AFTER its defeat in World War II, Germany was divided into four zones under the control of the United States, Britain, France and the former Soviet Union. The division, nevertheless, was provisional. In accordance with the Potsdam Conference of 1945, ''there shall be uniformity of treatment of the German population throughout Germany'' and ''certain essential central German administrative departments shall be established.'' What the Powers desired was an economically united Germany rather than a divided one because the country's economic recovery was a prerequisite of the revival of postwar Europe. However, the postwar development of Germany turned out to be different from the settlement of the Potsdam Conference. The Powers failed to adhere to what they had decided in the conference and began to pursue their own interest in their occupation zones. Different policies were carried out in the four zones, so economic unity and inter-zonal agreements had never been achieved. The most serious divergence existed in the US zone and the Russian zone, and consequently frictions developed between them. The problem of reparations was the focus of dispute. For the Russians, the extraction of the greatest possible amount of reparations from Germany was of primary importance, so equipment was removed from the German factories and products were seized. For the Western Powers, the economic reconstruction of Germany was given priority. The endless requirement of reparation made by the Russians looked certain to retard the economic plans of the Western Allies, so General Clay, the Commander of the American zone, made efforts to search for a mutual understanding with the Russians on the reparation issue. An agreement was reached in March 1946 on an industrial plan, but the Americans withdrew from it after a month because of Russia's insincerity. The conflict over reparations between the Russians and the Western Allies surfaced when General Clay stoppedthe reparations deliveries to the Russian zone in May 1946. There was also a disagreement on shaping postwar Germany. The former Soviet Union extended the communist economic and political systems towards its sphere of influence. The government, police and factories were dominated by communists. Nationalisation and socialisation went on in full swing. Land was collected and then redistributed to the peasants. Bigger industries and commerce were transferred from the private sectors to state ownership. As a result, the Russian zone developed separately from the Western occupation zones. In the Western zones, a different pattern of polices was carried out. The Allies preferred to stop Germany from posing as a menace to the world order by making it a peaceful member of the international community. The United States hoped for a democratic, pluralistic and capitalistic Germany that could become a market and partner of its trade. After about a year of unpleasant experience, the Americans realised that they could hardly co-operate with the Russians on the German economic reconstruction and political unification, so they decided to work on their own. In September 1946, the UnitedStates announced that the US zone and the British zone would be merged to become the ''Bizonia''. It was the starting point of German division. The release of the Truman Doctrine in March 1947 ended all the possibility of a US-Soviet co-operation and dashed the hope of German reunification as well. Later that year, one more step was taken to consolidate the unity of a West Germany. France no longer opposed to the creation of a West German state and agreed to combine its zone with Bizonia to form the ''Trizonia''. The merger of the three Western zones was completed by mid-1948. The Russians reacted by introducing the Ostmark in their occupation zone and the whole of Berlin. They also suspended all land and air traffic to Berlin. This was known as the ''Berlin Blockade''. The Western Allies had to carry out massive airlift to provide food and other supplies to the West Berliners. The Russians eventually agreed to put an end to the blockade as it was costing more than it was worth, but the fundamental differences betweenRussia and the Western Powers on Germany could not be reconciled. The Berlin Blockade accelerated the setting up of a separate government in the Western zones. The Federal German Republic (West Germany) was set up on September 21, 1949. This was followed by the setting up of the German Democratic Republic (East Germany) with East Berlin as its capital a month later.