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Kohl's Miscues on the Road to Reunification

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In order to finance reunification, the federal government has engaged in a positively American bout of deficit spending, driving interest rates to record highs. And on top of it all, the West German economy, pumped up in 1990 by pent-up consumer demand from the East, is now in deep recession, just as the United States seems to be coming out of one.

These outcomes all were predicted and expected. The collapse of the wall was an economic as well as a political event, since the wall was the only thing that kept the East German economy from imploding during the last three decades. Suddenly, with economic unification, East German companies had to compete with immensely more sophisticated West German competitors. Is it any wonder that so many of them went bankrupt? In 1990 Kohl refused to listen to the voices of economic common sense - including the hea d of the Bundesbank itself, who resigned in protest - who urged a more cautious approach, tax increases, and more protection for the East German economy. He has only himself to blame if he refused to listen.

Americans can perhaps get a sense of the magnitude, if not the precise contours, of what is happening if they imagine what might occur if President Clinton were to announce suddenly that Mexico was about to become the 51st state.

There is an irony of history in all this. On Nov. 9, 1989, when the wall fell, East German masses danced in the streets and went on a buying spree in West Berlin. They naively believed that West German prosperity was now around the corner. But it was not prosperity, it was economic depression, that was around the corner. Sometimes political freedom does not go hand in hand with immediate prosperity.

Unfortunately, Kohl did nothing to disabuse East Germans of their economic illusions and a great deal to delude them even further. It now looks as if large numbers of people in the GDR, and possibly in the Federal Republic as well, equated the concepts "democracy" and "national unity" with the concept "economic prosperity." That is a dangerous confusion; when economic prosperity did not immediately materialize, the concepts of democracy and national unity also came into question.

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