December 10, 2005

Ugly battles strain Berlin-Hamburg relations

By Erik Kirschbaum

BERLIN (Reuters) - A row between Germany's two biggest
cities over attempts to snatch each other's businesses has
degenerated into ugly name-calling and torn open historical
rivalries that go beyond just another tale of two cities.

Local officials in wealthy Hamburg, home to many of
Germany's corporate giants, have even warned Angela Merkel to
stay out of their money-driven tiff while poorer Berlin,
scarred by the Cold War, is begging the new chancellor for

"It's the battle of Berlin," read a recent headline in the
Hamburger Abendblatt newspaper. "It's Berlin vs Hamburg."

The fight erupted when Hamburg's authorities said last
month that they had spent five months secretly negotiating with
German railway operator Deutsche Bahn to lure its corporate
head office and up to 2,000 jobs from Berlin to the northern
port city.

Berlin, the capital, had previously done some of its own
poaching, enticing Universal Music's German headquarters and
gala award ceremonies away from Hamburg in 2000, as well as MME
entertainment company and advertising firm Scholz & Friends.

Berlin Mayor Klaus Wowereit ripped into Deutsche Bahn
chairman Hartmut Mehdorn, a Hamburg native, branding him
"Rambo" because of the clandestine talks with Hamburg behind
the back of the company's owner, the federal government.

"I was feeling fine until Mehdorn ruined my day," Wowereit
said after learning of the secret talks. He said he was fed up
with "Mehdorn the groveller" and vowed to fight any move.

"No one will stand in his way if Mehdorn wants to pack his
bags and go to Hamburg," Wowereit said. "But the workers of the
railways are staying in Berlin."

Hamburg has offered to sell its lucrative port at a
knock-down price to Deutsche Bahn if the company moves.

Berlin leaders have accused Hamburg of "extortion" while
officials in Germany's second city have threatened to block all
legislation in the upper house of parliament if they don't get
their way.

Local newspapers have joined the fray, claiming their
respective cities have better weather conditions, better food,
better museums, better zoos, better entertainment and even
better brothels.


Hamburg Mayor Ole von Beust, who spent months secretly
meeting Mehdorn and offering the lure of the harbor sale, told
Chancellor Merkel to stay out of the row -- even though her
government owns the railway operator.

"If she's smart, she'll stay out of it," said von Beust
with surprising bluntness given that the new chancellor is also
the leader of his own conservative party.

"This is not any sort of pseudo competition between the two
cities, but rather it's only about corporate interests," added
von Beust, whose city of 1.7 million is 300 km (180 miles)
northwest of Berlin.

Merkel, herself from East Germany, has remained silent in
public, but Bild am Sonntag newspaper said she was "extremely
annoyed" by Hamburg's moves.

Transport Minister Wolfgang Tiefensee said the government
opposes any move because it would be a setback to the
economically depressed east. Mehdorn, however, was undeterred
and said he would study the Hamburg move further.

The tit-for-tat fight for each other's corporate gems has
marred relations between the cities at a time when ties were
growing closer thanks to a new high-speed rail link that cut
inter-city travel time to 90 minutes.


The bad blood between the two cities has historical roots.
Even before World War Two, Hamburg resented Berlin's political
power and greater size, while Berlin envied Hamburg's

Hamburg, which flourished as West Germany's media and
transport hub with its lucrative port, now resents having to
pay subsidies to poorer states such as Berlin as they try to
catch up economically after decades of isolation during the
Cold War.

A recent Bertelsmann Foundation study measuring the
economic strength and position of Germany's 16 states found
Hamburg to be the "most successful" state for a third
consecutive year while Berlin slipped one notch to 15th.

Per capita income levels are around 30 percent higher in
Hamburg than Berlin and property values are much higher. Berlin
has unemployment of 18 percent compared to Hamburg's 11

Moves to relocate big companies such as Deutsche Bahn could
compound the problems.

Although boosted by the government's move to the city,
Berlin still boasts only one major company, pharmaceutical firm
Schering, while Hamburg is home to many corporate giants such
as Deutsche BP, Shell and Exxon.

Berlin, with a population of 3.5 million, had been a major
center of industry and banking before many large companies,
such as Siemens and Deutsche Bank, fled at the start of the
Cold War -- when fears of a Soviet takeover loomed large.

It is keen to avoid the same thing happening again, but
Hamburg Mayor von Beust is not giving up on the plan to move
Deutsche Bahn, saying it would be symbolic and draw more firms
to the north.

No matter what happens, railway chief Mehdorn has claimed a
center-stage role in the rivalry.

"Mehdorn doesn't feel that he or his company are being
sufficiently honored in Berlin," wrote Der Spiegel news