The concern that the Daimler sale might set a precedent proved warranted. Shortly after it was consummated, another large section of the Potsdamer Platz was purchased by the Sony Corporation, also at a bargain price. However, Sony’s decision to build its European headquarters in Berlin, like Daimler-Benz’s commitment, could be taken as a sign of faith in the city. Once the Mercedes and Sony logos were shining like beacons above a rebuilt Potsdamer Platz, could anyone doubt that Berlin was “back”?
In the meantime, the activities of the initial big investors, which also included American and French interests, ignited an explosion in real estate values and rents. Prices for choice properties in the city center had doubled following the Wall’s opening, and they doubled again in the months following the Bundestag vote. Berlin suddenly went from having the lowest real estate costs of any major German city to vying with Frankfurt and Munich for the highest. By 1992, some commercial tenants were paying twice what they would for similar property on New York’s Fifth Avenue. While this surge in prices was good news for Berliners with property to sell or rent out, it was bad news for old-line tenants, many of whom had been enjoying low rates because of rent-control. If Berlin’s transformation was not to increase the gap between rich and poor, and between east and west, ways would have to be found to cushion the socioeconomic effects of unification.
This was not the only challenge that the city faced. Over the past forty years East Berlin had fallen drastically behind West Berlin in terms of infrastructure development. Telephone lines, sewers, public transportation networks, and road surfaces were all substandard. The task of renovating the east and knitting the two halves of the city back together was enormous—the urban equivalent of reconstructive surgery on a partly gangrenous patient. In this regard, Berlin was a microcosm of the new Germany. As Der Spiegel warned: “The test-case of Berlin will illustrate to even the most carefree and ignorant citizens of our land what national unity really means: a wonderful catastrophe.”
The challenge soon became evident in a host of legal, political, and social dilemmas that complicated the process of unification. Among the trickiest of these problems was the welter of conflicting ownership claims attached to many factories, houses, and even vacant lots in eastern Berlin. In a fateful decision, the German government elected to restore ownership to those whose property had been confiscated by the Nazi or Communist regimes. (An alternative would have been to pay compensation, which is what the new Czech government did.) This meant that ownership issues had to be resolved before a property could legally be sold. Although the problem was hardly restricted to Berlin, the former capital was a veritable minefield of conflicting claims owing to its premier importance in the Communist and Nazi systems. By the summer of 1992 over 2 million claims had been filed throughout the former GDR, 200,000 of them in eastern Berlin alone.
Berlin’s postunification boom, it quickly turned out, could not be sustained amidst all the doubts about the city’s prospects. In addition to the problem of conflicting ownership claims, continuing resistance by the pro-Bonn lobby to the shift of central governmental institutions from the Rhine to the Spree undermined confidence in the capital-elect. According to the victorious Berlin resolution of June 20, 1991, the parliament was supposed to move east in four years. But later that year the Bundestag passed a new resolution establishing a commission to study the transfer based on “a division of labor between Bonn and Berlin.” No time frame for the move was specified. The federal government, meanwhile, decided in December 1991 to relocate the chancellor’s office to Berlin but also to divide the ministerial functions between Bonn and the new capital. Eight ministries (later changed to six) would retain their main offices in Bonn, including Defense, the largest. As further compensation for Bonn, eleven bureaucratic agencies already located in Berlin would be moved to the Rhine. As for the ministries slated to move east, Kohl’s cabinet decided that the transfer could not be completed until the year 2000, with individual offices making the shift as their designated quarters became ready for occupancy. In an effort to expedite this process, the municipal government of Berlin proposed refurbishing existing structures that had served the GDR and/or the Nazis. Bonn, however, called for totally new buildings, whose construction would require more time, not to mention a lot more money. The inconsistency between Bonn’s warnings about the high cost of a capital transfer and its demand for brand new government buildings was not lost on the Berliners. They spoke derisively of a “luxury move,” suggesting that Bonn’s insistence on new construction was designed to delay the transfer and to make it less palatable to the public.
The plan to shift capitals was in fact becoming increasing unpopular. A poll taken in early 1993 showed that 55 percent of the populace opposed the move, with only 39 percent in favor. The pro-Bonn faction voiced the hope that the next Bundestag, due to be elected in 1993, would reverse the parliament’s decision to move. “I considered the decision to have been wrong at the time, and I still do,” said Bonn’s mayor, Hans Daniels. “You would have to be a prophet to say what the next parliament will decide,” he added. For their part, Berliners complained that the efforts by the Bonner to postpone or cancel the move were having a negative effect on the local economy. As Mayor Diepgen put it, the campaign “makes investors uncertain and harms Berlin and the eastern states.” As evidence for this, Diepgen pointed to the fact that of the eighty Japanese firms that had initially said they would establish branches in Berlin, only ten remained on board in 1993.
The Berliners themselves, however, were partly to blame for their city’s failure to blossom economically in the wake of unification. Instead of focusing all their efforts on knitting the city together and creating an attractive climate for business, city officials divided their time between internecine battles over turf and all-too-ambitious schemes to elevate the city’s profile.
Their biggest mistake in the early going was to waste valuable time and energy on a breathtakingly mismanaged campaign to win the Olympic Summer Games for Berlin in the year 2000. Of course, the last time Berlin had hosted the Olympics was in 1936, when Hitler had used the event to promote the Third Reich. Munich was the host in 1972, when eleven Israeli athletes were killed by Palestinian terrorists. Neither of these precedents was especially promising, but Berlin boosters were convinced that their city’s recent history, especially its triumph over ideological division, gave it an excellent chance of getting the 2000 games. Its promotional scheme included a plan to refurbish the decaying Reichssportfeld as the main venue, which was probably not the best idea in terms of symbolism. In any event, the campaign quickly became mired in scandal and incompetence. The first head of the Berlin Olympic Committee, one Lutz Grüttke, was fired for fraud after just six months on the job. “It is sad that there is always such bad news from Berlin,” lamented a spokesman for Daimler-Benz, one of the campaign’s chief sponsors. Grüttke’s successor, Nikolaus Fuchs, also got fired after it was revealed that the Berlin Committee had compiled dossiers on the private lives of International Olympic Committee members, complete with information on their drinking habits and sexual preferences. Optimistically, Fuchs had concluded that only seven IOC members were “not for sale.” IOC president Juan Antonio Samaranch, who had previously described Berlin as a “strong candidate,” now was reportedly opposed to the city. Berlin’s bid was further weakened by lackluster support from the Kohl government, which thought that the future capital had enough on its plate without trying to host the Olympic Games. Many Berliners, in fact, thought this themselves, noting that their city was already a mess because of reconstruction. A leftist “NOlympic” movement, meanwhile, argued that the games were nothing but a gift to the rich, paid for by the poor. For months on end this group sought to sabotage Berlin’s bid by staging violent demonstrations and bombing buildings belonging to the campaign’s sponsors. Although Mayor Diepgen claimed that “no other city would symbolize the Olympic ideal of peace and friendship” more effectively than Berlin, the IOC might be forgiven for thinking otherwise. In September 1993 it voted to give the games to Sydney, Australia. Berlin’s botched bid had cost $100 million.