
and were themselves considered evil.
But they had a secret.
A secret that made them
ever more similar to their enemies.
I came across this incredible story
of movement of weapons from East Germany
and this mysterious ship the Pia Vesta.
Where was it heading?
NARRATOR: This is the story
of the 20th century's biggest lies.
It is the story
of the Cold War's secret relationships.
No morals! If the business is legitimate, do it.
It was always about business, never about politics.
SHADY BUSINESS UNDER THE IRON CURTAIN
(ship's horn sounds)
Growing up as a young person
during the last years of the Apartheid regime,
and as a young white person during my school years,
I can recount having been exposed to
exactly the kind of propaganda.
The messages about this "red threat"
that was constantly being reinforced.
And the messaging of course was:
The Soviet Union was the evil empire
for Apartheid South Africa.
♪♪
I'm Ronnie Kasrils,
born in Johannesburg, South Africa,
involved in the liberation struggle
against Apartheid all my adult life,
and I was a minister several times
in the democratic government,
first when Mr. Mandela was president in 1994.
And many portfolios through to 2008.
Well, what was Apartheid?
It was institutionalized racism.
Based on the control, exploitation,
and oppression of the black majority
by the white population,
which amounted to about ten percent of all the people.
When Sharpeville took place, this massacre,
I was 21 years old.
And it hit me with such a shock.
Black African people were protesting peacefully
against these documents...
these ID-documents that controlled their lives.
And 69 were killed on the spot
and another 250 were injured.
My idea of being part of public protests came to an end.
I became part of that armed struggle
and was involved initially in sabotage actions
against the regime in South Africa.
Against the visible signs of Apartheid
and the Apartheid institutions and offices.
♪♪
We had no weapons ourselves.
Everything was monopolized by the white Apartheid regime.
An African in South Africa could not even own a gun.
We were able to turn to socialist countries
such as East Germany,
who were very prepared to provide us with
the training and weapons that we needed.
♪♪
We had big training camps
in the forests and jungles in Angola.
♪♪
And we were able to receive food, military clothing,
AK-47s,
and other such light weaponry, mortars,
and rocket propelled grenades.
And that would be delivered to us in ports
such as Dar es Salaam,
and particularly Luanda, Angola.
(jet engine roaring)
♪♪
I would like to offer you the sincere greetings
and congratulations
of the workers of the German Democratic Republic.
(crowd roars)
The support we received in East Germany
was wholehearted.
And I want to say this: I was one of a few white people.
Most of our people were black.
And for them, to be trained
in a country by white officers who treated them as equals,
and very kindly, who didn't despise them.
To be waited on by German white women at the table,
people doing all the work in the kitchen,
doing the cleaning, it was a huge eye-opener.
♪♪
But most important was our own theater of struggle.
We developed armed groups in South Africa,
so the struggle was really taken into
the heartland of the Apartheid state.
♪♪
NARRATOR: The fight against Apartheid
seemed an important mission for the socialist lands.
Simultaneously, the heads of the superpowers
began to hold talks about nuclear disarmament.
The President of the United States
shook the hand of the Soviet Union's head of state.
But good will didn't suffice in 1986,
and no agreement was reached.
♪♪
NARRATOR: The Cold War went cheerfully on.
The states in the south of Africa
had become the playground of the superpowers.
The CIA and other secret services
covertly supported the allies of the Apartheid regime.
The Soviets, the East Germans and the Cubans
supplied the other side.
But this wasn't the whole of the truth.
One would hear from time to time,
and it would usually be
projected in the western press,
that the Soviet Union or East Germany or China
has got some business deals going.
We didn't believe this.
We were sure that the boycott of South Africa was total
when it came from the socialist countries.
♪♪
It appears that the decade of the 1980s,
just at the time that militarization was taking place,
that the weapon sanctions were starting to take effect
against Apartheid South Africa,
that there was a desire to look for new markets.
And the East Bloc was definitely
of great interest to the Apartheid government.
♪♪
My colleagues and I,
we were working through the archives
the South African military intelligence had declassified.
We were sitting in one of the dusty rooms
and came across this incredible document
that spoke about a man by the name of Starckmann
whom I'd never heard of.
It was a meeting between South African
and French top intelligence officials.
And the South Africans had said that Starckmann
owed them approximately 20 million dollars.
♪♪
The market for such deals was much smaller than today.
At that time there wasn't so much exchange
between the states.
There were always middlemen who did the deals.
THE MIDDLE MAN
At that time there were maybe ten of us.
That's all.
♪♪
In 1986,
I was visited by people representing
a South African special army unit.
A pastor and army general who was accompanied by
a man from the realm of politics.
They wanted to buy weapons to send them to Angola.
The weapons in question were Soviet ones
which they believed could be bought in East Berlin.
FRIEDRICHSTRASSE STATION
♪♪
I contacted a friend,
a German named Heinz Pollmann.
He was in contact with the IMES, which was part of the Stasi.
♪♪
We met in a building on Friedrichstrasse in Berlin.
A car brought me across the border
and straight to the office.
I asked them about the goods that the South Africans wanted.
They explained to me
that they couldn't deliver this material to South Africa.
I told them that I no longer cared,
and that I would also buy other material,
and they said I could have everything I wanted.
We didn't discuss any further details,
but they were no idiots.
They knew exactly I was buying weapons from them
that were intended to fight Communists abroad.
(chanting)
♪♪
East Berlin got about seven million.
The money was sent from South Africa
to a bank in Luxembourg.
Luxembourg sent the money to Spain,
because things were easier from there.
From Spain, we transferred it directly into
the National Bank in East Berlin.
♪♪
One of our starting questions was not only to understand
how hardware was moved around the world,
but it was precisely to follow the money trail.
