From ANNA TOMFORDE

in EAST BERLIN

UP to 3000 East Germans are still leaving their country for the West

each day -- a trend that is placing the East Berlin Government under

enormous pressure to push through radical economic reforms.

Statistics show that most of the new arrivals come for purely economic

reasons, having grown impatient with the slow pace of change. When the

exodus began last summer, the large majority of East Germans said they

left their country because they felt deprived of basic democratic

rights.

But with a transitional Communist-led Government in power in East

Berlin, and the West German Government play- ing a tactical game over

who best to support in the East, talks about concrete economic aid are

only slowly progressing.

When the Berlin Wall fell last November, Chancellor Helmut Kohl in

Bonn promised East Berlin aid of ''a completely new dimension.'' But

since free elections have been announced for May, West Germany has kept

its economic powder dry to await the outcome of the poll.

This week, the newly set-up joint economic commission between Bonn and

East Berlin decided on a DM6 billion (#2.2 billion) credit package for

medium and small scale enterprises in the East. The deal is a beginning,

but it falls far short of the vast East German appetite for loans and

investment needed to modernise outdated industrial plants and revive the

economy, rundown by the now disgraced leadership under Erich Honecker.

According to West Germany's Dresdner Bank, East Germany needs annual

investments of DM10 billion (#3.7 billion) to enable it to attain West

Germany's standard of living by the year 2000. East German economists

speak of an investment need of a total of DM500 billion (#185 billion)

to avert a collapse of the economy. Half of that money alone was needed

to refurbish industrial plants with environment-friendly technology.

But while the debate goes on and proposals are being exchanged, East

Germany's economy continues to crumble. Because of last year's mass

exodus of labour, East Germany recorded a sharp decline in its national

income (GNP) in the last quarter of 1989. Last year's ''growth rate''

stood at 2%, half the target figure envisaged in the state plan.

Meanwhile, the formerly Communist-aligned Trade Union Federation

(FDGB) is recording a dramatic loss of membership. Of the previously

9.6m members, almost a million had quit by the end of last year. For the

first time the FDGB this week announced ''jobless figures'' showing that

85,000 East Germans are at present unemployed.

It is against these formidable odds that the transitional Government

of Hans Modrow is fighting. Modrow, himself an economist, is prepared to

move towards the concept of a free market economy. His close political

ally and Economics Minister, Professor Christa Luft, has held out the

prospect of West German shareholdings of more than 50% in small and

medium-scale business in East Germany.

East Berlin is also drafting a law on ''joint ventures'' and has

promised tax concessions for West German firms ready to set up business

in East Germany. It has also announced legislation on a free transfer of

capital and the protection of investment.

All these steps are being welcomed by West Germany's powerful business

community. But reluctance remains in industrial circles over the risks

involved in switching from state planning to a Western-style free market

economy.

''In essence, what the East Germans have to offer is little more than

industrial sites and labour,'' a leading West German economist said,

indicating that the business community here would remain sceptical over

investment until real headway was made towards a free market economy in

the East.

On the other hand, opposition groups in East Germany fear a sell-out

of their country's economy to West German business tycoons. They want

their Government to guarantee that basic industries remain nationalised,

and have warned against the West's exploitation of cheap labour

resources among East Germany's 16m population.

''What we don't want is Thatcher economics,'' said Mr Pavel Strohner,

an economist and member of the New Forum opposition group.

While West German industry is holding back with investment, the Bonn

Government has made it clear that it does not believe in granting state

aid to East Germany. It is, however, prepared to secure private

investment through Govern- ment-backed guarantees.

Unlike the opposition Social Democrats who, in 1981, provided Poland

with a massive loan -- only to find that a large chunk of it had to be

written off later -- Chancellor Kohl's Christian Democrats reject on

principle the granting of direct state aid to Eastern Bloc countries.

While the debate continues, precious time is being lost as East

Germans, fearful of even greater economic problems, vote with their

feet. It is perhaps not surprising, therefore, that among the posters

regularly held up at East Germany's mass rallies is one declaring:

''German reunification -- the only chance for our economy.''