BY CARL-ERIK ISACCSSON
STOCKHOLM, Sweden - After considerable debate between Chancellor Helmut Kohl and the Bundesbank, Germany's central bank, Bonn put off until 1998 a scheme to lower its budget deficit by revaluing its gold reserves. The German government had announced plans May 28 to pass legislation to allow the transfer of some $11 billion in revalued gold profits from the country's central bank to cover a budget deficit. Bonn claims the so-called shortfall is largely caused by nearly 5 million jobless workers drawing benefits.

Kohl also unveiled a program on May 22 to create 100,000 jobs a year in east Germany. Unemployment in east Germany was 17.5 percent in April -7.7 percent higher than in the west. The eastern region has received government payments of $90 billion annually since reunification in 1990.

The federal labor office announced May 6 that the country's unemployment rate had soared to the highest levels since World War II. Manfred Stolpe, president of the eastern state of Brandenburg, said unemployment had become "a very real danger to social peace in our country."

Last October, protests swept Germany as 400,000 metalworkers walked out of factories and steel mills, protesting cuts in sick pay and other social entitlements.

According to London's Financial Times, an "experts' report" was published May 15 in Germany that forecast a Deutsche mark (DM)118 billion ($68 billion) deficit in budgeted revenues between now and 2001. The report was released as German finance minister Theo Waigel, presented the government plans to revalue the nation's gold reserves to the country's central bank

The gold reserves are currently valued at DM13.69 billion, more than DM40 billion below their market value. Waigel said a transfer of Bundesbank's profits from the revaluation of the gold reserves to the "redemption fund for historic burdens" would go toward reducing Germany's public deficit and debt. This fund is among others used to cover costs for German reunification.

Waigel asserted the move would ensure that the country's overall deficit stayed below the limit of 3 percent of gross domestic product, the criteria for membership in the European Monetary Union. He also announced further sell-offs of Deutsche Telekom shares and other government properties and tightening controls of public spending to plug the gaps in the budget.

These reserves, although among the world's largest, have not been of crucial importance to the German rulers as they have benefited from the strong German mark that came out from the country's economic recovery in the post World War II boom. The gold revaluation plan, however, is a sign of economic weakness and reflects the regime's trepidation in launching a deep assault on workers' wages and benefits. Bonn is caught in a "financial squeeze brought on by the high cost of reuniting with eastern Germany and lackluster economic growth," the New York Times reported May 29.

Government officials from other countries in Europe seeking to enter the monetary union railed against Bonn's "creative accounting." Italy's foreign minister Lamberto Dini said, "Recourse to accounting gimmicks" makes "precarious the respect and sustainability of the stability pact." Similar onetime financial maneuvers by Paris and Rome had been denounced by the German regime.

The German daily Die Welt described the government's apparent desperation as "Helplessness." Bundesbank officials stated disapproval of the plan May 29. On June 1, Oskar Lafontaine, leader of the opposition Social Democratic party called for new elections, declaring "the Kohl government should not damage further the credibility of Germany monetary and finance policy."

Carl-Erik Isacsson is a member of the metalworkers union at Scania truck factory in Sodertalje outside Stockholm.  
 
 
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