Those same bank accounts that were used to transfer money
to arms companies in France or Italy or the United Kingdom
or to the CIA and others,
were precisely the same bank accounts
that were being used to transfer monies
between Communist countries and Pretoria at the same time.
It's amazing because they would
almost wash this cash free of any ideology,
regardless of where it came from,
at the end of it, it was just money.
(waves crashing)
NARRATOR: Everyone had got what they wanted.
Except for the South Africans. They'd been done down.
But more on that later.
♪♪ ("Dance of the Sugar Plum Fairy")
(ship's horn sounds)
NARRATOR: East Germany had received
a few million dollars from South Africa
and had sent a ship with weapons across the ocean.
Its course, however,
was for a completely different continent.
And it sailed with the special blessing of Moscow.
In the heartland of Communism,
the tinkering for the liberation of oppressed peoples
was still going on,
though this was not meant to prevent anyone
from also doing business with the racist Apartheid regime.
One hears the rumors in the 1980s that
Harry Oppenheimer,
one of the wealthiest people in the world, a plutocrat,
a South African, an arch-capitalist,
who is at home with the leaders of the so-called free world,
is spotted in the Bolshoi Theater in Moscow.
And what makes it extraordinary
is that Oppenheimer's company, De Beers,
this almost mythical diamond company
that his family had created,
had started doing business,
almost you know unbelievably if one thinks about it,
with Moscow!
De Beers: It's probably one of the corporations
that best represents
one of the ugly faces of capitalism:
that relies on the Apartheid system
to shore up massive profits in the hands of a very small group,
a very wealthy family.
So what we see happening in the second half of the 20th century
is de Beers starting to buy the diamonds from Russia
that Russia's producing.
♪♪
The sale of diamonds by the Soviet Union
to the de Beers monopoly
was probably one of the biggest income earners
of foreign currency for the Soviet Union
throughout the latter part of the 20th century.
♪♪
NARRATOR: The Cold War, Communism,
and the profit motive.
The Communists were evidently just as keen on gold and wealth
as the capitalists.
But hadn't they wanted to abolish the profit motive?
♪♪
Welcome to Moscow,
the capital of Communism,
the evil empire.
♪♪
So you want me to show you some Communism?
Let's see what we can do!
NARRATOR: What about money and Communism?
Money and Communism?
NARRATOR: Communism also had its price.
But was it not the case that even for Lenin,
money and its power was one of the greatest obstacles
to a better society?
(no audible dialogue)
COMMUNISM AND MONEY
I really don't know what to say...
Lenin and money!
The idea of abolishing money wasn't there.
People came up with that later.
Lenin wanted a fairer social system for all.
To put it simply, a socialist society.
The wealth of the whole country
belonged to five percent of the population,
and the rest...
Okay, maybe not 95, but 80 percent lived in poverty.
That was Lenin's main argument against capitalism:
Its unfair distribution of wealth and goods.
♪♪
(over loudspeaker) Comrade Lenin,
the slogan on our banner, "Down with capital,"
is what we will implement.
One has to recall Lenin's words:
We can have thoughts and theories,
but practice will offer us many more opportunities.
And probably everything will turn out differently, anyway.
♪♪
Communism is expensive.
Expensive.
Do you know the four biggest problems
in building Communism?
- NARRATOR: No. - The biggest problems:
Winter, spring, summer and autumn.
NARRATOR: Communist practice was obviously
completely different to Communist theory.
The weapons destined for South Africa
and shipped by East Germany
were only the culmination of
a long series of attempts at getting money.
These attempts, however, were not always so successful.
THE HOPELESS SEARCH FOR GOLDEN TREASURE
♪♪
So, Stern journalist Gerd Heidemann...
Should I mention the fake Hitler Diaries?
NARRATOR: Nah.
A pretty prominent Stern journalist
reports one day to the Stasi in East Berlin,
saying he's bought a map
from a well-known militaria dealer
for some tens of thousands of deutschmarks
on which a treasure is allegedly marked:
One consisting of several boxes of gold and precious stones
which Hermann Goring is said to have
sunk here in this lake, Stolpsee,
at the end of the war.
MAN (on recording): We received the information
from a contact person whose code name is Rose.
In April 1945, on Goering's instructions,
three boxes of 150 kg precious metals each...
...gold, platinum and jewelry,
were sunk in the Stolpsee at Furstenberg.
It was foggy that morning,
and only one building with a cross could be made out.
The task was completed by three Polish prisoners of war
who, after its completion,
were shot in the forest on the shore.
This is the treasure map.
The map shows the Stolpsee.
Here is the place, Himmelpfort.
Here is a bay on the other side of the lake.
There is a tree stump in this bay,
and in 1945 a large carpenter's nail
was driven into the stump.
One would have to draw an imaginary line
from this tree stump
over to a house in Himmelpfort that has a cross on its roof.
And then a second line,
which leads here at a certain angle from the shore.
This represents the point of intersection
where the boxes were sunk.
♪♪
(camera shutter clicking)
NARRATOR: So did they actually find anything at all?
That's the problem. They never found a thing.
They always only searched, but never found a thing.
NARRATOR: Erich Mielke, Head of the Secret Service.
Minister at the Ministry of State Security.
He was the brains behind the treasure hunters.
It was this insistence of Erich Mielke's
on always being the best and always succeeding.
He wanted to shine, he wanted to find the Amber Room
to impress the Kremlin leadership.
(camera shutter clicks)
And of course he wanted to find gold, too,
and find works of art in order to make money
to again shine in front of Erich Honecker, his boss.
It's pretty weird.
(chuckles) You know...
There they are,
pursuing all dissidents and locking them up,
and they've got their spies
in the Chancellery and everything,
yet at the same time,
there they are, hunting for Nazi treasure.
