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investment needed to modernise outdated industrial plants and revive the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.''
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