INNER-GERMAN AGREEMENTS: AN INITIAL APPRAISAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80T00634A000500010009-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 16, 2016
• Document Release Date: November 1, 2004
• Sequence Number: 9
• Publication Date: November 27, 1978
• Content Type: IM

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CENTRAL INTELLIGENCY AGENCY
National Fa reign Assessment Center
27 November 1978
INTELLIGENCE MEMORANDUM
INNER-GERMAN AGREEMENTS: AN INITIAL APPRAISAL
Kerb Judgments
The agreements signed on 16 November by East and West Germany
constitute the most comprehensive and important bilateral accords
reached since relations mere normalized in 1972. The significance
lies mainly in the Zong-:hange ianpZications of this pae~.age. In
immediate terms, the balance of interests rather favors East
Germany, but Zong term gains in the new agreements accrue mainly
to West Berlin, which ~aiZZ be more accessible and which will
benefit industrially frorn the canal improvements.
-- Bonn has achieved major transit improvements between West
Germany and West Berlin.
-- The agreements provide for continuing foZZo~r--up dialogue
which zaiZZ be significant both as a stabilizing factor in
inner-German relations and for detente in Central Europe.
-- East Germany, far its part, raiZZ receive over $3.5 billion
in badly needed hard currency over the next ten years, ~-ith
the possibility of smaller additional. sums for projects to
be discussed in 1980.
-- The agreement is a personal plus for East German party chief
Erich Honeeker, zvho acquired a large hard currency ~indfal-Z
zaithout malting humanitarian concessions.
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The West German Opposition to Chancellor Schmidt wi"LZ not
basically reject the neu~ package of aZZ-German agreements,
but it tvi.ZZ make good rase of its standard charge that Bonn
was outbargained by East Berlin. The West German parliament
zuiZl, nevertheless, endorse the package after lively debate,
provided there is no unexpected distuz~bance in inner-German
relations in the meantime.
?-- Moscow clear"Ly supports these agreements; the negotiations
gained momentum fo"I,Zoraing Brezhnev's visit to Bonn Zast May.
The major elements covered by the accords are*;
-- construction of a new transit autobahn from Hamburg to
West Berlin, costing West Germany 1.2 billion Marks
($600 million)
-- reopening of the Teltow Canal in West Berlin, costing
70 million Marks ($35 million)
-- major repairs to the Mittelland and Elbe-Havel
canals between West Germany and West Berlin, costing 90
million Marks ($45 million)
-- conclusion of a 10-year transit road accord that fixes
annual transit payments at 525 million Marks ($262.5
million)
-- discussion in 1980 of such additional projects as further
transit waterway reFyairs and expansion of the
Herleshausen-Wartha crossing point near Eisenach, costing
at least an estimated 500 million Marks (250 million)
The joint projects are a stipulated fallow-up to the 1971 Quadri-
partite Agreement on Berlin ar~d the Basic Treaty of 1972 which laid the
groundwork far future negotiations. It was agreed in late 1975 to enter
into formal negotiations on the autobahn in 1978, and talks began in
1977. Negotiations were placed on ice, however, following the cooling
of relations resulting from the S ie el "manifests" affair, and did not
resume until after Brezhnev's visit to Bonn last May and the June meeting
of Guenter Gaus, head of the West German Permanent Mission in East Berlin,
with Honecker, their first since 1976. Talks progressed at a fast pace
*a detailed account of each provision is given in the Appendix.
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Proposed Autobahns and Crossing Points
- --- Proposed autobahn
~ Existing crosaing point
~ Proposed crossing point
BALTIC SEA
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Teltow Canal
~52a.
