THE NATION’S BUSINESS

Berlin: Europe’s new commercial cabaret

Peter C. Newman February 14 1994
THE NATION’S BUSINESS

Berlin: Europe’s new commercial cabaret

Peter C. Newman February 14 1994

Berlin: Europe’s new commercial cabaret

THE NATION’S BUSINESS

PETER C. NEWMAN

Every once in a while you run into a phenomenon so bizarre, so totally unexpected, that your world turns upside down. Like most North Americans, I had viewed the 1989 destruction of the Berlin Wall as the most blessed international event of my generation, assuming that East Germans, who had remained isolated for nearly half a century in a country that had been turned into a prison, would rejoice in their newfound freedom. Not necessarily so.

As the city emerges out of its time warp, one of its major players is Toronto’s Peter Munk, the architect of a major international business park

During a recent visit to Berlin spent talking to people on both sides of the former Wall, I quickly discovered that many former East Berliners, especially those over 30, sigh for the days when their streets were safe, rents were low, prices were stable, and jobs were guaranteed. Cast out to look after their own welfare and having to seek work within the newly competitive framework of free enterprise, they feel lost and frustrated. “We used to have some money but no goods to spend it on—now, there are goods but we have no money,” complains a typical housewife.

What’s bizarre about all this is that given a choice, many if not most of the people who lived on the east side of the Wall wouldn’t mind having it back. (The local joke is: ‘Why do most Chinese smile all the time?” The answer: “Because they still have their Wall.”) If the very notion of wanting to return to the oppression of the communist regime sounds far-fetched, consider the fact that an entertainment impresario in the former East Germany named Frank Georgi is planning to build a theme park devoted to recreating the recent past. The park will come complete with a heavily patrolled wall and “secret police agents” masquerading as bartenders, as well as stores with low prices, little to buy, and surly clerks. Visitors will find themselves attending compulsory parades with banners and slogan-chanting interludes, and if they

don’t march properly they will even be thrown into make-believe jails. The $50-million venture, being planned for the site of a former army camp at Prenden, 30 km north of Berlin, is already receiving reservation inquiries, though it isn’t due to open until 1996. (It’s not the only manifestation of this off-thewall brand of nostalgia. A Berlin museum commemorating life in the former German Democratic Republic has proved so popular that a branch is now being built at Eisenhüttenstadt, a town located 100 km southeast of Berlin.)

Since its monetary union with West Germany in July, 1990, followed three months later by political unification, the economy of the former East Germany has all but collapsed, with the cost of goods produced by the onetime communist state increasing by a damaging 300 per cent. Under the original unification agreement, salary levels in both parts of Germany are to be equalized by 1996—even though productivity in the eastern zone is only one-third that of the west. While official statistics show unemployment in the former East Germany at 16 per cent, the figure jumps to more than 30 per cent when people assigned to government-spon-

sored make-work projects are included. With nearly 3.5 million people unemployed, crime rates have shot up, especially bank heists, which were previously all but unknown. (“The real reason we didn’t have too many robberies in the old days,” explains a former East German journalist, “is that you had to wait 18 years for a getaway car.”)

The government of Chancellor Helmut Kohl is pouring about $150 billion a year into the eastern provinces, mostly in public works and infrastructure improvements. Bonn’s debts accrued from its unification initiative will reach more than $600 billion this year. “Just about everything in the east now has to be done the western way,” says Alexander Longolius, a parliamentarian representing a part of the former East Berlin. “All that survives from the former GDR is that you can turn right on a red light. It’s a frustrating time because, while only a few people believe they were better off with the Wall, a majority of easterners are dissatisfied and keep telling me that the life they lead now isn’t what they had in mind when they were demonstrating for freedom.”

Berlin will take on greatly enhanced significance once it becomes united Germany’s new capital by the end of this decade. Sources in Bonn say the transfer of government departments will cost at least $20 billion, but that the expenditure will be well worth it because the move, which is already under way and is being accompanied by a massive influx of private-sector investments, should turn Berlin not only into Germany’s, but Europe’s, financial, cultural and entertainment capital.

An integral part of the new Berlin will be a massive industrial-business park being built by Toronto’s Peter Munk, who is investing $40 million in the project. The entrepreneur created American Barrick, which has become one of the world’s largest gold-mining companies, and in terms of its market capitalization, Canada’s third-largest company, ranking ahead of such bétter-known financial giants as the Bank of Montreal and the Bank of Nova Scotia. This Canadian project, owned by Horsham Corp., the main Barrick holding company, is strategically located next to the village of Genshagen, about 10 km south of Potsdam. Expected to create at least 10,000 jobs by the end of the 1990s, the 550-acre park has already attracted 15 tenants, including such international giants as CocaCola and McDonald’s, who have undertaken to put up factories and distribution centres totalling 3.15 million square feet. “One of the world’s major cities is emerging out of its time warp,” Munk told me, “and I want to build a company where all the real estate we own is in the Berlin area, and we can then go public and give German institutions a vehicle for getting in on the action.”

That the Munk venture is Canada’s only major commercial presence in Europe’s future capital indicates much missed opportunity. The Wall will never be rebuilt, but Berlin will realize its dreams.