Perhaps it’s a sign of the times that the artist most constantly invoked on my first day at the Sydney Readers’ and Writers’ Festival last year was not Patrick White or Orhan Pamuk or WG Sebald, but that mumbling icon known as Robert De Niro. “I don’t want to start thinking of novels as if they were just film-scripts in disguise, waiting for Robert De Niro,” a best-selling novelist told me over lunch. I turned round to meet a Lebanese writer from Montreal who had just published his first novel, about his country’s civil war. What’s its title, I asked. “De Niro’s Game,” he said, with magnetic intensity. “As in Robert De Niro.”

At breakfast three hours earlier, the most memorable moment had come when a novelist told me he had received a call “from Robert De Niro’s people, from the set of The Good Shepherd. They wanted to tell me, ‘We’re going to get Paramount to option your book’”.

The convergences say something about Sydney. I certainly hadn’t had conversations like this at similar festivals in Auckland a week before, or even LA the previous month. It is, pre-eminently, a city on show, a place of bright, seductive exteriors; where Melbourne prides itself on its secrets, its privacies – everything that can be discovered only on second, or 22nd, meeting, in its sometimes rainy and certainly weathered interiors – Sydney is a city that advertises itself right off and discloses everything on arrival: the floating light “sails” of the Opera House, the heady blue (and, for the most part, unpolluted) skies, the blondes who drive their red sports cars with the top down through the Central Business District (or “CBD”, as its sparky nickname has it).

A Los Angeles without fuss or urgency, a San Francisco alive with the al fresco pleasures of the moment – tapas bars along the wharf where all the tanned bodies and free-and-easy fashionistas park themselves on couches under the gorgeous skies – Sydney might be a billboard for the Good Life in its latest sleek, hyper-visual incarnation. The city has always seemed to lie midway between Ireland and California, peddling a “G’day” irreverence that comes from living a long way from other people’s standards and codes, and making up its rules itself; even in its sparkling new multicultural duds, it can have the (fresh) air of a London that’s got a tan, scrubbed its face very clean and shed its clothes. Bankers head home from work on the ferry in white shirts and backpacks, and when you look up amid the new high-rises, what you see, at end of day, is a huge moon rising over tropical palms.

The “tyranny of distance,” as it’s been called, gives Sydney, like the country around it, its own unimpressionable savour, just like the man beside me at a very formal lunch who, as soon as a speaker began talking of her Pentecostal girlhood, whipped out a business-card on which he was identified only as “atheist”. Jesus “is the only one who gives you spirit without damaging your liver”, announced the sign outside the church as I drove in from the airport, turning the same bravado in the opposite direction. Two tall blond boys were walking hand-in-hand among the skyscrapers as I disembarked at my hotel, insouciant advertisements for themselves.

Sydney, in short, is openness, unasbashedness, the girls in white, the men with shoulder-length locks arranging themselves in yoga positions along the walk from Bondi Beach to Bronte at first light, as perfectly framed against the rising sun as posters for a club-class, New-Age world. “In Melbourne we believe in keeping everything behind closed doors,” a theatre director from that second city assured me. “You see a street that’s completely empty, and you go through an alleyway and come to an inner courtyard. Sydney thinks heaven is a pair of ugly shorts.”

Even though she was trying to put down her urban rival, she couldn’t help confessing that “there are many people in Melbourne who would love to live in an English vicarage. Their image of heaven is a small plot of green, sipping tea with Jane Austen with their pinkies raised.” Sydney, she might have been saying, is really, by contrast, a city of the future, a shiny, three-dimensional trailer for the pleasures of the new century. “We believe in seasons in Melbourne,” she went on, “in textures, moods. Things are turned inward for us, back towards the past.”

At the same time, none of this makes Sydney an obvious home for the word. The city, like the continent it cradles, is more and more famous for supplying the global screen with its most potent talents: the Nicole Kidman or Toni Collette who have become among the most commanding figures in our planetary Hollywood precisely because they can play to perfection Californians or old Britons or themselves. Some studios make some of their “American” movies in Sydney these days, and the Sydney Film Festival was arriving in town the very week the Readers’ and Writers’ Festival subsided (festivals themselves a way a city shows itself and its unofficial pleasures off to the world).

