E. Germany’s Sudden Shift Has U.S. Officials on Guard : Foreign Policy: Bush is pleased by the latest reforms. Other officials worry about instability or violence.

The Bush Administration, taken by surprise by East Germany’s sudden lurch toward democratic reform, moved Tuesday to counter what officials called a dangerous potential for instability on the front line of the Cold War.

President Bush on Tuesday called the East German government’s behavior “encouraging” and said he believes that reform in the Soviet Bloc is becoming irreversible. “I think it’s gone too far . . . to set back the fledgling steps toward democracy,” he told a news conference.

But even as Bush expressed satisfaction and astonishment at the swift pace of change in East Germany, other officials said the Administration is worried about possible instability and even violence.

“If the opposition runs amok, we’ve got a potential problem,” one Administration official said. “It hasn’t happened yet, but we have to plan for everything.”

One reason for the heightened concern over East Germany, officials say, is geography. The country, created in 1949 from the Soviet-occupied sector of defeated Germany, is on the front line of the Warsaw Pact-North Atlantic Treaty Organization standoff. Long one of the world’s most militarized countries, it is host to 380,000 Soviet troops.

Another is the swiftness with which the country’s political structure has been transformed. Until last month, only two men had ruled East Germany during its 40 years of existence. But then, under pressure from a restive population demanding the same kind of reforms as other Soviet Bloc countries, the ruling Communist Party changed course.

Reacting to the expected pace of events, U.S. troops who still occupy part of West Berlin have quietly prepared for several scenarios, including a mass attempt by demonstrators to break through the Berlin Wall. Officials say that possibility is highly unlikely in view of the East German government’s decision to ease emigration, but they want to be prepared nonetheless.

U.S. officials are also discussing ways to help West Germany cope with the flood of East German refugees, which has reached about 190,000 this year with no sign of abating. And they said the United States is willing to join in a West German-led effort to help stabilize East Germany’s economy under the newly reformist leadership of Communist chief Egon Krenz.

“We are prepared to look favorably” on economic aid efforts, one official said. “It may not be on the scale of our aid to Poland and Hungary . . . but we are willing.”

Since coming to power Oct. 18, Krenz has liberalized emigration, allowed massive protest demonstrations to pass unmolested, retired seven members of the party’s Politburo and--on Tuesday--accepted the resignations of the entire Cabinet.

Bush, at his news conference, said Krenz’s behavior “is quite encouraging and really contradicts the very early . . . assessment of the man.”

But another U.S. official, while praising Krenz as “reasonably flexible,” warned: “I don’t think Krenz is a reformer. He’s just smart enough to know that he’s not going to stay in power if he doesn’t move.”

Experts outside the Administration offered even more dire forecasts.

“Things are coming apart very fast,” said Robert E. Hunter of the Center for Strategic and International Studies. “The inner German border (between West Germany and East Germany) is the most heavily militarized area in the world. What happens if something goes sour?”

“The short-run worry is a real collapse (of the political system) that will lead to a flood of refugees and undermine the government’s hold on power,” said Gregory Treverton of the Council on Foreign Relations. “But if it’s pushed too far, the East German government may decide that it needs to react. . . . There is always the possibility of violence.”

In the longer run, they said, Krenz’s instability has reopened the larger “German Question”: Are East and West Germany more likely now to bolt from the Warsaw Pact and NATO to make their own deal for reunification?

“The German Question has been defused for 40 years,” said Robert G. Livingston of the American Institute for Contemporary German Studies. “What the East Germans are doing now has the effect of relighting that fuse.”

For more than a decade, he noted, West Germany has been quietly “stabilizing” its eastern cousin through direct economic aid and trade concessions under the theory that the relationship would some day help the two halves of the country to rejoin.

“But I don’t think they ever had a real plan for what to do if a situation like this arose,” he said.