It's totally incredible.
NARRATOR: In the end, the Head of the Secret Service
didn't find a single gram of gold.
But his passion for treasure led him to seek elsewhere.
There, where his chances were much better.
♪♪
Since the end of the war,
there had been various bank deposit boxes
and safes in old banking houses
that had not been opened.
They were more or less dormant,
because many of their owners had either died in the war
or had gone to West Germany, had fled to the West,
and didn't dare return to East Germany
to retrieve their property.
Of course, these also included the bank deposit boxes of Jews
who had become victims of the Holocaust
or who had fled abroad.
♪♪
So the Stasi came up with the idea
of taking a peek at what these boxes contained.
♪♪
MAN (on recording): We obliged all those involved
to maintain silence about Operation Light.
There was to be no way to trace
the deposit boxes' previous owners.
♪♪
Operation Light
was the brainchild of the Minister for State Security,
Erich Mielke.
The operation began on the afternoon
of 06 January, 1962, a Saturday.
They picked up the bank managers from their homes
under some pretext,
and they basically forced them
to open the boxes, to hand over the keys.
They had no idea as to the whys and wherefores,
or what became of the items.
Some resisted, too.
So pressure was applied.
In cases where there were no keys left,
they were broken open by brute force.
Safes were opened, too.
All the items that were in these bank deposit boxes
that had remained untouched since 1945
were stolen, loaded into crates,
and taken to State Security, Stasi, HQ in Berlin.
It was a thorough, nationwide operation
throughout the municipalities
where, basically,
every financial institution was visited
and its deposit boxes opened.
♪♪
Mountains of boxes with jewelry, valuable manuscripts,
paintings,
and small gold ingots...
Everything one can imagine that wealthy people, collectors,
keep in their bank deposit boxes.
NARRATOR: Mielke's plan was perfidious
because those who owned the boxes
and all that they contained
could not fight back.
His Secret Service had a free hand.
♪♪
Operation Light's aim, from its very inception,
was to sell the proceedings to the West
in exchange for D-Marks.
In order to bring hard currency to the economy.
It was premeditated robbery from the very beginning
in order to turn things into money.
♪♪
(clanking)
NARRATOR: As much as they wished to break with the profit motive,
money was always one of the Communists' Achilles' heels.
The longer Communism endured,
the more they pursued that which
the class enemy seemed to have in abundance:
Money.
(traffic noise)
♪♪
(camera shutter clicks)
THE EXPERT
Paper work, paper work, paper work.
(indistinct dialog)
(no audible dialog)
LESSON 1 HARD CURRENCY!
So you want to illustrate that with this game of Monopoly.
I hate this game.
It hasn't been used for a long time, as you can see.
So if this were a real country
isolated from the rest of the world.
Okay, fine, you are collecting money,
you are building houses,
you presumably pay taxes, etc.
But once you are trying to take this into
the real world and buy anything with it,
then I'm afraid you'll get a little bit of a shock.
Well, there are similarities, in the sense that East Germany
was also a closed society in a sense.
Once you step outside that closed community,
you need the hard currency.
That will be 14 pounds 25.
Do you have change for a 20?
- What are you giving me? - This is Monopoly money.
We don't accept Monopoly money here.
- Not even a 50? - Are you joking?
- What about 500? - No, not at all.
Take everything!
You're in the UK now.
Well, I'm sorry. Then take this.
♪♪
NARRATOR: That was the irony.
The Communists needed their enemies' money.
And the solution was neither to be found
in Nazi treasures
nor in all the gold in the deposit boxes.
♪♪
But the Communists
wouldn't have been the Communists
if they hadn't been able to come up with something else.
Something that was to turn the world on its head.
The man who took on the money problem
was called Alexander...
Schalck...
Golodkowski.
I must confess, even though I would read
Neue Deutschland every day...
compulsive, yes, it only took five minutes...
but this Schalck-Golodkowski was completely unknown to me.
His name, his bizarre name, was completely unknown to me.
He had always been some kind of background figure.
Sure, he'd be in the photos
somewhere in the third or fifth row
behind Erich Honecker,
but hardly anyone ever noticed him.
Then his name went around through the media, the press,
and he became known as the main villain of East Germany.
♪♪
Big Alex was his nickname.
Schalck-Golodkowski, with his sunglasses and so on,
who drove a western car,
and was an international player
who juggled with foreign currencies
actually lived up to the negative image
of the capitalist manager.
The way he presented himself was that of
a mover and shaker.
(camera shutter clicks)
♪♪
I talked to a former spokeswoman
for the East German Embassy in Washington
who described Schalck-Golodkowski to me
marching in there, his pockets full of money,
and inviting her to dinner.
He was completely his own man there.
They were imaginative.
And Schalck-Golodkowski was one of the most imaginative
in terms of ways of rectifying
East Germany's lack of hard currency
and, indeed, actually saving East Germany.
That was his intention.
BLOOD
♪♪
Blood is a rare commodity.
Which made trading in it very difficult.
Yes, you need humans for
the production of blood components,
and that, of course, drives prices up, too.
It was the early '80s
when I first came into contact with those people.
What did they call it...
THE BLOOD DEALER
♪♪
...commercial coordination.
♪♪
It was in the '80s
when the difficulties with HIV arose.
In the beginning, the tests to detect for HIV
were not as advanced as they are today.
So one was obliged to get plasma from countries
with very low HIV rates.
And East Germany was one such a country
because people in East Germany couldn't travel.
So the danger of someone getting infected
was much lower than, for example,
in Europe or the US.
♪♪
Regarding the white component in particular, we'd often ask
how they persuaded people there to make donations.
DONATE BLOOD SAVE LIVES
NEWSCASTER: There are many people,
who, with the assistance of the German Red Cross,
donate their blood.
