Counterculture Vs. Capitalism: Iconic Berlin Squat Fights Its Last Battle

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The building can be visited at any time, and tours are available by prior arrangement. On a recent hot afternoon, 40 teenagers from western France climbed the stairs in the Tacheles building, passing walls covered with graffiti and plastered with several layers of posters and walking across floors littered with cigarette butts. The stench of urine was in the air.

The adolescents were in Berlin for just one day, and there were three things on their itinerary: the Reichstag, the Brandenburg Gate and the Tacheles. A Belarusian painter and a trash artist showed the students their studios. The roughly 70 artists currently working in the building don't pay rent, although they do have to pay their share of the building's operating costs. "It's really an original museum," said one of the girls.

The Tacheles is "the only real street art museum in the world," says Reiter, adding that it gets about 400,000 visitors a year. Reiter, who lived in Vienna before moving to Berlin, has been the head of the association that operates Tacheles for years. And now, for the past year and a half, the artists are squatters once again, a role that Reiter seems to relish. He announces hunger strikes, writes letters to the German president and Chancellor Angela Merkel, and tries to forge alliances with people fighting capitalism elsewhere in the city. "Commerce kills," he says.

He is no longer interested in joining forces with Eben, the café owner and his former friend. "We're not fighting for that restaurant owner," he says.

A Remnant of 1990s Berlin

Café Zapata is large, dark and full of metal art. It looks like a typical Berlin bar from the heady years of the early 1990s, and it now includes a large beer garden behind the building. Ludwig Eben, who is originally from Munich, was one of the early squatters. After a year, he took over Café Zapata from an Australian. On some days, says Eben, he feels as if he were working in a museum.

Eben isn't a "capitalism denier," the term he uses to describe Reiter. He runs a business in an excellent location, with 40 contract employees and 10 freelancers. He supports young bands and says his café is also a place for alternative culture.

The artists moved in shortly before the derelict department store was scheduled to be demolished. After German reunification, the federal government put Tacheles and the surrounding land up for sale. Berlin was slated to become the new capital of reunified Germany, and officials wanted to see new buildings in the Mitte district, not ruins. The Fundus Group, a real estate company based in Düren near Cologne, showed an interest in the property.

Anno August Jagdfeld, who had worked as a tax accountant before getting into real estate, had discovered the potential of derelict buildings and abandoned properties in the former East Germany. He developed these properties, on Berlin's iconic Friedrichstrasse and Pariser Platz square, and later in Heiligendamm, a Baltic Sea resort.

In 1998, Jagdfeld and Fundus Baubetreuung -- a subsidiary of the Fundus Group -- purchased the Tacheles site. They agreed to invest 180 million deutschmarks (€92 million), create 950 jobs and build housing. According to the purchase agreements, the company paid 65.2 million deutschmarks to the federal government and another 3 million to the Berlin-Mitte Housing Association.

Symbolic Rent

On the evening of Nov. 9, 1998, Reiter, Eben and Jagdfeld were sitting around a table in the Tacheles theater hall. A few people from the artists' association were also there, as was a theater producer who had long mediated between the squatters and the investors. Jagdfeld asked the others to tell him about their lives. There was wine, the meeting ran late into the night, and on the next day Jagdfeld announced that Tacheles e.V. was getting a lease: for 10 years, at a symbolic monthly rent of one deutschmark.

He also unveiled his plans for a new neighborhood to be called the "Johannisviertel," which was to contain up to 40 new buildings, complete with space for housing, shops and offices. To that end, Jagdfeld renamed Fundus Baubetreuung as Johannishof Projektentwicklung GmbH (Johannishof Project Development). The funding came from several state-owned banks, including the precursor to the current HSH Nordbank.

The artists, too, could now make their own plans for the future. But now that the external pressure was off, things became increasingly tense in the building. Many artists left, and those who remained began jostling for power and sources of income. The conflicts led to over 100 court appearances, and one case was even heard by Germany's Federal Court of Justice. The disputes involved issues such as rent for the café, operating costs and the election of board members.

Johannishof Projektentwicklung hired architects in Miami and New York, but the construction never began. One of Jagdfeld's sons ran a nightclub in one of the buildings on the site. Artists built a frog pond on the land behind the Tacheles building. Berlin's counterculture had won the fight, at least temporarily.

Bank 'Regrets' Situation

The lease between the Tacheles association and the investor ended in 2008, when Tacheles and the properties were already under bank receivership. The bank then began an effort to evict the artists. In 2009, it demanded €105,500 in back rent plus interest from the association.

HSH Nordbank, which had to be bailed out by the government during the financial crisis, urgently needs money. As a "sponsor of culture," the bank regrets the situation, says a spokesman, but is quick to insist that it isn't HSH's fault. According to HSH, the investor had failed to make payments on his loan for 10 years, and the company now owes the bank €75 million.

Jagdfeld is no longer willing to discuss Tacheles with the press, although a spokesman agreed to answer a few questions. The development project, says the spokesman, was to be financed through a closed-end real estate fund, but "the underlying conditions for such funds" worsened considerably. So what happened to the money, the €75 million? "We cannot confirm the loan sum that has been mentioned," says Jagdfeld's spokesman. In any event, he adds, the money went to Johannishof Projektentwicklung and "was used within the agreed framework" -- in other words, to purchase the property and to cover planning costs. The company also apparently invested €6 million in the ramshackle Tacheles building.

The Berlin Senate intends to mediate as soon as a new investor appears on the scene. The development plan requires that the Tacheles building, which is listed as a protected monument, be used as a cultural venue. André Schmitz, Berlin's culture secretary, has made the bank aware of these requirements in a letter and is now waiting to see what happens next.

Preserving Berlin's Wild Side

There is a widespread view in the city that it is important to preserve Berlin's wild side, because it is part of the city's international reputation and helps to attract visitors. According to this view, artists are good, investors are -- at the very least -- dangerous and commerce kills.

Eben says that he has found a supporter who wants to buy Tacheles. The building alone, separated from the property, would be worth €3.6 million.

Reiter is demanding that the bank lease Tacheles to a nonprofit foundation. He recently went to Leipzig to pick up space heaters that someone had auctioned off on eBay. He wants to make sure that the Tacheles artists will be warm enough this winter. Reiter is convinced that they'll still be there then.

The bank says that the entire property, including Tacheles, will be sold at auction by the end of the year. The property was recently reappraised. Apparently it's worth €35 million.

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• Part 1: Iconic Berlin Squat Fights Its Last Battle
• Part 2: 'Commerce Kills'