Kohl tells Germans the price of unity

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The Independent Online
THE 'hour of truth' about the cost of unification has finally arrived, Helmut Kohl said yesterday. In his opening speech to the congress of the Christian Democrats (CDU) in Dusseldorf, the Chancellor warned that Germans face a 'mighty trial of strength', as he announced that tax increases were now the order of the day, reversing previous assurances that they would not be needed.

An improvement in government revenues - as the Chancellor insisted on calling it - will be unavoidable by 1995 at the latest. This is the date when the accumulated debts of former East Germany fall on the Bonn budget, said Mr Kohl. But tax increases will come 'much sooner and be much steeper', he threatened, if western Germans did not accept significant sacrifices in terms of public spending reductions and real wage cuts. 'We must have the courage now to do what is necessary and correct.'

The final breaking of the 'no tax increase' taboo, coming when the CDU is limping badly in public esteem, drew a particularly frosty response from the floor. 'You may not wish to applaud,' said the Chancellor, turning on the delegates, 'but let us be absolutely clear. If we want this ship of state to stay afloat, then we must take the necessary steps, and that is what I am calling for today.'

Mr Kohl's tough words in public yesterday were, by all accounts, far tougher on Sunday night during a table-thumping address to a closed-door session of the CDU executive. The government's fate was at stake, he said, and the party leadership had to rally behind him on what promised to be a tough course. 'I refuse to be accused again of not having told the truth,' said Mr Kohl bitterly, in a reference to the unpopular decision to raise taxes in 1991 despite an election promise not to do so.

Mr Kohl's normally cautious hand has finally been forced by the dramatic worsening of the German economy. In the west, GDP will decline by 0.5 per cent in the second half of this year, while from the devastated east come endless new demands for financial assistance. 'For a long time to come' almost the entire annual growth in Germany's nominal GNP will have to go into subsidising the east - some 140bn marks ( pounds 58bn) a year, said Mr Kohl.

When and how the government's 'revenue enhancements' will come was left open by Mr Kohl. 'The necessary decisions must be taken quickly,' he said. Central to this is the negotiation of a so-called 'solidarity pact', in which the government wants the trade unions to agree to significantly moderated wage claims. If, as they have indicated, the unions insist as a quid pro quo on raising taxes on the better-off, then Mr Kohl's threatened increases will come sooner rather than later.

Mr Kohl's dilemma is that raising taxes will aggravate the problems of a struggling economy. The only possibility of avoiding this is to push through 'cuts and savings of a size which we in the west are no longer used to', said Wolfgang Schauble, leader of the CDU parliamentary party.

Dramatic words were also reserved by Mr Kohl for the asylum problem. If the flood of refugees into Germany - a record of more than 50,000 this month - were not reduced, then 'we face the danger of a deep crisis of confidence in our democratic state - effectively a state of emergency'. Warning that 'extremists are already crawling out of their lairs', he said it was time for the democratic parties to act decisively.

The congress re-elected Mr Kohl as party chairman with 91.5 per cent, a drop from the 98.5 per cent at the last congress in 1990.

BONN - Thirty-five per cent of Germans surveyed in the west and 52 per cent in the east expressed dissatisfaction with the political system, Reuter reports. A year ago, 22 per cent in the west and 48 per cent in the east were unhappy with democracy.

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