The Hufeland medal for 100 blood donations
was awarded today to Gunther Schneider
and Irmgard Bauer.
They are among the 500-plus blood donors
who are to be honored over the coming days.
One can assume that the delivery of blood plasma
from East Germany to other countries
was neither reported on
nor a matter of common knowledge.
Certainly it did occur
that some districts were left without sufficient blood
because too much was exported.
Of course East Germany learned quickly,
and the price they demanded
rose from year to year.
It was about 20,000 liters of plasma...
...which made for about 40,000 donors.
The demands made by East Germany continually increased.
They wanted the maximum achievable price.
NEWSCASTER: We asked the Minister's Representative
for the blood donation and transfusion system
why we in our country are increasingly oriented
towards this matter:
Medical Councilor Dr. Helga Surber.
I think the name spells it out.
It's called donating blood,
and donations are always a form of assistance.
Furthermore, one has to say
that blood is a very special substance,
a special liquid,
that cannot be equated to any financial value
or to any material thing.
Donating blood is always a humanistic matter,
and thus always a form of offering assistance.
♪♪
So on each occasion the blood in question
was delivered to Switzerland in special lorries
It had to be...
the blood, or its white component, at least,
had to be frozen to 20 degrees.
You knew pretty well: there would be about
4,000 liters stored there per month.
East Germany had decided
that those blood bags that were for export
and sent to Switzerland
would have a tick on the front
indicating that it was not contaminated by HIV
without their ever having tested it.
NARRATOR: The quality of the blood from East Germany
was praised all the way to America.
Socialist blood now also flowed
through the veins of many a class enemy.
The Party leadership could be satisfied
with him: Dr. Schalck-Golodkowski.
That the other side wants to make a profit in these deals
will come as no surprise to anyone.
Our concern, however,
is to ensure through preparation,
wise negotiation,
and diligent work
that our Republic enjoys the greatest possible advantage
from such deals.
♪♪
LESSON 2: SCRUPULOUSNESS!
One way of thinking of this is in terms of axes.
So imagine you've got a horizontal axis here.
Which is morality.
So you have got over here, you got amoral, low morals.
And over here you've got somebody
who has got very high morals.
At the same time another axis here.
Which is about how comfortable you are
with the legal process.
How comfortable you are abusing the legal process.
So someone like me, I am down here.
I am highly moral.
But I also hate
having anything to do with the law.
I keep to the law,
but I hate regulations and paper work.
Paper work. Paper work.
But then up here this is the pure evil person
who has no morals and he is very comfortable
with hiring lawyers or bribing judges,
and whoever is to be bribed to make your profit.
These are the bad guys up here.
♪♪
8TH PIONEER MEETING, KARL-MARX-STADT
(Children laughing, trumpeting)
NARRATOR: To those outside, East Germany remained unchanged.
Socialism was the declared goal.
Long live East Germany!
And the people were working towards it.
But however much they struggled,
the funds that the theorists had come up with
would not bring socialism victory.
A new victory plan had to be devised.
An almost devilish idea was what was required.
The idea is Schalck-Golodkowski's.
He voiced it in a letter to Politburo members in 1965.
He explicitly pointed out
that all kinds of deals,
both illegal and legal,
and even speculative business deals
were to be employed to make profits for East Germany.
In Bramsche, Lower Saxony,
in my constituency, Osnabrucker Land,
nobody knew about KoKo, commercial coordination.
THE INVESTIGATOR
No one had heard of it. It was an unfamiliar term.
They thought they needed to get hard currency,
so how would they go about it?
So they examined the matter
and found an individual who was in a leading position.
Former East German Secretary of State...
Schalck-Golodkowski...
According to a Spiegel report,
Schalck-Golodkowski ran his own West Germany spy ring.
139 files with documents
from the former weapons company IMES
belonging to Schalck-Golodkowski's empire
have been secured by the Berlin judiciary today.
Have you see this?
This is part of that report.
There's hardly ever been an inquiry committee
it could be compared to.
There probably won't be another any time soon, either.
There were 191 witnesses and 17 experts,
including police officers,
who we listened to.
We conducted almost 500 hours of interviews.
On the agenda today:
The hearing of Dr. Schalck-Golodkowski.
Rumor has it that 100 billion marks
are being hoarded on numbered bank accounts
in Switzerland,
not only in the form of money,
but also in the form of gold, silver and platinum bars.
And here you can see...
the parties involved.
And as I say, it's not complete.
These are those whom we found out.
♪♪
NARRATOR: In the KoKo,
Schalck had built a capitalist empire
that reached around the globe,
operating through hundreds of shadow companies.
The network was organized
that the puppeteers behind it went undetected.
♪♪
LESSON 3 HIDE YOUR TRAIL!
Let me show you something.
Suppose you're a large company working with smaller companies.
Smaller companies are there
to hide your connection to dodgy dealings.
Obviously it's no good if there's a direct connection
between the large company and the small companies
that are doing the naughty things.
You want to somehow
create a disconnect
between the large and the small companies.
So what you try to do
is make a break between the large and the small.
Just cut the connection.
So whatever the small company does,
it doesn't reflect badly on the large company.
Of course the connection is still there.
You just, you can't see it.
One always had this idea: it's socialism,
people don't do that kind of thing there.
But if you're a faithful Communist, so to speak,
you want to bring in a maximum to your own stores,
and you are prepared to use the enemy's resources.
You have no ideological problem with this
because you say, "We're going to win, anyway.
So it's legitimate.
And as long as capitalism exists,
we're going to take advantage of it."
So it's only the petty-minded
on the socialist side who say
"We must abide perfectly by the doctrine."
Such people don't get it,
so they have to be kept in the dark
about how such deals are done.
That's why there was no reporting on KoKo
in East German newspapers.
