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GERMANY FACES ESCALATING COSTS, OTHER HURDLES IN MAKING UNITY WORK

Published: Tuesday, Dec. 4 1990 12:00 a.m. MST

Two governments made German unity possible this year, but the united nation's newly elected leadership faces perhaps an even more daunting task: making it work.

In the rush to unify, East and West Germany left some of the most pressing questions for the government that would replace them, including:- How to use, dispose of, analyze or make public the secret files on 6 million people kept by East Germany's former secret police.

- How to find and whether to prosecute Communist Party functionaries and police agents blamed for crimes ranging from corruption to murder.

- How to sift through the morass of 1 million claims on eastern German property made by western Germans who used to live in the region.

- Whether to move the seat of government to Berlin, the new capital, or leave it in Bonn.

The most immediate concern, however, will be dealing with the mounting costs of unification and the cash drain that former East Germany has become.

A day after Chancellor Helmut Kohl and his Christian Democrats were elected Sunday to lead the new nation, officials of Germany's central bank gave comments seen as early warning signs that the costs of unification could hurt the strong German economy.

Bundesbank President Karl Otto Poehl, perhaps the most powerful man in Germany behind Kohl, said in a Stern magazine interview that the government's borrowing plans to rebuild the eastern lands could hurt the economy.

Poehl said drastic spending cuts were needed to offset the borrowing.

The government plans to borrow up to $100 billion in 1991.

Johann Wilhelm Gaddum, the Bundesbank director responsible for eastern Germany, said officials hadn't understood warnings about the danger of high government borrowing.

He said there are worries about "the ability to finance the public budgets not only next year but also in the following year."

Eastern Germany's teetering economy is expected to crash and burn in the first three months of next year.

East Germany was a principal exporter of industrial goods to other East bloc nations, but many of those contracts expire in January.

Economists say some may not be renewed by struggling nations that find it cheaper to use their non-convertible currency to buy goods from Hungary, for example, rather than Germany.

Likewise, many enterprises are operating on credit that will run out in the first quarter of next year.

Joblessness is officially only about 573,000, about 6.1 percent of the work force. But economists say up to 1 million people now are carrying around layoff notices that won't kick in until January or March.

The new Germany also needs to mesh two sharply different school systems, apply Western environmental safeguards to one of the world's most polluted regions, and repair a communications and transportation system considered crucial to luring new investment into the east.

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(Additional information)

Second German minister resigns

Germany's minister for women's affairs, under increasing criticism for her low profile, said Tuesday she would not join Chancellor Helmut Kohl's new Cabinet.

Ursula Lehr, responsible for youth, families, women's affairs and health, was the second minister to resign in two days.

She said in a statement she was giving up her post to return to a career in academic research.

Lehr was widely expected to quit after criticism within her party, Kohl's Christian Democrats (CDU), that in two years in the job she had done little for women's affairs, in contrast to her popular predecessor Rita Suessmuth.

A day after Germany's national elections, Economics Minister Helmut Haussmann said Monday he was resigning for personal reasons, following months of mounting criticism of his lackluster performance.

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