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Unsafe SkiesPoland grounds Soviel planesAs t he summer-vacation seasonreached its climax last week. the Polish air-travel system was in disarray . Thereason: the nation 's air carrier. LOT Polish Airlines. had grounded more than halfits fleet ofSoviet-built airpla nes af ter concluding that the planes were not safeenough to fty. lL was a remarkable movefor a member of the Soviet bloc. whosegovernments and official press have longrefused to engage in public discussions ofaircraft safety.The grounding stranded hundreds oftravelers, some of whom were forced tospend an evening on chair s and f100rs in thedepartur e hall at Warsaw's Okecie International Airport. Downtown at the VictoriaIntercontinental hotel. dozens ofpassengersgathered in the hope of exchanging theirtickets on canceled LOT f1ights for seats onPan Am planes out ofWarsaw. Said Katarzyna Tomaszewska. director of Pan Am'sWarsawoffice: " [ hate tosay toall these peopie that there will be no seats tomorrow northe day after tomorrow."Polish authorities took the Sovietplanes out ofservice after conducting testsaf their entire commercial fleet. Tnvestigators had recommended the tests following study of the crash last May of a LOTI1yushin Il -62M shortly after takeoff.which killed all 183 people aboard theew York- bound ftight. Governmentappointed experts traced the accident to adamaged metal bearing in one of (he jet'sfour engines. which, Lhey said, led to thedestruction of the inside left engine duringflight. As that engine disintegrated. hotmeta I shards ripped into the neighboringoutside engine and punched holes in theplane's fuse lage . Th e investigators alsofaul ted the plane's design. parti cularly theplacement of its four engines at the rear ofthe fuselage near critical control lines forthe plane's e levator. The fleet inspectionsled LOT Lo ground five of iLS six longrange lIyushin 11-62Ms. eight of its ninellyushin 11-18 turboprops. and at leasteleven of 26 smaller Tupolev and Antonov planes used for shorter f1ights .P rivately, Polish authorities say theybelieve that Soviet negligence was responsible for the crash . since engine maintenance is conducted in the Soviet Union.There have been no repOrlS on the LOTgrounding in the Soviet press. and Moscow reportedly disputes Poland's conclusion. Poland's underground periodicalKos stated this summer that Soviet officials flew to Warsaw after the crash and"tried to intimidate the Polish side. shouting that all Polish mechanics and pi lotsshould be put on trial." Jn response, saidKos. "all LOT employees threatened tostrike." Another underground publication. Tygodl/ik Mazowsze . has chargedthat LOT routinely had to cannibalize itsplanes when replacement parts wereneeded. since the Soviets failed to shipsufficient spares. Thundered Tygodllik

TIM E. CPTCMBI::R 7. 1987

Mazowsze: "There is no doubt thatthe Soviets are responsible for the crash ."The dispute reflects widespread dissatisfaction with Soviet-made aircraftwithin the Warsaw Pact nations. Citinginadequate acc ident-reporting practices.the Montreal-based lnternational AirTransport Asso iation does not compileofficial accident statistics for the Eastbloc. It is known. however. lhat at leastni ne Ilyushin [1-62Ms have crashed since1972, killing 1.097. Western analysts believe that unreported accidents involvingSoviet-built planes number in the dozensand estimate that the rate of plane crashesper passenger mile in the East is roughlytr i pie that ofairli nes in the West. In theirview, subs tandard tec h no logy , agingequipment an d s hoddy mainlenancepraclices are Lo biarne.

Stranded travelers seek tickets in Warsaw"No seals tOlllorrow or file day after."

