German unity 'will not be free'

"If you had lost the South after the Civil War and had a chance to get it back, would you ask about cost?"

That was the pointed response of a senior advisor to West German Chancellor Helmet Kohl to a question I asked last week in Bonn about the cost of German re-unification.

The Bonn government is not looking back as it moves forward with an aggressive plan to unify the two German states. The Berlin Wall came down Nov. 9, 1989. On July 2, less than eight months later, the two German states will enter into a currency union.

This will be a cold shower for East Germany. At that time East Germans will exchange their currency one-to-one for West German Deutsch marks - even though on the day after currency union, East German business and industry will fact major problems.

The shoddy shoes and smoke-belching cars they now produce will not be able to compete with the products of the West. Massive unemployment is likely as East German companies go out of business or downsize to remain competitive.

For example, the manager of an East German knitting needle factory employing 56 people said he plans to lay off 25 workers, more than half of who are so-called "redundancy workers," put there by Communist party functionaries to ensure full employment.

There are widespread reports of canceled orders for products from East German factories as buyers in Poland, Hungary and other former East bloc states are now free to shop in the global marketplace.

Unemployment in East Germany has grown by 100,000 since January in anticipation of the effects of the currency union.
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Some West German leaders fear widespread unemployment in the East could lead to social unrest, which could become ugly, even dangerous, if frustrations focus on Soviet troops now garrisoned in East German.

But many fear Germany unity also will be a cold shower for West Germany. There is a fear that the huge investments required to rescue East Germany from more than four decades of Communist mismanagement will cause deep resentments among West Germans.

One respected economist, who is a local leader in Hamburg, put it this way: "German integration will not be free. But the costs could have been spread over five to eight years." Unfortunately, chancellor Kohl's approach means there will be heavy front-end costs.

That will mean deep cuts in local spending for everything from highways and mass transit to kindergartens," he added. "This will not go down well once people here begin to see consequences of the course we are following."

So, to some Germans, the price matters. As we move into the months ahead, it will be important to see whether the birth of the new Germany goes smoothly, or if we are faced with serious new problems in central Europe as leaders in business, government and politics put Humpty together again.