Twenty years ago, the centre of the city seemed just a small cluster of grey buildings surrounded by green parks, the engulfing harbour, the hourly attraction of the skies; now Sydney is much more obviously grown-up, plugged into the global circuit, bristling with importance and post-Olympic confidence, as able to position itself near the centre in a cyberworld as any European city with a thousand years of history.

Its main industry, excitingly, seemed display. The overflow crowds at the festival often sat outside under a blinding sun, listening to talk on the Iraq war or the future of globalism on loudspeakers as they sipped their white wine by the water, the sun burning on the blue and the TVs in the distance announcing that this was the first day of winter. “This is a very sexy city,” an English exile told me on my first night in town. Sydney can sometimes seem a city of grateful exiles. As she spoke, I remembered how one of my most vivid images of Sydney from Australia’s bicentenary year was of a couple openly giving and receiving sexual favours in the otherwise genteel tropicalism of the Royal Botanical Gardens.

Now those same gardens advertised an exhibition of orchids and “carniverous plants” with the title Sex and Death. Every other street seemed to fly rainbow flags. Its very brazenness and outwardness appeared to be the way that Sydney would answer the enduring question of how it would become a city of importance without losing its habitual irreverence; how, in effect, it would get to work and claim real ambition and success while still telling itself that it wasn’t trying too hard and its main investment was in irony.

I’m not convinced that Sydney will ever really become a city of the book, made for the indoors, introspective world of novels, though of course the place constantly produces more than its share of great writers. Right at the heart of the tourist area of Circular Quay, the city has placed plaques on the ground, the Down Under equivalent of the stars on Hollywood Boulevard, to celebrate and recall all the writers (not film directors, movie stars, architects or style consultants) who have carried its distinctive voice of intelligent subversiveness around the globe: Robert Hughes, Clive James, Peter Carey, Germaine Greer. The only trouble with that roll-call of world-class literary talents is that two of them have written all their lives in London, the other two in New York.

Yet as the crowds poured in to hear writer Andrew O’Hagan begin the festival with a soaring address about the power of the word that evoked the Australia some of his ancestors had escaped to as a “blue heaven of the imagination”, and as the Lord Mayor herself, in the ageless, self-mocking way of Oz, officially opened what she called the “carbon-neutral writers’ festival” by calling her home “something of the Paris Hilton of cities: shallow, self-absorbed, famous for being famous” (at least as the rest of the world sees it), I found myself less able to resist the city’s particular gift for making indoor pleasures outdoors, democratic, sunlit ones. By now the Writers’ Festival is the third-largest in the world, bringing in more than 65,000 people to enjoy more than 320 panels and more than 420 writers, many of us coming from the far corners of the earth. (This year’s festival lasts the whole of May.)

At my first session, I found myself in a second-floor acting space on a wharf, in a room full of windows through which the setting sun picked out gold in the skyscrapers and the entire audience could savour what I had found to be the greatest pleasure of them all in Sydney: the light show put on by the southern sun every day between 4pm and 5pm in tropical winter. The streets outside brought together several centuries with their old imperial buildings, their abundant parks, their convicts’ museums and the transparent white blocks – like the Icebergs Club in Bondi – that offer swimming-pools just above the beach. Robert De Niro may not have made an in-person appearance, but one event in the Readers’ and Writers’ Festival featured a new movie starring Aussie hunk Eric Bana. And the writer that many of us were keenest to hear was that very English star of the American screen Richard E. Grant talking of imperial Britain, of his adventures among the crowned heads and covered tails of Hollywood.

Pico Iyer’s most recent book, ‘The Open Road: The Global Journey of the Fourteenth Dalai Lama’, is published by Alfred A Knopf in the US this month and by Bloomsbury in the UK in May

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