The conviction is widely held in German political circles today that a phase of postwar development is ending and that the Federal Republic is approaching a new era of political, social and economic challenge. The reconstruction achieved in the years after the war led to a remarkable economic upsurge. But that success cannot make us overlook the continuing failure to solve our most outstanding political problem-that of reunification. A great deal of German energy and much-touted German industriousness has spent itself in the market place, while-for whatever reason-our number-one political problem has hardened in its status quo. The oft-cited "German phoenix" which rose out of the ashes has actually been paralyzed in one wing.
But if the Germans are not to find themselves some day in circumstances of acute political frustration, a new Federal Government must find ways and means to make progress in solving the problem. This will not, nor can it, happen overnight; on the contrary, a long, stony path may lie ahead. But the goal must not be lost sight of. Certainly its attainment can be approached only in careful steps, and just as certainly the fruits of economic progress must figure as tools. Indeed, economics is already playing a role (albeit a very limited one), for example, in the Federal Republic's aid to West Berlin and in interzonal trade.
Aid to Berlin consists of financial contributions to its budget and favorable tax treatment. In recent years this aid has made it possible for the city to pursue an expansionist economic policy-in spite of the erection of the Wall in 1961. In 1964, Berlin's gross product, industrial output and investments were each II percent above 1961 levels (in constant prices). This policy has enabled Berlin to come to grips with its labor shortage: since 1963 the city has shown a net gain from migratory movements to and from West Germany which more than compensates for the high urban death rate. Once again the population is growing. And finally, in combination with the
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