RESURRECTION:
Dresden's Frauenkirche, destroyed during WW II, will be restored by the end of 2005
A Brand New Start?
Growth is slow and jobs are still scarce, but believe it or not, Europe's biggest economy is showing some fragile signs of life. Now consumers have to conquer their fear of the future
Posted Sunday, July 18, 2004; 8:34 BST
Two more decrepit buildings came down last month in Weinbergweg, a leafy suburb of the dismal industrial city of Halle in the former East Germany. In the 1970s, Halle was the G.D.R.'s center for chemical production and one of its most heavily industrialized cities. But 14 years after East Germany's reunification with West Germany, its chemical factories are closed and some 75,000 residents — a quarter of the total — have moved away in search of jobs. So many people have left Halle, in fact, that the city is demolishing scores of vacant apartment blocks.
By almost any measure, Halle is the worst place in Germany, a symbol of what's wrong with the nation. Unemployment is around 20%, twice the national rate, and the average income is just €21,600, Germany's lowest. When the Institute of the German Economy in Cologne surveyed the country in April, Halle finished last on a list of 50 cities on the basis of wealth. "It's clear we will never return to the industrial city of the past," says Halle mayor Ingrid Häussler. "We have to find a completely different orientation."
But the two buildings demolished last month are actually signs of hope — and of what's starting to go right for Halle and Germany. Once used as Soviet barracks, they were knocked down to make room for a sprawling €300 million science and technology park taking shape on the city's western edge. Sixty companies and 19 educational institutions — active in such fields as biotech, nanotech and environmental science — have so far settled there, and 2,500 new jobs have been created. Probiodrug, a biotech start-up that has won acclaim for its research on diabetes and acquired a clutch of lucrative licensing agreements with big-pharma firms, is one of the early tenants. "Halle has a unique situation," says Probiodrug CEO Hans-Ulrich Demuth. "There's a strong university in the field of biosciences and a highly educated and motivated workforce here."
Halle has a long way to go before it lifts itself off the bottom of Germany's prosperity list, and one science park does not amount to a new industrial revolution. Since reunification, Germany has spent a staggering €1.2 trillion on the east, much of it squandered, but Halle's high-tech development shows that not all of it was wasted. The presence of world-class companies like Probiodrug proves that even the most downtrodden town can shake off years of stagnation and lethargy and begin a comeback. If Halle can do it, can the rest of Germany be far behind?
The first signs of a national turnaround are starting to show. The German Institute for Economic Research (D.I.W.) in Berlin this month revised its GDP growth estimate from 1.4% to 1.8% for this year and 2.1% for next year. "The turnaround started in the first quarter of this year," says Gustav A. Horn, a D.I.W. economist. "Exports are running very high — it's an export-driven recovery." The Germans got a boost as economies in the U.S. and Asia began to grow again, and from the run-up to E.U. enlargement, as exports to new members in Eastern Europe surged. "Germany remains an export machine that keeps running and running," says Holger Schmieding, an economist at Bank of America. "Despite the strong euro, even Germany is having a modest upswing."
Auf Wiedersehen, It's Been Good to Know You [Mar. 24, 2003]
As U.S. bases move east to New Europe, communities that used to host thousands of American troops come to terms with their loss
Mogadishu at 60 Miles an Hour Arms merchants are once again doing brisk business after a rapid change of power in this tough town, but so far the peace has held
The Year of The Nuke A rundown of the world's nuclear powerhouses, and what to expect in the coming months
Indicates premium content
