IF the latest currency-swap plan was put up as a West German trial balloon, it had a short flight. The East Germans shot it down as soon as they saw it. After harsh negative reaction from all major parties in East Germany, West German Chancellor Helmut Kohl began to distance himself from the plan Monday. He emphasized that the exchange rate, as suggested last week by the West German central bank (Bundesbank), needs ``careful examination.''
The Bundesbank's 1-to-2 rate would, in the absence of other measures, halve East German pensions and wages. But savings of up to 2,000 East German marks per person could be exchanged at a direct 1-to-1 rate and would then equal about $1,180. This savings limit is far less than what most people, East and West, anticipated.
When it appeared that Bonn was prepared to back this plan, not only East Germans but politicians in Mr. Kohl's own coalition accused him of breaking his campaign promise to East German voters. Kohl had told them that West Germany would exchange the savings of the man-in-the-street (``small savers'') at 1 to 1.
Although Kohl never promised to exchange pensions and wages at 1 to 1, the implication was that West Germany would look after the ``little guy.'' If the 1-to-2 rate goes through, ``we'll have difficulty keeping people here,'' said Lothar de Maizi`ere, chairman of Kohl's conservative sister party in East Germany.
The Bundesbank stands by its suggestion because it says the East German commercial sector isn't competitive enough to support a 1-to-1 switchover. Why should an East German, for instance, shell out 15,000 to 18,000 marks for a noisy, smoke-belching Trabbi when he can have a new Volkswagen for the same price? Unable to sell their products, East German manufacturers would quickly fold, analysts here predict.
Other ways to make up the wage and pension difference are starting to emerge, however. The West German finance minister suggests that Bonn could add to pensions or salaries in East Germany to keep the commercial sector competitive.
In any case, this is not the final word. According to the West German timetable, as soon as a new government takes the reins in East Berlin the two countries will spend 14 days negotiating economic terms. After initialing an agreement, it will go to both parliaments for approval.
East Berlin came a step closer to political order this week when the second-place Social Democrats agreed to enter formal negotiations to form a grand coalition with the conservatives, who won the March 18 elections but don't have the two-thirds majority needed to make necessary changes in the Constitution.