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To: goldsnow who wrote (30379)	3/20/1999 8:38:00 PM
From: lorne	Read Replies (1) \| Respond to of 116791

Broke Berlin fitting backdrop for EU summit By Erik Kirschbaum BERLIN, March 19 (Reuters) - Its debt has quadrupled in the last decade, unemployment has doubled, and Berlin hasn't had the cash to hire teachers or police in years. The city even switches off some fountains and street lamps to cut costs. When European Union leaders arrive in the capital for a special summit meeting that starts next Wednesday, they will be landing in a city in financial turmoil and suffering from the costly after-effects from decades of Cold War division. Unlike the tidy Rhine riverside town of Bonn or other pleasant western German places where previous meetings of EU leaders have been held, cash-strapped Berlin will nevertheless provide a splendid backdrop for Chancellor Gerhard Schroeder's campaign to cut Germany's payments to the EU. By far the EU's largest contributor, Germany transfers 22 billion marks ($12 billion) more each year to the EU than it gets back. The lopsided sums were agreed by Schroeder's predecessor Helmut Kohl, whose rule began in a far more prosperous era. Schroeder makes no secret of his desire for a reduction. The enormous costs of unification in 1990 have blown gaping holes in city and federal budgets and cries for austerity ring out from the Baltic Sea to the Black Forest. The cuts have been most acutely felt in Berlin, the country's largest city with 3.4 million residents. "There is probably no better place to see first-hand the difficult situation Germany is now in as far as public finances are concerned than in Berlin," said Dieter Vesper, a senior economist at Berlin's DIW institute for economic research. "There are certainly wealthy individuals and fantastic new buildings going up. But the public sector has become impoverished. The financial situation is desolate." DEBT AND UNEMPLOYMENT Berlin's debt has risen four-fold to 60 billion marks since the wall dividing the city fell in 1989, reuniting it after 28 years. Unemployment has doubled to 15 percent -- higher than in any other formerly West German state. The chief factors for the city's precarious plight are: an abrupt end of generous federal subsidies that kept West Berlin solvent during the Cold War; bloated bureaucracies resulting from the reunification of two cities; the loss of more than 210,000 industrial jobs; and the exodus of well-heeled taxpayers into newly accessible suburbs outside western Berlin. "Berlin has been confronted by the post-unification upheaval more than any other city in Germany," said Dirk Wildt, spokesman for the city government's finance office. "Berlin is still struggling with the transition from the Cold War era. The changes that have to be made can't be done overnight." With the debt growing by nearly eight billion marks a year, the city began slashing public finances in the mid-1990s. It stopped replacing teachers, police officers and other public sector workers who left their jobs. The number of police officers has been cut by 2,000 to 28,000 in the last three years even though crime continues to rise. More than 50,000 jobs from the city administration's once-bloated total of 206,000 have been cut since 1991 and another 11,000 will be axed by next year. "We're out of money and we have to cope with that fact," said Rita Hermann, spokesman for the city school administration, which has lost 3,000 of its 30,000 teachers. "We can't afford the things we had before the Wall fell." It's impossible for Berliners to avoid the pain -- which can sometimes even be felt in especially sensitive areas. Potholes, for example, are sometimes left unrepaired by road crews because the budget for road repair was halved. Some districts have switched off every second street lamp at night in a bid to save money. Others have shut down water fountains or accept donations to keep them flowing. A number of hospitals, schools, youth clubs and centres for the elderly have been closed because of the cuts, while fees for public swimming pools, rubbish collection and dog licences have been sharply raised. Adding to a sense of poverty that stands in marked contrast to many western towns, many of Berlin's underground stations haven't been renovated in decades. Many escalators leading out of the neglected stations have been turned off because of a shortage of money for repairs. And unlike wealthy western German cities where modern underground train lines whisk commuters around town, Berlin still uses some wooden local rail trains built for the 1936 Olympic Games. "The cuts have been painful for everyone," said Klaus-Peter Laschinsky, finance director of the district of Zehlendorf, who has tried to counter a 50 percent cut in funds from the city by selling district property. But he's worried about the point when the prosperous western district runs out of property to sell. "Then we're going to have to start closing things down," he said. "There's no joy trying to organise the shortage." ($1=1.790 Mark) reuters.com