A rebirth for that small town in Germany

A rebirth for that small town in Germany
By Nicholas Kulish
Wednesday, June 18, 2008

BONN: Someone forgot to turn out the lights in Bonn.

Germany's former capital, known derisively as the "Hauptdorf," or capital village, is supposed to be a relic of the past, nine years after Parliament and the embassies picked up and moved to Berlin. But the little city on the Rhine, immortalized by John le Carré as "A Small Town in Germany" in his spy novel of the same title, has succeeded in the unlikely goal of remaking itself as a place of the future.

Local officials and entrepreneurs combined shrewd spending and no small amount of federal largesse with the city's prime location in the Rhine Valley to refashion it into an international campus for everything from medical research to alternative energy to the United Nations, which began opening offices here in 1996.

Since the Bundestag and the Chancellery left in 1999, rather than watching employment plummet, Bonn has seen an increase of more than 12,000 jobs in a city of just 315,000 people.
Bonn, like Germany itself, appears to have been written off far too soon. Unemployment in Germany is at its lowest level in 15 years. And while it is expected to slow, the German economy grew at an annual rate of 6 percent in the first quarter of this year.

Though it is bound to be overtaken by the breakneck growth of China, this old standby in Old Europe is by many statistical measures still the world's third-biggest economy, behind only the United States and Japan. It is also the world's leading exporter of goods, second to none thanks to its thriving, high-end manufacturing sector.

The former Parliament building is now a convention center, with an even bigger facility going up beside it amid a thicket of cranes. Bonn is also home to SolarWorld, one of the leading companies in Germany's top-flight solar-energy industry.

Health care accounts for 1 in 10 jobs in the city and surrounding area. The central government announced in March that Bonn had been selected as the site of a new $1 billion dementia research center.

The dominant feature of the city skyline has appeared since the government left. The 40-story steel and glass Post Tower of Deutsche Post, the postal service that employs 7,000 people in and around Bonn, towers over the city. It opened in December 2002, two years after Deutsche Post went public. Deutsche Telekom is the region's largest employer with 12,000 employees.

"It's really a city that I feel growing in importance and not the other way around," said Torbjorn Possne, an executive at Ericsson, which has offices here.

Both Germany and its former capital, which former Chancellor Helmut Kohl referred to as a "symbol of conspicuous modesty," have reasons to be understated about their strengths. Germany's tendency to bury its power and influence in international institutions, chiefly the European Union but also the United Nations and the North Atlantic Treaty Organization, allows it to exert its influence without tempting accusations of revanchist ambitions after the two world wars.

The city's receipt of more than $2.2 billion from the federal government from 1994 to 2004 to ease the transition without the Parliament, bred no small amount of resentment around the country. And, by law, the city held onto about 20,000 government jobs, including the headquarters of half a dozen ministries. Taxpayer groups say the result is wasted money and commuting time for employees shuttling back and forth from Berlin, and environmentalists have complained about pollution as a result of the excessive air travel.

"One remains very reserved about it," said Jörg Haas, chief executive of HWB, a private equity group based in Bonn.

Haas is less reserved about the gap between his country's reputation and its economic reality.
"Germany is always written off, but if you look at the numbers it just isn't true," said Haas, who moved his previous software company from Cologne to Bonn in 2001.

"In the past, we tried a great deal of off-shoring in the countries to the east; we went to Hungary, to Poland," Haas said. "We brought everything back because at the end of the day the most productive structure and the most affordable place to develop and produce software is Germany."

He cited the education, efficiency and reliability of the workers, as well the physical infrastructure in Germany as factors.

Now Haas and his partners' have bet their money on the future of Bonn, building a $465 million real estate development at a scenic bend in the Rhine River. The five-star luxury Elysion Hotel, under construction, was originally planned to be 160 rooms, but strong local growth led the planners back to the drawing board to expand it to 254 rooms.

The views of the Rhine from Haas's office - with long narrow barges filled with sand and stone heading toward the Netherlands - are breathtaking, as are those of the peaks of the Siebengebirge hills, including Petersberg and the Drachenfels with the castle ruins on top.

The city still benefits from its time as the Cold War capital. The federal government spent half a century trying to give Bonn the trappings of a historic capital. As a result, Bonn sometimes feels like a small city on steroids, with all the perks and benefits normally associated with big-city living, like a subway system and top-notch museums and concert halls and international schools.
Its time as the capital also gave the city name recognition that few smaller cities could hope for, which helped the city gain a reputation for medical tourism among foreign civil servants from less developed countries.

Dr. Jürgen Reul, a specialist in neuroradiology, just opened a private clinic specializing in minimally invasive surgery for neurovascular and spinal problems. Operations started on the first of the month and patients from everywhere from the Arab Gulf states to Russia have helped the clinic fully book its first month of appointments and left it with a waiting list.

"Bonn was pronounced dead, and then everybody went ahead and proved the opposite," said Reul. "Now there's a gold-rush mood."

Reul has a unique perspective. Before starting his medical studies, he worked as an agent on diplomatic security details in the mid-1970s.

"We used to say that it was a sleepy nest of bureaucrats," Reul said. "It's a living city now."


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