I'm a Profiteer in Cold War Germany

Chapter 218: Chapter 1: Stepping into Koko

At 7:30 in the morning, Werner stood before number 78 Schönhauser Street, looking up at the five-story gray building.

The walls were mottled, the windows small and heavy, and a few rusty lightning rods stood on the roof—a typical pre-war Prussian-style building. It looked out of place among the surrounding post-war "matchbox" apartment blocks.

By the door hung a single nameplate with white text on a black background: "Special Office for Foreign Trade." The font was so small you had to get close to read it.

Werner lit a cigarette.

January in Berlin was deadly cold. The smoke from his cigarette mingled with his breath, condensing into a white mist in the air.

Across the street, an old man in a shabby overcoat pushed a handcart full of coal briquettes, which creaked as it moved along. In the distance, the bell of a tram could be heard.

’This is one of East Germany’s top-secret departments? It looks even less conspicuous than the kiosk on the street corner.’

But Werner knew what was hidden inside this building—KoKo, short for "Kommerzielle Koordinierung," the Commercial Coordination Department.

On the surface, it was a foreign trade department. In reality, it would become East Germany’s biggest foreign currency-earning machine, handling hundreds of millions of West German Marks annually.

The Stasi, the Ministry of Foreign Affairs, and the National Security Council all had their tentacles reaching into this place. To walk through that door was to truly step into the gray area at the core of East German power.

Werner stubbed out his cigarette and pushed open the heavy wooden door.

Behind the door was a narrow hallway. The cement floor was worn smooth, and the walls, coated in cheap paint, were already starting to peel.

At the end of the hallway was a faded banner that read, "Contribute Foreign Currency for Socialist Construction!" Next to it, a small wooden sign was nailed to the wall: "Personnel Department, Second Floor, Turn Left."

The staircase handrail was ice-cold, and the steps creaked under his feet.

The second-floor hallway was even longer, lined with rows of offices. Through the frosted glass, you could see the dark silhouettes of people inside. The clatter of typewriters, the ringing of telephones, and the sound of voices all blended together, like a hornet’s nest.

The door to the Personnel Department was ajar. Werner knocked twice and pushed it open.

The room wasn’t large. It contained two metal desks, a row of green filing cabinets, and on the wall hung a photograph of Ublis and a map of East Germany.

Behind the desk by the window sat a woman in her forties. Her hair was combed immaculately, and she wore black-rimmed glasses, her head bowed as she flipped through a file.

"Werner Betelich?" the woman asked without looking up.

"That’s me."

"Papers."

Werner handed over his temporary work permit. The woman took it, checked it against a list on her desk, then pulled out a stack of forms and pushed them toward him.

"Fill these out."

Werner pulled over a chair and sat down.

The forms were densely packed with the same old questions: family members, educational background, work history, any connections abroad, party membership status... The last page was a confidentiality agreement, stating in bold letters: "Anyone who leaks state secrets will be prosecuted to the full extent of the law. The maximum penalty is death."

Werner filled them out impassively and signed his name.

The woman collected the forms and took a white plastic badge from her drawer. Werner’s photo was affixed to it, stamped with a red seal.

"This is your temporary pass. You’ll get your permanent one in a month." She pushed the badge toward him. "You are not to take it out of the building. You are not to lend it to anyone. If you lose it, the fine is five hundred Marks. It must be worn during work hours, or security has the right to question you."

"Understood."

"You’ve been assigned to the Special Procurement Department. Your direct supervisor is Director Otto Rehman." The woman stood up. "Follow me."

She led Werner down the hallway, passing several offices. Through the cracks in the doors, Werner caught glimpses of the scenes inside—

In one room, seven or eight people were crammed together. Two telephones were ringing simultaneously, and a middle-aged man was shouting into a receiver, "No, this shipment has to go out today! I don’t care if you have anyone in the warehouse!"

Another room was even more chaotic. The desks were piled high with samples: vacuum tubes, ball bearings, chemical reagent bottles, and even a few disassembled radios. A young man with glasses was carefully examining a circuit board with a magnifying glass.

Farther on, a door bore a sign that read "Financial Settlement Department."

The sound of an argument came from within: "This accounting is wrong! The report from Switzerland said thirty-five thousand, so how did you end up with thirty-two thousand?"