NARRATOR: Schalck had got it:
You had to act like your opponent...
without anyone getting wind of it.
Maybe it'd be possible to beat them after all
with their own weapons.
- ART AND ANTIQUES - 507,000. 508,000.
9,000, 10,000, 11,000,
12,000, 13,000.
So around '82, '83,
I was at an auction at Christie's, New York,
and at the preview, in a showcase,
I was astonished to see a Marklin ship
made around 1895...
an early Marklin ship.
They'd forgotten to remove a plaque that read
"Nationalized East German Antiques Trading, Pirna".
♪♪
(camera shutter clicks)
THE ART DEALER
Well, it all began with
the fact that I wanted to open a restaurant
and needed deco:
Art and antiques.
And since I knew of various parties
who'd already bought extravagant items there.
I wrote a letter to
the Foreign Trade Ministry of East Germany.
Nothing happened for quite a while,
then half a year later I got a letter from East Berlin
telling me to contact a certain Mr. Lothar Busch
who has an office in Grunewald, West Berlin,
on Richard Strauss street.
He was known as Mister Ten Percent
because that was his cut on every deal.
Anyone who wanted to enter East Germany
to buy antiques
had to go via him.
♪♪
People would meet at the Michendorf service area,
for example.
Or there was a KoKo office on Franzosische Straße
that no one knew about.
But you knew it if you were an insider.
You'd meet there,
and then drive to the different warehouses
in a Volvo with nice curtains in the back.
There was a driver, companions.
Of course there'd be someone from State Security.
And also the official KoKo employee,
who, so to speak, was the vendor.
It was always a little like Christmas.
You'd just drive off,
and you had to rely on
the people who'd arranged it all.
♪♪
(door creaks)
It was like, if you will,
shopping at the cash and carry, as stupid as that may sound.
There'd be shelf after shelf all full of stuff.
You had to act as indifferent and uninterested as possible
to not give the game away.
Some of them had no idea whatsoever.
And that's why you had to...
just walk past the stuff and feign as well as you could
a complete lack of interest.
And once you had the right object in view,
you had to coolly say, "Well, alright, I'll take that."
My experience was that
our prices were quite low by international standards.
I don't mean to imply
that on occasion objects weren't sold too cheaply.
But our average
for our type of wares is pretty acceptable.
Yes, here I have one such object, it comes from Saxony.
Saxons were always very keen on curios and mechanical items.
This, for example, is an advertising gimmick
from the days of colonial goods.
It's extremely strange.
Yes, you could...
It interested me back then, and I was able to purchase it.
There are things that are, and will remain, beautiful.
Antiques.
They belong to the finest testimonials
to the culture of yesteryear.
We look forward to showing you selected pieces.
We take care of customs arrangements for you,
and can also provide transport for your purchases
from one venue to the next.
Sales are made in freely convertible currency.
They'd have SS daggers, uniforms, no problem.
All that filthy shit
they'd be trying to turn into rubles...
into hard rubles.
♪♪
Our business is primarily with the following countries.
First there's the Federal Republic...
Holland, Belgium,
Italy.
Some of the goods go via Holland and Belgium
to the United States.
They bought up whole warehouses by the score.
Whole warehouses!
With all their contents!
And the stuff was shipped overseas,
in bulk and by the container load.
East Germany would have been completely sold out
if it hadn't just collapsed one day.
And 300, 320.
At 350.
NARRATOR: But because the supplies of the art dealers from the East
were steadily waning,
they were soon obliged to look for new sources.
MAN (on recording): The scarcer the export goods became,
the more we targeted private collectors.
We visited them under various pretexts,
and evaluated their collections.
Then they'd get a tax penalty.
The entire cultural landscape was infiltrated by Stasi spies.
It was only a matter of time until you, as a collector,
became conspicuous.
They were under observation.
In real terms,
what this meant was that those affected
would be visited in the early morning.
There'd be Stasi men at the door,
and the KoKo exporters would be right behind them.
They'd ring the bell and say: "House search, tax offenses."
They'd estimate the collections,
and two weeks later the person involved
would get a tax assessment
relating to the value of the collection.
The conclusion would then be, "Well, you now owe us
100,000, 500,000, 1000,000.
You have 14 days to pay."
Such quantities of cash were unheard of.
A skilled worker earned 1,000, 1,500 East marks,
so the authorities would then say:
"It doesn't matter, we'll keep the collection...
in lieu of your debts."
♪♪
(no audible dialog)
NARRATOR: Business was fine,
and the comrades continued to believe in the future.
They were in good spirits,
and nobody wanted to let it be known
that East Germany was facing insolvency.
In the early '80s, East Germany was on the verge of bankruptcy.
Big Alex was the man of the hour.
He was meant to fix it.
In December 1981,
East Germany's credit ran out.
And in January 1982, at the instigation of
Alexander Schalck-Golodkowski and others,
there was a close examination of the situation.
And the result was
that people were told
that by the third quarter of 1982
East Germany would be insolvent.
The worse East Germany's financial situation became,
the more important and more powerful the KoKo became,
and the more questionable its business practices became.
NARRATOR: And the more questionable its business,
the more important the partnership
between Schalck and the Stasi became.
A symbiosis made in heaven for good business.
Both planned to save East Germany.
And both did that what they were best at.
We discuss our successes, but also our weaknesses.
You have to pay attention to them.
That doesn't mean that you should stop.
You have to grow a bit, have to do more.
PRISONERS
♪♪
WOMAN (on recording): I was so scared.
I was frightened for my life because I knew
that what I was going to experience
wasn't going to be good.
When I was brought here,
it took me three months to acknowledge
the reality of it all.
Because I always thought: this is impossible.
This isn't me.
