The city of Berlin played a significant role in Phase I and Phase II of the Cold War. Why was it such a big deal? 1) Because it was the physical dividing line between the East and West. 2) Because the western half of the city was a "capitalist island in a sea of communism." 3) Because it symbolized the end of WW2 and the beginning of the Cold War. 4) Because of all the above reasons.