For the first time since the reunification of Germany after the fall of the Berlin Wall, Berlin is to have a government that includes the successor party to the East German Communists.
They will be in coalition with Chancellor Gerhard Schroeder's Social Democratic Party - although not at the federal level.
The negotiations were long and difficult, but Berlin's Social Democrat Mayor Klaus Wowereit had little choice. His party won the largest number of votes in October's Berlin state elections, but not enough to form a government on its own.
Negotiations with the environmentalist Green Party and the free trading, tax cutting Free Democratic Party had failed, and his only other partner had to be the Party of Democratic Socialism or PDS.
That the PDS is the reformed, democratic successor party to the East German Communist Party and the party which built the Berlin Wall - made the choice difficult enough. That the PDS is also the only German party to oppose the fighting in Afghanistan, and to vote against sending German troops made matters more difficult still.
At the federal level, Chancellor Schroeder has distanced himself from the PDS, and has made it clear he cannot conceive of a coalition with the PDS.
But in Berlin, the two parties have agreed on what some political commentators call a "red-red" coalition government. PDS leader Gregor Gysi will be the city's deputy mayor. The two socialist parties have agreed on a program of spending cuts - including a $1 billion cutback in the civil service and cuts in every government department, except education, culture and science.
They also plan to raise state property taxes and water charges in an effort to deal with the city's most overwhelming problem: It has debts of nearly $40 billion, and expects to end up with another $6 billion in debt over the next two years.
Without federal government help, Berlin's Mayor Wowereit believes there is little chance to pay out of its own budget for the costs of rebuilding the city after the fall of the Wall.