The Arts: From a city in decline to European Capital of Culture 2004, the French city of Lille sets the pace for Cork next year, writes Lara Marlowe

From the moment you step off the high-speed train in Lille Flandres station, you're confronted with the city's transformation. Pink-tinted glass has replaced the old clear roof panes, and even on a grey day, the cavernous space is bathed in pink light. Hot pink globes the size of basketballs adorn streetlamps in front of the tracks.

For decades, Lille was perceived in black-and-white. In the 1970s and 1980s, the textile plants and steel mines closed and Lille sank into post-industrial depression. With a substantial immigrant community, 12 per cent unemployment and a young population - 42 per cent of greater Lille's 1.2 million residents are under the age of 25 - the northern French city was a daring choice for European Capital of Culture.

A third of the way through the year-long festival, Lille is invigorated and visitors are flocking to its 90 art exhibitions, daily concerts, plays and street parties. There are dancing robots, circus artists playing music while suspended on trapezes, interactive films where the visitor is held back by a man on screen and Shakespeare in three languages.

"We're giving Lille back its colours," says Laurent Dréano, the co-ordinator of Lille 2004. Dréano harks back to Lille's glory days as the capital of Flanders, a trading city and the crossroads between London, Paris and Brussels. Throughout its decline, Lille never lost its reputation for conviviality. "People here know how to throw a party," Dréano continues. "C'est 'le place to be'." If anything, the European Capital of Culture is a victim of its own success. A tidal wave of 600,000 people came to the opening night on the feast of Saint Nicholas last December 6th; only 150,000 were expected. Some complained they couldn't hear conductor Jean-Claude Casadesus and the Orchestre National de Lille playing Berlioz's Chant des Chemins de fer in front of the Lille Flandres station. But the street party nonetheless continued all night, without a single incident.

Many events are over-solicited and queues form for everything from the Rubens exhibition at the Palais des Beaux Arts to drinking tea at the Chinese pagoda in the Rue Faidherbe. With 2,130 events - compared with 130 scheduled so far for Cork 2005 - it's difficult to choose. No event is entirely pre-sold, so there's always a chance of admission.

Lille wanted to host this summer's Olympic games, but lost to Athens. Becoming the European Capital of Culture was a consolation prize. "This is much better," insists Catherine Cullen, the half-Scottish, half-French cultural adviser to Lille's socialist mayor, Martine Aubry. "With the Olympics you make a huge investment and you're left with a lot of ruins when it's over. With culture you go on forever." The most important permanent contribution of Lille 2004 is the creation of 12 "Maisons Folies" across the region. Only one of the cultural centres is a new building.

Others took over a former linen factory, a disused brewery, a 17th-century convent and a 17th-century mansion. The "Maisons" are intended to be less formal than the cultural centres established by André Malraux. Their goal is to involve local residents in art, and they'll include artists' studios, dining rooms, children's playrooms and gardens.

When Dréano and four colleagues began planning the festival in 2000, they decided to invite the entire region to participate, including eight towns and cities across the border in Belgium. Every one of 170 towns is hosting at least one event. And many events move from one location to another. For example, Lucie Lom's Suspended Forest, an amazing sound and light show that projects a forest upside down, 12 metres above the ground, started in Roubaix, has moved to Arras and will run in Lille until the end of June.

The festival's full-time staff have grown to about 50, and they work feverishly, if chaotically, in an open-plan room in the Euralille shopping mall and office complex between Lille's two train stations. Through the glass wall overlooking the motorway, you can see four of the festival's signature pieces.

To the far right, beside the train tracks, a 20-storey high-rise has been decorated with 1,880 lime green neon lights. Different sections of the building light up, turning it into one of the festival's four modern-day Flemish jacquemarts or "jack-in-the-clocks".

Closeby is the Crédit Lyonnais tower, known as "La Botte", by Christian de Portzamparc, France's best-known contemporary architect. The silhouette of a unisex character wearing a Portzamparc "boot" on each foot strides through the sky on the festival's poster. The third season, which begins in September, will have a strong architectural component, including an exhibition of Portzamparc's work.

In the esplanade below the Lille 2004 headquarters stands Yayoi Kusama's brightly coloured polka-dot sculpture, The Tulips of Shangri-La. It was part of the Flower Power theme of Lille 2004's first season. Along with a half-dozen other sculptures, it will remain when Lille is no longer capital of culture. To the left stands Lille's 17th-century Roubaix Gate, one of several historic sites which were renovated for this year, outside the festival's €73.7m budget. Every night, four such venues are transformed by artists using neon lights and lasers.

Much of the infrastructure underpinning Lille 2004 was already in place: Vieux Lille, the cobble-stoned 17th- and 18th-century heart of the city, was renovated a decade ago. The neo-classical Opera House was shut down in 1998. Its €20m renovation was speeded up so it could be ready for the festival, and it hosted Mozart's Don Giovanni in the first season.

Dréano says Lille 2004 benefited from about €70m in investment outside its budget. That includes some work on the city's already excellent transport system. Lille is a main stop on the Eurostar line to London, and on the high-speed TGV route from Paris to Brussels. Metro lines extend almost to the Belgian border, and there are tramways within the city.

Indeed, the festival chose transport and movement as one of its themes. An author of science fiction comic books placed seven high arches representing launching pads for outer space on the streets of Lille as well as the nearby towns of Lomme and Maubeuge.

But the main theme of Lille 2004 is La Fête.

"Our region has a strong festive heritage," explains Dréano. Valenciennes, half an hour by train from Lille, is hosting a superb exhibition of the 18th-century painter Watteau, who was inspired by Flemish masters in his portrayals of refined country parties.

Festival organisers have integrated several pre-existing fêtes, including Lille's annual soup festival in May, which was attended by 80,000 last year. This year's event will serve soup from around the world, free, along with street music.

The Grande Braderie, an enormous, city-wide flea market where the inhabitants of Lille offer heirlooms and junk in front of their houses, will be used to launch the third season in September.

And Lille 2004 is reviving lost traditions. The Giants' Parade from July 9th to 11th is a northern custom going back to the middle ages. Some 300 cardboard and papier mâché figures, up to eight metres high, will converge on Lille. The giants represent people, animals and monsters, and they will be joined by creations from Mexico and China.

The festival is also importing new traditions. On April 3rd, 10 giant sculptures, representing Lille's 10 quartiers (quarters), will burn all night. The sculptures are known as Fallas and the idea comes from Valencia, because Flanders was ruled by Spain for a century.

Thirty-two weekends called "Parallel Worlds" are an important part of the festival that seeks no foothold in Flemish history - merely the joy of transforming a neighbourhood into New York, China, Montreal, Poland, Marrakech, or according to themes such as "piano" or "tango". Sometimes the mix is eclectic: the Rambla of Shanghai, for example, is inspired by the pedestrian district of Barcelona but imitates the features of China's most vibrant city.

Catherine Cullen's advice to Cork 2005 is simple: "Make sure your citizens feel involved". Before the festival started, Lille 2004 received 15,000 applications from "ambassadors" whose volunteer duties range from spreading news about events, to serving coffee and croissants at 4 a.m. after the launch of the second season on March 6th, to running the coatroom at the Rubens exhibition.

Cullen sought ideas from residents of Lille's quartiers. Many of their projects have been incorporated into the programme. For example, an artist wanted to give painting lessons in the low-income housing projects known as HLMs.

"The five poorest HLMs gave him space in their buildings," Cullen says. "Classes are packed, with kids as young as six and adults as old as 80. He's spending two months in each place, and we decided to replace him with other artists as he moves on. At the end of the year, the town hall will exhibit all their pictures."