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It's around 11 in the morning and the ferry to Watsons Bay has just pulled out from Circular Quay, Sydney's main ferry terminal, briefly churning the water to the color of peppermint ice cream. I'm sitting outside on the upper deck and am already conscious of a sense of profound well-being. I am clearly not alone in this feeling, as most of the other passengers look notably cheerful and relaxed. And it's not because they're on holiday. Most are carrying briefcases; some of the men are even wearing ties, albeit with short-sleeved shirts, just like the ones I used to wear, until I went to high school.

Within two or three minutes we reach a point in the harbor where the city's famous Opera House, the Harbour Bridge, and Admiralty House (the home of Australia's governor general), form an equilateral triangle. It is the nexus of the city and a point where, to lift a line from Wordsworth, "every prospect pleases." Okay, Sydney's office buildings are rather utilitarian examples of corporate modern architecture, there is an egregious observation tower sticking up insistently in the background, and the Harbour Bridge has a slightly industrial appearance. Moreover, the Opera House, which from the shore lives up to its reputation as one of the most original building designs of the century, when seen from the harbor has a kind of unfortunate, gap-toothed leer. Nonetheless, the panorama ranks among the most stirring sights in the world, a splendid instance of the whole being greater than the sum of the parts. It makes you feel better just to look at it.

Leaving this glory in its wake, the ferry chugs off down the southern shore of the harbor. To our right now are the Royal Botanic Gardens, where even from this distance flocks of yellow and white cockatoos can be seen, hurling themselves into gum trees. Next there are the navy yards in Woolloomooloo Bay, where a couple of frigates, keen and lean as greyhounds, are leashed to a dumpy supply ship. Then comes a succession of inviting residential bays and peninsulas: Elizabeth Bay, Darling Point, Double Bay, Point Piper, Rose Bay, Vaucluse, and finally Watsons Bay, just around the corner from South Head, where the harbor meets the Pacific. There's something unimprovable about this shoreline, even though it lacks the grandeur of Hong Kong or Rio, and its low hills are covered for the most part by houses of unremarkable design. Yet who wouldn't want to own one? Especially one down by the water, with a view of the Harbour Bridge and the Opera House and a lawn that ends in a jetty.

I'm bound for Rose Bay, the pinnacle of Sydney real estate. (Double Bay may boast glitzier boutiques and jewelry stores, but Rose Bay is the summit of residential aspiration.) Unhappily, I haven't come on a house-hunting expedition; rather I'm due shortly at the Rose Bay Seaplane Terminal for an aerial tour of the city. With much juddering and clanking, the ferry makes fast and I descend the gangway in a jostle of lean, suntanned bodies. Out in the harbor, a stiff ocean breeze forces the yachts to heel over, and three or four even have their spinnakers out. Here on shore the air is still, tiny wavelets flutter and expire on a pristine white-sand beach, and two or three hundred small boats lie supine at their moorings. While over at the Seaplane Terminal itself, a lovely, old De Havilland Beaver floatplane seems glued to the water's glassy surface.

My pilot's name turns out to be Ali, a reminder that Sydney these days is far from being an exclusively Anglo-Saxon city. At the end of World War II, the majority of its inhabitants were of British origin. Then came the Italians, Greeks, and Lebanese, followed shortly by Vietnamese, Chinese, Japanese, and Indonesian settlers. Nowadays Sydney is cosmopolitan and polyglot. Ali is clearly second generation, however. His accent is broad Aussie, and his manner has that uniquely Australian laid-back affability. Ali eases out the throttle, and the propeller blurs. Leaving behind a widening trail of foam, the plane slides into the air and heads off toward the Pacific. Below are the famous beaches—Bondi, Coogee, Manly—stretches of shining sand on either side of the narrow harbor entrance. Ali dips the wing to point out a couple of right whales forging along, parallel to the coast. Then, banking steeply, he heads back inland, flying over bays where pleasure craft are scattered as thickly as confetti after a wedding.

