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GERMANY IN THE E.U.

In assessing the importance of the Maastricht Treaty for Germany's future role in Europe, Chancellor Kohl said that 'Maastricht is the proof that united Germany is actively fulfilling her responsibility in and for Europe and clearly abides by what we have always said, namely, that German unity and European Union are two sides of one and the same coin.' Despite the severe damage to the European Monetary System, Germany adheres to the goal of Monetary Union. The common internal market of the twelve EC countries was launched on 1 January 1993. This market embraces 345 million Europeans who form the strongest economic area in the world in terms of purchasing power. With the sole exception of Switzerland, the members of the European Free Trade Association, EFTA, who are Austria, Sweden, Norway, Finland, Iceland and Liechtenstein, have formed the European Economic Area together with the European Community.

The European Monetary Union entered its first phase in mid-1990. Transfers of capital among EC countries have been liberalized, and the coordination of economic policies and cooperation among central banks have been intensified. The second phase begins on 1 January 1994. From then on preparations will be made for the establishment of the European Monetary Institute (EMI) and of a European Central Bank. The decision on the third phase, which will be the final and irrevocable phase, will not be made until the end of 1996 at the earliest. Complete Economic and Monetary Union presupposes a greater degree of monetary stability and budgetary discipline.

The German Government attaches particular importance to the fact that at the summit meeting in Maastricht in 1991 the heads of state and government not only negotiated the treaty on Economic and Monetary Union but also a treaty on European Union as the superstructure of a further integrating European Community. This is being achieved by means of the new common foreign and security policy as well as cooperation in the fields of justice and home affairs. In the opinion of Chancellor Kohl, this deepening of the Community must go hand in hand with its enlargement to include not only the EFTA countries but, in the longer term, the nations of central, eastern and south-eastern Europe.

Germany's economic unification.
The process of German unification is taking place within the framework of European integration and parallel to a global political and economic restructuring as a consequence of the collapse of the communist system in eastern Europe.

The conversion of the former east German command economy into a well-functioning market economy system is a unique challenge. It requires not only a massive transfer of resources from west to east (in 1993 the gross amount transfer to eastern Germany comes to about 183 billion marks, following 140 billion in 1991 and 152 billion in 1992) but a complete change of management. New markets have to be tapped, supplier systems reorganized, and personnel retrained or enabled to improve their qualifications.

Many factories in the former GDR were in such a derelict condition ecologically as well as technically that their continued operation would have been irresponsible. Nor could the transformation of industry be carried out without painful adjustments to the labour market. Without large-scale redundancies it was impossible to get the economy onto the road of productivity. Competitiveness is, after all, essential for a company's long-term economic survival.

The government has introduced heavily funded job-creation programmes. Despite this effort, however, it has not been possible in 1993 to improve on the 15% unemployment quota, which is twice as high as that in the western states.

The privatization of state-owned companies that were worth saving was handled by the Treuhandanstalt (Trust Agency) at great cost. Up to the end of August 1993, 12,800 enterprises had been privatized and nearly 3,000 wound up, leaving 1,500 still on the Agency's books. The new owners of the privatized firms have undertaken to retain or to create 1.54 million jobs. On top of this they have bindingly undertaken to invest more than 180 billion marks, which promises a boost for economic growth and renewal in the years ahead. The Trust Agency intends to complete its work by 1994 at the latest.

According to the forecasts of research institutes, eastern Germany's real gross domestic product will increase by 5-6% in 1993. In the opinion of the Bundesbank the worst is over and economic growth there can become increasingly self-sustaining. There has already been a distinct upswing in some branches, for instance building, trades and some services and industries, but many others still face enormous problems, mainly due to the low level of productivity. This year it reached about 36% of the west German level.

As from 1995 the new states will be incorporated in the country's normal financial equalization system. Until then their financial needs will be covered by the 'German Unity Fund', which is one of the main ingredients of the 'Solidarity Pact' agreed between the federal and state governments in the spring. Under this arrangement nearly 57 billion marks will be available to fund the new states and the local authorities. The new legislation enacted for this purpose also sets aside substantial amounts for housing, transport, postal services and research. All this assistance is designed to put the German economy on a sound footing.