I was in such a state of trauma, I was so horrified
that I felt nothing at all.
THE PRISONER
I just didn't think, this is the here and now.
I'm not here at all. This cannot be.
♪♪
Hoheneck was actually like a labor camp.
Everyone here had to work.
Those who didn't work were confined,
and if they still refused,
they'd be put in a darkened cell.
It'd sometimes be for three days...
and might be extended to up to ten days.
You'd lose all orientation.
(tape player clicks)
WOMAN (on recording): Basically you'd have a quota,
and that's why it was important
to have a sewing machine that cut well;
the blade had to be good, and it also had to sew well,
or you wouldn't manage 100 percent of your quota.
We'd often sit in our cells and cry
because we knew already
we'd not manage tomorrow's quota.
(sewing machine whirs)
Work was basically...
a means of killing.
But also exploitation,
it was really methodical exploitation,
our ability to work was not we ourselves,
it all belonged to them.
And they just used it as they pleased.
♪♪
I sewed pantyhose...
Esda, for Esda.
We'd be working here
for a real People's Own East German firm.
The quota for me was 550 pairs of pantyhose.
In time, I gradually became able to do more and more,
until I really could do 550.
And 550, that was 100 percent.
Working time is effectively utilized here.
If you compare that with outside,
without having exact figures to hand,
with regard to the various businesses here,
it's apparent all the same
that this is what I'd call lucrative.
The crazy thing was that...
the pantyhose we sewed in such quantities
was not available in East Germany.
(clattering)
Yes, I think we were aware that they'd be sold in the West.
The rumors went around alright.
I can tell you
in a quantity, as expressed in marks,
how much we produced in 1989.
MAN: How much?
I can tell you precisely,
since other magazines
have already made representations,
and figures have to be treated with respect.
There was about...
Planet produced some....
118 million marks worth of bedding.
- MAN: Per year? - Per year. 118 million.
And Esda produced about...
1.03 billion.
So over a billion marks in pantyhose was produced here.
I'm ashamed to mention it.
I'm ashamed of having been a forced laborer.
I mean, you can be a prisoner...
but a forced laborer to boot...
It's... I mean, really...
I get goose pimples, I think it's totally...
...it's still humiliating today.
NARRATOR: The prisoners
weren't only valuable as workers.
They themselves were turned into money
by being bartered against Western goods,
thus becoming a major source of income for KoKo.
We had the impression that prisoners were being produced,
and that at certain times of currency shortage
there'd be more prisoner-releases
from East Germany.
How they were selected we do not know.
We only know
that at times, proceedings were initiated,
criminal proceedings, in order to imprison someone
for fleeing or attempting to flee the Republic.
And once he was in prison, then he had a certain value.
♪♪
Basically they'd released a person
against a delivery of goods.
And these goods would then be sold on
by the KoKo company.
(train horn sounds)
These were goods that were
immediately convertible into money.
They were usually crude oil, copper, industrial diamonds,
silver, mercury and so on.
It was a billion-dollar business.
♪♪
NARRATOR: The KoKo deals were going well
and put a lot of money into the coffers.
Nonetheless, in terms of progress,
the West was about to outstrip East Germany.
The West made every effort to prevent
certain goods arriving in the East:
Anything that might advance the Communists' cause
was to be withheld.
CUSTOMS AND EXCISE
The embargo policy
soon turned into a sort of competition.
A whole army of smugglers was exclusively occupied
with breaking the enemies' embargoes.
At first the commodities were still rather crude...
(snorting)
MAN (on recording): One of the first coups that was landed
were two breeding boars from England.
The English had managed to develop
a multi-purpose pig with an additional pair of ribs,
but because of the embargo
that NATO countries had imposed against us,
it could not be imported legally.
The Party leadership wanted the boars
to increase meat production targets.
The contact person, a Frenchman,
bought the pigs in England
and legally brought them to France,
where they spent several weeks hidden on a farm.
Because horses were not under an embargo,
he planned to transport the two boars
to East Germany in a horse transporter...
beneath the horses' feed-boxes.
(pigs grunt)
To prevent the pigs grunting on the border,
he anesthetized them with red wine.
When the pigs arrived over here,
they'd already been unconscious for 24 hours.
In the end, though,
the operation was a great success.
Ten thousand East German pigs
were the offspring of these two English boar.
(rustling)
♪♪
NARRATOR: The pork cutlets of the '80s were computers.
Nowhere was the supremacy of the West as evident
as it was in microelectronics.
It had the potential
to render the other side invulnerable.
This was not just a question of shortages:
This was a matter of victory or defeat.
The story of American technology is long and proud.
Today the story continues with the workers
who built the computer in a child's room.
The engineers who designed
the communication satellite
that silently rotates with the Earth,
shining in the sunlight against the blackness of space,
and the men and women who helped to put
American footprints on the moon.
NARRATOR: Reagan's plan was fantastic.
The high-tech boom was to shake the competition forever.
Especially in military terms.
But there was one remaining option:
To attain the other side's knowledge
and be able to also produce high-tech.
And all means were legit.
In the Federal Republic, in 1982,
I was arrested for secret service spying activity.
♪♪
I always put it this way:
I was a smuggler of electronics
working under Schalck-Golodkowski.
I was, to all intents and purposes, his embargo smuggler.
THE EMBARGO SMUGGLER
NARRATOR: This man was to make a last attempt
to keep East Germany competitive.
His mission
was to convince a Japanese company
to tell East Germany the secret
of how to produce one's own high-tech processors.
I got the relevant order
to go to Japan and commence talks with Toshiba.
The outcome of these initial contacts and discussions
was the basic willingness to cooperate
that Toshiba brought to the table.
(camera shutter clicks)
Toshiba suggested
that a so-called "gentleman's agreement"
would be concluded.
