Inside Story: Resurrection in the air: German reunification unearthed the dirty secret of the toxic swamp known as Bitterfeld. John Eisenhammer goes back four years later to find a miracle in the east

THE LOCALS still call it the road of a thousand fragrances. It runs from the Wolfen film works in the north to Bitterfeld, home in the days of Communist East Germany to one of Europe's largest chemical complexes. Whenever the wind changed, it swept in a different odour - some unseen ingredient from the devil's brew in the air - to sting the eyes and tighten the throat.

Today, the only real stink is easily identifiable; the exhaust fumes from countless trucks rumbling along this main thoroughfare, carting away the remains of razed factories and bringing in materials for building new ones. They rumble past futuristic glass edifices of recently settled companies and the traditional yellow and red brick facades of old buildings, seemingly miraculously retrieved from under the thick crust of decades of appalling pollution.

Once the collapse of the Communist regime in the east tore open the heavy secrecy shrouding Bitterfeld, this appropriately named chemical town became a byword for the worst excesses of environmental desecration and abuse of the 18,000 unfortunates who toiled in the state-owned monolith or Kombinat.

Just four years on, the talk today is of the Bitterfeld Model, of an unfolding success story against tremendous odds. The central economic challenge facing eastern Germany was how to transform a system of Kombinate into a culture of small and medium-size enterprise. It crossed few minds that Bitterfeld, of all God-forsaken places, might show the way.

But it is doing so, as new businesses, many chemical-related, spring up amid the debris of the collapsed giant, nurtured by generous subsidies, political arm-twisting, entrepreneurs with an eye for the main chance, and a corpulent visionary waving glossy pictures of yacht marinas and sun-drenched promenades.

A trip to Bitterfeld is now de rigueur for senior environment officials from Eastern Europe visiting Germany. 'When we began here in 1990, Bitterfeld was a synonym for environmental destruction and the ruin of a once-proud industry. Today, it is the chemical area in eastern Germany with the best prospects; a positive example of maintaining and modernising a core industry,' says Heinrich Harries, until recently head of the supervisory board of the Bitterfeld- Wolfen chemical company, as the Kombinat became known when it was taken under the wing of the Treuhand privatisation agency.

Like so much in eastern Germany at the time of unification, Bitterfeld was the object of hopelessly unrealistic expectations. Politicians in Bonn imagined the Kombinat could be taken over lock, stock and barrel by one of the big western companies - BASF, Hoechst or Bayer - and that would be that. But they failed to look closely at the dilapidated, often perilous state of the plants, the hopeless overmanning, the vanishing Comecon markets, and the frightening pollution.

'No one in their right mind would have touched it; the era of those chemical mastodons in the east was over,' says Helmut Lehmann, who heads Bayer's operations in Bitterfeld.

The Treuhand quickly realised the only way forward was to sell it off bit by bit. Here Bitterfeld had an advantage over the two other main chemical centres in the east, Leuna and Buna, which were predominantly petro-chemical mono- structures. Bitterfeld was known as the apothecary of the nation, manufacturing about 4,500 products, including chlorine components, dyes, cement, plastics, pesticides, phosphorus derivatives, industrial cleaning agents, technical gases and pharmaceuticals.

Buyers were soon found, for example, for the old PVC piping business, taken over by the Elf subsidiary Omniplast, and the water- purification agent business, now run by Sidra.

But the breakthrough came with the idea for a chemical park - the Chempark Bitterfeld- Wolfen. 'This place has a chemical tradition going back a hundred years. Its future will also largely be defined by chemicals. The trick was how to use one to nurture the other,' says Gunter Langner, chief executive of the park. The idea comes from Brazil, and the aim is to attract companies to the park by offering a comprehensive service structure, enabling the new businesses to focus on their core activities. The Chempark management company is responsible for cleaning up the old Kombinat site in preparation for incomers, the laying of infrastructure such as roads and rail lines, and the operation of the new utilities - a gas-fired power plant, a water treatment centre, and a solid toxic waste disposal and recycling plant.

Still owned by the Treuhand, and so stuffed full of subsidies, the Chempark offers enticing deals. Its glossy brochure boasts of assistance covering 45 per cent of investments and 90 per cent of start- up costs. And Bonn has assumed all responsibility for former pollution damage. In addition, the Chempark management company provides its services at a highly favourable rate. But the range of facilities available to investors goes much further, as part of the idea of the Chempark was to give new, privatised life to the services belonging to the old Kombinat.

The large technical department became the biggest management buy-out in eastern Germany, with 570 staff, and now provides support for all the companies in the park, with an expected turnover of DM40m ( pounds 16m) this year.