Central to plans for modernizingEasL bloc ai r lines is the long-range Ilyushin Il-96-300, still in the testing stage.Yet they doubt the new Soviet-builtplane. a four-engine craft with seatingcapacity of some 300, will be ready aspromised by 1990. Most East bloc pilolS.moreover , would prefer to fly the morereliable aircraft manufactured in theWest. "Tl would be better , naturally.'said a LOT employee last week , "but inour situation , this is wishful thinking."Nor would the introduction of We ternbuilt craft in itself solve Eastern Europe's air-sa fety problems. Rumania operates Tarom airlines with six Boeing707s and an assortment of eleven Britishplanes. Owing to inadequate maintenence. however. Ta rom s ac cident rate isreportedly more than ten times the average in the West. - By Kenneth M. Pierce.Reported by Veit Dengler/ Vienna and TadeuszKucharski/Warsaw

TIM E. SEPTEMBER 7. 1987

Economy ~LongHotIsraelis want aT ension mounted Iweek as tal ks overcontract affecting 451pubLic sec tor ente redtheSoltam munitionsrael. 1,000 workers a lgered by plans for a fatruee company offichours. ln Tel Aviv. Reof lhe Civil Servants"war until the bitter Ithat his members wouto secure better contranance Ministry. whicnegoliations on beha.1Histadrul. Tsrael's labened to remove itselftract talks.a move thaernmenl to bargainseparate unions, repnworkers as telephonevants and airplane mfnot only complicate SIas one trade unionist cthe government a 101 rUnderlying therest is the governmenterity program. whicreducing the annualto its present le'20 C:C. The most volatisummer's round of coer, has been labor'stions in the six-dayworkweek . a mainsta:omy since the a t i o nHistadrut has soworkweek for adeca.sUlprise. therefore , wnance Moshe issimed the Cabinet to badTsrael's 450.000 putwho presently work lSunday through Fri


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farmers who drove their cattle into citystreets and blocked trafik. In Montreal itself, hundreds of agrodemonstrators rallied near the Palais des Congres, wherethe 90 ministers and 892 other delegateswere assembled.There were glints of hope amid thegloom. Before the meeting officiallyopened, the gathering came to an agreement on a relatively minor aspect of global agricultural policy. Industrial and developing countries, including E. C .members, the US ., Japan, Bram andMexico, agreed to lower tariffs on a wideselection of tropical products worth $25billion to $30 billion a year. Among them:bananas, cocoa, rattan and litchi nuts.While farm-policy debates overshadowed other discussions in Montreal, delegates were able to adopt a framework forfurther negotiations on bolstering freetrade in service industries. Services, including transportation, finance, communications, insurance and tourism, constitutethe most rapidly growing portion of theworld economy- about 30% of all trade-and were valued at $960 billion last year.In most countries they are protected bymultiple layers of nontariff barriers.Ministers remained stymied ,however, on the US .-sponsored subject of protecting intellectual property rights likepatents, copyrights and licenses. Washington estimates that pirating of such goods astape cassettes and computer software costUS. firms alone more than $40 billion ayear. West European companies face similar problems. India, supported by other developing countries, resisted the US. campaign, eager as New Delhi is to restrictprotection for "lifesaving" technology thatis needed in the Third World.Before the review began, fears werevoiced that failure of the UruguayRound might lead to the demise of themultilateral GATT system. that countriesmight in turn negotiate more bilateralor regional pacts with only a few trading partners. Japan is particularly concemed about such agreements. Said aJapanese diplomat: "We are very worried. We are facing a uni ted Europe in1992 and the new US .-Canada freetrade zone. That makes us the odd manout. GATT may be the one way to prevent us from being frozen out."In the end, disappointment in Montreal did not lead to dramatic rupture;no one is quite ready to abandon GATT.Said Bill Martin, chief economist ofPhillips & Drew, a leading London brokerage firm: "There's not great hopethat GATT can achieve much in the wayof further trade liberalization. But GAITis a very important bulwark against galloping protectionism ." An importantbulwark , but an increasingly leakyone.- By Bamara Rudolph. Reported by Gise laBolte/ Montreal andAdam Zagorin/ Bt1Issels

