GERMAN ECONOMY IN STEEP DECLINE German production and export income dropped steeply in the first quarter of the year, pushing Europe's largest economy deeper into recession. The gross domestic product shrank 3.2 percent compared with the level a year ago, the largest drop since the first quarter of 1975, when the GDP (a measure of the total value of goods and services, excluding income earned abroad) dropped 3.5 percent, the Federal Statistics office said yesterday. Every component of the economy in western Germany declined in the first q uarter. It is the worst German economic crisis since World War II and the government last week announced plans to slash spending. The persistent recession is threatening the recovery in eastern Germany, which costs the government $90 billion annually. Bentsen hits Japan surplus

The US criticized Japan yesterday for willful failure to rein in its soaring trade surplus and open its markets to more foreign goods. It was the second such warning in two days. US Treasury Secretary Lloyd Bentsen demanded in a speech to the Anglo-American Press Club in Paris that Japan make a "fundamental change" in the way it deals with trading partners. Mr. Bentsen said Japan's trade surpluses hurt world growth. He also said the days of tolerating efforts by other nations to protect their markets as "the price of stability and winning the cold war ... is over." Germans, Turks mourn

Germans and Turks mourned together in Cologne yesterday for the five Turks killed by a firebomb in the German town of Solingen May 29, the Monitor's Francine Kiefer reported. At an emotional memorial service attended by high ranking politicians of both countries, German President Richard von Weizsacker blamed German society as a whole for the deaths. "If youths turn into arsonists and murderers, it's not their fault alone but the fault of all those who have an influence on their upbringing," he said. The

chief suspect of the firebombing, already in custody, is reportedly 16-year-old Christian Riha, who lives across the street from the Turkish victims and known by the local police for hatred of foreigners and for repeated involvement in assaults, arson, and break-ins. Food to Sarajevo blocked

United Natons aid officials yesterday worried about how to feed Sarajevo's 300,000 residents after the suspension of the airlift to the besieged city. The UN halted relief flights Wednesday after snipers wounded four French soldiers and an American relief plane was hit by a machine-gun bullet. The airport was unlikely to be reopened before the weekend. Overland shipments have been blocked by fighting in most of Bosnia. Mortar rounds that killed 15 people Tuesday at a soccer game in a Sarajevo suburb came

from Serb positions, the UN said. Masson wins case

Jurors in the $7.5 million libel trial against journalist Janet Malcolm and The New Yorker magazine decided Wednesday in favor of plaintiff Jeffrey M. Masson, but they were deadlocked on what the damages should be. This initial decision must be followed by agreement on damages to complete the decision, according to the judge's instructions. Sihanouk rules again

National reconciliation leader Prince Norodom Sihanouk formed a new interim government in Cambodia yesterday evening, joining the Vietnamese-installed administration and the main opposition party. He will be premier and supreme military commander. The announcement eased worries of conflict between the ruling Cambodian People's Party and the Sihanouk's opposition party after his party took a virtually unbeatable lead in last week's general election. Ndadaye wins in Burundi

Opposition candidate Melchior Ndadaye has been declared the winner in Burundi's first multiparty presidential election since independence in 1962. With 70 percent of the vote counted, Ndadaye won 60 percent compared to 39 percent for Pierre Buyoya, the military leader who came to power in a 1987 coup, the Ministry of Interior declared Wednesday night.

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