By the end of the 1950s, East Germany portrayed itself as a socialist paradise. But the reality was far different. Dependence on heavy industry created shortages of essential goods and consumer items. East Germany knew it could not compete with the swelling prosperity of West Germany.

Every month, thousands of East Germans fled across the open Berlin border and took refuge in the West. Most of the refugees were young and skilled. Their departure was bleeding the East German economy to death. East German leader Walter Ulbricht urged Khrushchev to recognize East Germany as a sovereign state.
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