ROBERT D. BALLARD

**EDUCATION:** Dr. Ballard received his undergraduate degree in Geology and Chemistry from the University of California. He attended graduate school at the University of Southern California, the University of Hawaii's Graduate School in Oceanography, and received his Ph.D. in Marine Geology and Geophysics from the University of Rhode Island.

**MILITARY SERVICE:** Dr. Ballard graduated from the University of California as a distinguished military graduate with a Commission in Army Intelligence. Later his Commission was transferred to the U.S. Navy, and during the Vietnam War he served on active duty as an Ensign, Lt. J.G. and finally as a Lieutenant. Dr. Ballard has rejoined the U.S. Naval Reserve as a Commander.

**PUBLICATIONS:** Dr. Ballard has published over 50 scientific articles in refereed journals including Science, Nature, Earth and Planetary Science Letters, the Journal of Geophysical Research, and many others. He received the Newcomb Cleveland Award from the American Association for the Advancement of Science for an article he co-authored in Science detailing the discovery of high temperature vent fields in the East Pacific Rise. Dr. Ballard has also written many popular articles for the general public including eight articles in National Geographic Magazine, as well as three books.

**TELEVISION PRODUCTS:** Dr. Ballard has participated in the production of numerous television programs for the B.B.C., Open University, National Geographic Educational films, Nippon Television, German Television, the Office of Naval Research, the National Science Foundation, Public Television, Walter Cronkite's "Universe", and three National Geographic Television programs entitled "Dive to the Edge of Creation", "Born of Fire", and "Secrets of the Titanic."

**RESEARCH EXPEDITIONS:** Dr. Ballard has led or participated in over 60 deep-sea expeditions including the use of the deep-diving submersibles ALVIN, ARCHIMEDE, TRIESTE II, BEN FRANKLIN, TURTLE, CYANA, and NR-1. These expeditions included the first manned exploration of the Mid-Ocean Ridge, the discovery of warm water springs and their unusual animal communities in the Galapagos Rift, the discovery of polymetallic sulfides and high temperature "black smokers", and the discovery of the R.M.S. TITANIC.

**AWARDS:** In addition to receiving the Newcomb-Cleveland Award from the AAAS, Dr. Ballard has received the Underwater Society of America Award for Science, the Cutty Sark Award for Science, the Compass Award from the Marine Technology Society, the Boston Sea Rovers Diver of the Year Award, the Underwater Society of America Northeast Region Diver of the Year Award, the Citation of Merit from the Explorers Club, the Distinguished Alumni Award from the University of California at Santa Barbara, the first Secretary of the Navy Chair in Oceanography, a member of Sigma Xi, Distinguished Achievement Award from the College of Engineering at the University of Florida, Innovations in Photography Award from the American Society of Magazine Photographers, Washburn Award from the Museum of Science, Lowell Thomas Award from the Explorers Club, Fellow of the Rochester Museum, Honorary Doctorates from the University of Rhode Island, Clark University, and the University of Southeastern Massachusetts. In 1988, Dr. Ballard received the National Geographic Society's Centennial Award and the David Bushnell Award from the American Defense Preparedness Association.

**PRESENT POSITION:** Dr. Ballard is a tenured Senior Scientist in the Ocean Engineering Department of the Woods Hole Oceanographic Institution and Head of the Deep Submergence Laboratory. He is also Director of the Institution's Center for Marine Exploration, founded in 1986 to foster the development and use of unmanned deep ocean systems.

UST

100 WEST PUTNAM AVENUE, GREENWICH, CONNECTICUT 06830
(203) 622-3563

ROBERT E. BARRETT
Senior Vice President

FEB 25 1991

February 20, 1991

Dr. Henry Kissinger
Kissinger Associates, Inc.
350 Park Avenue
New York, New York 10022

Dear Mr. Secretary,

Regardless of where I go in life, I will always think of Gerald R. Ford and Henry Kissinger a "commander and deputy commander." (of course, not necessarily in that order.) As a "loyal subordinate," I feel it my duty to inform you of my whereabouts at all times.

As of January 1, 1991 I am a senior vice-president with UST, Inc. I believe you and/or your associates are assisting the company on matters of international concern with specific focus on the European community.

I am most fortunate in that this new position allows for my continued involvement with and representation of President Ford. Specifically I will still work extensively on such things as the Gerald R. Ford Foundation, the World Forum as well as anything else President Ford so desires.