30':
`J/ S
~Isberg
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over the next five months, a fact many 4Jest German officials, no doubt
correctly, have attributed to the Kremlin's desire for improved relations
with West Germany. Certainly the thereto-fore abdurate East Germany
became markedly more forthcoming on such matters as the reopening of the
Teltow Canal,
While on the surface it might appear that East Germany came away
the big winner from the negotiations, especially since Honecker made no
humanitarian concessions, the Federal Republic did in fact score some
strategic points. West German opposition criticism will center on the
lack of any perceptible "human improvements." Both sides pursued dif-
ferent goals, East Berlin opting for financial advantage and Bonn for
political objectives. It is not inconceivable that there was an unwrit-
ten understanding that East Berlin will be more forthcoming on certain
humanitarian issues in the future. Some spokesmen in Bonn are portraying
this as being the case, but until the East Germans act, the impression
remains that East Berlin has sold the Federal Republic a "pig on a poke"
on humanitarian concessions.
Our initial assessment, based on what is known thus far about the
accords, follows.
The View from Bonn
Pluses
1. The Federal Republic represented West Berlin de facto in
the negotiations and Bonn is pleased that this strengthened
its claim to handle West Berlin interests. (In the past
East Germany considered West Berlin a ?'special" political
entity, and insisted that the West Berlin Senat, not Bonn,
nega?tiate on the Teltow Canal. ~~
Z. Reopening the Teltow Canal and repairing other major transit
waterways will be an economic boost for West Berlin as it
will cut shipping costs and transit time and aid local
industry.
3. Construction of the Hamburg-West Berlin autobahn significantly
shorten driving time to West Berlin.
4. The fixing of the road transit fee for ten years will enable
6onn's economic planners to better judge transit outlays
and will avoid the renegotiation delays previously experienced.
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5. The autobahn and canal projects demonstrate to the West
German and West Berlin public Bonn's policy of support far
West Berlin, within the terms of the Quadripartite Agreement.
6. The agreements lock the two Germanies into an ongoing
dialogue for a few years and this could increase East German
confidence and trust in bilateral dealings with Bonn.
Minuses
1: East Berlin obtains a large sum of hard currency.
2. Bonn did not achieve--at least in the form of a written agree-
ment--any concessions for improving the lot of East German
citizens.
The View from East Berlin
Pluses
1. The GDR replenishes a reservoir of badly needed hard cur-
rency which it may use to import more technology from the
West and to offset its trade deficit with Bann. The acqui-
sition of stated sums at specified times will help East
German economic planners.
2. The hard currency windfall, accompanied by Soviet approval
for the agreements, should act as a plus for Honecker.
3. The GDR now has legitimate, acknowledged reasons to talk with
Bonn.
4. East Germany was successful in avoiding any public or concep-
tual linkage between the economic package and humanitarian
concepts.
Minuses
1. East Germany has recognized Bonn's de facto representation of
West Berlin in negotiating the Teltow Canal.
Z. Construction of the new superhighway will open up the GDR to
many mare West Germans; their presence creates additional
political, ideological, and security problems for the regime.
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3. East Germany will have fewer excuses to interfere With the
autobahn and waterway traffic as both come under the transit
route regulations, which are in turn linked to the Quadri-
partite Agreement.
4. The Te1tow Canal reopening was apparently the result of
Soviet ?'suggestions," implying that East Berlin's toes may
have been stepped on.
5. Some in the party 1eadersh~ip, particularly persons in the
military and security establishments, are likely to have
reservations about the resultant increase in contacts with
West Germans. This dissatisfaction could mean difficulties for
Honecker if a post-13rezhnev leadership is more conservative
in its policies towards West Germany.
The Poker Play
The East Germans held relatively firm on all major issues during
the negotiations. The talks were punctuated by "hints" fram East German
and Soviet unofficial spokesmen who told their West German and West
Berlin contacts of Soviet "pressure" on the GDR, Moscow's "displeasure"
with Nonecker's domestic policies, and rumars that the East German leader
was under fire from Politburo "hardliners" because of the negotiations.
Clearly this tactic was a ploy to obtain the maximum amount of hard
currency from Bonn. Inner-Gerrnan talks have usually been characterized
by such a rumor pattern and the West Germans again a arently gave them
at least some credence.