From 5,000 feet up it's quite easy to appreciate writer Jan Morris' observation that "Sydney is preeminently a city of suburbs." The Harbour Bridge and Opera House lie dead ahead—next to a smallish clump of high-rise buildings—but in every direction urban sprawl extends as far as the horizon. At present Sydney officially covers 4,787 square miles, an area eight times the size of Rome. In part this is due to the ready availability of land; but it is also a reflection of the prevailing Australian democratic spirit, the insistence that ideally each family should have a patch of ground to call its own. After 20 minutes of pure exhilaration—a harbor flight should be high on your list if you are a first-time visitor to Sydney—Ali cranks down the flaps, and we land with a faint jolt and a spectacular cascade of spray.

By now it is lunchtime—and back in Rose Bay, on the balcony of Catalina, one of Sydney's groovier restaurants, a couple of dozen people are sitting under a white awning, eating rock oysters, Balmain bugs (a kind of langouste), and lightly grilled fillets of barramundi. Inside, the restaurant is crowded with all the usual suspects: producers, agents, P.R. consultants, fashion designers, and over in the corner behind dark glasses someone who could conceivably be a rock star, judging by the designer stubble and the expensively acquired dishevelment. Most big cities now possess such modish establishments, and purely from the faces (tanned), the clothes (black), and the decor (minimalist), it would be difficult to decide where you were. And yet I am struck by something distinctive. Maybe it's the sheer intensity of the light, bouncing up off the water, surging in through the open glass doors, and flooding the ceiling with liquid and shifting reflections. No. It can't be just that. Then I get it. Everyone is drinking wine. On a weekday. At lunch. And not just a glass of watery Pinot Grigio, but whole bottles of robust-looking Cabernet Sauvignon.

The inhabitants of Sydney are called Sydneysiders—nobody knows why—and any one of them will confidently assert, without the least apparent fear of contradiction, that he or she lives in the most dynamic, generally Manhattanish place in the Southern Hemisphere. At first that seems true. There are office towers and a stock exchange, and everyone talks about how fast-paced life is, just like they do in New York. But all of those people ordering one last bottle of Cabernet Sauvignon, at three o'clock on a weekday afternoon, certainly give one pause for thought.

Later in the day I raise the matter with Deborah Light, the editor of the Australian Financial Review. We are sitting high in the sky at Forty One, a restaurant favored by Sydney's business elite (and so named because it's on the 41st floor of the Chifley Tower). Sometimes, I suggest, it can be hard for an outsider to figure out why Sydney is so conspicuously affluent. Where does all the money come from? You don't have to live in Manhattan long to understand why it's a wealthy place. The sense of striving is palpable. But Sydney? It seems more devoted to pleasure than to acquisition. This observation is not very well received by the otherwise extremely affable Ms. Light, and I find myself the recipient of a chilly stare.

"Sydney is a world city," Light insists. "It's a place where deals are done." There follows a brief, awkward silence before she goes on. "But nowadays a lot of wealth is created by immigrants, by new arrivals striving for a better life. Take the western suburbs, for example. That's where people tend to settle first. There's a huge amount of growth there right now, not least because of the Olympics. That's where they'll be held."

The following morning I go to see Leo Schofield, who works in a suite of downtown offices home to many of the boards charged with turning the 2000 Olympics into a civic triumph. Schofield is universally known as Mr. Sydney. I turn up prepared to be cynical—and am immediately charmed. Though in his early 60s, Schofield generates enough energy to light up a small town. Back in 1993, after a successful international career in advertising, he was hired to run the Melbourne International Festival of the Arts. Then in February 1997 he was poached by Sydney—a bit like dumping the Yankees to sign for the Mets—to become both director of the annual Sydney Festival and artistic director of the 2000 Olympics Arts Festival. In addition to these responsibilities, Schofield is currently chairman of the Sydney Symphony Orchestra and a weekly columnist. "Well, Sydney can be an intense city," Schofield insists. "It is a kind of mini-Manhattan. In comparison, Melbourne works at a very leisurely pace and has a very gentlemanly order to things. Sydney is much more cut and thrust. It's a go-for-it city. But what you have to understand is that because of the water and the climate, Sydney is both a commercial metropolis and a resort. You see people standing side by side at a pedestrian crossing, one in a business suit and one in shorts. And there's something about that which generates a tremendous sense of ease."

