Their biggest mistake in the early going was to waste valuable time and energy on a breathtakingly mismanaged campaign to win the Olympic Summer Games for Berlin in the year 2000. Of course, the last time Berlin had hosted the Olympics was in 1936, when Hitler had used the event to promote the Third Reich. Munich was the host in 1972, when eleven Israeli athletes were killed by Palestinian terrorists. Neither of these precedents was especially promising, but Berlin boosters were convinced that their city’s recent history, especially its triumph over ideological division, gave it an excellent chance of getting the 2000 games. Its promotional scheme included a plan to refurbish the decaying Reichssportfeld as the main venue, which was probably not the best idea in terms of symbolism. In any event, the campaign quickly became mired in scandal and incompetence. The first head of the Berlin Olympic Committee, one Lutz Grüttke, was fired for fraud after just six months on the job. “It is sad that there is always such bad news from Berlin,” lamented a spokesman for Daimler-Benz, one of the campaign’s chief sponsors. Grüttke’s successor, Nikolaus Fuchs, also got fired after it was revealed that the Berlin Committee had compiled dossiers on the private lives of International Olympic Committee members, complete with information on their drinking habits and sexual preferences. Optimistically, Fuchs had concluded that only seven IOC members were “not for sale.” IOC president Juan Antonio Samaranch, who had previously described Berlin as a “strong candidate,” now was reportedly opposed to the city. Berlin’s bid was further weakened by lackluster support from the Kohl government, which thought that the future capital had enough on its plate without trying to host the Olympic Games. Many Berliners, in fact, thought this themselves, noting that their city was already a mess because of reconstruction. A leftist “NOlympic” movement, meanwhile, argued that the games were nothing but a gift to the rich, paid for by the poor. For months on end this group sought to sabotage Berlin’s bid by staging violent demonstrations and bombing buildings belonging to the campaign’s sponsors. Although Mayor Diepgen claimed that “no other city would symbolize the Olympic ideal of peace and friendship” more effectively than Berlin, the IOC might be forgiven for thinking otherwise. In September 1993 it voted to give the games to Sydney, Australia. Berlin’s botched bid had cost $100 million.
Berlin floundered economically also because reunification did not bring an end to some of the bad fiscal and administrative habits nourished during the division. The municipal bureaucracy, which had long been bloated in both east and west, did not trim down, at least in the first years after unification. True, some eastern officials with tainted political pasts were forced out (more on this later), but overall the merger of the two bureaucracies exacerbated problems of overstaffing. As in the past, officials who themselves ate copiously at the government trough spent lavishly on municipal amenities. Berlin was the only city in the world to have three major opera companies, three huge public universities, four symphony orchestras, and two city-run zoos. This would have been hard enough to fund even if generous subsidies continued to flow from the central governmental faucet, but—despite the best efforts of Diepgen—the subsidies from Bonn were scheduled to be phased out beginning in 1993.
There were problems on the private-sector front as well. Companies based in West Berlin, which had also been on the receiving end of generous federal subsidies, often failed to prepare adequately for the loss of that advantage. Moreover, with the collapse of the Soviet economic system in the early 1990s, West German firms with branches in Berlin found it expedient to move operations from there to places like Hungary and Czechoslovakia, where labor costs were lower and environmental regulations less stringent. After 1993 a substantial number of firms went out of business or left the city. The result was that the economy of western Berlin began to shrink within three years of unification, while unemployment and public indebtedness shot up. By 1996 the situation had deteriorated to the point that a new city treasurer, brought in from Hesse to help clean up the city’s finances, ordered drastic cuts. To cope with an expected deficit of DM 32 billion over the next four years, she called for a hiring freeze, reductions in university staffing, and the scrapping of plans for a new east-west subway line.
