East Germany, formally the German Democratic Republic or GDR ( or DDR), was a state within the Eastern Bloc during the Cold War period. From 1949 to 1990, it administered the region of Germany which was occupied by Soviet forces at the end of the Second World War—the Soviet Occupation Zone of the Potsdam Agreement, bounded on the east by the Oder–Neisse line. The Soviet zone surrounded West Berlin, but did not include it; as a result, West Berlin remained outside the jurisdiction of the GDR.
The German Democratic Republic was established in the Soviet Zone, while the Federal Republic was established in the three western zones. The East was often described as 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. Soviet forces, however, remained in the country throughout the Cold War. The GDR established the Ministry for State Security, or "Stasi", which aided the Soviet Army in suppressing uprisings in 1953. Until 1989, the GDR was governed by the Socialist Unity Party (SED), though other parties nominally participated in its alliance organisation, the National Front of Democratic Germany.
The economy was centrally planned, and increasingly state-owned. Prices of basic goods and services were set by central government planners, rather than rising and falling through an unregulated market. Although the GDR had to pay substantial war reparations to the USSR, it became the most successful economy in the Eastern Bloc. Nonetheless it did not match the economic growth of West Germany. Emigration to the West was a significant problem—as many of the emigrants were young well-educated people, it further weakened the state economically. The government fortified its western borders and, in 1961, built the Berlin Wall. Many people attempting to emigrate were killed by border guards or mines.
In 1989, numerous social and political forces in the GDR and abroad led to the destruction of the Berlin Wall and the emergence of a government committed to liberalization. The following year open elections were held, and international negotiations led to the signing of the Final Settlement treaty on the status and borders of Germany. The GDR was dissolved and Germany was unified on 3 October 1990.