All language subtitles for Deutschland.86.S02E11.Comrades.and.Cash.Geheime.Geschafte.unter.dem.Eisernen.Vorhang.1080p.AMZN.WEB-DL.DD+2.0.H.264-AJP69

♪♪

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?

♪♪