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Keep Your Hands Off, Comrades!Czechoslovakia ignites an East bloc shopping warF r years the Kotva department store inPrague has been something of a meccafor East Europeans seeking much prizedconsumer goods. The store offers five fioorsof products that range from Portuguesesardines to Russian samovars to Chinesecolor-television sets. So many foreignerscrowd Kotva that they have become an inspiration to Czech quipsters. Question:Why do Kotva's managers play the national anthems of other East bloc countries every half-hour? Answer: So Czech customers can get to the salesclerks while theforeigners ar e standing at attention.Now all the joking has come to an end ,and something akin to a trade war is fiaring in the East. While representatives ofthe Council for Mutual Econornic Assistance (Comecon), the bloc 's counterpart ofthe European Cornmunity, were discussingthe first steps toward an integrated marketlast J une in Prague, the Czech govemmentdecreed that most consumer merchandisecould not be exported from the nationalterritory. In a move labeled "market protection," the regime posted lists of some 80embargoed products. Included were mostfoodstuffs , household appliances, buildingmaterials, bicycle and auto parts, diapers,toothpaste and toilet paper. Big-ticketiterns like television sets, veRs and personal computers can henceforth be taken out-side the country only with a license andwill be subject to ,export duties of 100%.

The protectionist measures were adopted to ensure that Czechs will not find barestore shelves when the Christmas shoppingseason swings into full gear. Strict enforcement caused long lines of stalled traffic atborder crossings and train delays of up tofive hours, as customs inspectors checkedthe luggage ofvirtually every departing for -

eigner. As the discomfort grew, angrywords began to fiy among bloc countries.Czech consumers were also subject tothe restrictions, refiecting acute shortagesof some vital cornmodities. Under the newlirnitations, shoppers can purchase nomore than two items of most products, suchas toiletries, socks and underwear. A shortage of sanitary napkins triggered protestsby female workers that almost shut downproduction lines at several textile factoriesin northem Bohernia.Czech officials explained that thecrackdown on foreign shop pers was causedby the inadeq uacies of neighboring economies. Thousands of Soviets, East Germansand , in particular, Poles have been crossinginto Czechoslovakia to buy articles that arescarce or unavailable at horne. By contrast,Czech citizens, whose Cornmunist Partyrulers have bestowed almost none ofthe po-liticallibera1ization spread by Mikhail Gorbachev's glasnost policies, live in relativecomfort. Says Daniel Thorniley, a Viennabased expert on Eastem Europe: "Since1968 , the Czech consumer supply has always been very good , in foodstuffs excellent, in order to placate the population andmake up for the political freeze."Within days after Prague posted itsembargo lists, East Germany issued itsown rundown of no-go items. Poland. thecountry most affected by Prague's protectionism, accused the Czechs of "unfair discrirnination" and also imposed export reg-ulations. With austerity looming, Prague'sRude Pnivo, the party daily, injected someunintended hilarity into the situation. "Wehave enough goods," noted an article supporting the government's restrictions. "Justtoo many customers." - By Michaels. Serrill.Reportedby Veit V. Dengter/ Viema

Kotva department s tore: fro m Portuguese sardines to Chinese television setsPreventing the neighborsjrom stripping the shelveso/Christmas goodies.

TIME, DECEMBER 19, 1988


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B u s n e s s - - - - - - - - - - - - - - - - - - - - - - ~

Playing by Old RulesIn doing business with the East, barter is the name of he gameBy KENNETHw.BANTALONDON HOW A SWAP M IGHT WORK

When the Soviet Commission of Agriculture andProcurement agreed withPepsiCo Inc. this monthon a $3 billion deal to seilmore Pepsi-Cola to theSoviet Union, the contractwas seen as evidence ofMoscow's genuine openness to Western investment. But for Western investors rushing toward therapidly liberalizing economies of the Soviet Union

1 The Polish Canit Co. wants to buy $1 million worth of canning machinery fromWestgoods Inc. Since the zloty is nonconvertible and Can it has little hard currency,it offers to barter tomato paste, pickled vegetables, plastic sandals and some cash .

and Eastern Europe, the PepsiCo venturealso demonstrated how little has changedin the region's rudimentary patterns of doing business. The largest trade agreementever signed between Moscow and a U.S.company, the accord calls for PepsiCo toincrease its bottling capacity in the SovietUnion from 24 to 50 plants and to opentwo Pizza Hut restaurants in Moscow.Instead o f settling accounts in dollars,however, chronically cash-short Moscowcut an old-fashioned bart er deal. It agreedto trade ten tankers and freighters andhuge shipments of Stolichnaya vodka forPepsiCo's soft drinks and pizza. PepsiCowill dispose of the ships through complexsale and leasing arrangements and will reseil the vodka in the West. Says RedmondDill, an expert on East European trade atLondon's Barclays Bank: "This is theshape of many deals to come. Barter was atthe core of trade with the East in the past,and it will be there in the future."Forward-looking leaders in Moscowand Eastern Europe would like to thinkotherwise, hoping to put trade on a hardcurrency footing and predicting a glowingfuture for joint ventures and other Western investments. But the combination ofunderdeveIoped industries,. a continuingshortfall of foreign exchange and relianceon nonconvertible currencies means thatEast European economies cannot expectto avoid the world's oldest form of commerce in the foreseeable future. Whilemany East-West deals involve cash, in virtually all cases a barter element is the

