Berlin is a city of permanent change, a modern and open metropolis. But behind the gleam of steel and plate glass, Berlin is also a city shaped by the chequered events of post-war history. One symbol of that history of change is the Brandenburg Gate.

The wall split Berlin into two worlds, and both developed completely different systems. East Berlin was the capital of the communist German Democratic Republic, West Berlin was the showcase of capitalism. Today, only isolated fragments of the Wall still stand. But there are still deep differences between the two halves of the city.

Expensive history

Three decades of separation left a disastrous financial legacy. Rejoining the two halves was costly, but big-time industry and resultant tax revenues were scarce. Compound that with endemic mismanagement here at the Berlin state Bank and the result came close to bankruptcy for the city.

"Berlin is being forced to tighten its belt - the city's finances are in a dramatically poor state. We also had the crisis in the state-owend bank this year, which cost the state of Berlin a few billion more," says Karl Brenke, an economics expert from the German Institute on Economics Research (Deutsches Institut für Wirtschaftsforschung).

Berlin's restored role as German capital has brought yet more costs: it has to fulfil a representative function and also ensure the security of its political masters, even more so after the terrorist attacks in the USA.

The centre of the city is dominated by the machinery of federal government. As a result, demands are growing that the central government should contribute more money. The new, old centre of the German capital is a cityscape which symbolises both the process of political change and the checks and balances of democracy.

A vote to remember

The voters of Berlin cast their ballots on Sunday. The city's acting mayor will also be the new one: Social Democrat Klaus Wowereit. His party emerged as the clear victor of Sunday's poll.

Even more clear was the political collapse of the Christian Democrats, who lost their position as largest party to the SPD. But one question was left unanswered by the electorate: who will the SPD's coalition partners be?

There are many possibilities: A coalition with the Greens and the liberal Free Democrats. One option would be a red-red coalition: the Social Democrats in conjunction with the Party of Democratic Socialism, which grew out of the former East German Communist Party.

Christian Democrat downfall

It was a stinging defeat for the Christian Democrats. But perhaps it was not altogether unexpected. From banking scandals in Berlin to former Chancellor Helmet Kohl's spectacular fall from grace, the CDU continues to suffer from its recent political disasters. But on the other hand, victory is not going to be a bed of roses for the SPD. Berlin's acting mayor, Klaus Wowereit, will now be forced to form a coalition within the city parliament.

Christian Democrat leading candidate Frank Steffel is putting a brave face on things after the vote. Sunday's election results fulfilled his party's worst fears, and he's probably glad the whole thing is over.

"We received a clear warning from voters. This is a serious setback for Berlin's CDU party," Frank Steffel said.

One reason for the CDU'S losses is their association with the banking scandal that shook the capital last June. They've been in power for over ten years. But the surprise results for Germany's Party of Democratic Socialism also contributed to their fall.

And the winner is….

The clear winners of Sunday's election, the Social Democrats do not seem to be worried by the PDS gains. However, the SPD is far from having an overall majority.

Klaus Wowereit, Berlin mayor:

"It's no big surprise that we will need one or possibly two partners in a Berlin coalition government. As to who will be our partner or partners will depend on upcoming talks."

The green party narrowly escaped a setback in Berlin's election - reason enough for their candidate Sibyll Klotz to be pleased with Sunday's results.

Surprise success

One of the big winners are the Free Democrats. In the last election they took 2.2 percent of the vote, on Sunday they won almost 10 percent!

Günter Rexroth, FDP leading candidate: "Nobody can tell us that these results are because of another party's losses. "

But not everybody agrees. Some see the CDU's setback as having contributed to the FDP's gains.

East-West divide

Sunday's big winner was the PDS. The Party of Democratic Socialism - the successor to former East Germany's communist party - received over 5 percent of the vote in the western districts --- and a clear majority in East Berlin.

Gregor Gysi: PDS candidate: "I know Berliners well, and however great the difference in mentality may be between East and West, they all want to be part of Germany's capitol."

Gregor Gysi hopes that after Sunday's results, he will be part of the next Berlin city government - but that will very much depend on the Social Democrats.

Berlin was originally not due to elect a new state parliament until 2004, but a series of financial scandals at the city's state-backed bank, the Berliner Bankgesellschaft, left the reputations of many senior Berlin politicians in tatters and the city itself deep in debt.

The Social Democrats, junior partners in the governing grand coalition, pulled out and toppled the long serving Mayor, Eberhard Diepgen, with the votes of the opposition Green Party and the PDS.

Sunday's result shows that Berlin is still a divided city - the former west still supports the CDU, while, in the former east of the city, the PDS comes close to an absolute majority.