It's the kind of story that provokes knee-jerk reactions. As soon as the press reported that Berlin's mayor, Eberhard Diepgen, wouldn't attend last week's ceremony to dedicate the construction site for a mammoth Holocaust memorial near the Brandenburg Gate, he came under fierce attack.

Political opponents at home accused him of tarnishing Berlin's image in the world, and across the Atlantic commentators were quick to conclude that the snub was a harbinger of a disturbing trend. Washington Times columnist Helle Bering denounced the "moral smugness and lack of historical sensitivity and perspective" of the current generation of Germany's leaders. In other words, the Germans can't be trusted: given half the chance, they'll try to slam the door on the past and pretend they have nothing to atone for.

I just wrapped up a three-and-a-half-year tour as Newsweek's Berlin bureau chief, and I beg to differ. Quite emphatically. Diepgen may not have exhibited political finesse in the way he ducked this ceremony, but his determination to be a no-show shouldn't be misread. It's part of a basically healthy process, a growing willingness on the part of Germans to speak or act according to their beliefs, rather than reflexively looking for the safest, least controversial stance on every issue touching on the legacy of the Third Reich.

But this doesn't mean that Germans are trying to shove the past into a closet where it can be forgotten, as most Austrians have done for so long. Nor does it mean that they have suddenly shed what German-Jewish historian Michael Wolffsohn has called their "terrible national angst"--their continuous, often agonizing efforts to confront and live with their past. It's just that this struggle is entering a new phase.

The controversy over the Holocaust memorial in Berlin encapsulates both the old and the new approach to such issues. After years of debate, last year the German parliament approved the construction of a five-acre memorial, at an estimated cost of $26 million, in the heart of the newly unified city. The plan, as designed by American architect Peter Eisenman, is for a field containing over 2,000 stone pillars and a "documentation center" that's supposed to give the memorial at least the trappings of an educational as well as a commemorative function.

But the suspicion lingers among many critics of the project that its immense size works against it, making it little more than a place for visiting dignitaries to drop off their obligatory wreaths. It will be too impersonal to have much of an emotional impact, they say, and the money would be better spent on renovating the concentration camp museums or on other worthy educational projects.

Jews inside and outside Germany have been deeply--and vociferously--split on this issue, making it doubly difficult for Germans to decide what constitutes the right course of action. At a dinner party at my apartment in Berlin, a Ukrainian-born Jewish immigrant berated a German parliamentarian for voting with the majority that approved the memorial. "Just imagine what the world would have said if we had voted this down," the MP sighed, leaving little doubt that he felt he had no choice, whatever his private reservations.

That's pretty much the old German approach. What's new is that at least some Germans are voicing their misgivings publicly, no longer paralyzed by the fear that they may be branded anti-Semites if they do so. They're emboldened by the Jewish critics like Daniel Libeskind, the American architect who designed Berlin's stunning new Jewish Museum. While ostensibly reluctant to comment about the plans of fellow architects, he sardonically notes: "Just because you make something bigger doesn't make it better."

Diepgen shares the view that the project is too "monumental." But, more importantly, some Germans feel that they need a more open, honest approach toward everything that flows from their past. In 1998, novelist Martin Walser sparked a furious debate when he warned against exploiting Auschwitz for current political purposes and criticized the "ritualistic" way Germans talk about their history. He angrily fought back accusations that he was trying to put an end to discussions about the Holocaust. "This chapter of history can never be closed--it'd be crazy to think so," he told me. "But you cannot prescribe how Germans should deal with this country's shame."

And, make no mistake, that sense of shame is still there, even among younger Germans. A German journalist in her 30s recently explained to an audience of Americans and Germans that her generation has grown up with the notion that they comes from a family of "reformed criminals," and that they can't help but wonder if some "criminal gene" may have been passed on by their grandparents and parents. In the classroom, on TV, in the movies, Germans are bombarded by lessons from the past. To their credit, they rarely try to hide from this bombardment. In fact, books like Daniel Goldhagen's "Hitler's Willing Executioners" are best-sellers in Germany, and movies like "Schindler's List" draw huge German audiences.