The Shock of the New; The boom in Prague has sparked controversy over the remaking of one of Europe's most charming cities.(City overview)

Byline: Katka Krosnar

Prague's world-famous sky-line--its Gothic cathedrals, Romanesque rotundas, Renaissance palaces--has survived centuries of war, invasion and communism. But like cities throughout Eastern and Central Europe, Prague is now grappling with a new threat: development. Just south of its storybook city center, Old Town, a real-estate developer has laid out plans to build four office and apartment buildings, including a 31-story, V-shaped glass tower. In the north, another developer has embarked on Tower City, a pair of 42-story skyscrapers, which if completed as planned would be the city's tallest buildings by 18 stories.

With an architectural history that dates back 1,000 years, Prague has one of the few perfectly preserved city centers in the world, and the plans to redraw its surrounding skyline have set off perhaps the most passionate clash over preservation in Eastern and Central Europe. As some of the newest members of the European Union, the Czech Republic, Hungary, Poland and the Baltic states have all enjoyed booming economies, in which developers insist that old (sometimes historic) buildings need to make way for the demands of an increasingly rich populace and work force. But to conservationists, the Czech twin towers and other new buildings represent an unwelcome "Manhattanization of Prague," and a self-defeating threat to Old Town, the main draw of a tourism industry that accounts for 10 percent of the Czech economy. "If we allow such tall skyscrapers, there will be no turning back," frets Richard Biegel, executive director of the Club for Old Prague, a preservation lobby. "These tower blocks will destroy the skyline and change the city forever."

Prague is at the heart of these battles because its economic transformation has been particularly sweeping, and its Old Town is among the largest and best preserved in Europe. The neighborhood, which covers 866 hectares, and surrounding areas are already dotted with modern construction and remodeling, with glittering glass structures extending the height of historic buildings, and baroque facades redone in glass and metal. Yet the pace of development is a step behind demand for space in a city that, with its location near the markets of Germany, Austria and Poland, has attracted the regional headquarters of multinationals like Sun Microsystems and Hewlett-Packard. Commercial vacancy rates are 5.5 percent, half the European Union average.

Developers are now turning a 19th-century military barracks on the edge of Old Town into a massive mall. They gutted the inside but ...