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linchpin that makes the transactionpossible. Barter business al readyaccounts for more than 20 % of theannual $88.5 billion East-Westtrade. As such commerce expandsand the supply of hard currencytightens, barte r is bound to rise.

2 Westgoods does not knowthe value or marketabilityof the Polish productsoffered, so it hires aconsultant to negotiatea fair trade.Some form of barter has traditionally been a central component ofmost Western investment in the region. West German trade with EastEuropean countries other than EastGermany rose 22 % from $21.3 billion in 1988 to $25 .9 billion lastyear; most of that trade was basedon barter. Firms traded constructionequipment and high-quality steel fornatural gas , wheat and even trafiksigns. Similarly, British exports tothe Soviet Union, ranging from foodprocessing equipment to condoms, c1imbed21 %, to $1.1 billion, from 1988 to 1989; virtually all of that trade involved some form ofbarter for such items as Soviet ores andfoodstuffs.In a deal still under negotiation, Siemens AG, the West German electronicsgiant, agreed earlier this year to supply asmany as 300,000 personal computers to theSoviet Union, to be financed through thesale of up to $893 million in Soviet chemicals to Third World customers. In a morecomplex transaction, Fiat is spendingabout $1.5 billion to build its Micro car inthe Soviet Union in return for the right toexport one-third of the autos, which Fiat

will seil for hard currency to help pay for itsTIME, APRIL 30, 1990

investment. Some proposals are bizarre:Soviet negotiators recently offered theBritish electronics firm Rank Xerox a selection of live falcons, racing camels andgoat homs in return for photocopying machines. Rank Xerox turned them down.Although direct exchanges of productsalong the lines of the PepsiCo deal are thesimplest kind of East-We t barter, moreelaborate variations are coming along.Known collectively as "countertrade " bythe specialists who routinely organize suchdeals, the arrangements have a commondenominator: the Eastern partner ultimately pays its debts with a commodity instead of cash. In part, the growth of moreexotic countertrade deals has been causedby a shortage of East European goods


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available for export to the West: most manufactured goods are too shoddy for Western buyers, while goods that can be sold,such as vodka or mineral ores, have limitedmarket or are in short supply in the producer countries. But complex barter arrangements are increasingly being writteninto joint ventures and even into newWestern investments in the East.That is often true even when the dealis officially described as a hard-currencyarrangement. Says a countertrade expertin London: "Scratch almo t any deal below the surface, and you will find that it

is countertrade in some form that makesthe transaction pos ible." Fiat's Microproject is an example of one type of suchcountertrade known as buyback. BecauseFiat cannot easily transform the rublesearned on Soviet car sales into Westerncurrency, the deal allows the company toexport a portion of the new cars for saleelsewhere.Another, more tortuous device is the"countertrade switch," in wh ich a Westerninvestor extracts hard-currency profit bytrading the Ea t European goods or currency in wh ich he was paid to two or more intermediaries before getting his cash. Since 1985Christian Dior has opened three shops inMoscow and Prague that seil perfumes forrubles and Czecho lovak korunas. Becausethe earnings cannot be repatriated, Dior has

