The Decline of Germany

Drive down Berlin's Unter den Linden these days, and it's easy to imagine you're in the capital of a vibrant new Europe. The rebuilt, buffed-up avenue now rivals the Champs-Elysées as the Continent's most majestic thoroughfare. Daringly designed buildings are everywhere, the Berlin Wall a fading memory. The Brandenburg Gate is freshly cleaned and polished. Nearby, Chancellor Gerhard Schröder governs from a new, grandiose, nine-story residence and office complex that makes the White House look like a summer cottage. The refurbished Reichstag is a paean to the power and prosperity of unified Germany, the linchpin of the European Union.

That's how Germany's leaders want the world to view their country. But looks are deceiving. The showcase city of Berlin is in such a financial fix that it's firing teachers and closing swimming pools. Just four months after Schröder's reelection as Chancellor, his Social Democratic Party is so unpopular that it was clobbered in two key state elections on Feb. 2. Polls show Germans more pessimistic than they have been in decades.