Within UST I will be concerned with corporate development and all "external communications" currently ongoing and those to be developed. Since this means I will be coordinating with Kissinger and Associates I would request the following.

1. Please forgive my misplaced loyalty to the President rather than to you during the years 1974 - 1977. (Like Haig, I was a military man and didn't know where the real power resided.)

2. Do not drop UST as a client and return the unused portion of the retainer. The people here at UST are wonderful and think you know me and like me.

3. All humor aside, I do look forward to any and every opportunity to see you more often than has been the case in recent years. My very best to Nancy.

REB:jg

[Y]

6/27 -- SSM: I'm afraid this is a tad dismal...can you help
or do you think it's adequate? His blurb in Intl
Who's Who follows. Jody

Your Royal Highness:

For your 80th birthday on June 29th, I send my warmest
congratulations and best wishes for [continued good health]
and happiness.

May your vision and concern continue to be an inspiration
for years to come to The Netherlands and to the many causes
which are so much in your debt.

HRH Prince Bernhard

telephone: 175-1756.

garian politician; b. 14 Dec. 1922, Páka, County
arted as meat industry worker, joined CP 1945;
-54; First Sec. County Csongrád Party Cttee.
Head Party Cen. Cttee. Dept. of Agric. 1960-65;
ty Cttee., Hungarian Socialist Workers' Party
- HSWP 1962-65, 1974-85; Deputy Sec. Gen.
tee., HSWP 1970-88, Head of Econ. Bd. attached
4-78; Pres. of Presidential Council 1987-88; M.P.
of Merit 1955, 1959, Order of the Hungarian
blications: Tettekkel-felelősséggel (Acts-Respon-
lob követelmények utján (On the Road of Higher
, Társadalom, Politika (Party, Society, Politics)
al Council, Kossuth Lajos tér 1, 1357 Budapest,
754.

garian politician; b. 24 Jan. 1948, Monok; s. of
rit (née Stajz) Nemeth; m. Erzsebet Szilágy 1971;
niv. of Budapest; lecturer in Political Economy
deputy section head Nat. Planning Office 1977-
as deputy leader, of HSWP Cen. Cttee. Dept.
pt. Leader 1987-88; mem. of Cen. Cttee., Secr.
Cttee. 1987-88; M.P. 1988-; Prime Minister of
council of Ministers Nov. 1988-; appointed to four-
SWP 1989; mem. Presidium, Hungarian Socialist
1989 (resgnd.). *Leisure interests:* sailing, tennis,
s Office, 1055 Budapest, Kossuth Lajos tér 1,
600.

riot politician; b. 2 June 1930, Limassol; m. 2nd
c. from first marriage; fmr. Man. Nemitsas group
reps. 1976; fmr. Pres. Parl. Cttee. on Commerce
of Commerce and Industry 1988-; fmr. mem. Bd.
Industrialists' Fed., Chamber of Commerce and
s and several cos.; fmr. Deputy Chair. Woolworth
y of Commerce and Industry, Nicosia, Cyprus.

Fyodovovich, DR. HIST. SC.; Soviet politician and
1929; ed. Magnitogorsk Pedagogical Inst.; mem.
and teaching at inst. 1956-63; Second Sec., Magnito-
68; Sec. of Chelyabinsk District Cttee. 1968-75;
of CPSU Cen. Cttee. 1975-86; Pres. of U.S.S.R.
ing, Printing and Bookselling 1986-89; Head Soviet
d. mem. of CPSU Cen. Cttee. 1981-89, mem. April
commission for Television and Radio Broadcasting of
ya ul. 25, 113326 Moscow, U.S.S.R.

rtine medical practitioner; b. 19 Oct. 1930, Bahia
z Bianco; Prof. and Dir. of Public Health School,
consultant Pan-American Health Org., the World
American States; Minister of Public Health and
cations: books and articles on social medicine,
de Salud y Accion Social, Defensa 120 C.P. 1349,
l.

harles, M.A., B. PHIL., F.A.A.M.; Australian professor
1929, Adelaide; ed. Oxford Univ.; lecturer, Univ.
niv. of Sydney 1962-72; Prof. of Philosophy Univ.
v. of Adelaide 1974.- *Publications:* The Shape of
Valuing 1989. *Address:* Department of Philosophy,
S. Australia 5001.

