East German town rusts as its steel lifeline dies: Steve Crawshaw saw the plight of Eisenhuttenstadt, where Communist ideals foundered

IN FORMER times, the town was known as Stalinstadt. And what glorious times they seemed to be. 'In Stalinstadt, the future greets you. Stalinstadt is a town without a history. But in this town, history is being made,' says one of the yellowing leaflets in the town museum. In the past 40 years, Eisen huttenstadt (as it was renamed in 1961) has gained a history. But it may also have lost a future.

Founded in 1950 a few miles from the Polish border, this was 'the town of German-Soviet friendship, the town of raw iron, the town of peace'. The steelworks, the reason why the town was built, was the model Communist industry.

Now, Eisenhuttenstadt is the most serious casualty of the new economic realities in east Germany today. In 1989, 12,000 people were employed at the steelworks. A quarter are left. Many believe it is only a matter of time before Eisenhutten-Kombinat-Ost, better known as Eko, is forced to close.

For almost two years, the Italian group Riva and others sniffed around Eko-Steel, with a view to buying and investing. The Italians even signed a contract of sorts, with get-out clauses. Britain, the most notable critic, was reluctantly persuaded to approve the deal, despite concerns about overproduction and unacceptable subsidies within the European Union. Then, Riva suddenly announced this month that the deal was off. Bonn was embarrassed, angry and dismayed.

Now the talks are back to square one. But the outlook is bleaker than ever. West German steelmakers, suffering from overproduction, showed little interest before, and may show less interest now. There is, in any case, deep scepticism in Eisenhuttenstadt regarding west German motives. In the words of one worker, 'if Krupp or Thyssen take it over, it would only last two or three years, before they close it down. The west Germans want the place to go bankrupt - that's clear.'

The winding down of Communist heavy industry, and the ensuing mass unemployment, has become a painfully familiar tale throughout the region. But the problems of Eisenhuttenstadt are even worse than elsewhere, since the town, built in the middle of the fields, only ever had one reason to exist. A hoarding puts the message starkly: 'Eisenhutten stadt must live. Therefore: steel'.

The town of 50,000 was created for Eko-Steel and may die with Eko-Steel. There are cosmetic changes, of course. Lenin Avenue has become Linden Avenue, 'Eko- Steel: We Are Your Partner]' proclaims the bright new slogan, outside the concrete town hall. There are car showrooms, travel agents offering holidays in Kenya, and even a newly opened shopping precinct, 'Cityi Center'. But, despite some half-hearted official attempts to suggest differently, there is nothing to give the town an economic life of its own.

German politicians are due to hold meetings in Brussels in the days and weeks to come, to explore the possibilities of saving the plant. But Germany's European partners are unenthusiastic about allowing further investment for new capacity in the current climate. The cost of propping up Eis enhuttenstadt in the last two years alone has been estimated at pounds 400,000 per job, and the bill may rise further.

The cynics (an almost all-embracing category in Eisenhutten stadt these days) suggest there will be no announcement on closing Eko-Steel until after 16 October. On that day, Chancellor Helmut Kohl is hoping to be re-elected for a fourth term.

Already, Eisenhuttenstadt's population has dropped sharply. Unless an industrial base can be re-established, the trend seems set to continue. Those who can move, are doing so. Few have the stomach for a fight. Instead, there is bitter resignation. Volker Wellemsen, 50, expects never to get another job. 'For us, it's all over. They do whatever they want with us. What have we got to say?'