IWhile the Soviets are suspicious of all contacts
between "Germans", as mentioned above, the rapid progress registered after
Brezhnev's visit suggests that the Soviets were well informed about the
talks all along and that the "hints" represented an orchestrated Soviet-
East German "scare campaign."*
East Berlin's hardnosed negotiation stance was logical in view of
three of the regime's major. gcaals: a~ acquisitian of a large sum of hard
currency, b) demonstration of the country's "sovereign" and "independent"
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status, and c) refusal to concede humanitarian improvements whenever
possible. The psychological need to emphasize the country's "sovereign"
status accounts far the regime's outright refusal to accept any linkage
between the economic package and humanitarian concessions. To the
prestige conscious regime, any linkage would be considered bending the
knee to Bonn. Tn July Bonn had linked humanitarian concessions with the
economic issues to be negotiated. Specifically, the West Germans wanted
the East Germans to permit increased travel to the West and a lowering
of the age far the pensioners who could make such a trip. Schmidt
emphasized the linkage at a cabinet meeting last September. East Germany,
however, refused such linkage on the grounds that the number of East
Germans who had travelled to the West increased by 20 percent in 1977.
Foreign Office State Secretary Guenther Van Well subsequently informed
the Allies that, despite this rejection, the GDR said it would take another
look at the matter, but only after the inner-German transit agreements
vrere signed. The talks on humanitarian questions would take lace at
a "different level?'--presumably separate from other topics.
.ere are, owever, rumors a e may e
or coming an some uman rights matters in the future. West German
plenipotentiary for West Berlin, Dietrich Spangenberg, told the Allied
ministers on 16 November that the humanitarian situation was, in fact,
much better than generally viewed by the West German population.
Spangenberg said that East Germany this year was allowing 1500 political
prisoners to emigrate with their farm ies, fora total of about 5000.
The West German government wa~a, of course, paying the East German regime
80,000 Marks ($40,000.00) for each of the 1500 prisoners. Ne also said
that many family reunification cases were being resolved, but gave no
statistics; he added that East Germany was also allowing more East Germans
to visit West Berlin and West Germany. Spangenberg went on to say that
all of the party leaders were kept informed about the humanitarian aspect
of the talks and they were prepared to keep quiet about the East German
concessions.* The pumping up of the above "concessions,'" however, smacks
of an attempt to make the best possible case out of an embarrassing
issue, especially as Bonn hacl hoped for some results.
Domestic Impact on East Germany
The agreements have both an economic and political impact for East
Germany. The cash inflows, beginning in 1979, should substantially
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alleviate, at least initially, the growing trade deficit with Bonn and
prevent any cutbacks in sorely needed imparts from the Federal Republic.
Hard currency inflows associated with the accord will total about
$40Q million next year and represent approximately an 8Q percent increase
over 1978 in transit fees paid by the West German government. Total
transfer payments by Bonn, while difficult to assess, may reach more than
$600 million annually.
The East Germans have traditionally run a trade imbalance with West
Germany. While the deficit was substantially narrowed last year, there
was a $177 million gap during the first half of 1978 due to stagnating
East German exports, The poor quality of some East German products and
commitments to expert to CEr9A trading partners could perpetuate the
erosion of East Germany?s export performance and magnify the importance
of future West German transfer payments in maintaining a balance in
inner-German trade.
The East German debt to the Federal Republic currently stands at
$1.6 billion and will probably reach $2 billion by the end of 1979.
Neither Bonn nor East Berlin appears overly concerned about this deficit
and inner-German credit facilities are adequate to handle expected future
increases. The East Germans are likely to proceed with new long term
capital equipment purchases from the West Germans as a result of the cash
inflow-provided by the economic agreements.
On the political side of the ledger, the agreements appear a plus
for lianecker. Despite rumors that he was under pressure from the Soviets
and "hawks" in the East German Politburo over his German policy and
same of his economic programs, we have seen no proof that this is true,
Regarding the alleged opposition to Honecker within the party, it is
likely that same security and military officials apposed opening the
country further to the "class enemy" (~i,e., the West Germans) as a
matter of principal and their opposition was not directed against the
party chief personally. Honecker probably tried to placate some of those
who opposed his inner-German policies by refusing to make concessions in
the negotiations, especially in refusing to accept linkage between the
economic package and humanitarian concessions.
