Although the GDR had to pay substantial war reparations to the Soviets, it became the most successful economy in the Eastern Bloc. Prices of housing, basic goods and services were heavily subsidized and set by central government planners rather than rising and falling through supply and demand. The economy was centrally planned and state-owned. The SED made the teaching of Marxism–Leninism and the Russian language compulsory in schools. Until 1989, the GDR was governed by the Socialist Unity Party of Germany (SED), although other parties nominally participated in its alliance organization, the National Front of the German Democratic Republic. A satellite state of the Soviet Union, Soviet occupation authorities began transferring administrative responsibility to German communist leaders in 1948 and the GDR began to function as a state on 7 October 1949, although Soviet forces remained in the country throughout the Cold War. The GDR was established in the Soviet zone, while the Federal Republic of Germany, commonly referred to as West Germany, was established in the three western zones. Most scholars and academics describe the GDR as a totalitarian dictatorship. The Soviet zone surrounded West Berlin but did not include it and West Berlin remained outside the jurisdiction of the GDR. Its territory was administered and occupied by Soviet forces following the end of World War II-the Soviet occupation zone of the Potsdam Agreement, bounded on the east by the Oder–Neisse line. Commonly described as a communist state, it described itself as a socialist 'workers' and peasants' state'.

In these years the state was a part of the Eastern Bloc in the Cold War. In 1959, the East German government issued a new version of the flag bearing the national emblem, serving to distinguish East from West.Įast Germany, officially the German Democratic Republic ( GDR German: Deutsche Demokratische Republik, pronounced ( listen), DDR, pronounced ( listen)), was a country that existed from its creation on 7 October 1949 until its dissolution on 3 October 1990. The initial flag of East Germany adopted in 1949 was identical to that of West Germany.

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