By EDMUND L. ANDREWS
FRANKFURT, July 7 -- In an abrupt reversal from a decision aMonth ago, Volkswagen A.G. has agreed to set up a fund to compensate workers who were forced into slave labor in World War II.
In a terse announcement three weeks after the company had been threatened with a lawsuit, Volkswagen said its decision was "in recognition of the historical and mor al obligations" to those who were forced to work in its factories under the Third Reich.
Volkswagen has acknowledged that it used slave labor. According to a history financed by the company two years ago, it employed 15,000 slave laborers in the war. By now, many of them are dead.
But Volkswagen executives had until today insisted that compensating victims was a Government responsibility, because the company had been acting on Government orders. When a group that represents former workers from Hungary threatened last month to sue, a Volkswagen spokesman said any direct compensation by the company was simply "not possible" under current law.
Though reversing its position, the Volkswagen board declined to say how much it would pay or whether it would make payments to victims' families. The company said it would announce details in September.
Those who campaigned against the company declared victory today. "It is an unconditional surrender," said Klaus von Muenchhausen, a lecturer at the University of Bremen who began to campaign last month on behalf of 30 former factory workers. Mr. von Muenchhausen, who I threatened to sue Volkswagen if it did not offer compensation by the end of July, said the company's decision was quite likely to strengthen those who pursued similar complaints against other German wartime companies.
Mr. von Muenchhausen said the workers he represented had been Jewish teen-agers who were captured in Hungary and taken to Auschwitz From there they were sent by rail to Volkswagen factories in Wolfsburg. Today the former workers all live in Israel.
Volkswagen apparently came un der pressure from the government of Lower Saxony, whose Governor is Gerhard Schroder, the Social Democratic candidate for Chancellor. The government of Lower Saxony owns 20 percent of Volkswagen, and Mr. Schroder is on the supervisory board.
Mr. von Muenchhausen said state officials had pressed Volkswagen because they did not want to be dragged into a unpopular court battle, particularly in an election year.
Volkswagen may have had its reasons for choosing to sidestep an ugly controversy. The company has just completed the acquisition of Rolls-Royce Motor Cars, the British manufacturer of luxury cars, and it is acquiring Lambourghini, the Italian sports car company.
In light of Volkswagen s new flash and success in the marketplace, some local political leaders were unwilling to stick out their necks to defend the wartime record.
"It is paradoxical to buy the world's luxury brands and on the other side be so miserly," the head of the Lower Saxony parliament, Rolf Wernstedt, said several weeks ago.
Slave labor provided a vital element of the German war machine. Some estimates put the number of slave laborers as high as 10 million, chiefly from Russia, Poland, the Netherlands, Norway and other countries, and many were Jewish.
Volkswagen made rockets, military vehicles and other materiel.
Some big German companies of the early postwar years like I.G. Farben and Krupp made payments to slave laborers, sometimes under pressure from contractors overseas.
A recent court decision opened the way for foreigners to claim reparations. In March, a weapons maker, Diehl Stiftung & Company, reached an out of-court settlement to pay S700 a month to former slave laborers.
Mr. von Muenchhausen said he was asking for more than $2,000 a month