Chapter 28: Chapter 28: Foreign Exchange Arbitrage

Once the door closed, Werner sank into his chair, his back drenched in a cold sweat.

He knew he was on the Stasi’s radar.

In this country, being targeted by the secret police was as dangerous as being caught in a viper’s coils.

Yet, at the same time, he felt a strange thrill.

Danger meant opportunity. Being noticed meant his business was successful enough to attract official attention.

The key now was figuring out how to keep his business growing under the Stasi’s watch.

He needed to be more careful and more clever. He also needed to find new opportunities—and protection.

Werner walked to the window and watched the black sedan disappear down the street below.

He would have to remember the name Vonke. In this game of cat and mouse, knowing your opponent was just as important as knowing yourself.

Besides, he had a hunch. This Stasi agent, Vonke, might be more than just an enemy. In this complicated political environment, today’s enemy could easily become tomorrow’s partner.

The key was finding the right time and the right approach.

Night fell, and sparse streetlights flickered on across East Berlin. In this divided city, everyone struggled to survive, and everyone had their secrets.

******************

Werner stood before an abandoned building on the edge of Alexanderplatz, a common gathering spot for Black Market dealers.

He glanced around and quickly found the person he was looking for—Otto, a tall, skinny middleman who specialized in foreign currency exchange.

"Otto!" Werner called out, walking over.

The tall, skinny man turned. Seeing it was Werner, he broke into a grin. "Werner! What brings you here? That thing you asked about last time..."

"That’s exactly why I’m here," Werner said. "How many foreign exchange coupons can you get?"

Otto glanced left and right, then lowered his voice. "I can get quite a few lately, but the price..."

"What’s the price?" 𝗳𝐫𝚎𝗲𝚠𝚎𝗯𝕟𝐨𝘃𝚎𝗹.𝗰𝗼𝗺

"1.5 to 1, West German Marks for foreign exchange coupons." Otto held up a finger. "This is the best price you’ll get. These coupons aren’t easy to come by."

Werner did a quick calculation in his head.

The purchasing power of the coupons in the foreign trade shops was roughly equal to the West German Mark, but on the Black Market, they cost fifty percent more. ’Still,’ Werner thought, ’considering the potential for arbitrage, the cost is acceptable.’

"Deal." Werner pulled a thick wad of West German Marks from his coat. "Three hundred Marks. I need coupons."

Otto’s eyes lit up as he quickly counted the bills. "Well now, looks like you’ve struck it rich."

"Less talk, more trade," Werner said, not wanting to explain.

A few minutes later, Werner had 200 coupons in hand. It was a little less than he’d hoped for, but that was the price of doing business on the Black Market. He carefully tucked the coupons away and said goodbye to Otto.

Half an hour later, Werner calmly pushed open the glass door of a foreign trade store.

This special store, which catered to foreign tourists and the East German elite, was like a giant treasure trove to him.

The Western goods displayed in the window—Nestle coffee, American cigarettes, Swiss chocolate—were priceless treasures in East Berlin, and now he held the key to acquiring them.

The store was brightly lit, the shelves were neat, and a few Western tourists were casually browsing. The relaxed atmosphere made Werner even more certain his plan was the right one.

"Werner!" Eva’s voice came from behind the counter. She looked a little surprised. "What are you doing here?"

"I’m here to set our plan in motion." Werner walked up to the counter and discreetly flashed a corner of the coupons.

A flicker of excitement crossed Eva’s eyes, but she quickly regained her composure. "What are you looking to buy?"

"French lipstick," Werner said, his mind already made up. "Pick a few of the most popular shades. And small bottles of French perfume, the ones with the delicate packaging."

"Smart choice," Eva nodded. "They’re small, high-value, and the officials’ wives love them."

She began expertly plucking items from the shelves, grabbing only one or two at a time to avoid attracting the other customers’ attention. "How many lipsticks do you want?"

"Eight, different shades," Werner said. "Six bottles of perfume."

"Won’t that be too much at once?" Eva asked, a little worried.

"We’ll check out in two batches," Werner said, one step ahead. "Buy some now, and we’ll get the rest after the other customers leave."

Eva gave him an appreciative look and began to bag the items as instructed.

For the first purchase, Werner bought five lipsticks and three bottles of perfume, spending 110 coupons.

After the Western tourists had all left the store, Eva brought out the remaining items. "That’s ninety coupons for the rest."

"Perfect." As Werner paid, he noticed Eva splitting the goods into two different shopping bags. "You think of everything."

"You learn to be careful when you work here long enough," Eva said with a smile.

Transaction complete, Werner walked out of the foreign trade store with his shopping bags, feeling pleased.

He went straight to the Old Town, where the Black Market was concentrated. Its narrow alleys concealed all sorts of illicit dealings.

"Werner!" Fatty Wolf spotted him from afar. "Brought any good stuff today?"

"See for yourself." Werner pulled a French lipstick from one of the bags.

Fatty Wolf looked so surprised he nearly jumped. "My God! Is this French lipstick? The real deal?"

"Fresh from the foreign trade store," Werner said coolly.

"Excellent! Lady Lark was just asking me a few days ago if I had any high-end cosmetics like this," Fatty Wolf said excitedly. "How much have you got?"

"Not much, but the quality is guaranteed." Werner adopted a mysterious tone. "What do you think they’ll sell for?"

"One hundred and twenty Marks a piece!" Fatty Wolf said, as if the number pained him. "And the perfume, two hundred Marks a bottle!"

Werner was ecstatic. The prices were even higher than he’d anticipated. He had invested 200 foreign exchange coupons, which cost him about 1,000 East German Marks. Selling everything at this price would bring in 2,160 Marks, more than doubling his initial investment.

"Good. Take a few to test the market." Werner gave Fatty Wolf three lipsticks and two bottles of perfume.

Just as they were making the exchange, a boy of about fifteen or sixteen cautiously approached them.

He had blond hair and wore a neat student uniform, looking like the child of a wealthy family.

’A well-off kid like him, here in a seedy place like the Black Market?’ Werner thought. ’He must be here for something important. An official’s son wouldn’t risk coming to a place like this otherwise.’

"Excuse me," the boy said timidly. "Are you Mr. Betelich?"

"And you are?" Werner asked, sizing up the boy.

"I’m Martin Schmidt," the boy introduced himself. "Mrs. Schmidt’s son."