Original subtitles

♪♪

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?

♪♪