Regional Outlook : New Era Draws Near for Germany : Next Sunday the two halves are to sign an economic, social and currency union. It will begin to transform a nation and a continent.

Amid the ghosts of its troubled past, Germany next week begins to become a single, powerful, unified nation once again.

For Germany and for Europe, the significance of Sunday’s first step toward German unification--an economic, social and currency union between East and West Germany--is hard to overestimate.

The move to merge banking and business laws, join the social welfare systems and make the deutschemark an all-German currency may appear mundane, but it is the cornerstone of a process that seems destined to reshape the Continent’s power relationships.

It is the dawn of an age that offers enormous new advantages to a united Germany; it is the most important step so far in a headlong German rush toward unity that could be largely complete by Christmas--barely 13 months after the Berlin Wall first cracked open.

“Germany will be a nation confident, conscious of its power, with an economic and technical leadership in Europe,” predicted Heinrich Vogel, director of the government-backed Federal Institute of East European and International Studies in Cologne.

Added Heinrich Machowski, a senior economist at the Germany Economic Institute here, “Germany will be Europe’s motor, and if events run as it looks like they might, then it’s unstoppable.”

Economically, experts predict, unity can only increase the strength that already makes West Germany one of the world’s two largest exporters (the other is the United States); a co-leader in global research (together with the United States and Japan), and so dominant a member of the European Community that the region has effectively become a de facto deutschemark currency area.

Respected German voices predict that as much as 1 trillion marks ($600 billion) or more eventually could be involved in lifting East Germany to West German standards. The result is likely to make Germany a key locomotive to global economic growth and, barring disaster, ignite a second German Wirtschaftwunder --economic miracle.

“These people are going to work like mad once the parameters are set,” predicted Vogel. “There’s extraordinary growth potential in the GDR (East Germany).”

East Germany’s economy may be only 10% the size of West Germany’s, but its 300,000 Russian speakers--and its well-developed economic links with the Soviet Union and the rest of Eastern Europe--give a united Germany unique strength for expanding its economic influence eastward.

Politically, unification will break Germany’s direct link with the legacy of the Third Reich’s collapse, restore its full sovereignty and increase German influence far beyond the combined weight of its constituent parts.

One by one, symbols of Germany’s World War II defeat, such as the presence of nearly three-quarters of a million foreign troops stationed on German soil will disappear.

More importantly, unity will end the sense of artificiality and shallowness that frequently has left the West German state uncertain of itself despite its dazzling material success.

Disorienting debates over identity that so sapped the West German spirit in the past (“Are we a whole, or half of a divided whole?”) will disappear, most likely to be replaced by a firmer, healthier sense of nationhood.

To be sure, the intention of a united Germany to renounce nuclear weapons, its lack of a permanent seat on the U.N. Security Council, the likelihood of limits on the size of its military (within the context of European-wide reductions) and the fact it would be starting from scratch as a world power all are expected to act as restraints on this political influence.

But a new assertiveness is to be expected, political analysts believe.

“With unity, self-assertiveness is bound to grow,” predicted a respected Western ambassador in Bonn. “You are bigger, you feel you have a right to speak out. Their interests will also be more complex.

“At the same time, they will be watched closely and will get criticized, so they must try to restrain themselves too,” this diplomat added.

For those who still hear the echo of British wartime Prime Minister Winston Churchill’s warning about the Germans--”They are either at your feet or at your throat”--the very idea of a new assertiveness is alarming.

Others, however, say that such a change is only natural and that viewing a modern democratic Germany as a potential threat would be both wrong and dangerous.

“It would be a self-fulfilling prophecy to regard this nation of 75 million people in the heart of Europe as potentially more dangerous than any other nation simply because it is (seen as) too big or as (having) a special past,” warned Michael Stuermer, director of the Ebenhausen Institute near Munich, a government-funded think tank on foreign policy and security matters. “It would be something that, for reasons of political wisdom, we shouldn’t allow ourselves to let happen.”

That the German extreme political right has virtually disintegrated as a political force in the months since the Berlin Wall fell is an encouraging sign for those who believe in the country’s 40 year-old democracy. But doubts linger and even within Germany, opinion is divided.

Chancellor Helmut Kohl may reassure President Bush that “you can trust the Germans,” but others, like respected German author Guenter Grass, see it differently. “We cannot get by Auschwitz; we shouldn’t even try,” he said, arguing against unification as talk of it gained momentum late last winter.

