TIME: Almanac 1993/TIME Almanac 1993.iso/time/022690/02260012.000

Text File | 1992-08-28 | 5.4 KB | 117 lines

                                                                                WORLD, Page 14

Yes, Let's Get Together, But . . .


    One would think that Heinz Lyscik, director of an East
Berlin cabaret famous for its risque pillorying of the former
political order, would be overjoyed at the fall of the
Communists and the prospect of unification with the West.
Imagine: no more hassles with the censors, complete artistic
freedom, new crowds from the West flocking to his place, Die
Distel. But Lyscik is more worried than cheered. Under the
Communists, he notes, "we got 13 marks per ticket in subsidies.
Tickets cost patrons only 1.50 marks. Now we are already up to 4
to 8 marks, and we don't know from day to day if we will
continue getting our subsidy. If not, we'll have to start
charging the 30 to 40 deutsche marks they charge in the West.
What kind of audience will we have then?"

    Polls show that two-thirds of East Germans and
three-fourths of West Germans favor unification. But with
unification likely to take place sooner than almost anyone
expected, East Germans are beginning to realize that they are
going to lose the attractive sides of communism (subsidized
housing, guaranteed jobs) as well as the less desirable aspects
(secret police, censorship). Across the border, meanwhile, West
Germans are starting to fret about the high costs of adopting
their poor relations.

    Last week's agreement between the two countries to start
immediate negotiations to replace the East German ostmark with
the West German deutsche mark provided the starkest reminder yet
of the downside of unification. The immediate aim of the
monetary union is to stanch the East German stampede to the
West, which continues at the rate of 2,000 a day. The theory is
that if Easterners were more confident about their country's
economic future, they would be less prone to flee. The first
step in that process is to replace East Germany's funny money
with West Germany's stable, convertible currency.

    Easterners, though, will have to pay to get their hands on
hard marks. Even if the notes are traded at three ostmarks for
one deutsche mark, the official rate of exchange for foreigners,
East Germans will find their savings slashed by two-thirds
overnight. The damage will be worse if the exchange rate is
closer to the more realistic 10 to 1 offered on the black
market. East Germans have a lot to lose; their personal savings
total more than 150 billion ostmarks, or some $3,100 a person
at the inflated exchange rate of three ostmarks to the deutsche
mark.

    Fearful of a sudden devaluation of their hoards, East
Germans last week staged a minirun on banks, withdrawing cash
for shopping sprees. "People are buying whatever has value,"
said a salesclerk at East Berlin's Zentrum department store.

    After unification, East Germany will adopt West Germany's
market-oriented economy, and the going could initially be rough
for East German companies and workers. Aging and inefficient
East German industries like automobile manufacturing, which
produces the pathetic 26-h.p. Trabant, will face competition
from modern, powerful West German counterparts like
Daimler-Benz. This could cause widespread factory closures and
job losses, which never happened in the old centrally controlled
East German economy. A report by the European Community leaked
two weeks ago estimates that East Germany, which now has a
worker shortage, could have 15% unemployment -- 1.2 million
workers -- in the first year of economic reforms.

    East Germans also count other costs of becoming
Westernized. There are the usual bugbears of crime, pornography
and AIDS, as well as more ethereal concerns over competitive
pressures in the ellenbogengesellschaft, or "elbow society."
Some Easterners feel their identity is already being eroded by
the encroachment of West German politicians in the campaign for
next month's parliamentary elections. Western parties have
adopted each of the major Eastern parties, providing them with
money, organizational support and clout. Former West German
Chancellors Willy Brandt and Helmut Schmidt, among others, have
been crisscrossing East Germany, drumming up support for the
Eastern counterpart of their Social Democratic Party, which
polls predict will win as much as 54% of the vote. "The West
Germans are hijacking our campaign," moaned Barbel Bohley, a
founder of New Forum, which led the popular revolt against the
Communists last year.

    While East Germans fret about being swallowed whole, West
Germans worry about indigestion. Expanding the deutsche mark's
territory into East Germany risks setting off a torrent of
inflation in a country that has traditionally been paranoid
about rising prices. The currency issue aside, West Germans know
that to prevent the total evacuation of East Germany, they will
have to flood the area with money to reconstruct its aged
industrial base, raise income levels and provide unemployment
insurance. Earlier estimates that put the price tag for
unification at $12 billion have been raised to some $50 billion.

    Despite their anxieties, few Germans on either side of the
border want to stop unification. But Germans of all persuasions
are learning, as the adage goes, to be careful what they wish
for, because, from all appearances, they are certainly getting
it.


By Lisa Beyer. Reported by James O. Jackson/Berlin and Ken
Olsen/Bonn.