PH.D.; American professor of economics; b. 12 Oct.
muel Henry Nerlove and Evelyn (née Andelman)
iv. of Chicago and Johns Hopkins Univ.; Analytical
of Agric., Washington, D.C. 1956-57; Assoc. Prof.,
polis 1959-60; Prof., Stanford Univ. 1960-65, Yale
Econs., Univ. of Chicago 1969-74; F. W. Taussig
d Univ. 1967-68; Visiting Prof., Northwestern
rof. 1974-82; Prof. of Econs., Univ. of Pa. 1982-86,
n. N.A.S.; John Bates Clark Medal 1969; P. C.
Publications: Dynamics of Supply 1958, Distrib-
d Analysis 1958, Estimation and Identification of
on Functions 1965, Analysis of Economic Time
9, Household and Economy: Welfare Economics of
1987; numerous articles. *Address:* Department of
Philadelphic 2710 Leinert-Wolff 6907 Philadel.

Eng. Inst. and Leningrad Conservatoire (V. Lukanin's class); soloist with Leningrad Maly Opera and Ballet Theatre 1963-67; soloist with Kirov Opera 1967-71; soloist with Bolshoi 1971-; mem. CPSU 1974-; Teacher of solo singing at Leningrad Conservatoire 1967-71; mem. staff, Moscow Musical Pedagogical Inst. 1972-74; Chair. of Singing at Moscow Conservatoire 1975-, Prof. 1981-; Pres. Opera Section, U.S.S.R. Musical Soc. 1987-; Grammy Award, American Acad. of Recording Artists 1979, Lenin Prize 1982; Hero of Labour. *Roles include:* Boris Godunov, Dosifey (Khovanshchina), Prince Igor, Mephistopheles (Gounod's Faust); Grigori (Dzerzhinsky's Quiet Flows the Don), Kutuzov (War and Peace); mem. Congress of People's Deputies 1989-. *Publication:* *Thoughts on My Profession* 1985. *Address:* Bolshoi Theatre, Marx Prospect 8/2, 103009 Moscow (Officer, Fruzenskaya nab. 24/1-178, 119146 Moscow, U.S.S.R. (Home).*

NESTERIKHIN, Yuri Efremovich; Soviet physicist; b. 1930, Ivanovo; ed. Moscow Univ.; mem. CPSU 1960-; with Inst. of Atomic Energy 1954-61, Inst. of Nuclear Physics 1961-67; Prof. 1970; Corres. mem. of U.S.S.R. Acad. of Sciences 1970, mem. 1981-; Dir. of Inst. of Automation and Electrometrics, Siberian Branch of Acad. of Sciences 1967-; most important works on plasma physics and thermonuclear synthesis. *Address.* U.S.S.R. Academy of Sciences Institute of Automation and Electrometrics, Universitetsky Pr.1, Novosibirsk, U.S.S.R.

NETANYAHU, Benjamin, M.A.; Israeli diplomatist; b. 21 Oct. 1949; m.; one c.; ed. M.I.T.; man. consultant, Boston Consulting Group 1976-78; Exec. Dir. Jonathan Inst. Jerusalem 1978-80; Sr. Man. Rim Industries, Jerusalem 1980-82; Deputy Chief of Mission, Israeli Embassy, Washington, D.C. 1982-84; Perm. Rep. to UN 1984-89. *Address:* c/o Ministry of Foreign Affairs, Hakirya, Romema, Jerusalem, Israel.