"Consumer Goods Import Department," the woman said, pointing to the door on the left. "Industrial Materials Procurement Department," she said, pointing to the right. "The Special Trade Department is on the third floor. You don’t need to go there for now."

She stopped in front of a door at the end of the hall and knocked three times.

"Come in."

Behind the door was a larger office, about thirty square meters, with eight desks. Each desk was piled high with folders and samples. Several tall filing cabinets stood against the wall, their tops weighed down with unidentified objects wrapped in newspaper. On the windowsill sat a few wilted-looking green plants.

A man in his fifties stood up and walked out from behind the rearmost desk. He wore a dark gray suit and his hair was neatly combed, but his face was lined with exhaustion, and the bags under his eyes were heavy.

"Otto Rehman." He extended a hand. "You must be Werner."

"Yes, Comrade Rehman." Werner shook his hand, feeling the rough palm and the calluses on the web of his thumb.

"Don’t bother with ’Comrade.’ We just use first names here." Otto waved a dismissive hand, then turned to the woman. "Thank you, Ingrid."

After the woman left, Otto poured Werner a cup of coffee—real West German coffee, not the malt substitute.

"Have a seat." Otto leaned against the edge of his desk, sizing Werner up. "Colonel von Brown spoke to me about you. Said you’re very capable. Did some good work with the Black Market and the political prisoner exchanges."

"I had good guidance."

"No need to be modest." Otto smiled, the crow’s feet at the corners of his eyes deepening. "There aren’t many people in all of East Berlin who can walk the tightrope between the Stasi and the Black Market without falling. But—" his tone shifted, "—this isn’t the Black Market, and we don’t do things your old way here. KoKo is part of the state machine, with strict rules and procedures. You’ll have to adapt."

"I will."

"I hope so." Otto took a sip of coffee. "Do you know what the Special Procurement Department is responsible for?"

"To be honest, not really," Werner said frankly. "I only know that KoKo is responsible for earning foreign currency."

"That’s right. Earning foreign currency is our core mission." Otto walked to the window and pointed at the gray, hazy sky outside. "But how do we earn it? It’s not as simple as just exporting goods for foreign currency. East Germany is short on too many things—precision instruments, chemical raw materials, electronic components, optical equipment... This stuff, either we can’t make it, the quality is poor, or our production capacity is insufficient. The factories need it, research needs it, and the military-industrial complex needs it even more."

He turned around. "The problem is, the West has an embargo on us. High-tech products, strategic materials—you can’t buy them through normal channels at all. And without these materials and equipment, East German factories can’t produce the goods we need to export for foreign currency. So, KoKo’s logic is this—"

Otto drew a circle on a piece of paper.

"First, we find a way to get the things East German industry needs from the West, so the factories can operate normally. Then, the products made by those factories are exported by us to the West in exchange for foreign currency. This in-and-out flow is the complete foreign currency cycle. Understand?"

"So KoKo handles both imports and exports?"

"Exactly. And they’re often tied together." Otto sat back down in his chair. "For example, say a chemical plant in Leipzig wants to procure a catalyst from West Germany through us. We can get it for them, but on one condition: the chemical products they manufacture must be handed over to us for export. The foreign currency earned belongs to KoKo. That’s how we keep the operation running."

"I see."

"So the work we do in the Special Procurement Department, on the surface, is ’procurement,’ but in reality, it’s about ’generating foreign currency.’" Otto lowered his voice. "And a lot of the time, the procurement itself makes money. A piece of equipment from West Germany costs fifty thousand Marks, we turn around and sell it to an East German factory for one hundred thousand Marks. The difference is our profit. Of course, it won’t be written that way on the books. It’ll be disguised as ’shipping fees,’ ’middleman commissions,’ things like that."

Something stirred in Werner. He was all too familiar with this kind of game. ’At its core, it’s just information asymmetry and a monopoly on channels.’

"Last year, our department procured eighty million West German Marks’ worth of materials," Otto continued. "Half of it was embargoed goods. Triangular trade, middlemen, disguised end-use, smuggling... all the things you used to do, we do them here. Just on a scale a hundred times larger, and with more complex methods."

Werner let out a low whistle.

"Don’t get too excited." Otto pointed at the other empty desks in the office. "As you can see, we’re short-staffed. We used to have twelve people, now there are only six. Some were transferred. Others... ran into trouble."

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