A New Germany Rises

UWE MEINHOLD / AFP / GETTY IMAGES
Workers raise the cupola and gilded cross on Dresden's Church of Our Lady 59 years after it was destroyed in the Allied firebombing of World War II

Two more decrepit buildings came down in June 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 unification with West Germany, the city's 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 about 20%, twice the national rate, and the average income is just $26,300, Germany's lowest. "It's clear we will never return to the industrial city of the past," says Halle mayor Ingrid Haussler. But the two buildings demolished 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 $365 million science-and-technology center 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 settled there so far, 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 pharmaceutical 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 work force 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 unification, Germany has spent on the former East a staggering $1.46 trillion, 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 lethargy and begin a comeback. If Halle can do it, can the rest of Germany be far behind?

As the economy begins to stir from a decade of stagnation that has rattled the nation's self-confidence, Germans are again making ambitious plans for the future. Nobody is predicting a boom, but there are signs that Germany is ready to reassert itself as the economic engine of Europe. The economy is growing again, albeit slowly. The heart of Berlin, cut in two for 28 years by the infamous Wall, is now a showplace. The DZ Bank with its magnificent vaulted roof, the Jewish Museum with its lightning-bolt shape and the Sony Center in Potsdamer Platz with its circus-tent glass roof are all signs of a country bouncing back.

The first indications of a national turnaround are starting to show up in the numbers. The German Institute for Economic Research in Berlin in July revised its GDP growth estimate from 1.4% to 1.8% for this year and from 1.8% to 2.1% for next year. The Germans got a boost as economies in the U.S. and Asia began to grow again, and also 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."