View from Palermo, Sicily: Palermo is like nowhere else, next to Africa but in Europe, combining traces of great historic riches with extraordinary squalor only gradually being alleviated.

Palermo is immensely old. Founded by the Phoenicians in the seventh century BC, it was seized by the Romans as their empire expanded. They were succeeded by the Byzantines who got it back after an Ostrogothic interlude. By conquest, papal and imperial intrigue or marriage it passed to Saracens who came from what is now Tunisia, then Normans, Holy Roman Emperor Hohenstaufens, Angevin French, Aragonese and the Spanish Bourbons. After them came the government of an Italy united under the northern Savoyards and, less than a century later, the bomb-heralded arrival of the Allies in 1943 (themselves soon bombed by the Germans). Each regime left its mark on the fabric of the old city, which flops lazily round its ancient natural harbour under the massive, green forested Monte Pellegrino at the sea end of the Conca d'Oro valley (the Golden Horn of Plenty).

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Traces of immense wealth abound. Norman churches with glittering Byzantine mosaics are embedded in a matrix that embodies fragments from every period. Is that a Saracen tower enerusted in a medieval tenement? A wild Mannerist town gate erected to celebrate north African victories of the emperor Charles V abuts the straggling Palazzo dei Normanni, still the seat of regional government, on the site where the Saracen emirs had their castle, which was itself reputedly built on top of the original Punic fortress. Baroque palaces like the town house of Lampedusa's Leopard (the elegant, melancholic prince who watched his island being changed from feudalism to Mafia capitalism in the nineteenth century) are nudged by tottering five- or six-storey seventeenth-century flats. But now, the lodgings of the poor sometimes seem more stable than the palaces, where you can often look through glassless windows and see the sky because the roofs were blown off in 1943, and the owners have never had the will or money to restore them.

Parts of the city are still in rubble caused by bombs and earthquakes. Palermo must be the only place in Europe where you can still see the terrible devastation of the Second World War--and the awful disparity of wealth in early twentieth-century societies. In some places, people are still living in the ruins. Sicily is almost in Africa. Parts of the old city look like Cairo where, because of laws introduced by the British in the Second World War that hold down inner urban domestic rents, only the lowest floor of a tenement is still profitable and usable. But in both cities, there is very lively street life: shops, restaurants, cafes and markets jostle round religious buildings. Apparently, the cause of the continuing decay of Palermo's old city is not antiquated military laws, but the Mafia, which still controls a large part of the building and development industries. European Community money is poured into Sicily, which is not only one of Europe's poorest regions but an island, which gives it even more claims on communal funds. Yet in Palermo, the money often seems to get stuck in pockets before it can be turned into buildings.

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But in even the poorest parts of the inner city, there are signs of improvement. You no longer have to be very afraid of walking in the poorest districts, where the guide-books tell you to beware of people hurling objects down off their balconies to disable visitors so that they can be robbed easily. Indeed, balconies are re-emerging in new developments throughout the poorest parts of the old city, where a new vernacular of four- or five-storey walk-up flats, publicly and privately funded, replaces ruined traditional tenements. Storey heights and elevational ratios of solid to void reflect traditional texture without descending into kitsch.

The old town focuses on the crossroads of what must have been the Roman cardo and decumanus: the Quattro Canti, where Baroque palace elevations front the square, now intolerably overrun by traffic (Sicilians are determined drivers). To the north of the medieval and Baroque centre is the Citta Nuova, in which the regular grid of a rational plan, like the earlier one of the New Town of Edinburgh, sets off the great monuments of the last phase of Palermo's prosperity, when the rich built palaces and public buildings in an extraordinary flowering of Liberty-style (Italy's answer to Art Nouveau, named after the hugely influential shop in London). Escape from the old, crowded, stinking, dirty, poverty-stricken city must have been a priority for anyone who could afford to do so in the nineteenth and early twentieth centuries. Much of the resulting fabric was built in Fascist times, and the sober, scraped, dull but essentially urban street fronts of that era set off the frolicsome Liberty monuments.

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Further out, interlaced with EU financed motorways, are endless crumbling concrete suburbs, in which the poor of the inner city, and those who flocked to Palermo from the countryside, were housed after the war. No foreign visitors go there, but in several parts, conditions are not much better than those of the worst parts of the slums. Strangely, in the middle of this disastrous failure of the Modernist dream, are embedded extraordinary remnants of the Norman-Saracenic palaces like La Cuba built in 1180 by the Norman William II (the Good): a castle that lives up to its name, once set in an enormous pleasure park, full of strange plants where the king lived with a large harem and menagerie.

William the Good also founded the cathedral of Monreale, the royal mountain, some 10 kilometres south of the city at the head of the Conca d'Oro. It was a riposte to the power of his former friend the archbishop of Palermo who ruled in a cathedral now ruined by a disastrous early nineteenth-century Neo-Classical makeover. The unpretentious little town of Monreale has the most magnificent Byzantine interior that exists anywhere. William used craftsmen from Constantinopole to create the interior, in which the gold mosaics still create the sensation of being transported to a luminous heaven, experienced by barbarian visitors to Hagia Sofia which was built six hundred years before and has lost most of its decoration. The image of Christ Pantocrator, the all powerful, in the semidome of Monreale's apse is not terrifying, unlike its pictures in the art books. He looks down on you with great tenderness, and over a chancel and nave on the walls of which the whole story of the bible is magically told in little bits of stone and glass.

William II's grandfather Roger II created the Cappella Palatina, much smaller than Monreale's cathedral but a foretaste of its golden narratives, as part of the Palazzo dei Normanni. It crowns a city that is often slovenly, dark, frightening, collapsed, corrupt, clandestine, racked with poverty and posturing business and bureaucracy. Yet its fabric is slashed with Baroque shafts of light, layered with tales and studded with arcane wonders. Palermo's ancient and often tortured fabric remains as a vibrant and moving fable of what urban life once was, and perhaps could be again. But it could all be irretrievably changed if Berlusconi succeeds in building his bridge over the Straits of Messina (scheduled for completion in 2011 but much contested). It will draw Sicily to mainland Europe and pull it away from Africa, and its amazingly intertwined past. P. D.