East European countries, seeking to modernize their troubled econmies with Western technology but without amassing still more debts to the West, are turning increasingly toward an ancient trading technique - barter.
The idea is to press Western companies harder to accept more Eastern manufactured or grown products as part payment for goods bought in the West.
The expanding emphasis by the East on such techniques was in evidence here this week at the mammoth Leipzig international trade fair that brings together some 9,000 exhibitors from 60 Eastern and Western countries.
Two large U.S. firms exhibiting electronic and chemical products here said privately that apparently serious East German interest in buying their equipment was also accompanied by just as serious inquiries about the prospects for paying for some of it in barter.
The most dramatic example, however, came in the announcement that the Italian steel firm of Danieli had won a $250 million contract from East Germany to build a new plant in Bradenburg, East Germany.
The West German firm of Salzgitter thought they had the contract sewed up. The Italians are said to have slightly underbid the West Germans. However, the Italians also have agreed to accept as payment for the contract part of the plant's steel output plus a selection of other East German manufactured goods.
West Germany is East Germany's largest and most important trading partner in the West, and West German businessmen clearly are worried over the expanding demands by the East for these direct barter or so-called "buy-back" provisions.
West German officials say the barter pressure clearly is higher this year than last and that it is now a major problem, especially for some shaller and medium-sized firms that don't have the flexibility to make such deals pay-off.
It is not clear yet how the East will fare in their campaign, however, if trade in this basis continues to grow. It could cause a boom for the handful of brokerage houses in London, West Berlin, Vienna and elsewhere that specialize in barter deals.
"The way it works, is that East Germany may be interested in some U.S. electronic equipment but may want to pay in part with plum jelly, just as an example. The brokerage firm finds out how much they can sell Eastern plum jelly for in the West and the electronic company then decides whether they want to play. After everybody takes his cut, however, the price of the electronic equipment goes up," one U.S. businessman here explained.
For East Germany, which already is estimated to be in debt by about $5 billion to the West, barter is very important. Like much of communist East Europe, East Germany does not have convertible currency and thus needs to sell its products in the West in order to get hard currency with which it can pay-off some of its debts and import still more technology.
But the barter issue creates other problems. Some East Germany products, such as optics built by Carl Zeiss in nearby Jena, are world-renowned and sell well on their own. But other East German products, even though of reasonable quality, would clearly have a hard time competing with Western goods in the West.
Thus, the East Germans want to use barter for two reasons. One, to take advantage of Western marketing operations that are already setup and which they could not hope to compete with. Secondly, however, they are also trying to use it to get rid of some of the products they also have trouble selling in the East, said one Western businessman.
The Italian steel plant deal is also being viewed by some experienced observers here as reflective of another potentially important trend - an effort by East Germany to backaway slightly from its overwhelming dependence on West Germany as a trading partner.
Last year, trade between the two German states was more than $3 billion. The Bonn government, however, clearly gets the better of that, with the East in debt to West Germany alone for some $900 million.
On the other hand, 11 per cent of East German exports to the West go to West Germany, and the East Germans have been both expanding exports to Bonn and cutting imports in the past year.