Walking along the charles Bridge at sunset, with statues of saints reflected on the moonlit waters of the Vltava River and forms of embracing lovers silhouetted against the faraway castle lights, it’s easy to forget that I’m passing through a battleground. For all its fairy-tale beauty, Prague remains a city where the battles for Europe’s soul have been waged — battles between East and West, Catholics and Protestants, Bavarian princes and Holy Roman emperors, Axis and Allies, communism and capitalism. Today, with the Czech Republic’s recent admission into the European Union, Prague is again facing a challenge as it strives to prove that a nation smaller in size than the state of South Carolina can become a player in the global economy without losing its independent spirit.

It would be a fair guess to assume Prague’s nickname, “The Golden City,” refers to the abundance of yellow baroque buildings clustered along the city’s narrow, cobblestone streets, but the moniker actually stems from a 14th century decree issued by King Karel IV. The king, who established Prague as capital of the Holy Roman Empire, ordered the lead roofs of the city’s walls and towers gilded as a symbol of the empire’s wealth. These days, Czech leaders are advertising the nation’s economic success with a massive building boom. Thanks to an influx of foreign investment, Prague is addressing its traffic and pollution problems, restoring historic buildings and adding new structures to the skyline of a thousand spires. Two of the seven buildings in City Project — a 317,000-square-foot complex of office, retail, entertainment and sporting facilities located outside the city center – have already opened. When the last, City Tower, opens in 2007, it will be the Czech Republic’s tallest building.

The nation’s newfound wealth hasn’t benefited everyone: Unemployment remains at almost 10 percent. However, the economy has rewarded entrepreneurs — both Czech and foreign — particularly in the computer and telecommunications industries. The country’s external trade balance reached the highest level in its 11-year history in May, and consumer confidence remains high: Most Czechs seem to believe better economic times are on the way. Although the Czech koruna continues to fall against the euro, it has risen 12.2 percent against the dollar in the last year, with us$1 now worth about 26.2 koruna.

Things have changed a great deal since 1993, when I first visited the city. The Velvet Revolution had just ended communism in the Czech Republic, and the “velvet divorce” had separated it from neighboring Slovakia. In those days, it was easy to rent an apartment in Prague for $20 a night. Wenceslas Square was still a charming little avenue lined with pushcart vendors and people asking to change money. The whole country seemed to be waking up from a dream. And yet, the city’s sense of self was still intact despite years of occupation by Nazis and Soviets: This was still the city of Dvorak, of Janacek, of Kafka, of Kundera, of towering Gothic churches and fine pilsner beer. This was a city that had the good sense to replace a statue of Stalin with a giant metronome: Politicians come and go, but the beat goes on forever.

Prague has survived the changes wrought by capitalism as well as it withstood the ravages of communism. Neon and Niketown have come to Wenceslas Square, but I could still find a merchant behind one of the dozens of jewelry counters willing to make a deal on an amber ring or a garnet necklace. I didn’t find accommodations — or much of anything else — for $20, but the best things about Prague are still those that money can’t buy: the view of the city from the castle grounds, the mysterious movements of the astronomical clock in Old Town Square, the sight of an accordion player and his dog competing for tips on a street corner.

The best way to see Prague is to get lost. It’s hard to avoid doing this, in any case: In 1968, the people of Prague took down all t he street signs to confuse the Soviet invaders, and I’m not convinced they put any of them back in the right place. The streets are narrow and crooked and blend into each other without warning, and the buildings look so similar that it requires close attention to determine which one is the theater where Mozart premiered Don Giovanni, for example, and which one is a cafe that opened last year. That’s what’s wonderful about wandering in Prague. I never knew what I would discover as I explored the various legends I had heard about the city.

Like most people, I began my visit with a trip to Prague Castle. Fair warning: it’s a long, steep, uphill climb, but the experience is worth the effort. The royal palace is beautiful, and it’s hard not to be impressed by the grandeur of St. Vitus’ Cathedral — the sheer number of artistic styles that blended together during its 585 years of construction is mind-boggling. However, I preferred the simple beauty of the Loreta, a baroque church just behind the castle that has several small chapels surrounding an open garden. The Loreta’s treasury has a terrific collection of jewels from the glory days of the empire, and the Chapel of Our Lady of Sorrows — with its statue of a crucified bearded woman, St. Starosta — has to be seen to be believed. The castle gardens, just to the left of the Loreta, might be Prague’s best-kept secret: The secluded park was nearly empty on the day I visited, and I can’t think of a better place to have a picnic.

Prague’s best — and most popular — walk is the Kralovska Cesta (Royal Way), the ancient coronation route through the Old Town and Little Quarter to Prague Castle. I managed to avoid the crowds by taking the walk later in the day; the experience of crossing the Charles Bridge at night is something I’ll never forget. I felt the same way while wandering through Josefov, Prague’s old Jewish Quarter, and visiting Stary Zidovsky Hrbitov, Europe’s oldest surviving Jewish cemetery. Next to the cemetery is the Pinkasova Synogoga, a former synagogue that has become a memorial to the 77,297 Bohemian and Moravian Holocaust victims whose names are written on its walls.

To say that Prague offers a variety of attractions is something of an understatement. There is a museum for every taste (and lack thereof), including the Museum of the Implements of Torture and the Museum of Sex Machines. Something unusual and unexpected — and often beautiful — lurks around every corner: The Hotel Imperial on Na Porici looks a bit seedy and run-down from the outside, but inside, the sumptuous, tile-lined cafe suggests an Old World decadence reminiscent of Hemingway’s Paris or Graham Greene’s Saigon. (It’s also possible, for reasons that are not clear, to purchase the right to throw day-old doughnuts at your fellow diners.) Even the city’s Metro stations are often as attractive as the buildings surrounding them. They’re also clean and easy to use — and a godsend when the weather turns foul.

Of course, you haven’t really seen Prague until you’ve heard it. Prague is truly a city of music — even Mozart believed he was better understood and appreciated here than anywhere else in the world. Watching a member of a Czech audience leap forward with tears in his eyes and shout “Brava, brava!” at the end of a performance at the Rudolfinum is almost as absorbing as watching the performers themselves. You don’t have to be a fan of classical music to appreciate the variety of sounds in Prague: It’s difficult to walk for more than a few minutes without hearing klezmer on Charles Bridge, Dixieland jazz in Old Town Square, or snatches of rock or ska on the radio. The list of each week’s scheduled performances reads like a who’s who of the musical world.

Shopping in Prague used to mean Bavarian glass, fine lace and jewelry — and I found all of those things among the many shops of Wenceslas Square. These days, however, Prague offers a variety of commerce worthy of a national capital: The large department stores along Na Prikope are especially impressive. For something a little different, I explored the used bookstores and stalls around Josefov — I found the same amber bracelets and Kafka T-shirts as everywhere else, but I also found hand-carved chess sets, ceramics and statues of the Golem, the city’s fabled supernatural protector. I also chose to commemorate my trip by bringing home bottles of Moravian wine and slivovitz (a kind of plum brandy). The truly daring may wish to explore either the legendary aphrodisiac qualities of Beche rovka or the more unusual effects of Czech absinthe — at their own risk, of course.

Before I left, I decided to take one last walk across the Charles Bridge — lined on either side by statues of the saints, and in the middle by artists, tourists, beggars, hucksters and dreamers. I found the statue of St. John of Nepomuk, who was supposedly thrown from that very bridge in 1393 for refusing to reveal the confessions of the queen to her husband. Like almost everyone else who crossed the bridge that day, I rubbed the bronze plaque beneath the statue, a guarantee — so the story goes — that I will someday return.