ABrief History of Barter . . .Or HowMuch Is That in Cows?A t the dawn of civilization, money did not talk. It mooed. Kingsand traders bartered in cattle. The Iliad notes, for example,that a talented woman slave was worth four oxen and that theGreeks besieging Troy purchased wine with cattle and oxhides. The bovine originsof money are still refiected in living language. The word pecuniary is derived fromthe Latinpecus, or cattle.Barter was not limited to unsophisticated economies. Israel's King Solomonexchanged wheat and oil for Tyrian cedar and fir to build bis temple. In Handynasty China, the Emperor contemplated dropping the counterfeit-ridden sys-tem of coinage and reverting to exchange in silk and cowrie shells. Accordingto tradition, the most lopsided barter deal in history occurred in 1626, when theDutch bought the island of Manhattan from Indians for trinkets said to havebeen worth about $24. Manhattan real estate is now valued at $77.7 billion-payable in money, thank you.

used considerable imagination to makedeals for cash or commodities tha t can betraded in Western markets with third countries that can use Dior' rubles and korunasto repay loans to Mo cow and Prague. Similady, Western companies often receive payment for goods or inve tments in the form ofcredits owed to an Ea t European or Sovietenterprise by a developing country, such asIndia. Those credits allow the

timating the potential value of an EastEuropean or Soviet barter product for resale in the West.

The consultant finds that the Polish tomatopaste is substandard, and asks for steelbeams and more cash instead. Canit agreesbut says tomato paste produced by its

Western firm to purchase Indianexport goods, like printed cottonfabrics, that can often be sold forhard currency more easily thanEa t European products. Says anofficial of France's advisory Associ

The relaxation or abolition of centralized control in the East's economies hasfurther complicated the barter bu iness.Where in the past a single foreign-tradeagency organized and often guaranteed acountertrade agreement, Western firmsnow routinely deal with independent factory managements, most ofwhich are inexperienced in foreign trade.To wend their way through the countertrade maze, sm aller Western companiesrely on specialist consultants, such as London 's Adams & Co., Munich's Bafag AGand Vienna's AWT Trading Ltd., or thecountertrade departments of large commercial banks, wh ich often structure andnegotiate the entire deal. Larger corporations, anticipating growing trade with theEast, are developing their own in-housecountertrade departments.

new equipment will be satisfactory.A deal is struck. ation for Countertrade: "The creative possibilities are enormous."So too are potential pitfalls. AsWestern firms inexperienced inthe complex art of barter dive intoEastern markets, casualties are inevitable. Among the more common mistakes: failing to ensurequality and on-time delivery ofbartered goods from the East, underestimating the high cost of conducting countertrade, and overes-3 The consultant advises Westgoods where it can seil thePolish products, and the commodities are swapped.

TIME, APRIL30, 1990

Some experts argue that in the long ron,East European countries, and even the Sovi-et Union, will transform themselves intomarket-based econornies in which countertrade will have no more place than it does onthe New York Stock Ex change. As a case in point,they cite East Germany,which may be catapultedinto Western trading patterns through unificationwith West Germany and theadoption of the deutschemark. Even if such changescan be wrought, however, itwill probably be years, ifnot decades, before theprocess is complete. Untilthen, Western firms will beobliged to keep playing anarcane if tantalizing tradegame. - Wdh reporlingby Veit v. DengIer/YHlflna andChristopherRedrnan/Paris

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Break from the past: voters in rural eastem Romania line up to mark ballots A man in the Danube River delta area casts his vote

EuropeWolves-orSheep?Ex-Communists ga in power in Romania and lead the polis in Bulgaria.That raises the question, How ex-Communist are they?By WILLIAM R. DOERNER

Oer the pa t eleven month , freeelection have proved uniformly

di a trou for once dominantCommunist parties across theformer Ea t bloc. Even though many of theprevious rulers had given them elves uchnew name as Social Democrats or the Party of Democratic Reform, voters in Poland,Hungary, East Germany and the Yugo lavrepublics of Slovenia and Croatia never hesitated a they howed them the door. Lastweek the anti-Communist reaction came toan end. In Romania voters gave a land lidevictory to a party whose leadership is prinkled with a sociates - though in most casenot prominent one -o f the executed dictator Nicolae Ceau escu. Next door in Bulgaria all indications pointed to a olid vic-tory in lune for the Socialist Party, whichhad hed it previou identity a the Communi t Party barely a month earlier.But what, exactly, did the new trendmean? Had the Comrnuni ts hed theirideological principles, to be rewarded withthe tru t of a forgiving electorate? Or wereunrepentant Marxi t-Lenini t wolves hidingunder the fteeces of plurali m?Whatever the answer-and no oneseemed to have it - the tactic proved to be