The whole deal was to be worth 75 million dollars,
without there being any documents for either party.
♪♪
NARRATOR: But the deal went bad.
The Americans had found out about Toshiba's plans.
Toshiba was found to have violated an embargo
and held accountable by the US authorities.
Toshiba sent a technician to Erfurt
who, together with us, destroyed the documents
at a garbage dump in Erfurt.
It didn't take into account, however,
or didn't want to believe,
that we had copied all the documents beforehand,
and were thus able to continue the work
and even save the 25 million dollars.
The only morality they recognize
is what will further their cause,
meaning they reserve the right to commit any crime,
to lie, to cheat,
in order to attain that. And that is moral, not immoral.
NEWSCASTER: The first East German-made megabit memory circuit.
With this East Germany has made the leap
into the ranks of the leading microelectronics producers.
Once again it's apparent that socialism,
as elaborated and scientifically founded
by Marx and Engels,
is far superior to capitalism
if all aspects of social life are considered.
Is that the red light?
Does that mean we're filming or something?
♪♪
LESSON 4 ARTIFICIAL SCARCITY
(paper rustling)
Would you like a jam tart?
50p each.
We've got raspberry, blackcurrant, apricot.
You sure?
♪♪
Don't tell my wife.
She thinks I've put on too much weight.
This is not helping.
If you have an embargo on things,
it almost inevitably pushes prices up.
Suppose, for example,
I'm buying these jam tarts from a shop.
The owner of the shop knows that my wife
doesn't like me eating five jam tarts in one sitting,
doesn't like me eating jam tarts at all,
so he might say:
"I'm sorry but I've got to put the price up."
Raspberry.
The moral of the thing: I have to have the jam tarts.
It's not like I can go without jam tarts.
If there's an embargo,
and I really need the jam tarts, as I do,
then that's going to have a very extreme effect
on the price of jam tarts.
(engines idle)
NARRATOR: Embargoed trade was to be one of the most
lucrative businesses of the Cold War.
In the end, both sides benefit
from a scarcity caused by a ban.
WEAPONS
My name is Mats Natt och Dag.
I have been working for the Bofors Company,
the big Swedish defense company,
from 1971-2007.
I have had a little bit of experience
with what you call "Communists,"
or Communist countries.
I am not sure about the persons, how much Communists they were.
But, very reliable.
Maybe even more reliable than some...
not so liquid West-European companies.
(laughs)
THE EXPLOSIVES DEALER
♪♪
Late at night we flew into Tegel.
And what then surprised me was, I was met at Tegel airport
with a nice black car, driver...
and they sped us through the city.
They sped us through Checkpoint Charlie, Friedrichstrasse.
I was amazed about how efficient everything worked.
They were dressed like me,
they had trousers, a jacket, a tie.
They behaved, to me, just like any business guy.
Nothing particular.
Shit, I was pretty high up in the defense company.
On the western side, mortal enemies to the...
(laughs) ...to the Communists.
So I knew that you had to be careful with the information.
This was, for me, a very peculiar business.
We sold propellants for production of ammunition.
But the business was in a very irregular way.
♪♪
Nobody could have really imagined
how all those embargo deals
and the relationship between
Sweden and East Germany actually was.
Suddenly everything was on the table.
Given the upheaval in East Germany,
it was suddenly possible to get one's hands on papers
one couldn't have dreamed of earlier.
And when I saw all this, I thought:
This is the coup of my life!
You could stand there with all these papers and prove
that it was all just a huge bluff.
Doctor Schalck,
we just want to ask one single question from Sweden.
- Is that okay? - No.
No? We just wanted to know
whether Mr. Schalck would come to Sweden
as a witness in a trial
about Bofors' smuggling of weapons.
Ask the question at my office.
Good, we'll ask it at the office.
♪♪
The problem is that Sweden was not allowed
to export any kind of military material
to countries behind the Iron Curtain.
The trick is
that you are going to send trains down here.
But you can't do it directly.
So Carlskuga and Bofors
is sending trains with explosives
through Western Germany,
and it goes down to Austria.
And here they have a company, Dynamit Nobel,
and they are buying all that stuff
and there is no problem with this all.
One neutral country sells to another. It's perfect.
And they sell it to this small company in Finland
consisting of only two people.
And it goes this time north again.
But it goes through East Germany.
And what happens is that
every train is disappearing here,
and the whole stuff is sent out by boats
from the harbor of Rostock.
(rumbling)
Well, if it had been for East Germany internally only,
a country not at war,
shooting one or two people at the Wall,
and of course doing a lot of training...
But I mean,
it was way too much for those purposes.
So certainly there was an export going on.
Of course they didn't tell me this.
And certainly they didn't tell me
where that ammunition was sold.
Well, what I'm having here is an investigation
from the Swedish customs
from the Mid '80s.
And you find lots of tons, lots of money,
which are all listed here.
It doesn't say anything here really about
that they are going to Iran.
Because they didn't really have evidence.
They had the suspicion it was going to Iran,
but they didn't really have the evidence.
Now with help of the East German documents
which we got hold of,
we could fill in the missing parts.
And that was when we first understood
how big this deal actually was.
And how tremendous it was.
It was not just one single case
of trying to get help from the East Germans
and the Communists getting loads of explosives to Iran.
It was several times. Again and again and again.
And the East Germans
always worked as the middlemen in this.
(gunfire)
There was a big war going on, a bloody, terrible war.
Between Iraq and Iran. In those days.
Almost every week we got a fax, a lot of faxes in those days.
This was a long time ago.
(laughs)
This was before the email time.
Lot of faxes
with requests related to Iranian needs.
Certainly we were not getting export permits
for military material to Iran.
♪♪
This country here, East Germany, is perfect for business.
