Tough Times in Germany

May 16, 1993

Germany's descent from euphoria to despond since the glorious days of reunification in late 1989 goes on and on. Some might attribute this to the usual German angst -- this, despite the fact that the country is the envy (and central banker) of Europe. But Germany's current problems are real and serious and of concern to its American allies.

Simultaneously, the nation is being wracked by recession, strikes, neo-Nazi violence, friction between its western and eastern regions and, most important, a sharp decline of public confidence in the political establishment.

The head of the opposition Social Democratic Party has just been forced to resign for lying and a member of Chancellor Helmut Kohl's cabinet has been booted out for petty graft, the third such minister to be involved in scandal. Also the minister president of Bavaria. With both of the major parties foundering, fringe elements on left and right are probing for advantage in next year's state and national elections.

This softness in the political center is a direct result of an economic calamity caused by the way reunification was pursued. Chancellor Kohl promised not only freedom but good times -- a rash miscalculation of what a mess the Communist regime had made of old East Germany. His government has pumped in more than $100 billion a year into the eastern states, but even this vast sum has been insufficient to replace obsolete factories and farms with viable enterprises. Tens of thousands of East German workers have been dumped on the dole, their self-confidence undermined.

What precipitated the first strikes in the eastern states in 60 years was the collapse of a bad bargain. At the time of reunification, workers in metal industries were promised 26 percent wage hikes this year and wage equality with their western counterparts next year. Instead, they will have to wait until 1996 because of low productivity.

The strikes, even if shortlived, are deepening Germany's economic doldrums. The country that once assumed its industrial superiority now finds its work force overpaid and over-vacationed and its products increasingly less competitive on world markets. Yet the underlying strength and heft of the German economy is such that it remains by far the locomotive of Europe, the chief source of investment in the old Soviet bloc, the place where hundreds of thousands of asylum seekers crowd in, thus triggering nativist resentments.

Despite all these troubles, Germany remains the anchor of U.S. strategy in Europe and a key trading partner. It deserves U.S. understanding as it goes through tough times. In the end, a genuinely reunited and prospering Germany will be essential if the collapse of the old Soviet empire is to bring democracy rather than instability to Europe.

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