NETHERLANDS, H.R.H. Prince of the (Bernhard Leopold Frederik Everhard Julius Coert Karel Godfried Pieter), Prince zur Lippe-Biesterfeld; b. 29 June 1911, Germany; s. of H.S.H. the late Prince Bernhard zur Lippe and Princess Armgard, Baroness von Sierstorpf-Cramm; m. Juliana Louise Emma Marie Wilhelmina, (q.v.), Queen of the Netherlands 1937-80; four d.; ed. Gymnasiums at Zuellichau and Berlin and Univs. of Lausanne. Munich and Berlin; assumed Netherlands nationality 1936; studied at Netherlands Staff Coll.; apptd. mem. State Council; after German invasion of Holland, May 1940, evacuated family to England and returned to Continent with army until fall of France; returned to England and qualified as pilot 1941; appointed Hon. Air Cdre. R.A.F.V.R. 1941; subsequently Chief Netherlands Liaison Officer with British Forces, Col. later Maj. Gen. and Chief of Netherlands Mission to War Office; visited war fronts in N. Africa and Normandy; maintained liaison throughout the war between Netherlands Underground and the Allied Govts.; appointed Supreme Comdr. (Lieut.-Gen.) Netherlands Armed Forces 1944 and played important part in liberation of Netherlands; decorated for his services in this operation by H.M. Queen Wilhelmina (M.W.O.) and H.M. King George VI (G.B.E.R.) subsequently resigned from office of Supreme Comdr. 1945; mem. Council for Mil. Affairs of the Realm, and mem. Joint Defence, Army, Admiralty and Air Force Councils; Insp.-Gen. of Armed Forces; Adm., Gen. R. Netherlands A.F., Gen. (Army) 1954-76; Hon. Air Marshal R.A.F. 1964; Hon. Cdre. R.N.Z.A.F. 1973; mem. Bd. of the Netherlands Trade and Industries Fair; has greatly contributed to post-war expansion of Netherlands trade; founder and regent Prince Bernhard Fund for the Advancement of Arts and Sciences in the Netherlands; Regent Praemiaum Erasianum Foundation; Founder-Pres. World Wildlife Fund Int., Pres. W.W.F. Netherlands, Pres. Rhino Rescue Trust; Chair. Achievement Bd. ICBP; Hon. mem. Royal Aeronautical Soc., Royal Inst: Naval Architects, Aeromedical Soc., Royal Spanish Acad.; Hon. degrees (Utrecht) 1946. (Delft) 1951, (Montreal) 1958, (British Columbia) 1958, (Amsterdam) 1965. (Michigan) 1965, (Basel) 1971; many decorations. *Leisure interests:* golf, skiing, filming, photography, hunting. *Address:* Soestdijk Palace, Baarn, Netherlands.

NETTERSTROM, Henrik Munc; Danish diplomatist; b. 12 Feb. 1924. m.; ed. Univ. of Copenhagen; Ministry of Agric. 1949-67, serving also in Danish missions to OEEC, Paris, to the EEC, CECA and EURATOM, Brussels and UN and EFTA; Geneva; joined Ministry of Foreign Affairs 1967, Under-Sec. for int. econ. and trade policy matters 1980-86; Perm. Rep. to OECD 1986-89; Ambassador to Austria 1989-. *Address:* Embassy of Denmark, 1015 Vienna, Führichgasse 6, Austria.

NEUBER, Friedel; German banker; b. 10 July 1935; Chair. Man. Bd., Westdeutsche Landesbank Girozentrale (WestLB), Düsseldorf/Münster 1981-; Chair. Supervisory Bd., Preussag AG, Hanover/Berlin, Deutsche Anlagen-Leasing 1984-; mem. Supervisory Bd. AEG Telefunken AG, Frankfurt, Co-op AG Frankfurt, Deutsche Solvay-Werke GmbH, Solingen, Varaždinische Bank GmbH, Düsseldorf, STEAG Essen, Thyssen Stahl & Ausrüstung GmbH, Düsseldorf, Düsseldorf

HENRY A. KISSINGER

April 26, 1991

Dear Joy:

It was good hearing from you and getting caught
up with your news. I expect I would have the
same reaction to rural English life as you do!

Unfortunately, Nancy and I will be abroad the week
of June 3rd but I'd be glad to do the interview
later on. Why don't you phone my office when you
get here and we can try to arrange something.

Nancy is adamant about not having the apartment
photographed, but would love to see you. She will
be disappointed if you don't call her.

Looking forward to seeing you,

Ms. Joy Billington
The Rectory
Church Brampton
Northampton
England

TWENTY-SIXTH FLOOR · 350 PARK AVENUE · NEW YORK, NEW YORK 10022 · (212) 759-7919

THE RECITORY, CHURCH BRAMPTON, NORTHAMPTON

APR 2 3 1991

Dear Dr. Kissinger,

I wrote a while back, but surmise that it was probably passed on by Nancy to your office, where it waits in the pending file. I'll be in New York from June 3 for about a week and would like very much to do a childhood'interview for The Times Saturday magazine. It's an on-going series, and I'd hope you would find it relatively painless; it would take about 30-45 minutes, and would deal with the influences before and up to, say, age 21 or somewhere around that period.