It's a dictatorship. And if you want to make business
and you can make business through or with a dictatorship,
well, then you are absolute secure.
Nothing from here will ever leak out to the west side,
to the western police or the western customs.
So seen from a business point of view,
this is... this is wonderland.
We run that business in '81, '82, '83, '84.
And then, in March '85,
the Swedish customs police raided my office.
My secretary called me, beside herself.
She was crying that three police guys
in black leather jackets had burst into the office
and checked our paper work,
and they had big plastic bags and took stuff away.
So I had to explain.
Sorry... so we stopped.
♪♪
So we stopped the business. They were very unhappy about it.
Really unhappy about it. And actually, so was I.
A little bit after I had canceled the business,
I got a phone call, I don't know from whom.
Somebody I didn't really know who it was.
NARRATOR: But from East Germany?
Yes, from East Germany.
Saying that they had checked about other propellants,
and they found one called RP13, which is a commercial product.
So we sampled them with RP13,
they were happy about RP13,
and we started selling RP13 to them.
The thing was,
RP13 had been reclassified from its military designation.
It had been a military powder, but now had a civil designation.
And civil products could be exported.
So you could send the trains directly
from Bofors, via Trelleborg, Sassnitz
and, hey presto, they were in East Germany.
But it was military powder.
And Spreewerk Lubben naturally then processed it all
into real Kalashnikov powder.
(metal rattling)
We're talk about tens of thousands of tons.
We're talking about several hundred train loads.
NARRATOR: With all that gunpowder,
East Germany could even supply both warring parties.
And the more one side got, the more the other wanted.
So the East Germans realized they could not only supply Iran,
they could also supply Iraq.
And that none of the parties, neither Iran nor Iraq
will get so much powder or explosives
that anyone could win the war.
So the whole reason was to keep the war going.
No one should win it.
Because that way you could export so much more.
You can make so much more money,
lots of people will die, but who cares?
You make the money.
(siren blaring)
I've been asked many times,
but didn't you have a conscience?
I mean, even if the business was legal,
don't you have any moral?
Well, this is not an easy thing.
The Bofors position was that any business
that can be done legally shall be done:
No morals.
If the business is legal, do it.
So East Germany is a winner
and Bofors at Carlskoga is a winner too.
But the people who really lose, they are not in the picture,
because they are back in Iran.
So lots of people get killed in Iran
and during the war with Iraq.
And they will come back to Sweden
and also to Germany as refugees
fleeing from the war.
NARRATOR: In East Germany's rhetoric,
peace was portrayed as sacrosanct.
Every child was to be educated in the spirit of world peace.
So dealings with the enemy were kept so secret
that even those responsible forgot them in a hurry.
From the first day on,
peace policy here was elevated to state policy.
The right to peace,
the right to live,
is the highest of all human rights
for our socialist state.
♪ Little white dove of peace ♪
♪ Come back soon ♪♪
Lovely.
♪♪
NARRATOR: Within a few years,
East Germany had become a respected figure
in the international arms trade.
Business was so good
that East Germany didn't look too closely
at who it was doing business with.
Truth be told, it did business with everyone,
be it friend or foe.
East Berlin was soon the meeting point
of the Who's Who of the international arms trade.
And so, in 1986,
it even found itself doing business
with the archenemy, South Africa.
Which brings us back to the start of our story.
While war raged in Angola
and East Germany supported the fight
against the Apartheid regime with all its vigor,
a ship sailed from a harbor in the north of East Germany.
And so things took their course.
(tanks rumbling)
The middleman Georges Starckmann
has been commissioned by South Africa
to buy weapons for their war in Angola.
The negotiations were very simple.
We explained what equipment we wanted
and they answered:
"We've got this, we don't have that."
They asked who the goods were for.
And we told them the truth or we said nothing.
They understood this.
Then we negotiated prices and that was that.
They issued an invoice and we paid.
Very simple.
♪♪
At some stage, we believe that
government officials in East Germany,
and no doubt in Moscow,
must have been aware of where these weapons were going.
(jet engine roaring)
NARRATOR: Only the story turned out different.
Or at least to how the South Africans imagined it.
Because before Georges Starckmann
flew to East Berlin,
he had contacted the White House,
a White House department
that was under the charge of this man.
Oliver North.
The White House was against the Apartheid regime
buying weapons to wage war in Angola.
The Americans were against this war
and wanted it to stop.
And they were against Apartheid.
But they said,
"Okay, if the South Africans
are already sending money for weapons,
we'll take the money and support the Contras.
They repurposed the money from a project that
the Americans didn't support politically
to a project that was politically to their taste.
NARRATOR: That's how the story took its decisive turn.
The weapons South Africa had paid for
never set out in that direction.
The ship, the Pia Vesta,
crossed the Atlantic heading west with a cargo
that was destined for a very different war.
But even there it never arrived.
In the port of Panama, its mystery cargo was revealed
and the world was faced with an enigma.
That the South Africans felt cheated
was a matter of indifference to the comrades in East Berlin.
They had their money
and had kept their part of the arrangement.
But despite the plan,
it wasn't enough to save East Germany.
Three years after the Pia Vesta came to light,
the Wall fell in Berlin,
and with it, many of its leaders' secrets.
They sold more weapons to people
who fought against the Communists
than they did to their Communist friends,
who never paid.
(waves crashing)
♪♪
These stories are incredibly important
because I think they help us to understand
how the Cold War was also constructed.
Regardless of whether the Iron Curtain existed,
regardless of whether there was a wall
between East and West Berlin,
the money found a way
to move across borders and boundaries.
We've been duped, I think, as people across the world.
We were fed a particular history.
And how much of this really was
for narrow profit taking, for behind-the-scenes-dealing,
for deeply antidemocratic behavior?
♪♪