Full text: The sudden contact between two separate worlds

should like,however, to say something on the conditions which favour the one or 
the other alternative. 
It seems to me that the first, brighter, perspective will be favoured by 
measures which keep the unemployment in narrow limits.This will be measures such 
as import restrictions or subsidies and retention of the traditional bilateral 
outlets in the east which keep the inefficient industries going as long as there 
is no alternative employments This policy has limits in so far as some products 
on account of quality may not find markets any more). The same purpose will be 
served by an appropriate exchange policy but there must not be too much 
undervaluation of the exchange rate since this would lead to inflation. The 
abolition of subsidies on food etc should be delayed as long as possible except 
in the case of energy. 
There is one factor,however, which is absolutely crucial when it comes to choose 
between the two scenarios: The infrastructure.The socialist countries have a 
dilapidated and run down infrastucture as well as a heavily damaged environment. 
To rebuild and modernise this infrastructure and to restore the environment to 
health must, for more than one reason, have the highest priority in the economic 
policies of these countries. The first reason is that it is very difficult to 
attract investment from the outside under the existing conditions. Indeed,the 
most essential things are amiss: Telecommmunications, railways and other 
transport, power supply.The computer networks which have become commonplace in 
the West are absent and money is carried by hand from one town to the other or 
by courrier abroad. The shortcomings of the distribution system and of repair 
services and the dilapidation of houses also are questions of infrastructure in 
the wider sense. Experience of regional policy in our parts of the world has 
shown that management shuns locations which are unsatisfactory with respect to 
infrastructure and environment. It is an open question whether enthusiasm and 
optimism of the concerns outweighs these handicaps. There is no doubt that it 
will take many years to restore infrastructure and environment.Politicians who 
pretend to disregard this are evidently in possession of Alladins wonderful 
lamp. 
A second reason for the urgency of building up the infrastructure is that this 
offers the best hope for counteracting the unemployment which threatens to arise 
from the upheaval in industry. Some time will be needed,though,before actual 
work can begin, because it would be crazy to approach this task without proper 
planning. Once the work starts on a reasonable scale there may soon be a 
question even of labour shortage. 
The spending on infrastructure is also in all probability what will contribute 
most to the creation of additional demand in Europe as a whole. But who will pay 
for it? Germany is probably in a privileged position in as far as it may hope 
for help from Bonn.The Federal Republic will have to turn Keynesian to face this 
task and one may foresee a lasting conflict between Bundesbank and government. 
For all the eastern countries the need to secure guaranteed credits on cheap
	        

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