Ground zilch: how Al-Qaeda defeated New York

America's enemies must be laughing. Four years after 9/11, the failed Ground Zero project exposes th

A full four years after suicide bombers felled the World Trade Center, the site on which the mighty twin pillars of New York's Financial District once stood remains a vast, empty hole. The grand plans to build a sparkling edifice to demonstrate to the enemies of the United States that no force on earth can stifle the power of business in America have come to nothing.

A year ago, amid great pomp and patriotic fervour, George Pataki, governor of the state of New York, laid a black marble cornerstone to mark the start of the replacement "Freedom Tower", declaring it would be ready for occupation by September 2006. Still no date has been set for construction to begin. The giant chasm, three city blocks long, two blocks wide and six storeys deep, has become a morbid curiosity for tourists, who peer into the void as if it were the Grand Canyon, and for naturalists, eager to log the squatting species of flowers, plants and wild animals that have become the only occupants of Ground Zero.

Osama Bin Laden intended his assault on the twin towers to strike at the heart of materialism and cause consternation throughout the western world. What he could not have expected, however, was America's failure to rebuild the towers without delay, a setback that has exposed the United States at its most politically inept, cripplingly litigious and corrupt.

Argument over what should replace the towers began before the last body part was removed from the smouldering ruins. What everyone agreed was that the World Trade Center should be succeeded by another totem to US financial strength. Yet no one could agree on what to build, who should pay for it, how the victims should be remembered and, perhaps above all, who would be prepared to work in a tower designed to celebrate the boldness of the United States in the face of adversity.

Even ownership of the site was in doubt. Six weeks before the planes hit, the property magnate Larry Silverstein took a 99-year lease on the World Trade Center from the Port Authority of New York and New Jersey, the agency that built the complex in the 1970s. Once the towers fell, Silverstein came under pressure to cede ownership so the port authority could alone develop the site, which had acquired symbolic importance. He resisted, but had to continue paying full rent even though the buildings, along with thousands of his tenants, were a pile of pulverised, toxic rubble.

Silverstein was confident he could cover the cost of rebuilding because he had taken out elaborate insurance. The insurers, however, were determined to minimise their liability. They disputed Silverstein's account: he insisted there had been two separate attacks on two separate towers; no, no, the insurers argued, it was one attack on a single building complex. It would take more than three years and millions of dollars in legal fees before a jury decided in Silverstein's favour.

Eager to get building, Silverstein was resigned to being burdened with costly and time-wasting demands. He agreed that there should be a memorial to the dead and a new cultural building, as long as he was allowed to replace the office space and the shopping mall hidden under the World Trade Center plaza. He then stood back and watched as politicians took centre stage. For many, the rebuilding at Ground Zero was less about national honour than about leaving a lasting monument to themselves.

It was in part the prospect of a grandiose memorial with his name attached to it that led the city's mayor, Rudolph Giuliani, in the dying days of his reign towards the end of 2001, to suggest that term limits be abandoned, allowing him to stand for a third term - an audacious power play that was stifled as soon as it was hatched. In Giuliani's place came the lacklustre state governor Pataki, a Republican Eeyore, who brushed aside Giuliani's successor as mayor, Michael Bloomberg, to put himself in charge of the rebuilding. With this exclusion of Bloomberg, a former Democrat who has a passion for the arts as well as an undisputed record of visionary leadership in the financial information business that made him a multibillionaire, Ground Zero was deprived of its one hope of arriving swiftly at a distinguished design.

George Pataki's Democratic counterpart in New Jersey, James McGreevey, had equal claim to be involved (the port authority which owns the site freehold is a joint New York-New Jersey agency). But McGreevey seemed preoccupied through the early negotiations, a lapse explained when the father-of-two revealed he was being blackmailed by a homosexual lover. He resigned.

Over the next two years Pataki steered the port authority, the Lower Manhattan Development Corporation (charged with retaining business activity in the Wall Street area) and the relatives of the nearly 3,000 victims of the 9/11 attacks through a tricky course. There was the semblance of an architectural competition, though it soon became clear that few world-class architects were willing to submit to the city's muddled and contradictory demands. The winning design, by Daniel Libeskind, architect of the Jewish Museum in Berlin, was as laden with heavy-handed symbolism as any Soviet monument to the fallen in the Great Patriotic War. Standing a tediously significant 1,776 feet tall, the spiralling, fretworked "Freedom Tower" was off-message. Instead of sounding a defiant note against terrorism, it celebrated the American revolution of 1776 - the country's own anti-British "insurgency". The error was as offensive as it was crass. Britain leapt to America's defence after 11 September 2001, and Britons formed the second-largest contingent killed in the twin towers.

