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West German Chancellor Helmut Schmidt said today President Reagan's...

WASHINGTON -- West German Chancellor Helmut Schmidt said today President Reagan's sanctions on the Soviet natural gas pipeline project troubled U.S. relations with Europe, but he hopes Secretary of State George Shultz can repair the damage.

Schmidt, now in San Franciso for talks with Shultz and a meeting of the exclusive, all-male Bohemian Club, was interviewed Wednesday in Houston for the CBS 'Morning News' aired today.

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The West German leader was asked about a remark attributed to him in the weekly publication Der Spiegel to the effect that it is harder to talk to the Reagan administration than it was to talk to the Carter administration.

'I don't remember the quote, but what I do remember is that after the very successful visit which President Reagan paid to Europe ... we had the feeling of more or less being on the same tracks. Afterwards came this extension of the American embargo as regards the pipeline and this did cast a shadow over the relationship.

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'But I am confident Secretary Shultz will work with all his abilities towards bridging any gap that has opened in the meantime.'

The pipeline is to bring natural gas to Europe and Reagan has objected to it because of the long-ranged political implications and in light of the Soviets' current pressure on Poland.

The sanctions are designed to prohibit pipeline materials made abroad under license from U.S. firms from being used by the Soviets. Schmidt said they make his job more difficult.

The sanctions, he said, will lead to more unemployment in West Germany. 'It will cost a couple of thousands of jobs. People are very much aware of it and aware of the fact that they are losing their jobs due to some action being taken in the United Stats. In the first place it puts into difficulty the employees. It puts into difficulty the (financially troubled AEG) corporation, but it also puts pressure on as regards the gederal government.'

Schmidt said European firms were acting in good faith when they got permission to build pipeline equipment. 'They didn't know of any conditions being tagged to those licenses, and I hope this will just be ... a unique thing and will not happen again. I think limiting the damage means trying to build up consensus and mutual confidence again.'

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Schmidt was asked if he would ask Shultz to modify Reagan's 'anti-Soviet crusade' as he told Der Spiegel, and replied: 'I hope that there's not going to be a crusade.'

He said he and Shultz would cover a variety of topics, in particular the high interest rates in the United States which, he said, affect the entire world.

'There's now a race going on for high interest rates in several countries in order to retain some of the liquidity within one's own country, or in order to suck in liquidity from abroad in order to finance one's own budgetary deficits. All this leads to too high interest rates and thereby leads to a strangulation of investment into housing, investment into fixed capital and thereby to high rates of unemployment,' said Schmidt.

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