The bosses of the East German economy, who direct the 140 or so large combines that operate Eastern Europe's most able group of factories, gathered recently in Leipzig for an unusually glum assessment of the future.
After an economic boom that, by socialism's standards, had rivaled the capitalistic success of West Germany and kept the Soviet Union supplied with machines and equipment, East Germany is into tougher times.
That fact is unnerving to a country that has been the Soviet Bloc's economic showcase, a country where the Communist leadership has managed to keep the public more interested in production and consumption than in politics.
Four major problems were on the minds of the senior directors at that Leipzig meeting. First, the Soviet Union, East Germany's supplier of oil, had announced it was cutting subsidized oil sales to East Germany this year by 10 percent to about 341,700 barrels a day, triggering an energy crunch.
Second, the demands of bailing out Poland have upset some of East Germany's long-term trade agreements and further strained the whole East European system of production.
Third, East German products are in danger of becoming less competitive on world markets as a result of an aged industrial base and slowness in adapting to new production technologies.
Finally, Western bankers, adding up these problems and skittish generally now about lending to Eastern Europe, are reluctant to extend new credits to East Germany.
According to Western estimates, East Germany's hard-currency debt was $12.8 billion at the start of the year, which for this nation of 17 million people amounts to a higher per capita debt figure than Poland's. More critical still is that about 60 percent of the money owed falls due this year or next.
The factory leaders recognized what had to be done. They pledged to Communist Party chief Guenter Mittag, the Politburo member responsible for economic affairs, that they would try to exceed the 1982 national production plan by two extra days' worth of output. It was the second time in two years that the plan was stretched, reflecting the economic pressures.
At a packing-machine plant here, that pledge has meant having to find and fill more than $500,000 in extra orders--without the benefit of extra energy, machines or overtime.
Official speeches and the government-controlled press carry lots of references to the need to intensify production, conserve energy and adopt new techniques. The official phrase "the economic strategies of the 80s" has become shorthand for the need to do more with less.
"The debt problem is the really critical one for East Germany, but you never find mention of the problem in the press," said Doris Cornelsen at the German Institute for Economic Research in West Berlin. "I'm very sure officials are worried about this, but they do not discuss it publicly."
Up to now, East Germany's economic success was a result largely of traditional pro-work attitudes among the people and a high level of vocational training. Special relations with West Germany also made an important difference, providing a market for East German goods and drawing large deutschemark payments for transit rights of West German citizens across East Germany.
Trade with West Germany, which totaled $5.4 billion last year, accounts for about half of East Germany's trade with the West. For West Germany, this inter-German business amounts to only about 2 percent of total foreign trade, but it is responsible for 70,000 West German jobs and, more importantly, it is seen in Bonn as a political instrument to promote deutschlandpolitik, the policy of bringing Germans together and sustaining the concept of one German nation.
These considerations served as background to Bonn's controversial decision last month to reduce by only a token amount the interest-free credit West Germany provides East Germany to finance inter-German trade.
Known as the "swing," this credit saves East Germany an estimated $25 million a year, which it would otherwise be forced to pay to maintain trade at current levels.
Negotiations on extending the credit were protracted this year as Bonn officials hesitated over how hard to press the Communists to reverse a 1980 decision that raised levies on Western visitors to East Germany. That move has reduced substantially the number of West Germans who can afford to cross the border to see friends and relatives in East Germany.
East Germany refused to rescind the increase. Instead, it granted some minor concessions on visitation rights. The Bonn government, in turn, announced the swing would be reduced in steps from $345 million this year to $243 million in 1985.
As a result of the general tightening of Western credits, East Germany has said it intends to cut back on Western imports. Its 1981-85 plan projects an increase in trade with the Soviet Union.
This comes after more than a decade in which East Germany shifted its East Bloc trade away from the Soviets toward more developed economies in Hungary, Czechoslovakia and Poland. The shift back is interpreted by Western analysts as an attempt by Moscow to force East Germany to bring its Soviet trade back into balance after allowing it to run at a net benefit to East Germany since the mid-1970s.
Austerity at the management level is the order of the day. To make up for the cuts in subsidized Soviet oil, gasoline use is being sharply curtailed and mining of brown coal stepped up.
Capital investment is down, presumably to reduce demand for energy and imported machinery. Central control over the economy by top-level government councils and by the national bank has been strengthened by a series of decrees. This has cast into question how much autonomy the huge combines, which grew out of the country's industrial reorganization, are really to exercise.
Significantly, though, East German consumers so far have been spared the pinch. While authorities in Poland, Hungary and Romania have raised prices on consumer goods, East Germany holds steady on its prices for basic food and clothing items.
Some inflation has crept into the system through the introduction of new goods of somewhat higher quality and much higher price. Thus West Berlin's Institute for Economic Research concluded that the buying power of the average East German really hasn't increased since 1977 after all.
East Germany's reluctance to raise prices seems to reflect the leadership's determination to maintain at least the appearance of forward momentum. "They're always comparing themselves with West Germany," observed Maria Handcke-Hoppe at the Institute for German Questions in West Berlin. "They don't look east because they're on top."
Recently, there has been evidence--including an article in a key East German monthly--of renewed concern here that East Germany's ties to the East Bloc are holding it back, that the country could produce things better, faster and with more profit, if it had fewer commitments to its socialist partners.
More than 80 percent of East Germany's exports of machinery and electrical products go to socialist countries, leaving a limited amount of products for export to the West to earn hard currency and face the kind of competition that would encourage innovation.
But there is little chance East Germany could excuse itself from long-term East Bloc contracts, which do have the advantage of serving as an economic anchor against ups and downs in world markets.
Last year, East Germany boldly announced a new five-year plan that aimed at a rate of annual growth slightly higher than the previous plan's 5 percent target. Some Western analysts believe East German growth did not exceed 4 percent in 1981, and all agree the toughest years are still ahead.