Honecker was also aided by the fact that he had Moscow's support.
While Brezhnev may be unhappy with same of Honecker's policies, the
East German leader has not posed major problems of the sort that occurred
when Walter tllbricht was in charge. A case in point is the agreement to
negotiate with Bonn aver the specifically Berlin-related issue of the
Tel tow Canal. As long as Bre~hnev is in control and detente in Central
Europe is pursued by Moscow, Honecker should be able to continue the
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present policy. toward Bonn. if the post-Brezhnev leadership is mare
conservative, however, this might reverse East Germany's goal of slowly
normalizing relations.
West German T_pact of New Interzonal Traffic Improvements
Opposition criticism in West Germany will center on the lack of any
perceptible "human improvements' in East-4dest German relations, for
example, relaxation of travel restrictions on East Germans. There is
really nothing to Shaw on this score, although government officials say
privately that East Germany is permitting more travel tp the West in
cases where monetary camperrsat;ian is provided. Other grounds far criticism
are that the road and canal Improvements are very costly and that East
Germany will collect pre-payments For these improvements well before
they become serviceable. Although the opposition will not basically
reflect the new package of a11-German agreements, it will make good use
of its standard charge that the Bann government was autbargained by East
Berl i n .
The, general nature of government claims to achievement, such as
Chancellor Schmidt's assertion that the agreements represent an "important
contribution to security and detente in Europe," indicates West Germany's
gains are not concrete and immediate. Though not publicly acknowledged,
top Sonn managers of the negotiations with East Germany were disappointed
that visible progress on German-to-German ties was not achieved nor are
there "firm expectations" of any. They may have accepted, at least to
a degree, the East German judgment that further "human improvements" at
this time are not possible, although no West German politician would dare
say so. The psychological impact of this long term all-German under-
standing, widely believed to have been urged by the Soviets, w111 need
to be tested by East Germany before any further relaxation of controls
is risked.
Long term gains in the new agreements accrue mainly to West Berlin,
which will be accessible more rapidly via the planned northern auto-
bahn and will benefit industrially from the canal improvements. West
Germany represented West Berlin de facto on its Te1tow Canal negotiations,
despite previous East German objections, and Bann is pleased ghat this
strengthens its claim to handle West Berlin interests. There is no
assurance, however, that East Berlin will not reassert its legal position
on this matter. Bonn and the Western Allies also see in East Germany's
readiness to place the improved transportation facilities under the
East-West German transit agreement an implicit strengthening of West
Berlin's position as defined in the Quadripartite Agreement.
Reaffirmation of these Western. positions on Berlin 'is beneficial psycho-
logically, in the absence of any new Eastern pressures on West Berlin.
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Perhaps the most important of these inner-German dgree[nents raised
the annual lump sum payment for use of the transitways about 30 percent
and fixed fit far 10 years. East Germany relies on this regular payment,
now fixed at 525 million Marks (DM} annually, and the new agreement pro-
vides stability to inner-German relations, as does the entire package,
although that stability depends on the overa11 political climate.
Another positive feature, one that will attract West German support for
the package, is an East German agreement to pay 50 million DM per year
for four years to settle non-cpmmercia1 claims from t?~est Germany. Thus,
by ploughing back into West Germany a fraction pf their take, the East
Germans improve the Bonn coalition"s prospects for gaining endorsement
of the deal.
All in all, the new agreements represent progress in East-West
German relations and they are impar~tant to the climate of detente, though
they determine it less than they depend on it. The Bundestag will endorse
the package after lively debate, provided there is no unexpected distur-
bance to inner-German relations in the meantime. The Soviets, who
probably helped East Germany to reach the agreement, will carefully observe
the impact of this demcrstra~tion of all-German cooperation on the people
and government of that country.
