Gray Leipzig Rises Like a Peacock

LEIPZIG, seat of the 1989 East German revolution, used to look like a scratched, black-and-white movie.

Coated with soot from coal furnaces, this gray city was often shrouded by dense fog, intensified by industrial smoke and exhaust belching from the rattling, two-stroke motors of East Germany's cheap Trabbi cars.

Now, almost four years after hundreds of thousands of Leipzigers took to the streets to protest communism and the utter neglect of their city, Leipzig is as colorful as a peacock. And of all the cities of the former German Democratic Republic (GDR), Leipzig shows the most promise, economists say.

The downtown shopping district has been entirely westernized. There are Moevenpick and McDonalds restaurants, and boutiques featuring Joop! and Lancome. Hardly anyone drives a Trabbi anymore. Jackhammers pound away in almost every neighborhood, as this city of 500,000 experiences a building boom unsurpassed in eastern Germany.

With air pollution greatly reduced, it is even possible to keep a windowsill white all year round.

Leipzig is returning to its pre-World War II role as a key trade and finance center in Central Europe. In communist days, banking here was limited to three state-run institutions. In today's Germany, Leipzig is second only to Frankfurt in terms of the number of banks and insurance companies, with over 80 different banks represented in the city.

Quelle, Germany's equivalent of Sears, Roebuck & Co., has meanwhile sunk 1 billion deutsche marks ($600 million) into a vast warehouse and distribution center on Leipzig's northern edge. A sign at the entrance gate describes it as Germany's largest and most modern warehouse.

The Quelle warehouse abuts another major new development in town: the designated site for Leipzig's international trade fair, or messe, which has an 800-year-old tradition. Twice a year, westerners would pass through the iron curtain to visit the enormous Leipzig fair. Now the fair has been divided into smaller categories, so that it runs year round. Relocation from its current dingy, block-house location to the modern fair grounds will cost 1.5 billion marks ($900 million). Marks flow to Leipzig

In all, a staggering 10 billion to 15 billion marks of investment is flowing into Leipzig, mostly from the private sector and much of it to office parks on the city periphery. (Malling of east Germany, left)

But the city, state, and federal governments are spending as well: on fiber-optic telecommunication links, a bigger airport, improved train transport, new streetcars, widened and repaved autobahns, and Leipzig's rich cultural legacy - a legacy which officials admit is really too big for a city this size to support but too prestigious to scale down. After all, Leipzig is where J. S. Bach spent most of his career.

The building and planning frenzy is based on the expectation that Leipzig will again become a springboard to the east. But businesses and city government officials acknowledge that, at present, the facts haven't yet caught up with the dream.

``There is not enough trade'' to support all the financial institutions and businesses springing up in Leipzig, admits Hans-Dieter Manegold, general manager of the Chamber of Industry and Trade in Leipzig. To the east, former communist markets still lie in ruins, and to the west, the European Community is suffering recession, he explains.

Michael Shimansky, director of economic promotion for the city, adds that even though Leipzig is transforming itself into a service economy, it needs to preserve more of its industrial base if it wants to flourish.

But it looks as though the industrial flame is very close to being snuffed out. According to Mr. Shimansky, the industrial sector - dominated by coal, chemicals, machine tools, and printing - is now a fifth of its former size.

The city's goal is to bring production jobs back up to half their previous number, but ``it's an illusion to think this can happen in two years,'' Shimansky says.

With the near collapse of industry in and around Leipzig, official unemployment has reached 13 percent. Real unemployment - counting workers moved into early retirement, people in federally funded jobs programs, and jobless undergoing retraining - is between 30 and 40 percent.

Joblessness and rising rents (which in some cases have increased five- and six-fold) make it hard for many Leipzigers to appreciate all the changes. They earn 70 to 80 percent of what west Germans earn, yet often pay similar or even higher prices. They still live in crumbling buildings without baths and with one toilet for several apartments.

If renovated, these baroque, renaissance, and art nouveau row houses would be jewels. But the city lacks the money to do more than the most basic changes: new roofs, windows, and conversion of heating from coal to gas and oil. And disputes over property ownership hinder repairs.

``Everyone wants to know why nothing is happening at their house,'' says Rudolf Ahnert, assistant mayor and head of building in Leipzig.

Although the city has systematically researched and identified the buildings that need immediate attention, the problem is simply too big to fix in a few years. Mr. Ahnert predicts it will take 10 to 20 years to renovate the city's elegant, old buildings.

This March, angered by unemployment, rising rents, and increasing crime, Leipzigers tried to reinstate the famous 1989 Monday night demonstrations. After three weeks, however, the protests petered out.

``Generally, there's a feeling here that you can't do anything about'' the new economic hardships, says Holger Herzberg, acting city editor for the Leipziger Volkszeitung, a daily newspaper. Strangers in their own city

While the new restaurants and stores in the city center make life much more tolerable for the west Germans working here, they are beyond the financial means of many Leipzigers, who sometimes feel like strangers in their own city.

And while this city has the unmistakable feel of a place on the move, it is on the move under Western leadership. The mayor is from west Germany, and so is the chief of police. The construction and development companies are all big west German ones. The stores and products come from the West, and more and more property is being bought by westerners - the only ones who can afford the steep prices.

``Of course west Germans had to come and show us how things are run,'' says Mr. Herzberg of Leipziger Volkszeitung. ``But people here have the feeling that they are nothing more than the hired help.''