Safeguarding the country's economic future
Germany's economic development since 1990 has not only been affected by eastern Germany's economic problems. The consequences of a severe global recession have also been increasingly felt, especially since 1992, a trend which began earlier in other industrial countries. After an estimated 1.5% shortfall in the gross domestic product in the western part of the country in 1993, it is expected that this deficit will be made good again in 1994.

The government has ushered in a phase of consolidation with a strict savings policy. It is hoped that new borrowing can be reduced considerably in the next few years. According to IMF statistics, Germany's borrowing is still below the average for western countries, in spite of having to meet the historic challenge resulting from German unification.

However, the savings, consolidation and growth programme is only one of many measures by which the government intends to maintain Germany's attractiveness as a place for industrial investment. Removing the ossified structures and aberrations of past decades is one of the nation's greatest economic and social challenges.

By means of its Investment Promotion Act the government intends, as from 1994, to considerably reduce company taxes and thus spur investment and job creation. New legislation is to be introduced to make working hours more flexible and ensure that machinery can be kept running for longer periods. A new genetic engineering act is intended to prevent some of Germany's top researchers and technology from emigrating. Protecting Germany's economic future is not only a responsibility of government but a challenge to the innovative flair of companies and the flexibility of both sides of industry.

Promoting social integration
The overwhelming majority of Germans were strongly in favour of national unification, but only gradually did they become aware of the degree of alienation that had developed over a period of more than 40 years when east and west Germans were practically isolated from one another by the communist regime in the east. Understandably, many east and west Germans have different opinions on the contribution which the people in the old states are making to help those in the new. Many east Germans who hoped that the standard of living between eastern and western Germany would quickly be brought into balance are disappointed. They feel they are being neglected by the people in western Germany no less than by the government.

Whilst in Leipzig to lay the foundation stone for the new complex of the city's international fair, Chancellor Kohl said that the Government 'knows that the necessary restructuring of the economy is a dramatic process which requires the people in the new states to make incisive adjustments to their private and working lives. It is understandable that such drastic changes evoke fear and concern. But the number who say they are satisfied with the progress of development in eastern Germany is steadily growing.'

In 1993 the pension insurance scheme alone transferred 15 billion marks to the new states in order to boost pensions there once again. Since unification pensions in the eastern part of the country have risen from 30 to the present 73% of those in the west.

A very tricky aspect of coming to terms with 40 years of communist rule in eastern Germany concerns the handling of 'government crime' by the courts, and particularly who is to be held responsible, and to what extent, for the shootings and deaths along the wall and barbed-wire fences that divided the country. Soldiers who actually fired and killed people attempting to flee over the wall have been found guilty but given mild sentences because they were, after all, only obeying orders. But how should one assess the guilt of the politial leaders who gave the orders? Is it at all possible to assess them in terms of the law?

In 1993 the former East German defence minister, Heinz Kessler, and his deputy Fritz Strelitz, were found guilty by the Berlin regional court of instigating manslaughter and given prison sentences of seven and a half and five and a half years respectively. Hans Albrecht, former district chief executive, was sentenced to four and a half years for being an accessory to manslaughter. The court also took a previous conviction into account. The trial of Willi Stoph, the former east German prime minister, on charges of having ordered the shootings was terminated on account of the accused's poor health. The former head of state and leader of the communist party, Erich Honecker, was released from jail for the same reason. In mid-1993 investigations were begun into the past activities of 1,700 members of the East German leadership, party functionaries and members of the government and judicial apparatus.

Another extremely sensitive issue is the scrutiny of the vast quantities of files (filling shelves with a total length of 180 km) maintained by the East German State Security Service (Stasi) by a government authority known by the name of its director, Joachim Gauck (the Gauck agency). People in the east want to know what kind of information the Stasi had on them and many of them have discovered that they were spied on by persons they had trusted.

No other development has disturbed the Germans more since 1991 than the outbreak of extremist right-wing violence against asylum-seekers, foreigners and Jewish institutions. In 1992 alone 17 people fell victim to such criminal activity, mainly committed by young people. The wave of violence reached another climax in 1993 with a firebomb attack on a house in Solingen in which five Turkish women and children were burned to death. The authorities and various other organizations are making tremendous efforts to stamp out right-wing extremism. Demonstrations in which nearly three million people have taken part testify to the fact that Germany is still a country friendly towards foreigners and that the German people reject violence. Today their desire to dominate Europe is evident on a political level instead.



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