MUNICH (Reuters) - For six decades, Germany heeded Nobel laureate Thomas Mann’s advice to seek “not a German Europe, but a European Germany.”
The euro zone crisis appears to have swept this post-war caution aside. Two years into the debt disaster, Germany looks increasingly confident in the role of economic superpower, pushing its model of fiscal discipline on the European Union.
But matching its new-found economic dominance with bolder leadership in foreign and security policy - something partners like the United States are urging on Berlin - is another matter for a country which has shied away from geopolitical power because of its Nazi past.
Defense Minister Thomas de Maiziere, one of Chancellor Angela Merkel’s most trusted aides, summed up the dilemma when he spoke at the annual Munich security conference this month.
Many allies now consider Germany has “the same rights and therefore the same obligations” as other major powers, he said, “but in Europe there are still people who worry about too much German leadership rather than too little German leadership.”
Since the euro crisis began in 2009, Germany has grown from reluctant bailout paymaster to a position of such influence that its unbending drive for austerity helped bring about the exit of Silvio Berlusconi in Italy and George Papandreou in Greece. It has also imposed a “fiscal compact” for EU budget discipline.
While other major EU economies flounder, Germany has posted growth of 3 percent or better for two straight years. French President Nicolas Sarkozy, in a battle to win re-election, now openly cites Germany as a model and has enlisted Merkel’s help in the campaign to bolster his own damaged credibility.
But Germany’s rise has not been without blunders, such as a heavy-handed proposal to send a “kommissar” to Greece to oversee its austerity drive, or the clumsy comment from a senior Merkel lawmaker that all Europe was now “speaking German.”
Berlin is also accused of being unwilling to pay the price of leadership by resisting calls from the International Monetary Fund and others to pay more money into euro zone bailout funds.
For some, though, it punches beneath its weight on the world stage, notably refusing to join NATO allies in air strikes against Libya’s Muammar Gaddafi last year. This was a “disappointment,” said Heather Conley of the Center for Strategic and International Studies in Washington.
With a stream of foreign leaders coming for enlightenment on how the economy has defied gravity, Berlin feels like Europe’s new capital. But Merkel gets conflicting messages. She must lead the euro zone out of crisis, but in acting she may find the cartoonist’s pen too often straying toward images of the overbearing Nazi or a beckoning “Fourth Reich.”
Germany’s initial reluctance to play this domineering role, and the restraints the constitution places on the chancellor’s ability to act without consultation, bred frustration in world capitals and financial markets at the slow deliberations in Merkel’s office and the Bundestag (parliament).
As the crisis drags on, however, Germany has been encouraged to take a more uncompromisingly decisive role.
“You have got to save the euro zone and with it to save the European Union,” said British historian Timothy Garton Ash. “So in this moment the challenge does in fact come back to Germany: the buck stops here.”
But De Maiziere senses that Germany has already assumed “more international responsibility than many of our citizens would wish.” Such reluctance worries former Social Democrat foreign minister Frank-Walter Steinmeier, who fears more people may start pushing for Germany to “go it alone” economically.
“German public opinion starts from the position that we were happy to keep the Deutsche Mark, be a ‘Greater Switzerland’, we didn’t want this domineering role, we’ve made lots of sacrifices and now you’re asking us to pay and pay again,” said Garton Ash.
Germans have grown skeptical of the benefits of spending taxpayers’ money on bailouts for euro zone states like Greece - or of staying in the EU at all. In a recent opinion poll, 46 percent said Germany would be better off without the EU, while 45 percent remained convinced of its advantages.
“Ironically it would be a better starting point if you had a more ambitious German public opinion which did seek a leadership role in Europe,” said the British historian.
The question of how much influence it is appropriate for Germany to assume in Europe and on the global stage has dogged post-war statesmen. Henry Kissinger put it succinctly when he said Germany was “too big for Europe, too small for the world.”
Chastened by its failed aggression in two world wars in the 20th century, Germany became a founder of the European Coal and Steel Community - precursor of the EU - and saw economic unity as the best way of avoiding further armed conflict in Europe.
German unification in 1990 reignited French, British and Russian fears that the new Federal Republic might get too big for its boots. But these appeared unfounded as Germany dedicated its wealth to the cause of European economic and monetary unity.