I attended the unveiling in December 2003 and noticed Silverstein in the audience. It was odd he was not sitting on the platform to launch his own building. So I asked him whether he approved of the design. His tight-lipped, finger-wagging response was ominous. Before long he brought in his own architect, David Childs of Skidmore, Owings & Merrill, to tinker with, then finally obliterate Libeskind's trite conception. Silverstein had no need to condemn Libeskind's master plan; thousands lined up to trash the scheme, chief among them those whose relations had died in the towers.

It is telling of the state of American consciousness that those who died in the towers, most of whom were hapless office workers, were all held to be "heroes".

A sign at Ground Zero, pinned to the perimeter fence, lists all 2,996 "heroes" as if they had died fighting al-Qaeda hand-to-hand. Such mawkishness has hugely empowered the relatives, and slowed the debate about what should be built. Their first demand, swiftly acceded to, was that no building should be constructed on the footprint of the fallen twin towers, an inhibition which ensures that the remaining site, if it is eventually developed, will be crowded with suffocatingly high-density office blocks. Had the relatives of the 3,000 people killed each month in the Blitz demanded a similar concession, the East End of London would be one huge park.

The 9/11 dead will be memorialised by two vast gloomy pits, a morbid solution likely to deter tenants from occupying the new offices. How simple and graceful by comparison is Edwin Lutyens's Cenotaph in Whitehall, a simple pillar of stone which marks the deaths of millions.

Typical of the relatives' frivolous abuse of influence has been the debate over a memorial theatre. New York City Opera was eager to decamp from the Lincoln Centre and set up at Ground Zero - but the idea fell foul of the 9/11 relatives. As one mother complained, "You would be dancing on my son's grave." The latest casualty of the relatives' wrath is the "Freedom Centre", a museum headed by one of George W Bush's Republican pals, no less, which is about to be expelled from the site because its board refuses to guarantee that exhibitions will never criticise the United States. So much for the First Amendment.

The main factor inhibiting Ground Zero's speedy development, however, is that the Financial District, of all places, is suffering from capital flight. Ever since the 1950s business has been drifting away from Wall Street in Lower Manhattan (at the southern tip of the island) to relocate in the more congenial surroundings of the shopping district of Midtown Manhattan. The glass cliff of newly built towers across the Hudson in New Jersey is also tempting companies looking to cut costs.

The World Trade Center was built by a corporate alliance of state government and the banks to protect property prices in Lower Manhattan by slowing the area's decline, and for 30 years that alliance was successful. After 11 September 2001, however, businesses fled to cheaper and safer locations - and they show little sign of wanting to return. Silverstein's 7 World Trade Center, the only building under construction near Ground Zero, is nearly complete and has yet to find a leaseholder. The chances of filling the 2.6 million square feet of the Freedom Tower are similarly bleak: the only people to suggest they will take space are, predictably, Pataki's office and the port authority.

Former twin towers tenants are reluctant to commit. Michael Jacobs, managing director of the May Davis Group investment bank, who was trapped in a lift in the north tower on 9/11, says his employees do not want to work in the Freedom Tower. "They wouldn't be happy," he said. "And if we knew people wouldn't be happy, we wouldn't move back." The Ground Zero blight is contagious. Goldman Sachs became so frustrated at the lack of progress that it cancelled building its new headquarters downtown and began looking in Midtown. Alarmed at the consequences to Lower Manhattan, Pataki and Bloomberg gave the bank $1.65bn in interest-free, tax-exempt "Liberty bonds", saving $9m interest a year, as well as a further $150m in tax breaks and cash grants. Goldman Sachs changed its mind.

Other banks have also been quick to snaffle taxpayers' money. Liberty bonds, raised by Congress to finance rebuilding at Ground Zero, to bolster Lower Manhattan and to build affordable housing downtown, have been siphoned off to fund more lucrative schemes elsewhere, including $650m towards a Midtown office block for Bank of America and $113m for a Bank of New York tower in Brooklyn. A scheme to subsidise the new New York Times headquarters in Midtown to the tune of $400m was halted after public protest. The American press, cowed by the patriotism demanded by the Bush administration, has been noticeably silent about the lack of progress at Ground Zero.

There is brighter news. Santiago Calatrava has designed a dazzling World Trade Center subway station for the city's transport authority. But that is about all. This month, on the fourth anniversary of 9/11, when Americans come to pay their respects where the twin towers once stood, there will be little to trumpet.

It will be years before the redevelopment of Ground Zero makes financial sense. Like the weed-covered bomb-sites-turned-makeshift car parks that once scarred London's landscape, it will remain a gaping wound, taunting the United States about the shortcomings of its market economy. If he is still alive, somewhere on the desolate border between Afghanistan and Pakistan, Bin Laden might allow himself a wry smile.