Facing a Big Loss, Bonn Capitalizes

Gone are the briefcase-toting ministers and their noisy motorcades. Nary a diplomat nor a political pundit is still keeping watch on the Rhine. Cold War-era spies have taken their game elsewhere, and the press has packed off to Berlin to cover the new Germany’s triumphs and scandals.

Long the butt of jokes as Europe’s only governing village, Bonn was expected to dry up and blow away after 15,000 federal employees and the private entourage that gathers in any capital left this summer to set up the German government in its new metropolitan home.

But a funny thing happened on the way to becoming a ghost town: A master performance of Germany’s renowned planning and engineering skills created a thriving new city in the departing bureaucracy’s place.

Rather than leaving echoing office blocks haunted by the absent government’s spirit, those overseeing the shift of the capital to Berlin transformed Bonn into a haven for science and technology wizards who are making it one of Europe’s most advanced business centers.

“When the decision was first made to move the capital, there was great fear that the lights were going to go out across this city,” says Tom Ulmet, an American who directs the Bonn International School, a private, English-based school housed in facilities previously owned by the U.S. government. “If our federal government left the District of Columbia, Washington would be a ghost town, a shell of poverty without hope. But Bonn’s not going to go that route.”

Closer to the European Union headquarters in Brussels than it is to Berlin, Bonn is a logical location for businesses and agencies active in a unifying Europe. It is also a more relaxed and scenic environment than the hectic metropolis to which the government has moved.

That doesn’t mean this quaint enclave of century-old townhouses and riverfront promenades is more affordable than Germany’s bigger, more bustling cities. On the contrary, real estate prices have been soaring in Bonn amid the influx of entrepreneurs.

Only 1.5% of housing and office space is empty, compared with nearly 30% in Berlin. Contractors in the new capital grossly overestimated demand during the building boom that followed the decision eight years ago to move the capital.

Hotel space is also at a premium here, with difficulties in finding rooms expected to persist until an 8,000-capacity convention center and hotel planned for the former Parliament grounds is completed in the middle of the next decade, says Martin Schild, head of the Bonn-based Tourism and Congress Assn.

Bonn’s success in deterring cobwebs is partly due to diligent defensive moves by a consortium of federal, city and private interests that pulled together in the early 1990s to conjure up a new future.

Fortunately situated along the highly traveled river, railroad and freeways linking Frankfurt with Cologne and Dusseldorf, Bonn in recent years has woven itself into the fabric of a bustling Rhine region. The area is alive with transportation services, media, research and development works, information technology and telecommunications.

A $1.5-billion compensation fund established for Bonn has been invested with emphasis on self-sufficiency. At the newly created Center for Advanced European Studies and Research, known as Caesar, director Karl-Heinz Hoffmann explains that all research at the site must be supported by the private industries--many of them too small to house their own R&D; endeavors--that will benefit from the work.

To prevent the center from becoming another academic institution dependent on government handouts, all researchers must wrap up their outside-financed projects within five years.

Among the projects underway is one producing crystals for the laser technology firm Korth in the Baltic Sea port of Kiel. Another is developing more advanced ways of analyzing blood and urine samples for medical laboratories.

Biotechnology is a major growth industry in the Bonn region, which has the world’s second-highest concentration of doctors and scientists per capita after Tel Aviv because of its profusion of hospitals, universities and research centers.

With telecommunications giants such as Deutsche Telekom and the newly privatized Deutsche Post now headquartered in Bonn, the city’s post-capital planners are hoping that the firms will act as a magnet for related technologies.

At GMD, the German National Research Center for Information Technology, one project aims to develop new commercial applications for virtual-reality imaging. It has bonded with another Bonn resource--the city’s biggest tourism draw, Beethovenhaus.

At the home of Ludwig van Beethoven’s birth in the historic old center, curators expect within the next couple of years to have computer-generated images of the composer at his writing table furiously penning notes on parchment and at the piano playing his creations.

“We want people from around the world to once again associate Bonn with Beethoven, not with the federal government,” says GMD’s Ute Schuetz.

