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Kohl's Grand Plan to Rescue East Falters

Stalled `solidarity pact' has cost credibility and deepened Germany's economic slide

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GERMAN Chancellor Helmut Kohl's vision of a "major national effort" to bring east Germany up to west German standards has turned into a pipe dream.

Two years ago Chancellor Kohl first launched the idea of a "solidarity pact," in which federal, state, and local governments, as well as trade unions, industry, and the political opposition, would pull together and rescue the eastern half of Germany from economic ruin.

But what began as a broad initiative for shared sacrifice has been reduced to a financial package of budget cuts and revenue enhancers. It involves just two groups: the federal government and the 16 states.

"In reality, there is no solidarity pact," says Fritz Fliszar, director of the Friedrich Naumann Foundation, which is affiliated with the Free Democratic Party, the junior coalition partner of Kohl's Christian Democratic Union (CDU).

Unions in west Germany have accepted reduced wage hikes this year (a 3 percent increase as opposed to 6 percent last year). But they have been forced into retreat largely by a worsening economy, not by any prodding from the chancellor.

Meanwhile, instead of forging consensus, discussions surrounding the solidarity pact have "opened up all kinds of fault lines between the federal and state governments, within parties, and between east and west," comments a Western diplomat in Bonn.

Last fall, the government was saying it wanted to wrap up the solidarity pact by last Christmas. Now, it is aiming for this week.

In two days of talks beginning today, Kohl wants to reach agreement with the state chiefs - the majority of whom belong to the opposition Social Democratic Party (SPD) - on how to share and pay for the east German bill of 110 billion deutsche marks ($66 billion) a year. This is the amount needed after 1995 to support recovery in the east and begin to pay off east German debt.

But both sides are entering the talks with hardened positions. The state chiefs refuse to shoulder as much of the burden as the government wants them to, they object to federal budget cuts in social spending, and they insist on tax increases before 1995.

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