Berlin In The News

Germany's highest court recently threw out a bid by the capital Berlin for appeals for funding the city’s chronic debt. Berlin, which owes a whopping €61.6 billion mountain of debt (approximately $74 billion), had gone to the court looking for help digging its way out of the financial hole that is has found itself in since the fall of the Berlin Wall and the reunification of the city and country. The Federal Constitutional Court judged that Berlin's financial problems did not yet amount to an emergency and reckoned that the city could solve the problem by itself, though Berlin Mayor Klaus Wowereit argues the injustice of floundering in a financial crisis that was not entirely its own making.

Since 1990 the city has been hit by the financial problems of West Berlin, which had been heavily subsidized as an enclave of the former East Germany and East Berlin, which had to deal with the problems following the collapse of communism and of East German industry. In addition, a 1990s bank scandal resulted in a bailout scheme that cost Berlin almost €10 billion.

The result in recent years has been sweeping cuts to everything from operas to swimming pools. High unemployment and a sizeable student population mean that Berlin's tax base is unable to make any substantial advancement in alleviating its debt. Annual interest payments on the debt amount to an additional €2.5 billion. In addition to making deep spending cuts, Berlin has also been aggressively marketing itself to tourists and business as an important center of culture and innovation with the slogan "Poor but Sexy", although the poor aspect may be somewhat of an overstatement. The German press is torn on the issues, portraying the decision by the court as a disastrous setback for the city, other sources view the ruling in the context of Germany's larger financial difficulties.