pectacularly ucces ful for Romanian interim President Ion Iliescu, 60, a Comrnuni t official for 17 years during Ceau escu 'reign. Iliescu wa catapu lted to a two-yearterm in office by a lop ided 85% of the voteburying oppo ition candidate from the Liberal and Peasant parties. His National Salvation Front, the political grouping thatseized power during last December ' revolution , coUected abouttwo-third of the 506 eat inboth houses of Parliament. WeUaware that his pa t i u pect,Iliescu sought to reas ure hi critics . "We have proved over thepast five months that we havemade a total break with thepast," he said. "There is nochance of liding back."Perhap . But the two-monthcampaign was hardly a completebreak with the pa t. Oppo ition lliescuofficial charged that their cam-paign workers were intimidated and attacked by Front sympathizer . Anti-Frontpartie were given cant acce to state-runtelevision, and their newspaper frequentlyfailed to get di tributed by provincial postoffice . Charged Ion Ratiu, leader of thePeasant Party: "Everything wa done to gagus from getting our po in t of view acro "

The Liberal and the Peasant Party alsocharged that the voting was rigged. " I findthe re ult monstrously exaggerated," saidLiberal leader Radu Campeanu. "They remind me of return in Ceau escu's time ."A team of 550 international ob erver fromWestern Europe and orth Arnerica notedcattered examples of ballot stuffing andmany in tance of poUing officia] helping elderly voters casttheir baUots. But much of the asi tance wa necessary: in theBuchare t area, the ballots forthe two hou e of Parliamentwere booklet of more than 30pages. "In our view it was a

proper election , , said NewMexico Govemor Garrey Carruthers, leader of a four-member U.S. ob erver team.The oppo ition' poor showing wa in con iderable mea ure.due to its own shortcomings.Both Campeanu and Ratiu are exile who

retumed to Romania early this year afterlong periods abroad, and were een by manyvoter as outsiders. The pie idential candidate al 0 alarrned potential upporters byadvocating a radical hake-up of the economy , even if that led to wide pread unemployment. "People voted for tability," said29


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Trailing in the polis: U.D.F. members in Sofiaa Western diplomat in Bucharest. "They didnot Want any experiments."But the main factor behlnd the Front 'sstrong showing was I1iescu. Since Ceaucescu's overthrow, the interim President hasbecome apopular, if ambiguous, figure. Hehas repeatedly praised the principles of democracy and pluralism, and is cIosely associated with the abolition of such Ceausescuera schemes as the bulldozing of thousandof villages to make way for larger-scalefarming. Even more important, in a countrythat had been suffering from widespreadhunger and malnutrition because of the austerity policies of the Ceausescu regime,I1iescu was credited with improving the foodsupply through purchases from the Westand a plan that distributed small plots of private land to collective-farm workers.I1iescu 's government is expected to beheaded by current Prime Minister PetreRoman, a hydroelectrical ,engineer underCeausescu and an old ally of the Presidentelect's. The administration will remain inpower for two years. The opposition will beweakened by the unexpected fact that thelargest single bloc in Parliament will be theHungarian Democratic Union of Romania,which represents the large Hungarian mi-nority. Though it did not field a presidentialcandidate, the H.D.U. R. won 37 parliamentary seats, five more than the Liberals.The most pressing task facing I1iescuand Roman-and the one that will providethe best fix on their ideologicalleanings-isthe drafting of a new constitution. So fartheir signals have been mixed. Both havepromised to transform Romania into a social democracy with a mixed economy,pointing to Sweden and Austria as possiblemodels. But they have also insisted that thestate must maintain control of collectivefarms and "strategic industries," mean-

