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especially the North Atlantic Treaty Organisation. Ministers should not raise the issue of German reunification, which was not an immediate issue. Progress had already been achieved on strengthening the EC's economic relations with East European countries. The EC had signed trade agreements with Poland and Hungary, and an association agreement with Yugoslavia. In due course Poland and Hungary might want to negotiate association agreements. Such a development was unlikely to cause major problems for the Soviet leadership. If events moved too quickly or Western governments did not Continue to take a measured and prudent attitude, there was a
sk that President. Gorbachev might be swept away. This bud cause grave damage to the broader Western objective of
moting democracy throughout both parts of Europe, and timately from the Atlantic through the Soviet Union to the borders of China. The EC could not ignore these crucially important processes of historic change which would have a profound effect on developments within the Community.
b.
fect
Western Europe
The Westerman Finance Minister, Herr Waigel, had made clear both in the formal and informal meetings of the Economic and ance Council on 13 November that West Germany saw its future remaining an integral member of the EC and
Waigel had emphasised that West Germany ay was not seeking reapfication at the present time. The same line had been taken the West German Foreign Minister, Herr Genscher, and the Defence Minister, Herr Stoltenberg, at the Western European Unionisterial meeting. Nevertheless, these statements contrasted with the greater attention paid to the theme of reunifon by Chancellor Kohl in recent speeches, though it should be remembered that he had always been one of the foremost advocates of reunification among German political leaders.
c. Against this background, West German government was likely to show an increasing tendency to examine new proposals for greater integration within the EC in the light of the implications for closer relations between East and West Germany and eventual reunification. In certain cases this tendency might be helpful to Britain's own interests.
d. In reality there were already close ponomic links between East and West Germany. West German companies were able to take advantage of cheap labour in East Germany in their manufacturing processes. Goods from East many were admitted to West Germany, and hence into the without tariffs or quotas. Hitherto West German comparties h had been deterred from major investment in East Germany because of the political situation there. The recent changes were likely to stimulate a significant flow of new West German invest East Germany. The Polish and Hungarian governments had stressed recently that they attached importance to sect
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