German Payoffs and Protests

March 30, 1991

There is a direct connection between protest demonstrations in eastern Germany and the unseemly wrangling between Bonn and Washington over the financing of the Persian Gulf war. This week, President Bush and German Finance Minister Theo Waigel sought to put the dispute behind them, with the latter promising prompt payment of Germany's $6.4 billion pledge and Mr. Bush expressing appreciation.

Nevertheless, the matter will probably continue to rankle. Many Americans were vocally unhappy over Germany's reluctance to supply troops during the war, even in support of NATO ally Turkey, and about illegal German shipments of chemical warfare materials to Iraq. Many Germans, on their part, have protested war payments to the United States at a time when their government is overwhelmed by the costs of German reunification.

This disconnect between the United States and Germany can be traced in large part to an economic collapse in what was formerly Communist East Germany. Only a few months ago, Chancellor Helmut Kohl was greeted rapturously by crowds in eastern German cities as the leader willing to risk a fast, big leap to unification.

Now, all is reversed. Monday night demonstrations in Leipzig -- a form of protest that brought down the Communist regime -- have been resumed, with Mr. Kohl the target of derisive chants. Karl Otto Poehl, chairman of the German central bank, has called last July's experiment in instant monetary union a "disaster." Opposition Social Democrats have called for new elections or a grand coalition, notions Mr. Kohl predictably rejected. He has been under attack for reneging on an election pledge not to raise taxes (sound familiar?). But almost everyone concedes that reunification costs pushing toward a stratospheric $100 billion make drastic measures necessary.

On all sides, there are predictions that conditions will grow worse quickly. With almost one-third of the work force unemployed or under-employed and antiquated factories being liquidated for lack of purchasers from the West, east Germans are dazed and disillusioned by the quick transition from cradle-to-grave security, drab as it was, to the risks of capitalism.

The situation suggests that the United States got its $6.4 billion war payoff just in time. Bonn officials have been charging that the U.S. stands to profit from the war through cost over-estimates, a notion that crowds of unemployed in eastern Germany will not soon relinquish now that it has been endorsed by the Congressional Budget Office. The White House had better realize the war-cost question will reverberate overseas as well as at home.

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