ing virtually all heavy industry.In Bulgaria recent opinion polisindicate that the former Cornmunist (now Socialist) Party willemerge from a two-round electionon June 10 and 17 as the largestparliamentary grouping-but withless than a majority. A survey takenby the government-funded NationalPublic Opinion Center three weeksago showed 44.4% of voters leaningto the Socialists, vs. 25.7% to theopposition Union of DemocraticForces, 11.5% to the Agrarian Partyand 11.8% undecided. The pollgave an approval rating of 72% toPresident Petar Mladenov, theCornmunist stalwart who led a successful Central Committee couplast November against Todor Zhivkov. That rating is twice as high asthe score accorded to the next mostpopular politicalleader, U.D.F. president Zhelyu Zhelev.With chronic shortages of meat,cheese, milk, sugar, tea, coffee andmany other cornmodities, the So-cialists are hardly free of embarrassing electoral baggage. Yet the partyhas proved to be so adept at changing positions that voters may see no reason todoubt that its leaders will solve a crisis asSocialists that they helped crea te as Communists. In recent months, opposition parties have been legalized, and many restrictions on the press have been lifted . Thegovernment has promised to turn landover to the peasants and guide Bulgaria toward a free-market economy.

The Socialist cause has also been aidedby U.D.F. gaffes. In one particularly costlyblooper, U.D .F . secretary Petar Beronquoted British Foreign Secretary DouglasHurd as warning that Western aid wouldbe withheld from Bulgaria i f the Socialistswon the elections. The Foreign Officepromptly denied that Hurd had made anysuch threat and promised that British assistance would be forthcoming as long as theelections were free and fair.Yet another East European country,Czechoslovakia, faces parliamentary elections June 8 and 9. There, however, thestring of anti-Communist triumphs is likelyto be rejoined. The Civic Forum, the movement that swept the Communis ts from power last November and placed Vaclav Havelin the presidency, is expected to emerge asthe strongest party in Czech regions of thecountry, with about one-third of the vote.The Forum's Siovak counterpart, PublicAgainst Violence, will almost certainly fareless weil, and both parties are expected tofall far short of the votes needed to form agovernment on their OWD. Instead, the CivicForum will probably cobble together a coalition with the Christian Democrats andGreens. The Communists? They are so unpopular that most observers and polispredict they will be lucky to gain 10% ofthe vote. - Reportedby Velt V. Dengler/V"lenna

WEST GERMANYPotholes to FillA Sodal Democratic bid toamend the union treaty fizzlesT he road to unification appeared tohave developed so me potholes lastweek. F1exing muscles gained in two stateelections May 13 , leaders of the oppositionSocial Democratic Party threatened toblock ratification of the newly negotiatedtreaty on economic and currency unionwith East Germany, due to take effect July1. The leaders-prodded by Oskar Lafontaine, the party's candidate for Chancel-10r-caUed for renegotiation of the accordto ease the blow that unification is certainto inflict on inefficient East German industri es and their workers. Without some adjustment, the SPD threatened to block theaccord in the Bundesrat, the upper houseof parliament, where it holds a majority.

The threat brought an angry retortfrom Chancellor Helmut Kohl's ruling coalition, which pointed out that it wasthe SPD that had campaigned in the stateelections against the heavy cost of unity.Economics Minister Helmut Haussmanprotested that the guarantees sought by the Social Democrats wouldadd more than $60 billion to the treaty's pricetag by keeping unprofitable East German companies alive throughsubsidies. Kohl declaredhimself willing to seekcompromise solutions toEast Germany's problems, but said, " I f itmeans renegotiating thestate treaty, my answer SPO'sVogelis a cIear no."

At that point, to the coalition's glee,rank-and-fiIe SPD members rebelied andLafontaine's power play fizzled. Backbencher Herbert Ehrenberg, who wasMinister of Labor in the last SPD govemment, fired off a letter to the leadership."I f this discussion does not end veryquickly in a positive vote for the statetreaty, then the SPD is going to repeat thehistorical mistake of 1949, when it rejected the social market economy," he wrote."I decIare now that I am going to vote forit." Another influential party member,West Berlin Mayor Walter Momper,agreed. Said he: " I know how the peopleof the G.D.R. will react to a de1ay."With that, the SPD leadership retreated . Said eider statesman Willy Brandt:"This is not the time for party egotism orone-man decisions. " Th e SP D leader ,Hans-Jochen Vogel, then moved quicklyto end the interlude: he agreed to meetKohl this week to discuss that offerof a compromise. _

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