Life in rural England is somewhat boring after Washington, I find, and I state that with considerable British understatement! There is a deep national apathy, plus a jealousy of all things American which can be trying to combat, even though we don't strike it on a personal level. In fact our villagers have taken like ducks to water being preached at in American tones each Sunday from the pulpits of our 700-year-old churches, but I get itchy for a good dose of American get-up-and-go every now and again. And Washington seems both remote and immediate - remote in that the names are almost all different, immediate in the sense of Henry Adams' Democracy, or rather one should say perennial. Anyway, freelancing is tough these days, because of the recession and because of one's time being past, but I continue undaunted, trying to put jam on the clerical bread and butter! Which brings me back to my request. I'll be in Washington until mid July, so if a later date suits you, I could come up from Washington to do the interview.

Thank you, and I'll hope to see you,

PS Nancy: Would you consider letting an English magazine, House and Gardens, photograph your NY apartment? I'd write it next?

TRANSLATION - jw

Nürnberg, 4 March 1991

Dear Prof. Kissinger:

As you have surely heard in the meantime, there have been
several profound changes at our club during the last three
months. First, Mr. Schmelzer resigned as president on
January 10th after we on the board weren't able to reach
any agreement regarding the continued employment of trainer
Arie Haan. Thus since January Mr. Oberhof and I have been
running the club alone and will continue to do so until the
next regular membership meeting in October. Morale on the
team hit bottom following the hopeless performance in the
game against Hertha BSC Berlin in November (losing 4-1 at
home). After that, the game against Wattenscheid was a
victim of weather conditions--which meant that as early as
November we began the gameless period of winter break to
prepare for the return matches. After resolving our internal
quarrels, we decided to take up the almost already hopeless
battle against relegation. We felt the only means was to
invest in new players. We therefore began raising the
financial basis for transfer of players Dorfner (DM 2.1 million),
Eckstein (DM 2.8 million) and Argentinian Zarate (DM 2 million).
As the intervening time has shown, this decision was the right
move. The game against Wattenscheid on February 16th was a
gala performance for our new players. Eckstein and Zarate each
made a goal. Then, the game in Uerdingen ended in a 0-0 tie,
and last Saturday against Leverkusen, we won 1-0. By virtue
of these results, we're now at least spared a relegation spot.
Friday we play in Hamburg against St. Pauli and then in
Nürnberg against VFB Stuttgart. It will certainly only get
harder, but I now have much more hope than a few weeks ago.
I will continue to keep you posted. Will your schedule
bring you back again to Franconia?

Kind regards,

Prof. Dr. Ingo Böbel
Kleiststrasse 6b
8500 Nürnberg 20
TF: 911/592289
FAX: 911/591392

03-05 18:38

49 911 591392 PROF. DR. INGO BOEBEL

003 S01

Prof. Dr. I. Böbel

Schatzmeister
1. Fußball-Club - Nürnberg e. V.

Prof. Dr. Henry A. Kissinger
Per Fax. Nr. 212 753 7248

Nürnberg, den 4. März 1991

Sehr verehrter Herr Professor Kissinger,

wie Sie sicher in der Zwischenzeit schon erfahren haben, hat sich bei unserem Verein in den letzten drei Monaten einige einschneidende Veränderungen gegeben. Zunächst ist Herr Schmelzer am 10.1.91 vom Amt des Präsidenten zurückgetreten, nachdem wir im Präsidium keine Einigkeit hinsichtlich der Weiterbeschäftigung des Trainers Ario Haan erzielen konnten. Seit Januar führen nun Herr Oberhof und ich den Verein alleine bis zur nächsten ordentlichen Mitgliederversammlung im Oktober. Die Stimmung innerhalb der Mannschaft war nach der desolaten Leistung im Spiel gegen Hertha BSC Berlin im November 90 (1 : 4 Niederlage daheim) auf dem Nullpunkt angekommen. Danach fiel das Spiel gegen Wattenscheid den Witterungsverhältnissen zum Opfer - was bedeute, daß wir bereits im November die spielfreie Zeit der Winterpause zur Vorbereitung auf die Rückrunde zur Verfügung hatten. Nach der Bereinigung unserer internen Querelen entschlossen wir uns, den fast schon hoffnungslosen Kampf gegen den Abstieg aufzunehmen. Das einzige Mittel konnte nach unserer Auffassung nur Investitionen in neue Spieler lauten. So begannen wir mit dem Beschaffen der finanziellen Basis für die Transfers der Spieler Dorfner (2,1 Mio.), Eckstein (2,8 Mio.) und des Argentiniers Zarate (2 Mio.). Wie sich in der Zwischenzeit gezeigt hat, war diese Entscheidung richtig. Das Spiel gegen Wattenscheid am 16.2. wurde zu einer Calavorstellung unserer neuen Spieler, Eckstein und Zarate schossen beide je ein Tor. Dann wurde in Uerdingen 0 : 0 gespielt und am vergangenen Samstag gegen Leverkusen ein 1 : 0 Sieg erreicht. Durch diese Ergebnisse sind wir jetzt wenigstens von einem Abstiegsplatz weggekommen. Am Freitag spielen wir in Hamburg gegen St. Pauli und dann in Nbg. gegen den VfB Stuttgart. Es wird siche noch sehr schwer werden, aber ich habe jetzt doch größere Hoffnung als noch vor einigen Wochen. Ich werde Sie weiter auf de4m laufenden halten. Führt Sie Ihr Weg mal wieder nach Franken?