Even now, two years into the euro crisis, Merkel still goes out of her way to give the impression that the Franco-German “Merkozy” partnership is still in joint command.
“German diplomats tell you they have had to learn to ‘lead from behind’ - to get everyone else to sign onto their plans in a way that it doesn’t look like it’s coming from Germany,” said the head of one U.S. think-tank, who asked to remain anonymous.
But with France’s economy losing its AAA-credit rating, it is clear who is in the driving seat.
With Merkel elevated to what one paper called an “ueber-Kanzlerin” (super chancellor), Garton Ash said her dominance was creating “something looking increasingly like a German Europe, that is to say, not just German leadership but something like a quasi-hegemony” regarding economic policy.
He offered reassurance about Germany’s suitability for this role, calling it an exemplary democratic and free-market state. Other advocates of German leadership feel compelled to qualify their recommendation with warnings that Berlin should not overstep the mark.
“It’s not to dominate, it’s not diktat, it’s not to act alone - it’s to point the way, and here I do think only Germany can do that,” said Robert Zoellick, president of the Washington-based World Bank.
George Soros, the Hungarian-born financier, said Europe faced a diet of austerity and structural reforms “effectively for no other reason than because Germany insists on it. Germany believes that what worked for Germany in 2005 would work for Europe in 2012.”
Some countries with strong historical reasons to distrust Germany are surprisingly positive about its new role.
Israel, with whom Germany has forged a special relationship conditioned by the Holocaust, sees no question that Germany is a European and world leader, but wonders how willing it is to perform that function, said Israeli Deputy Foreign Minister Danny Ayalon.
In Germany’s long-suffering neighbor Poland, the Foreign Minister Radoslaw Sikorski encouraged Germany to consider its position in Europe as that of the “largest shareholder.”
But Sikorski warned Germany it did not have the economic or military clout to become a “benign hegemon,” if it did harbor such ambitions: “As we put it in our part of Europe, don’t get too dizzy with success.”
More immediately, many foreign policymakers who welcome the Germanisation of the EU’s fiscal habits, like Zoellick or the Italian technocrat Prime Minister Mario Monti, warn that Berlin risks provoking a backlash with too narrow a fiscal focus.
Merkel, in her increasingly accepted role as leader of the euro zone, is constantly lobbied to provide a growth strategy to complement the fiscal straitjacket so that Europe can glimpse a future of employment and prosperity after the painful reforms.
“If at the end of 2012 Germany is only associated with austerity, it could become the target of ire,” said Zoellick.
GERMANY‘S 2ND CHANCE
Germany would also deeply annoy allies with more displays of a lack of reliability like last year’s abstention in a U.N. vote on Libya. This showed reluctance to take on the responsibility that comes with great global economic power, said Conley.
Germany, which opted out of the Iraq war, tells its allies in private the Libyan decision was an anomaly, taken amid great political tension at home over Merkel’s nuclear power U-turn.
Berlin points to its 7,000 troops on overseas peace missions including the third biggest contingent in Afghanistan as proof - in the words of De Maiziere, son of a Bundeswehr (armed forces) chief of staff - that “the Bundeswehr can fight and lead.”
But he acknowledged that domestic support for a more prominent security role would be problematic: “Regarding the economy, most Germans do want a leadership role for the country. Regarding security policy, probably not.”
Germany’s allies understand the historical reasons for its hesitancy but do not want Europe compartmentalizing leadership with Germany specializing in the economics and France taking on security and military policy, said Conley from Washington.
The current diplomatic stand-off with Russia and China over Syria gives Berlin with an opportunity to show its influence in these strategic relationships, as does the increasing distance between the EU and Britain, which Merkel is determined to close.
“My concern is we may have some more examples where these very critical questions are going to be put on the table and Berlin is going to have to make some decisions about how it wishes to proceed,” she said. “Time will tell, but there is expectation.”
German-born U.S. historian Fritz Stern said after the fall of the Berlin Wall that Germany had won a rare second chance to become the preeminent power in Europe, after blowing its first chance in the 20th century.
“The test of whether Germany seizes its second chance comes right here and now,” said Garton Ash. “Any of us who care for Europe and the wider European community to have a role must wish Germany’s leaders have the vision and skill to face that test.”
Writing by Stephen Brown; Additional reporting and editing by Noah Barkin