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APPENDIX
h1t~ or Points
Hamburg-West~Berlin Autobahn
Fast Berlin will receive T.2 bullion Marks (.$600 million); 120
million Marks ($60 million) will be paid in March 1979. as advance pay-
~~ent, and the remainder in four equal yearly installments. Last summer
East Germany demanded 2 billion Marks (.$1 billion) for the wank, and
the Federal Republic made a counter offer of 1 billion. Construction
will begin next dune and the project is scheduled for completion in
1983. The highway from West Germany to Wittstack in East Germany (125
km) will be new. The section from bdittstack to 11e1ten {76 km) an the
Berlin autobahn ring w111 utilize part of the already existing East
German autobahn from Berlin to Rostock. The twelve kilometer section
between 10e1ten and West Berlin will be new. projected construction also
includes two major border crossing points, at Zarrentin an the West-East
German frontier east of Hamburg, and in the Heiligensee (Stolpe-Dorf)
area of West Berlin where the new highway will enter the city. While
East Germany has refused to let West German construction crews participate,
it ,agreed to purchase 100 mil'l'ion Marks (,$50 million) of West German
road construction equipment.
The new autobahn is under the umbrella of transit regulations, but
the Federal Republic was evidently not successful in keeping the old
transit route (the F-5 highway) under the accords. East German negotia-
tor Alexander Schalck rejected Bonn's suggestion on this point in August.
Transit Raad Fees
Bonn will pay East Germany 525 million Marks (.$262.5 million)
annually for 10 years (1.980-89). Transit payments for 1972-75 were 234.9
million Marks ($117.45 million) per year, and 400 million Marks {$200
million) far 1976-79. The ten year frame provides a tang term fixed sum.
In the past, transit payments had been re-examined at intervals because
of changes in traffic volume and this resulted in differences due to
discrepancies in each side's methods of computation.
Tel tow Canal
East German agreement to reopen the Teltaw Canal in West Berlin
was a surprise and a plus for the Federal Republic. It was likely due
to Soviet "suggestions" as the GDR had been adamant in its insistence
that it would deal only with the West Berlin Senat on the issue, thus
emphasizing the "special" status of West Berlin and thwarting Bonn's
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claims to speak for the city. For its part, Bonn has fang argued that
the canal came under the transit agreement. and thus belonged to East-
West German talks, reserving only technical negotiations for the Senat
to discuss with East Germany.
The GDR also did not want the waterway included under the transit
accords. Although last January West German .officials noted that the canal
was a "hfighly political problem" unlikely to be resolved soon, Honecker
announced in June that the matter should be considered in the talks.
The GDR also-agreed that the canal should be included in the regulations
concern$ng tFie transit waterway system.
f;econstr'uction on the 38-kilometer long canal will begin next June
and is expected to take th~^ee years. The GDR will be paid 70 million
Marks ($35 million), for the v~ork, 20 tnil1ion Marks ($10 million) less
than East Berlin had originally demanded. Tt will be of economic benefit
to industries in the American sector of Berlin; shipping time and costs
will be reduced. As the western entrance to the Teltow Canal is blocked,
barges now use the Havel River, cross the Spree River into East Bel^1in,
and then enter the Kritzer Branch. Canal before entering the eastern part
of the Teltow Canal.
Transit Watet^way Repairs
Agreement on improvements to the Mittelland and Elbe-Navel canal
transit waterways was not contentiaus. The work, which will cost 120 mil-
lion Marks ($60 mi11ion7, is to be done over three years, The GDR opened
with a bid of 1 billion Marks (_$500 million) for repair of all segments
of the transit waterways, but Bonn said that it would agree only to having
the most urgent repairs made, and offered 90 million Marks ($45 mi1lian).
The Federal Republic did agree to a declaration of intent to discuss
further reconstruction of the waterways in 1980.
Won-Commercial Payments
East Germany will pay 200 million Marks ($100 million) in four equal
installments during 1979-82 to facilitate the disbursement of credit
balances in East German currency belonging to East German pensioners who
have resettled in West Germany. There apparently was not much disagreement
over this issue, which fulfills an agreement signed in April 1974.
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