I try without success to think of another big city about which the same might plausibly be said. And upon reflection I realize that Schofield is absolutely right.

"I suppose that my quintessential Sydney day," he continues, "would be to finish work, go to the beach, get myself nicely warm, have a bracing swim, and then find a stiff vodka and tonic, before going to watch open-air opera or a concert."

So when, I inquire, did Sydney first shake off its provincialism and discover the ambition to be a world capital? Once Australians were known for having an inferiority complex in regard to Europe and America, a state of mind known here as "cultural cringe." But now this seems to have been replaced by a confidence bordering at times on arrogance. "We don't compare ourselves to Melbourne," one Sydneysider said to me scornfully, "but to New York, Paris, and Rome."

"It was in the early seventies, with the arrival of the Whitlam government, that times began to change," says Schofield. "I came back from London in 1965, and I remember thinking 'Oh my God! What have I done?' From a city where the newspapers had four or five pages of things I could do at the weekend, I returned to one with half a page of rather tawdry attractions. But the improvement was rather rapid. Partly that was to do with immigration—mostly from Asia—which has benefited Sydney more than anywhere else in Australia. And of course the Opera House was finally finished in 1973 and became a symbol of the city's transformation."

From Leo Schofield's office in the business district, I stroll along George Street, which eventually leads to The Rocks. This is where Sydney began—the precise spot where, a little over 200 years ago, the first Europeans stepped ashore. The Rocks became infamous for its brawls, brothels, and carousing sailors determined to make up for the enforced abstinence of several months at sea. But these days it's all very tranquil. There are bookshops, museums, and numerous restaurants, of which Rockpool is the most fashionable and best known. The city's most elegant hotel, The Observatory, is at the northern end of the district, and the Sydney Theatre Company is based on one of the old wharves. Even the terraces of Victorian cottages—with their distinctive wrought-iron railings—are these days freshly painted and lovingly restored. But as I walk down Argyle Street, beneath the Harbour Bridge and toward Circular Quay and the Opera House, the modest scale of the 19th-century architecture—tiny dwellings, huddled at the edge of a continent—strikes me as a succinct reminder of just how far Sydney has come from its origins as a British penal colony down at the bottom of the world.

As recently as 130 years ago Australians lived mostly on—or near—the coast. ("A generation ago," Deborah Light told me, "when two Sydneysiders met anywhere in the world, the first question they would ask each other was, 'Which beach did you swim off when you were a kid?' When you knew that, you felt you somehow knew all about them.") But Sydney is rapidly expanding inland, and the present generation of immigrants—mostly Asian—start their new lives in the western suburbs. It is here, in the previously nondescript urban sprawl of Homebush Bay, that the 2000 Olympics will be held (and leave behind $1.01 billion worth of infrastructure). Pretty much everybody—with the exception of cab drivers, who moan endlessly about congestion and the inadequate provision for new roads—thinks the Olympics are a good idea. Indeed, the games are seen almost as the fulfillment of Sydney's destiny. Where better to celebrate physical prowess than a city in love with athleticism and the outdoor life? (It was, after all, Sydney's ocean beaches, with their surfers, lifeguards, and girls with sun-bleached hair, that originally fostered Australia's self-image as the "lucky country," a place of sunshine and plenty.)

