YOU can't see Berlin for the cranes. They crowd the skyline, their arms busy filling in the gap left by the removal of miles of unwanted wall. Impossible to hide, they were recently given a starring role in an open-air ballet set to music conducted by maestro Daniel Barenboim. Reconstruction, Berlin-style, is now an art form.

The Reichstag has a spanking new British-designed dome (we're good at them, apparently) ready for when it is once more the home of democracy in the capital of a united Germany. The dome's floor is glass. Visitors will be able to peer down past their feet at the heads of their elected representatives.

The burn marks have been scrubbed off the facade, the bullet holes filled in ahead of next year's grand unveiling as the new Bundestag. Elsewhere in Berlin the memories of the city's disturbed history are being tidied away. The city fathers hope the new century will mean a fresh start at the heart of Europe.

On current maps Berlin is at the European Union's periphery. The Polish border, where the lorries on the main east-west trade route queue for hours to get through, is just 70 kilometres away. Brussels, where the decisions happen, is ten times that distance in the other direction.

Economists will tell you Berlin is outside the ''hot banana'', Europe's traditional population and industrial centre which stretches in a curve from London through northern France, the lowlands, western Germany and down into northern Italy.

But it is ideally placed to link the hot banana of downtown Europe with what might be called the warm cabbage of the East's developing economies. Berlin's future is as a lynchpin, between the Europe we know and its eastern frontier.

Another five years of economic growth and hard negotiation should see Poland and a clutch of other former Soviet satellites join the EU. At a stroke Europe's centre of gravity will shift eastwards, in Berlin's favour. From divided backwater, a geo-political oddity built on confrontation, the city could become Europe's new economic and cultural powerhouse.

I say could, because Berlin remains a city with conditions attached. Everywhere you look, it is impossible to avoid the little unresolved ironies that manage somehow to overshadow the excitement generated by that mess of cranes at its heart.

The German government overcame the reluctance of its political and civil service establishment to decree that from next year the national capital would shift from Bonn, a sleepy campus of a town in the West, to Berlin. With the disappearance of the wall, there was little choice.

But even now, with just months to go, the German press is still full of agonising about the move. Bureaucrats are a conservative lot. They view the prospect of upping sticks and shifting east with ill-disguised horror. Reunification, and the realities of the East's slow economic development, has done little to dispel decades of western snobbery.

Property prices are steadily going up in the posh bits of the city, in particular for the villas in the tree-lined streets of Potsdam. Across Berlin offices are being built to house the new ministries. The German Chancellor will get a brand new palace near the Reichstag.

But down Wilhelmstrasse, once Berlin's equivalent of Whitehall, the mighty finance ministry will move into a building made notorious by the Third Reich. Hermann Goering famously promised to change his name to Mayer if a single bomb fell on Berlin. The city was levelled, but his monolithic air-ministry survived unscathed. Gordon Brown can look forward to negotiating Britain's entry into the single currency from where the Luftwaffe was dispatched to blitz London.

The past is always there, ready to pounce. Last Friday, at an otherwise magnificent concert amid the gilded splendour of the Schauspielhaus by the German Radio Orchestra, there were audible murmurs of surprise from the older heads when its American conductor finished the evening with Lizst's Preludes. Those striking chords were last heard every evening during the war to accompany the official bulletins from the front.

In the east, away from the newly opened up-market boutiques of Friedrichstrasse, Berlin still has a long way to go to shake off the poverty and bleakness left by a half century of state-imposed socialism. The two-stroke Trabants and Wartburgs and their palls of brown fumes have all but disappeared and been replaced by sleek western models. But the satellite dishes cannot disguise the grim reality of dilapidated buildings where the jobless rate hits 75%.

From next year we will start to see a change. The arrival of thousands of politicians, diplomats, civil servants, and their hangers-on will complete the process begun on November 9, 1989, when the German Democratic Republic gave up and opened the wall. Their presence will help to reawaken Berlin, and dispel a few ghosts. And then the way will be clear for the new German capital to play its part in integrating the fragments of Russia's empire into the new europe. The dawn, remember, comes from the East.