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West Germany Creates Committee to Pursue Reunification

February 7, 1990

WEST BERLIN (AP) _ The West German government today created a committee to prepare for eventual German reunification and agreed to pursue immediate talks with East Germany on using a single currency.

Rudolf Seiters, Chancellor Helmut Kohl’s chief of staff, said the select committee began its work today under the chancellor’s leadership. Other panel members include Cabinet ministers in Kohl’s government.

Seiters said the panel will examine all the steps and decisions necessary for unification, including creation of a monetary union, East German economic reforms and legal questions, as well as issues of foreign policy and security.

West Germany will discuss ″confederative cooperation″ with East Germany after East Germany’s first free elections on March 18, Seiters said.

He made the announcement after Kohl’s Cabinet met to hear the chancellor’s proposal for urgent talks with East Germany on uniting the two nations’ currencies, which would be a giant leap toward reunification. A monetary union would make the West German mark East Germany’s currency and turn over much of East Germany’s economic sovereignty to West Germany and its central bank.

Economics Minister Helmut Haussmann said a ″German-German economic miracle″ like the one that made West Germany wealthy is possible as the two countries draw closer together, but that much work needs to be done.

Kohl, under domestic pressure to relieve the influx of thousands of East Germans seeking better jobs and housing in the West, said Tuesday: ″People in East Germany must see now that citizens of West Germany are ready to help.″

Nonetheless, new signs are emerging that both German states may have to make huge sacrifices to rescue East Germany’s ailing economy.

A newspaper quoted officials as saying that under reunification, West Germany would have to pay billions to salvage East Germany’s economy.

In East Berlin today, three leftist opposition movements agreed to join forces and campaign as a coalition for East Germany’s March 18 elections, said the ADN news agency. The three are New Forum, Democracy Now and the Initiative for Peace and Human Rights, said ADN. New Forum is East Germany’s best-known pro-democracy movement.

Three conservative opposition groups, including the Democratic Awakening, also have joined forces for East Germany’s first free elections.

Also today, authorities said ousted East German Communist Party leader Erich Honecker, who faces charges of high treason, will be tried together with three of his former lieutenants before the country’s Supreme Court next month.

Lother Reuter, deputy attorney general, said the four face charges including ″blatant human rights violations,″ ″complete hindrance of media freedom″ and ″deformation of the people’s economy.″

Kohl said details for talks with East Germany on reunification would be worked out when Premier Hans Modrow of East Germany visits Bonn next week.

Kohl did not give a deadline for the monetary union, but government sources said on condition of anonymity that Kohl shared Finance Minister Theodor Waigel’s view that it should come before the end of the year.

The newspaper Bild said Waigel wants East Germans to be able to exchange their currency for West German marks at a 1-1 ratio. The current official rate is three East marks for one West mark.

But Waigel also expects the process of creating a free-market economy in East Germany will result in a huge loss of jobs until new positions under new economic conditions can be created, Bild reported.

According to Bild, Waigel is proposing that West Germany pay out unemployment benefits to East Germans left jobless by economic overhaul and has estimated that would cost $6 billion annually.

Helmut Geiger, head of the West German Savings Bank Association, said monetary union would cost the West Germans a ″double-digit billion-mark sum.″

He said that would probably lead to tax increases in West Germany, higher budget deficits and an end to talk of shorter work weeks.

The head of West Germany’s central bank, Karl Otto Poehl, also has voiced reservations about a speedy monetary union.

East German officials, while acknowledging that sharing the same currency could ease some immediate problems, generally have resisted such a move because of fears that it would erode the value of East German savings.

They also fear that unprofitable, state enterprises would have to close, forcing large layoffs.

An accelerating exodus to West Germany, strikes and absenteeism are driving East Germany’s economy toward the brink of collapse.

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