And yet the Olympics don't dominate conversation quite as much as you might expect. Doubtless this is partly because the construction is taking place well out of the city center. But maybe Sydney's sophistication is getting the better of it. On a number of occasions it was suggested to me that the Games were all very well—terrific for tourism and a wonderful marketing opportunity—but not really that big a deal. Somehow sport isn't quite cool anymore. These days, most Sydneysiders like to think of themselves as urbane and cosmopolitan—the word sophisticated crops up with metronomic regularity—and the Olympics are an unwelcome reminder of an era when no one here had even heard of arugula. In fact it is food, rather than sports, which is Sydney's current obsession. People now talk in awestruck tones about restaurants with three-month waiting lists (Tetsuya's and Forty One) and display immense civic pride in their inaccessibility. ("Oh, you'll never get in there," I was repeatedly told, with evident satisfaction at this demonstration of Sydney's newfound chic.) That Sydney currently has the best restaurants in the world has become such an article of faith, to suggest otherwise is, at best, considered gross discourtesy, and at worst, blasphemy. (One other tip: Don't order Chardonnay. It's become the Nessun dorma of oenology here.)

The hallmark of Sydney cuisine is the quality of its ingredients—the fish and seafood are invariably superb—and the mingling of styles, chiefly Italian and French, with Thai and Japanese. You often hear it said that Sydney's acceptance and development of "Asian fusion" cuisine is clear evidence of its cultural tolerance. (Not everyone, however, goes along with this point of view. One eminent local food writer told me that the whole culinary phenomenon was chiefly due to Sydneysiders going on vacation to Bali and Thailand and discovering that the food there was much better than at home.) Whatever the truth of the matter, there is no question that the hype is partially justified. You can eat superbly well in Sydney. For example, at Darley Street Thai, in the raffish entertainment district of Kings Cross, David Thompson has created one of the finest Thai restaurants in the world. Not only does he go to the most extraordinary lengths in food preparation—water for his coconut cream takes three days to prepare, being first "smoked" using a jasmine candle and then infused with flowers—but he has unearthed recipes originally devised for Siamese nobility two centuries ago.

The only downside of the food cult is that the more modish restaurants come to be believers of their own publicity. Rockpool, for example, sometimes considered the city's top restaurant, struck me as the temple of some humorless sect. The interior is a forest of stainless steel; and the waiters, swathed in white, like acolytes attending the higher priesthood of the kitchen, swish past the congregation with disdainful disregard. Eventually, having waited well over an hour for my main course, I had the temerity to ask a waiter to tell the kitchen to get a move on. This prompted him to stand hand on hip, staring at me with outraged incredulity.

The weather on my last day in Sydney was fine, so I chartered a yacht with skipper. We set sail from Darling Harbour and having negotiated the congestion beneath Harbour Bridge, we put up a full spread of canvas and were soon close-hauled with spray surging over the bow. There really is nowhere else in the world you can do this. Yes, there are cities where you can set sail from downtown, but only in Sydney can you sail for three or four hours, right in the middle of the city itself. Salty, sunburnt, exhilarated, and extremely happy, eventually we put in at Balmoral Beach in the Middle Harbour and went for lunch at The Bathers Pavilion.

A white wedding cake of a building—once precisely what its name implies—it is now home to a laid-back establishment owned by Victoria Alexander, one of Sydney's celebrity chefs and the author of the best-selling Bathers Pavilion Cookbook. The dining room is cozy, with kilim-covered cushions, paintings with naval or nautical themes, and an open fireplace—for those winter days when the temperature plummets into the low 60s.

It was here that I came closest to emigrating. At that precise moment, Sydney seemed to have achieved a unique and miraculous balance between nature and civilization. It's a city where people still have time to be happy: to eat well, read books, and go to the beach with their children. But in the end, despite this brief epiphany, I couldn't shake off a sense of there being something slightly deficient. Sydney is congenial, but it is also uncomplicated. Never do you sense the fathomless complexity and raw power of a world capital like London or New York. In fact, it's all about the world's most beautiful harbor, which comes with a nice enough modern city attached. I guess this is further confirmation that you just can't have everything in life. Nice try though.

Andrew Powell, a Departures contributing editor, is based in London.


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