THE Basic Law of the Federal Republic of Germany (FRG) contains two separate articles addressing the parameters of citizenship. The atrocities of the Hitler era impelled the FRG's founders to adopt asylum provisions that are liberal by Western standards; the FRG's reputation for "economic miracles" also exudes a magnetic force. Article 16 of the constitution warrants that "persons persecuted on political grounds shall enjoy the right of asylum."Another provision, Article 116, reinstates the rights of those forced to abandon or renounce their citizenship during the Nazi era; it further defines as German anyone "admitted to the territory of the German Reich within the frontiers of 31 December 1937 as a refugee or expellee of German stock (Volkszugehorigkeit) or as the spouse of such a person." This passage yields the constitutional-legal anomaly warranting that even second- and third-generation offspring of former citizens/expellees enjoy the protected status of refugee - namely, the hundreds of thousands within the postwar borders of Poland, Czechoslovakia, and the Soviet Union who are expected to pour across the Oder-Neisse in 1992. These Aussiedler (372,342 in 1989) now stand in direct competition with the Ubersiedler, those "settling over" from the former East Germany (about 10,000 per month since January 1991). Even more vulnerable are the asylum-seekers and economic refugees from predominantly third-world states (57,605 in 1989, 169,785 January through September 1991). Unfortunately, average citizens tend to lump all three of these groups into one class - hence a sense of national panic over the 2.5 million who have entered or relocated within Germany since January 1989. It is time for the Federal Republic to abandon the myth that "Germany is not a land of immigration." Historical evidence proves otherwise, ranging from the 12 million refugees integrated after World War II, to the 4.8 million foreign laborers and dependents dwelling in a state of "peaceful coexistence." The Organization for Economic Cooperation and Development reports that since 1986, the FRG has taken in more foreigners than any of its 24 member states, including the US and Canada. The Federal Office for Foreigners' Affairs, created in 1978, is responsible for public education, along with the coordination of integration or repatriation processes. It has only eight employees and a total budget of 100,000 marks ($56,000). To be sure, there are limits to the number of refugees Germany can absorb. A favorite stopping place, Berlin, already faces a density of 3,800 people per square kilometer, in contrast to 90 in Brandenburg. The current "burden-sharing" formula derives from weekly meetings convened by representatives of the 16 unified states. Quartering quotas are based on population figures: The smallest city-state of Bremen is expected to absorb only 1 percent, the largest state of Northrhein-Westphalia 22.4 percent of t he new arrivals. A record-breaking 15 percent increase in the number of asylum-applicants prompted the inclusion of the five eastern states at the end of 1990, reducing booming Bavaria's quota by 3,000 and the indigent Saarland's by 375. Sixty percent of the new arrivals have refused resettlement to the east, however, largely by going underground. Economists estimate that declining birthrates in Germany will require reliance on an additional 1 million "guestworkers" to sustain its social security network as of the year 2000. West German employers report a shortage of 230,000 apprentices for this year. Guestworkers currently contribute 12.8 billion marks to the pension insurance fund, receiving only 3.7 billion marks in benefits. The FRG spends 5 billion marks annually in social assistance to asylum applicants and those whose appeals have been reje cted but who were not deported (490,000 in 1990) out of respect for the Geneva Convention on Refugees. By late September, a further 170,000 applications for asylum were submitted; 220,000 are expected before year's end. An estimated 100,000 will enter illegally, most from Poland and Romania. An estimated 1.5 million East European Gypsies are on the run as a consequence of civil unrest in their home countries. Hence the "German problem" cannot be divorced from a European solution. The answer lies in a combination of short- and long-term reforms. First, Bonn should immediately revoke the practice of "sharing the burden" across the affluent western states and the economically depressed new Lnder. Second, it must push for constitutional-legal changes in the definition of "citizenship" to eliminate its obsolete reliance on the principle of "blood over birthplace" and liberalize its naturalization requirements for more than 4 million guestworkers who have resided in the FRG for as long as 20 years. Third, the Bundestag must promulgate an effective immigration law, perhaps with "quotas," which incorporates provisions for distributing the asylum/refugee burden across Western members of the European Community. Finally, it should sponsor a multilateral agreement to channel 25 percent of the European "peace dividend" into an aid program to mitigate economic turmoil in Eastern Europe. The best way to stem the flow of refugees, political and economic, is to ensure human rights and economic opportunity in their homelands.