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West Germans Take Hard Line With East Germany on Unity Costs

April 30, 1990

EAST BERLIN (AP) _ West German officials closed the cash box on Sunday and said they would refuse to assume a bigger financial burden to cushion East Germany’s leap into the free market.

Higher taxes could result if the government of West German Chancellor Helmut Kohl digs any deeper to ease East Germany’s transition from a socialist system, officials said.

″Everyone must know that our offer is the maximum of what we could accept,″ West Germany’s finance minister, Theo Waigel, said in an interview with the West German newspaper Welt am Sonntag.

Economics Minister Helmut Haussmann said in an interview in Bild am Sonntag that any more financial concessions would endanger the West German mark.

Kohl told manual laborers at a festival in Saarbruecken, West Germany, he would oppose higher taxes to finance unification.

Without being specific, he said some of the ideas coming out of East Germany were unrealistic.

″We must also say that the prosperity in West Germany did not fall from heaven, but came from work,″ he said.

Meanwhile, the administrator of 8,000 East German state-owned enterprises was quoted as saying West German and foreign investors will be allowed to buy no more than 50 percent in each company that is privatized.

The West German newspaper Die Welt quoted the administrator, Peter Moreth, as saying the remainder of the companies’ will have a combined value of $178 billion after the economies of the Germanys are combined.

Moreth’s comments were released on Sunday by Die Welt in advance of publication on Monday. There was no immediate comment from West Germany.

East Germans fear that their current enterprises will be completely taken over by West German or foreign interests once East Germany becomes a free market economy.

Also expressing concerns are East German farmers, who worry that a flood of West German agricultural products will wreck their livelihoods.

Protesting farmers drove hundreds of tractors and trucks on main roads in protest. About 1,200 farmers formed a 30-mile caravan near Herzberg, 60 miles south of Berlin, the East German news agency ADN said.

Hundreds of farmers also blocked a road leading to nearby Torgau, where an ″East meets West″ jazz festival was held Sunday. Soviet and American troops linked up in Torgau on April 25, 1945 after invading Nazi Germany from opposite directions.

Fears of the economic consequences of unification came a day before the latest round of talks on merging the disparate economies. Both Germanys have said their economies and social institutions will be unified by July 2.

West Germany last week said it was willing to exchange East German marks at a 1-1 rate for the powerful West German mark. But it said personal savings of more than $2,300 would be traded at a 2-1 rate.

The government of East German Prime Minister Lothar de Maiziere has said it wants a higher limit on savings accounts to make up for the loss of housing and food subsidies that were part of the former socialist system.

De Maiziere has also said he wants to retain subsidies, at least initially, on rents, energy and public services.

The merger of the economies will clear a major hurdle to unification. A full political union would take place after all-German elections, which Kohl is pushing to hold next year.

Much of the debate in West Germany has been influenced by Dec. 2 national elections in that country. Opposition politicians charge that Kohl already has made too many financial concessions to East Germany.

Some West Germans fear that converting the nearly worthless East German mark at a 1-1 rate and absorbing East Germany’s faltering economy will reduce their buying power, and fuel inflation and tax increases.

While the debate continues on the cost of unification, de Maiziere and other East German officials met with Soviet officials in Moscow Sunday to discuss a united Germany’s strategic future.

The Soviets want a united Germany to be non-aligned and perhaps be a joint member of NATO and the Warsaw Pact. The United States and Kohl want a unified Germany to be part of the Western alliance.

The foreign ministers from the four World War II allies that divided Germany - the Soviet Union, United States, Britain and France - are to meet in Bonn on Saturday for their first formal negotiations on German unification.

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