The play is being funded by the Guben authorities, in the hope of spreading the message of tolerance.
Germany is clamping down on the far right, following a spate of neo-Nazi attacks on asylum seekers, Jews and the homeless over the past few weeks.
A recent bomb attack in the city of Duesseldorf wounded 10 immigrants, most of them Jewish.
German politicians, though, are divided on how to prevent the growth of the right wing, especially in eastern Germany, which has become a hotbed for neo-Nazi attacks.
In Guben on the Polish border, the townspeople are trying to combat racism, following the death of an Algerian asylum seeker last year at the hands of neo-Nazis.
In a disused Jewish factory building, young eastern German students are staging a Jewish version of Romeo and Juliet.
The play was popular in the 1920s, when Gruben's Jewish community thrived.
After the Holocaust, there were no Jews left in the small border town.
Threat to asylum seekers
There are, though, at least 500 asylum-seekers living in the town. Many are afraid of neo-Nazi attacks.
The play is being funded by the Guben authorities, in the hope of spreading the message of tolerance.
Antoinette Eckart, an 18-year-old student taking part in the play, hopes the message is getting through.
"This is a town of 20,000 people," she says.
"The people who commit these awful attacks are a minority - maybe 100 or 200 people.
"I'm fed up with their actions giving all of us this terrible reputation."
Not far away, in a suburb of Guben surrounded by communist-era tower blocks, is a small plaque.
It is the only memorial to the Algerian asylum seeker Farid Guendol, a 28-year-old who died last year after being chased through the housing estate by local skinheads.
He fell through a glass window as he tried to escape his attackers.
Disgust
Young left-wing demonstrators have gathered at the memorial to express their disgust at the recent spate of neo-Nazi attacks across Germany.
Their support has not helped those living at the local asylum seekers' hostel.
Hidden behind a thick metal fence and barbed wire, it is home to 233 refugees from around the world.
Ibrahim, a young man from Liberia, has been a resident for the last four years.
He used to share a room with Farid Guendol. These days, he hardly dares go out onto the streets of Guben.
"People shout insults at me," he says.
"They''ll call out 'Hey you nigger, what are you doing in Germany?'"
"And sometimes they'll even throw eggs at me."
The man in charge of the hostel, Mehmet Topraksuyu, is himself a Turkish immigrant.
"Locals are convinced there is not really much of a problem with racist violence," he says.
"But if that were true, why does the home need such a thick fence, and a night watchman on guard?
"I wish that the locals would simply come and talk to those at the home, to allay their own fears of foreigners."
Growing pains
The mayor of Guben, Gottfried Hain, acknowledges there is a problem.
"The problem in the east is that this is a young democracy," he says.
"Unity only happened 10 years ago, and it takes far longer for people to internalise democracy.
"A lot of young people feel their parents have failed, and they don't listen to them.
"This process of education is so important, but it's a slow one.
"I am optimistic that we can deal with the problems, but it will take time and patience," he insists.
Every day somewhere in Germany, there is a new attack on foreigners, Jews or the homeless.
In a country with Germany's history, the authorities are acutely aware of how much damage that does to their image abroad.
Figures show that there have been far more attacks this summer than over the same period last year.
There is talk of banning far-right parties such as the NPD, the German National Party.
However, not all politicians believe that is the answer.
Some think banning the party would simply drive the problem underground, and make the NPD more popular.
This week, the agonised debate in Germany continues.
So far, there are many theories on why more and more young people are committing such crimes.
However, there is no quick or easy solution as to how this country can deal with its troubled youths.