She rattles off the names of banks and insurance companies relocating to the abandoned capital and speaks of the 600 small info-tech companies starting up here.

“There’s a little bit from here and a little bit from there, and it all adds up to enough,” she says of the job-replacement dynamics.

In fact, the employment scene in Bonn is the envy of many other parts of Germany, which suffers a nationwide jobless rate of more than 10% and rates as high as 20% in the hardest-hit eastern areas. Bonn’s unemployment rate is less than 7%, and the pace of arriving newcomers is, at least for the moment, livelier than that of the departing civil servants.

“We’re surprised that there wasn’t more of an atmosphere of exodus,” says Heinz Gombel, chief executive at Cologne-Bonn International Airport. He estimates that only about 3% of the airport’s traffic was government-related and that the influx of private industry, especially in the high-salaried technology spheres, will more than make up for the lost state business.

Because the airport is more than eight miles from the nearest residential area, it has no restrictions on nighttime takeoffs or landings. That makes it an attractive alternative to most European airports for both passengers and freight, Gombel says. In just over two years, high-speed rail service will put the airport within an hour’s journey to Frankfurt to the south and Dusseldorf to the north.

Bonn is also the site of the Museum Mile, along which the country’s main national and natural history museums are located, as well as art and industry showcases built between the B9 highway and parallel rail tracks that have long given the city its severe north-south orientation.

One of spy novelist John LeCarre’s more damning observations about this setting for his Cold War-era “A Small Town in Germany” was the frustration of trying to travel even a few blocks from east to west. Speeding trains headed for more imposing European cities bring down the barricades to road traffic as often as every six minutes.

The trouble with Bonn, observes one LeCarre character to another, is that “either it is raining or the level crossings are down.”

Bonn’s reputation as a sleepy backwater is well deserved and, for many locals, even courted. Rental contracts for apartment dwellers forbid using toilets or showers after 10 p.m., so that the sound of water moving through the plumbing doesn’t disturb neighbors. It is likewise verboten to empty the trash at night or on Sundays, for fear that the sounds of slamming lids and breaking glass will disrupt the serenity.

Expecting a head-spinning transition from Cold War division to reunification, officials in Bonn and other cities along the Rhine banded together in 1991 to demand certain concessions from the federal government to cushion the blow of moving the capital.

They won guarantees that Bonn would retain some of its government profile--six ministries and 13 state programs and agencies--as well as funds to restructure the city away from bureaucracy and toward business.

The public funds, including the $1.5 billion in direct compensation, were put in the hands of a consortium of government and private interests--the Society for Structural Reform--that has spent the past five years promoting Bonn and its bucolic surroundings as a livable alternative to big European cities and a central location for high-tech firms with roots in Western Europe and new markets in the east.

But the saving grace of the government move was the decision by Deutsche Telekom’s largest shareholder--the government--to concentrate its operations in Bonn to fill the employment void. About 9,000 DT employees are located here now, and 5,000 more are expected once expansion into the former British Embassy building and the headquarters of the Christian Democratic Union--the main opposition party--is completed in the next few years, company spokesman Ulrich Lissek says.

Mayor Baerbel Dieckmann says the city’s economic outlook is rosy, but he acknowledges that Bonn’s cultural offerings remain under a cloud. The city has its own opera, ballet, symphony orchestra and theater--all of which, like those in other German cities, receive lavish subsidies from the government.

“Until 2003, we have a guarantee of continued support for our cultural institutions, but I can imagine a time in the future when we will be getting less,” the 50-year-old mayor says with a shrug.

While she is optimistic about the city’s economic future, Dieckmann acknowledges that several thousand more government employees might be commuting to Berlin during the ongoing transition and will eventually move there.

And although those workers will follow the government officials and regulators who were Bonn’s most visible inhabitants, the city remains home to one long-standing resident with far more admirers: Bonn is, was and always will be the heartbeat of the Haribo candy empire that brought the world Gummi Bears.