The fire-engine division was sold off, and now services the park, as does the former state medical practice. Even the old Communist propaganda department has found new life as a press and PR agency for the Chempark's companies. And the former training centre now offers a central place for teaching apprentices on a fee-paying basis. Bayer, the biggest investor in the Chempark, has already signed three-and-a-half-year training contracts with the centre. In addition to the western German chemical giant, a number of other well-known international names have been attracted by the Bitterfeld Model: Akzo of the Netherlands, Heraeus, a German company that set up the first plant in Europe producing synthetic quartz glass for optical fibres, Ausimont of Italy, and German-owned Linde.

Around them are sprouting small businesses providing services of all kinds, from artisans to tax consultants and planning offices. Since 1991, real or planned investment in the Chempark totals DM2.4bn, with 3,400 jobs secured or created. 'From a single, giant firm, we now have 180, of which about 70 are chemical-related. By the end of this year, we should have over 200, and that is a real achievement,' says Hans-Dieter Raschke, a former Kombinat director now on the Chempark board. Eventually, the park's businesses are expected to employ 6,000 to 8,000, compared to 18,000 in the days of the Kombinat.

The blue glare of the cutting- torch flame bounces off the eye- shield and breathing-mask covering Jurgen Meyer's face. He is one of a group disembowelling the silos of the old fertiliser works. The stench is unbearable. Like many others, he used to work for the Kombinat. Now he is among 3,000 using their knowhow to pull the place down.

The Treuhand company which runs this job-maintenance scheme is the biggest employer in the Chempark. 'When you rip up a lifetime's work, it creates a pretty difficult feeling,' Mr Meyer says. 'People kept these plants going only with great effort and ingenuity, and now they are worth nothing. But most realise it could not go on as it was, and for some it means a new beginning. The place is changing, thank God.'

The Bitterfeld-Wolfen Chempark covers the sprawling complex of the former Kombinat, 10km long and 2-3km wide. Almost half of the old plant has been, or will be, razed to make way for the new. This is no simple task. Often infested with toxic substances, the structures have to be carefully dismantled and disposed of. In some parts, as much as 3m of topsoil has been dug out and carted away. Fresh earth is then brought in by train from the nearby open-cast mines. The decontamination is expected to last into the next century at a cost of more than DM2bn.

One such area, the size of several football pitches, has recently been cleared, leaving a lone, blackened house standing awkwardly in the middle. Now a listed building, it used to belong to Walther Rathenau, the assassinated foreign minister of the Weimar Republic, who started the first chlorine production in Bitterfeld in 1894. Ten years later, polyvinylchloride (PVC) was discovered there, and in 1916 the first German aluminium works began. Under the Nazis, Bitterfeld acquired a more sinister reputation, becoming the middle German headquarters of I G Farben, the national chemical colossus that produced the poison gas Zyklon B, used in the death camps. After the war, the complex was taken over by the Russians and later handed back to the East Germans, who expanded the Kombinat into one of the central producers for the Soviet empire.

In most parts of the Chempark, it does not stink any more, it just smells. As you pick your way past the blackened corpses of silenced plants, occasional vapour clouds emerge and liquid drips from twisted, rusting pipelines. And then, unexpectedly, there appears a brightly painted building and gleaming pipes, where Linde has set up one of its technical gas plants. Or there is a small handpainted sign, pointing to one of the privatised workshops.

One is reminded of the old East German national anthem, 'Arise from the Ruins', devised for a different time, but ironically perfect for Bitterfeld's transformation. 'We are living in fast-forward mode now,' says Peter Heinrich, an ex-Kombinat engineer now working for Bayer. 'There is still much uncertainty, with almost half of people without a regular job, but you can sense the changes.'

It was in May 1991 that Chancellor Helmut Kohl made his now famous trip to the anguished chemical heartland of eastern Germany, and promised that this key industry would not be permitted to die. It marked a big adjustment to Bonn's policy of stressing market forces as the main agent of economic transformation. The dramatic pace of de-industrialisation had panicked the authorities into pledging to preserve the so-called industrial cores by means of state support. Bitterfeld was one of the chosen spots for Mr Kohl's promises of jobs and a future. In high- level arm-twisting exercises, the Chancellor impressed upon the barons of the western German chemical industry the importance of a commitment to the east.

Bayer targeted Bitterfeld, and switched investments that it had been planning elsewhere. At a total cost of DM750m, it is building three plants in the north-east corner of the Chempark, producing aspirins and Alka-Seltzer; coating resins for paints; and thickening agents. This latter plant begins operating this month. In all, around 600 jobs will be created.

Bayer's role has been crucial, as Mr Kohl understood. It is all very well wanting to create a predominantly small and medium-size business structure, but to attract companies one needs a flagship. The fact that Bayer was persuaded to invest was the decisive impetus the Chempark needed, as other big names followed, encouraged by the favourable terms, and the prospect of setting up business in an environment free of the intense resistance to chemical investments now predominating in the west, and where people were hungry for jobs. 'The Chempark cannot mainly consist of services. We must have a certain mass of production to carry it all,' says Gunter Langner. 'Another Bayer and a half and we should become economically viable. I give it another three to four years.'

