German Leaders Set the Stage

WEST German Chancellor Helmut Kohl and East German Prime Minister Hans Modrow have laid the groundwork for closer ties in their meeting here in a way likely to cheer both Germans and their nervous allies. On Tuesday, Mr. Kohl offered East Germany a broad economic package that emphasizes support for small- and medium-sized businesses. He increased investment and export credits by 3.5 billion deutsche marks, to a total of 12 billion DM. A revived joint economic committee will meet in January.

In return, Mr. Modrow promised democratic elections, a new constitution, and a market-based economy. He also said all political prisoners will be released soon, if possible before Christmas.

Both men also got what they wanted in terms of closer relations - at least for now. Early next year, they will sign the agreement that Modrow supported, which cements closer ties in a contract. After East German parliamentary elections in May, Kohl will pursue his ``confederative'' steps and try to build common government and parliamentary committees between the states.

They didn't forget their nervous neighbors and allies, either. The lead point in speeches, a press conference, and a joint statement was the importance of closer relations, but only in the framework of a ``European house.'' They emphasized patience, stability, and level-headedness. The comments came the day before French President Fran,cois Mitterrand was due in East Berlin.

Also, before Christmas, East Germany will tear down the wall at the Brandenburg Gate, the ultimate symbol of Berlin's division.

And, as of Dec. 24, West Germans will be able to cross the border without a visa and without having to exchange a minimum amount of 25 DM a day. East Germans will be able to exchange their East marks at a subsidized rate of 3 to 1 in the New Year.

Though Kohl tempered his statements, he said his real goal is a single German federation. He admitted differences with Modrow. At a wreath-laying ceremony at a church left in ruins as a memorial to World War II, Kohl told ecstatic Dresdeners: ``My goal, if history allows it, is the unity of our nation.''

A number of Dresdeners, however, wanted stronger statements from Kohl on the unity issue.

``Too bad he's making certain compromises,'' said Christoph Weber, talking about Kohl's many references to the fears and concerns of Europe regarding a united Germany. ``We don't need other countries to nod approval,'' said the engineer, in his 40s. ``When I want to marry a woman, I don't go around asking my neighbors' permission.''

The majority of the crowds following Kohl around town were pro-unification. They chanted ``Germany - United Fatherland,'' waved West German flags, and carried banners.

A knot of students who want to preserve a separate state were shouted down and booed by the crowd at the wreath-laying ceremony. ``Isn't it funny how, a month ago, we were all yelling for freedom of opinion and now I can't even say what I believe,'' commented one of the students.

Next to him, Katrin Hanschmann, a 26-year-old assistant at the technical university here, said that a united Germany would be unhealthy for Europe - and the East Germans, too.

``I was in Stuttgart [in West Germany] for a week. I saw stress. I saw that people were totally oriented to their work life ... I saw beggars on the street,'' she said.

In East Berlin on Tuesday, according to East German press reports, about 50,000 people, a much larger crowd than expected, turned out at an opposition demonstration supporting the sovereignty of the East German state. A recent poll by the West German magazine Der Spiegel and the West German television network ZDF showed 71 percent of East Germans favored East German sovereignty.

``Don't believe that,'' said Mr. Weber, the engineer in Dresden. ``I'd say 60 to 80 percent want reunification.''

One explanation for the big turnout in East Berlin may be that living standards there are higher than anywhere else in this country. Poor economic conditions are a driving force behind unification. Also, since the wall has come down in Berlin, reunification, in a sense, already exists. West Berlin is only a subway ride away.

Whether for one Germany, or two, everyone interviewed in Dresden expressed relief that the two leaders were talking and that West Germany is ready to help. Kohl and Modrow expect to meet again at the end of January or beginning of February.