The debate--and the doubts--are expected to be as much a part of the coming decades as a united Germany itself.

Adjusting to a more confident, assertive Germany will test many of the nation’s most important relationships, including the 12-nation European Community. Through much of its existence, the community has been blessed by the fact that its richest member, West Germany, was also its most altruistic. Indeed, for many years, West Germany was the only net contributor nation to the community’s budget.

In part, a genuine German enthusiasm for the European ideal nurtured a kind of ersatz patriotism impossible to express openly about their own country. But there were also the pressures of history and the implicit knowledge among many nations that the West Germans could always be pushed that extra step.

While bureaucratic arm-twisting has diminished sharply in recent years, unity will almost certainly draw it to a complete close.

“I don’t want to be told I have to take tasteless Dutch tomatoes with the argument that the Germans bombed Rotterdam,” commented Stuermer. “We’re sick and tired of this. We want to remember our history but don’t want to be made hostage to it.”

There will also be other adjustments for Europeans, including a greater German cultural influence.

Within the community, for example, German has suddenly become noticeably more popular and seen as a language best-suited for working in the emerging markets of Central and Eastern Europe, although it has yet to achieve the status of French or English as a working language.

Unity has also forced Germany to redefine its most delicate international ties--those with world Judaism, with the Soviet Union, Poland and France. How these relations are resolved will help determine the success of both Germany and Europe in the early decades of the next century.

Initial signs have been mixed.

* Soviet President Mikhail S. Gorbachev has endorsed the idea of German unity, yet Moscow’s inherent fear of a united Germany is the key stumbling block in negotiations presently under way among the four major victorious World War II powers and the two Germanys to settle the external aspects of unification.

* A near crisis in Polish-German relations erupted last winter after Kohl dodged Polish calls to guarantee the sanctity of the present Oder-Neisse frontier. While Kohl later backed off and both German parliaments last Thursday formally pledged themselves to the Oder-Neisse line, Polish-German relations are certain to remain difficult for the foreseeable future.

* West Germans were clearly shocked by French President Francois Mitterrand’s attempt late last year to enlist Gorbachev in an attempt to block unification. Last April, Mitterrand and Kohl patched over their differences enough to propose a plan for accelerated European Community political union, a move clearly meant to bind Germany in a larger political framework and thus allay the fears of both France and smaller European countries .

- German efforts to define a new relationship with world Judaism have proved more encouraging. An immediate acknowledgement by East Germany’s first-ever democratically elected government to accept responsibility for the Holocaust--something the previous Communist government never did during its 40 years in power--was an important signal. A successful meeting of the World Jewish Congress in Berlin early last month and the first-ever visit of a German warship to an Israeli port earlier this month brought more hope for a relationship Kohl called a “precious, fragile gift.”

Although those familiar with events here predict that the longer-term picture for a united Germany could hardly look more promising, the initial months following next week’s currency union are expected to be tough.

A worried but hopeful East German public faces an uncharted future, its confidence badly shaken by events, its anticipation of partaking in the freedom of the West diminished by the less attractive Western phenomena of street gangs, soccer hooligans, squatters, refugees and job uncertainty.

“It’s not what we expected,” admitted Klaus Walther, an East Berlin government employee. “There will be many adjustments.”

Unemployment, a completely new concept for East Germans, passed 130,000 last week and could be 20 times that by year-end, West German Economics Minister Helmut Haussmann warned.

“We’re going to experience two or three very dark months,” added Gerhard Fels, director of the Institute of the German Economy in Cologne.

According to East Germany’s own forecasts, its economy is so obsolete and so overmanned that roughly one in every five industrial enterprises could collapse immediately, while only one-third are listed as certain to survive.

The East German auto combine Ifa, for example, employs about 65,000 people to turn out 220,000 cars each year. By 1992, Japanese producer Nissan expects to turn out a similar number of vehicles at its modern new plant in the northeast of England with a work force of 3,500.

In education, East German authorities employ 2,000 primary and secondary teacher training experts for the city of East Berlin, while 150 do the same job in West Berlin with a student population three times the size.

Still, there are employment safety valves.

An estimated half a million jobs will be created in a near-nonexistent service sector, while about 480,000 jobs are linked directly or indirectly to long-term contracts with the Soviet Union and are likely to be spared at least in the short term.

Indeed, if Moscow wins German economic help as part of a final international settlement on German unity, these and other East German jobs could be assured for years.