Until then, the Treuhand, or whatever state holding company succeeds it, will have to continue subsidising operations. 'Bitterfeld may never be a spa resort, but it will become a dynamic industrial town like many in Germany,' remarks Bayer's Mr Lehmann. 'The past is still unmistakable, but so too is the new, in the park and the town itself. We are seeing the beginning of the Chancellor's promised blossoming landscapes.'

Today, if you stand alongside the road of a thousand fragrances and hold out your hand, something remarkable occurs: nothing at all. Four years ago, black flakes would in no time have begun settling on the skin. Much of that pollution has now gone, largely thanks to the closing down of industry. Around 90,000 tons of sulphur dioxide and 40,000 tons of dust used to be hurled into Bitterfeld's atmosphere each year. Inhabitants remember how virtually every day the sirens would scream, heralding some leak.

The Wolfen film works, where Agfa began producing in 1909, did not bother with waste treatment, but simply pumped raw effluents, full of lead, zinc, phenols and sulphur agents, into the local rivers and the so-called 'silver' lake, surrounded by skull-and-crossbones signs. Although 14m deep, above the sludge the water measures just one metre - reddish-brown in hue, with a sinister sheen. It was such horrors that inspired the former East German author, Monika Maron, to immortalise Bitterfeld as Europe's filthiest town in her book Flugasche.

Spring used to come early to Bitterfeld, as the leaves would turn brown by June. The Kombinat guest-house, now a smart, expanding hotel, had gas-masks lining the walls of the lobby. Everyone has their story, of the noses falling off concrete gnomes, of the priest who had to order new stained glass because the lead rotted away.

But for the Communist environmental officials, all was well in this corner of the workers' paradise. Only serious leaks, when the roses collapsed and the tomatoes blackened in the allotments, were acknowledged and small compensation paid. Otherwise, the true awfulness of life in Bitterfeld was buried in the secret statistics sent to East Berlin, and in the wracked bodies of children. Medical investigations, only revealed after unification, showed children in Bitterfeld suffered from a high level of chest and throat complaints, that their blood composition underwent abnormal changes, and that their development was slower than their counterparts in other regions. For four years after unification, Bitterfeld's children were sent for up to a month each year to the coast or the mountains.

Among the major polluters still operating in the area is Josef Maur, whose heavy jowls are continuously wreathed in smoke. Deputy mayor and in charge of Bitterfeld's economic development, he is the town's real force and visionary. One of the countless political imports after unification, Mr Maur draws on his 30 years of local government experience in western Germany to devise ever more ingenious ways, not all of them entirely by the book, of tapping sources of public funding, and of speeding up procedures and permits. There was a virtue in Bitterfeld's appalling past, for no region in eastern Germany has received so many subsidies, from Brussels, Bonn and Magdeburg, capital of the state of Saxony-Anhalt.

'Here in the east, the pressure to make things happen is enormous. One has to improvise,' wheezes Mr Maur. He strides proudly across the new town square, with its tastefully restored facades, as if he personally had laid the expensive cobblestones. He reels off his projects - 500 new council flats with underground parking, the private housing developments, the enterprise parks, the new pedestrian zones, and the switching of the whole town to gas in the space of three years. With the Chempark at its heart, he is working to give new life to Bitterfeld. Altogether, 1,200 new small firms have started in the area since 1991, creating 11,000 jobs. After four years of decline, the town's population has just begun to grow again. According to the Halle economic research institute, the number of jobs in mining and industry in the Bitterfeld region shrank by 73 per cent between 1991 and 1993. 'Now the young families are beginning to come back,' Mr Maur says.

Soaring high on his second political wind, Mr Maur's ambitions, however, reach well beyond restoring Bitterfeld's industrial prowess. He wants to transform a name almost universally associated with stench and filth into a welcome sign for holidays and leisure activities. 'We have to get the right ambience,' he says, employing this word with mantra-like persistency. Inside the portable building which is home to Mr Maur's aspirations until the grand glass temple of the new town hall is finished, the ambience is elusive. And then, from a battered folder, he brandishes artists' impressions of his dream - a tree-lined promenade of Mediterranean charm, running alongside azure waters skimmed by yachts and windsurfers.

It is just a brief drive from here to the edge of the dream, where the town stops and the crater of the old open-cast mine stretches as far as the eye can see. 'We begin flooding at the end of the year,' Mr Maur says. A carefully landscaped 6km section curves gently into the abyss. 'That is the beach,' he points out. 'Over there will be the yacht marina, here the main windsurfing area, and behind us, on the old prison property, will be 2,500 holiday homes. We are already discussing them with a Danish investor.'

The cost of this aquatic vision - DM3.5bn to DM4bn. He says: 'In the beginning many people thought I was crazy. Some still do, but a lot more are watching events in Bitterfeld closely. Because things are happening here, and fast.' He turns and wanders off in a cloud of smoke, suddenly stopping to say: 'I'll ring you when the windsurfing is ready.'

(Photograph omitted)