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Kohl, Modrow plan economic union

BONN - After meeting with the caretaker leader of East Germany, Chancellor Helmut Kohl announced Tuesday that a joint committee would start immediate preparations for currency and economic union, the first major step in Kohl's drive toward rapid reunification. "This offer by the federal government means that we are willing to give an extraordinary, even revolutionary response to extraordinary, even revolutionary events and challenges in East Germany," the West German leader said at a news conference.

Kohl, however, gave no new details about how the West German mark would replace the East German currency, and he said the union in any case would not take place until after the elections in East Germany on March 18.

Kohl also rejected East Germany's appeal for 15-billion marks, or $9-billion, in special emergency aid, saying that about $3-billion was already being spent on East Germany from a supplementary budget.

Hans Modrow, on his first visit to Bonn as the East German prime minister, formally acquiesced to forming the committee. But it was evident through the day that Modrow had little influence left, either in the negotiations in Bonn or over events in East Berlin.

He and his delegation of 17 Cabinet ministers were met at the airport by low-ranking officials.

At the news conference, Modrow sought to defend East Germany's integrity, saying that East Germans were not coming to reunification empty-handed, but carried "spiritual and cultural values," and that the state carried a net worth of 1.4-trillion marks.

West German economists said the figure was of little value, since it was denominated in East German marks and since holding these assets did not change the fact that the economy was rapidly deteriorating.

At the end of the news conference, listening to one of Kohl's government ministers describe Bonn's "good will" in helping East Germany, Modrow sardonically interjected, "Good will was the main topic today."

Kohl, by contrast, spoke as if he were already the chancellor of all the Germans and their guide toward rapid reunification, and he used Modrow's visit largely as a platform to press his case.

Kohl argued that the deteriorating situation in East Germany required "a clear, unmistakable signal of hope and encouragement" to the East Germans.

"We are offering our strongest economic asset, the deutsche mark," he said. "With that we allow our compatriots in the East to share directly in what the citizens of West Germany have built up and achieved in decades of continuous work. The deutsche mark is one of the world's strongest, most stable and widely accepted currencies and is the basis of our prosperity and our economic prowess."

Kohl said that simultaneously with monetary union, East Germany had to create "legal preconditions" for the introduction of a market economy.

Kohl said that West Germany's trade surplus of about 78-billion marks "gained a new meaning" in view of the task at hand.

"If we can redirect a small part of our trade surplus into East Germany, if we succeed in making a small part of our capital export available to East Germany, then this alone will be enough to give a strong start to the economy there," he said.