Bonn has already set aside $71.8 billion in public money over the next 4 1/2 years to ease the transition, but many economists see this as merely the tip of a far larger commitment required to rebuild East Germany. The actual total could run 10 times that figure, once private investment is also counted.

Among other concerns:

* An industrial pollution problem that will soak up billions of dollars, and also inhibit Western investment vital for East Germany’s revival.

* A declaying infrastructure that will require massive investment to bring up to West German standards. Estimates for the telecommunications network alone vary from 30 billion to 55 billion deutschemarks ($18-34 billion); for railroad improvements 120 billion deutschemarks ($75 billion); for roads 50 billion-100 billion deutschemarks ($30-60 billion).

* A potentially volatile conflict between East and West Germans over the ownership rights of up to 1 million pieces of private property confiscated by Communist authorities after World War II, then re-allocated to individual East German families or collectives set aside as party retreats. (Few expect a recent tentative agreement between the two governments to be the last word. The accord requires East Germans to return property seized since 1949, but it protects tenants’ rights.)

* A totally different perspective of East and West Germans as they come together in one nation. Twelve years of Nazism plus 45 years of communism have left the East Germans as a different people, with another body language, a different relationship to authority, only a superficial commitment to the European ideal and little exposure to the French rationalism and Anglo-Saxon pragmatism that have so influenced the modern West German’s view of the world.

Few, however, see any of these challenges as insurmountable.

Indeed, the only genuine worry expressed by a number of respected observers interviewed for this article is the curious, yet potentially powerful, undercurrent of West German pessimism that persists despite the euphoria of recent months.

“What worries me basically is whether the Germans understand that, for once in a century, they have really won in a lottery--and what they do with the things they’ve won,” said Stuermer.

In part, the pessimism is part of an inbred self-doubt that seems to afflict so many Germans, yet helps drive them to be a nation of over-achievers. Initially, at least, West Germans appear to fret that the cost of rebuilding East Germany might be too much for them as a nation to bear. For a nation that is among the world’s richest and most successful, such fears seem unfounded to many.

“I can’t understand why people are so preoccupied with costs,” West German parliamentary Speaker Rita Suessmuth told a recent gathering of the Atlantik-Bruecke, an organization promoting German-American relations. “We’ve seldom known such affluence. I see it as sad that we only talk of problems and not opportunities.”

Joked Walther Leisler Kiep, treasurer of the West German Christian Democrats, “Never has the disappearance of a bogyman left so many problems.”

Still, a majority of West Germans seem inclined to agree with the more optimistic view Kohl painted in a television interview recently.

“My main thesis is and remaims: In a few years , in three or four years, we will see a blooming landscape before us in (what is now East Germany).”

Echoed Vogel, “We’re going to see a second economic miracle.”

WEST GERMANY

The Mounting Tab for Reunification

120 billion deutschemarks ($75 billion)--To bring East Germany’s railroad up to West German standards and to link the two networks.

30 billion deutschemarks (nearly $19 billion)--To build a decent telecommunications network in East Germany.

50-100 billion deutschemarks ($30-60 billion)--To bring East Germany’s road network up to West German standards.

At least 200 billion deutschemarks ($125 billion)--To clean up East Germany’s polluted environment.

EAST GERMANY

Toward Unity

Social Union--The system of West German pensions, social security, state health insurance, unemployment insurance--in short, an entire package of West German social legislation--takes effect in East Germany.

Economic Union--West German banking and business laws as well as the authority of the West German Bundesbank to set interest and foreign exchange rates, determine money supplies, etc., are extended to East Germany.

Steps Ahead

The tentative schedule for steps toward the reunification of Germany. Most of the events are likely to take place this fall.

* East Germany holds state elections in 5 newly created states, preparing the way to all-German general elections.

* Major East and West German political parties merge.

* Possible conventional arms reduction treaty agreed in Vienna, paving way for Conference on Security and Cooperation in Europe (CSCE), whose mandate is to bless external conditions of German unity as agreed by participants in the 2 + 4 talks.

* Possible state treaty dealing with details of East German accession, the harmonizing of laws on everything from traffic fines to abortion and possible constitutional changes. (Unification via article 23 of the West German constitution, effectively means that unity will be achieved by East Germany joining West Germany, accepting its constitution and, with some exceptions, its laws.)

* Possible date for all-German elections, full accession of East Germany to the Federal Republic. All German parliament would convene in event that would signify the reunification of Germany, decide final elements of unity, select future capital of united Germany.