Bis bald herzliche Grüße aus der Noris

Prof. Dr. Ingo Böbel
Kleiststraße 6b
D-8500 Nürnberg 20
Tel. 0911/592289

TAX: 0911-591392

Birgit Breuel
Präsidentin

Treuhandanstalt

The Hon. Dr. Henry A. Kissinger
Center for Strategic and
International Studies
1800 K Street N.W.
Suite 1021

Washington, D.C. 20006

U.S.A.

Leipziger Straße 5 - 7
Postfach 11 92
O - 1080 Berlin

Telefon (W) 0 30 / 31 54 - 10 01
(O) 23 23 - 10 01

Telefax (W) 0 30 / 31 54 - 10 02
(O) 23 23 - 10 02

Telex 1152-417 ydd

SEP 24 1991

August 26, 1991

Berlin

Dear Mr. Kissinger,

It was a great pleasure meeting you at the Bilderberg Meetings in Baden Baden. Remembering your interest in the activities of the Treuhand and the economic restructuring of eastern Germany, I thought you might find our latest publication, "The Chance of the 90's: Investing in Eastern Germany" of some interest. We hope this booklet will provide the foreign investor with a clearer more defined picture of the policies and goals of the Treuhand.

As you know, the privatization and rebuilding of the economy in the new federal states can not and should not be undertaken by German business interests alone. Introduction of foreign managerial skills and capital are critical for the future success of the eastern German economy. Although the number of non-German investors is growing, it still remains a small proportion of the total. We believe, however, that by providing more information the percentage of foreign investors will increase. In an attempt to bridge this information gap, we are trying to enhance awareness both of investment opportunities in eastern Germany and the changing business climate.

Until recently, company specific information was minimal, but since the submission by companies of their complete balance sheets and privatization and restructuring strategies, the investor has ready access to more exact facts and figures about

- 2 -

each firm. Moreover, previously existing obstacles to investment have been dismantled. The issue of property ownership, for example, has been resolved, so that in most cases, the claims of the investor will supercede those of the former owner. Responsibility for environmental clean-up costs has also shifted, hence decreasing and often eliminating the extent to which the new investor must absorb these costs.

The numerous tax and credit incentives combined with a highly motivated, well trained labor force makes eastern Germany attractive for investment. Furthermore, business in the new German states is undertaken within the same legal and economic framework which has existed in the Federal Republic and proven conducive for social stability and economic growth. Within a short period, the infrastructure of the new federal states will be modernized and provide the perfect network to link the markets of the European Community with those of the newly emerging democracies of Central Europe.

In assisting us with our endeavour to inform prospective investors about their opportunities in eastern Germany, please do not hesitate to share our message and distribute this booklet to those interested in the new German states. I would be more than happy to provide you with more copies should you need them.

Thank you for your assistance, and I am looking forward to hearing from you.

Sincerely yours,

# The Chance of the 90's: Investing in Eastern Germany

## Introduction

The eastern German economy, once the pride of the communist world, is for sale. The Treuhandanstalt, based in Berlin, has been charged with privatizing the country's 10,000 state-owned industrial enterprises. That makes it the world's largest holding company engaged in the world's largest corporate break- up.

The sale began slowly in mid-1990 but has recently picked up speed. The Treuhandanstalt is seeking a fair price for the companies, but for investors ready to preserve jobs and invest for the future there are still bargains available. They may not be there long.

So far few non-Germans have been attracted to the sale of the century. That is also changing as the early confusion associated with the plunge into a market economy starts to clear.

Foreigners can increasingly balance the rewards of investing in east Germany against the risks involved.

