East-West German trade up 8 percent
Leipzig, East Germany — East German leader Erich Honecker has been spreading the traditional East-West German bonhomiem at East Europe's most important trade fair, the Leipzig Fair, Sept. 5 to 11.
As Russians lined up for shoes and Leipzigers wished they could line up for foreigners-only concerts in the spanking new Gewandhaus, Mr. Honecker once again expressed his wish for further expansion of East-West German trade.
West German Permanent Representative (i.e., ambassador in all but name to the East Germany that West Germany doesn't quite recognize) Hans-Otto Brautigam hoped for more person-to-person contacts between East and West Germans.
Mr. Honecker's wish is likely to be fulfilled. Mr. Brautigam's less likely, in the foreseeable future.
Just because of economic hardships in the West and financial hardships in the East, the East-West German form of ultrasophisticated barter-trade shot up 8 percent in real terms in the first half of this year and is still rising.
Just because of Poland's current Damocles-sword limbo, however, East Germany is ultra-cautious about expanding personal ties between East and West Germans.
This combination of political stalemate and economic surge in East-West German relations has led some West German conservatives (and some American observers) to accuse Bonn of softness toward East Berlin. In their defense, West German officials retort that there is no point in being tough in a period when East Germany, looking nervously at Poland, feels so vulnerable that it could not yield on anything anyway.
At the heart of the dispute is the interest-free ''swing'' credit that Bonn extends to East Berlin to help cover the usual running deficit in the Eastern share in East-West German trade.
This overdraft agreement expired last December, and West German officials hinted broadly at the time that the renewal of the swing would be linked to East German gestures in easing personal East-West German contacts.
What West Germany hoped for in particular was some lowering of the price charged West Germans visiting relatives and friends in East Germany. That price was doubled (or in some cases quadrupled, depending on the category) to 25 marks (about $10.40) per person per day in 1980. This was done apparently out of fear of political contamination from Poland and the West.
The cost increase reduced the flow of West German visitors to East Germany by 25 percent and West Berlin visitors by almost 50 percent, with children and older people simply dropping out rather than paying the higher price.
(Officially, the 25 mark price is a compulsory exchange for East German marks; in practice the artificial 1 to 1 mark rate means that West Germans just forfeit their hard currency and give the 25 soft East German marks they have been forced to buy to their East German relatives or friends.)
In the upshot, East Germany was not forthcoming on visits - but West Germany finally extended the swing this summer for three years anyway - with only a slight reduction, from an annual 850 million marks ($354 million) to 600 million marks ($250 million) by 1985.
West German officials justify their decision by pointing to three other gestures this year from East Berlin: a modest ''amnesty,'' a modest expansion of the category of hardship cases in which East Germans may visit members of their immediate family in the West, and a modest increase in East German liability for noncommercial payments.
In the mid-June amnesty the East German government promised not to prosecute any former East Germans (or their children) who fled East Germany between 1972 and January 1982 and became West German citizens. Previously East Berlin refused to recognize the new citizenship and threatened to jail these people who returned on visits to East Germany. They were jailed under East German law for leaving the country without official permission.
The February expansion of family hardship cases has already increased the number of East Germans under retirement age who have received permission to visit West Germany. It has increased to 24,600 in the January to July period, up 14 percent over the same period in 1981.
East German assumption of more responsibility for noncommercial payments concerns such things as donations by former East Germans now living in the West to family members still in East Germany. In renewing the expiring East-West German agreement in this area this year East Berlin increased its own liability by 10 million marks (about $4 million) to an annual 60 million marks net per year.
The three-year renewal of the swing should help promote the trade that Mr. Honecker is so keen to see increase. It may not be utilized immediately, however , since East Germany, exceptionally, has managed to produce a surplus in inter-German trade in the past two years. Its cumulative trade debt to West Germany now stands at 3.4 billion marks ($1.4 billion), and its additional hard-currency debt is at $9.2 billion, according to the Bank for International Settlement. By a stringent import shrinkage, East Germany managed to reduce its hard-currency debt by $1 billion in the first quarter of this year.
Nonetheless, this import belt tightening has already reduced some factories to less than full capacity and kept economic growth in the first half of 1982 at 3 percent, according to official figures. This was well below the 4.8 percent target.
East Germany's conscious reduction of its hard-currency debt also contributed to the rise in East-West German trade, as East Berlin diverted some imports from the US and Britain to West Germany. The former requires high interest supplier credits, which the West has been reluctant to grant (and East Berlin has been reluctant to take) since Poland's near bankruptcy. The latter can be arranged without high interest under the special category of inter-German trade.
Thus, East-West German trade rose in the first half of this year to 6.8 billion marks ($2.5 billion), up 14 percent nominally, 8 percent in real terms.