## Reasons to Invest

* Since October 3, 1990 it has been politically and legally part of a reunited Germany (pop 80m), and thus automatically part of the European Community poised on the brink of the Single Market project. The German economy, with its enviable record for monetary stability and exporting success, has often been difficult for foreigners to penetrate because of the high proportion of family owned, medium-sized, companies. Eastern Germany offers a new entrance into Europe's biggest economy.

* Eastern Germany's historic trading ties with the Soviet Union (262m) offer long-term potential although they have been disrupted through the collapse of Comecon. Moreover, the former state lies right in the heart of Europe providing easy access to the EC (325m), Northern Europe (18m) and the old East Bloc (96m).

* There is broad political consensus in west and east about the desirability of establishing the social market economy in eastern Germany, and consequently of privatising most of the economy. It is clear in both east and west that investment should not be dominated by German interests, and therefore foreign investment is heavily encouraged.

* Eastern Germany is now, in effect, a giant development zone, albeit one with a high growth future and a booming centre in Berlin, the new capital. Consequently generous incentives, potentially more than 50% of funds invested, are being provided by the German Government to invest in the new German Länder. Small and medium-sized businesses are especially favoured.

* The German Government is currently injecting about DM150bn per year into eastern Germany in income support, corporate subsidies and infrastructure investment. It means that even prior to the expected "take-off" there is enough cash to satisfy some of the pent-up demand for consumer and investment goods.

* Eastern German wages are still significantly lower than those in the west. Through the numerous training programs being implemented in the east, strides have been made which are leading to increases in productivity.

## Improving Climate

Predictions of mass unrest as factories close and unemployment rises have not been borne out and most observers agree that west German assistance and eastern German will-power shall bring about the transformation of eastern Germany into a modern market society in the near future.

To facilitate investment further, certain changes have been adopted making life for the investor easier.

* The "ownership question" created initial uncertainty for new business, but has now been dealt with. The German Government's decision to return east German land, property or business,

4

expropriated by either the Nazis (1933-1945) or the Communists (1949-1989) attracted more than 1m claims. The Government has now decided that, in most cases, new investment has priority over restitution. No new investor need fear that a former owner can lay claim to a factory or plot of land after it has been sold.

* The quality of information about eastern German companies has vastly improved with most now able to boast a DM Opening Balance Sheet, a business plan, and a profit and loss account for the second half of 1990.

* Progress has been made on reducing the over-manning in the companies that have not yet been privatised.

* Infrastructure, especially telecommunications, has already been significantly improved and will soon reach western standards. In a few years time eastern Germany will have the most modern infrastructure in Europe.

## Record So Far

In the past year the Treuhandanstalt has privatised nearly one-quarter of the 8,000 industrial companies and most of the 20,000 shops and service outlets under its control. The agency has now been reshaped and has shaken off the reputation for disorganisation acquired during the difficult early months of its existence.

It is primarily interested in 100% sales of the companies it owns, although green field site deals and other forms of acquisition are also welcome. Price is not the only criterion, indeed an investor who pledges to inject new capital and management and to keep or create jobs will be preferred to one who is merely offering more cash.

Foreign investment in eastern Germany began slowly, but over the past months investment from non-Germans has accelerated. Medium term there is no reason why the proportion of foreign-owned capital in eastern Germany should not match west Germany's figure of more than 15%. Indeed given the historic

difficulties of acquiring businesses in west Germany since they are mainly family-owned, the eastern German figure could rise even higher.

## A Users Guide

This report is directed at foreign business people who are showing an interest in eastern Germany. It is a "users guide" to the Treuhandanstalt but also provides some general background on the eastern German economy. The report is aimed especially at small and medium-sized businesses without the benefit of extensive legal and financial research back-up.

5

with

SEP 16 1991

ABC News 1717 DeSales Street, N.W. Washington, D.C. 20036 Telephone 202 887-7777

September 5, 1991

The Honorable
Henry A. Kissinger
350 Park Avenue
26th Floor
New York, NY 10022

Dear Dr. Kissinger:

On behalf of all of us at "This Week With David Brinkley," please accept our deepest apologies for cancelling your appearance on our program Sunday, August 25.

We especially regret cancelling our invitation so late, on Friday afternoon. We hope that we did not interfer with your weekend plans. We did not expect a positive response from Secretary Baker. We hope you understood our predicament.

We also hope that this will not change your view of our program, and that you will join us on a Sunday in the near future.

Once again, our apologies.

"This Week With David Brinkley"