BACK IN November 2011, as Europe struggled with its ongoing financial crisis, Poland’s foreign minister, Radek Sikorski, gave a speech in Berlin that beckoned toward his country’s western neighbor and pleaded with it to save the euro. “You know full well that nobody else can do it,” said Sikorski. “I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity. You have become Europe’s indispensable nation.”

Indispensable? This was an extraordinary statement from a top official of a nation that was ravaged by Germany during World War II. And it reflects a profound shift taking place throughout Germany and Europe about Berlin’s position at the center of the Continent. The past view that what was good for Germany was bad for the European Union is being supplanted by a new attitude that what is good for Germany is even better for its neighbors.

And Germans, who since 1945 had accepted the subservient European role forced upon them by their victorious World War II adversaries, are now cinching up their collective lederhosen and adopting a more assertive posture. The country is shedding its status as junior partner to America and embarking upon its own path. All this is evident in five important ways:

• Germany is forging a new national identity that is less influenced by the Nazi past and that looks to the broader sweep of the country’s place in European history dating back to the eighteenth and nineteenth centuries. Germany is increasingly looking back at its Prussian ideals, which it sees as having been betrayed, not represented, by Nazism.

• The trend toward German independence began with the socialist chancellor Gerhard Schroeder, who denounced the George W. Bush administration for going to war in Iraq—a change from Germany’s Cold War role as submissive ally. Additionally, in 2003 Schroeder, in a Nixon-goes-to-China move, courageously backed “Agenda 2010”—a set of sweeping economic reforms and social-welfare cuts that slashed government spending.

• This surge of self-confidence is bolstered by Germany’s new status as Europe’s economic powerhouse. As Sikorski’s pleading suggests, only Germany possesses the economic muscle to push through and support a European recovery program, and this is a development that Germans, habituated to shunning the spotlight, are grudgingly beginning to accept.

• Germany increasingly is pursuing a self-confident foreign policy set apart from the wishes and demands of its erstwhile American patron. Following on its refusal to participate in the Iraq War, it shunned the West’s intervention in Libya and has pursued independent ties with Russia and China, raising eyebrows in Washington, DC.

• And yet this new German emergence is accompanied by intense birth pains. Powerful political issues and forces have been unleashed, both within Germany and throughout Europe, as Berlin takes the lead in guiding the EU through its economic crisis.

All of these developments and issues are personified by Germany’s controversial but politically adroit chancellor, Angela Merkel. No European leader is being attacked more virulently than Merkel as she seeks to lead the seventeen-nation currency zone through its sovereign-debt crisis. In demanding fiscal discipline from the southern European states, she has incurred the wrath of Greeks and Spaniards, who routinely depict her as a reincarnation of Otto von Bismarck and Adolf Hitler. And at home, German socialists and conservatives are apoplectic at what they see as either Merkel’s foot-dragging or her folly in acceding to any bailout measures which would transfer more German wealth to the country’s profligate southern neighbors.

As Germans tremble at the prospect of their retirement pensions and savings flowing to these spendthrift states, the recent decision of the German Federal Constitutional Court sanctioning Germany’s participation in the decision of the European Central Bank (ECB) to buy up bonds is being treated as tantamount to a sellout of German national interests. The idea is that Merkel is being squeezed by Europe in general and Italy in particular—by Prime Minister Mario Monti and a fortiori by ECB president Mario Draghi. These apprehensions recently were captured in a column by the prominent German commentator Josef Joffe in the September 4 Financial Times: “Instead of ‘Germanising’ Europe, the Germans are about to be ‘Europeanised,’ or even ‘Club Med-ified.’”

But are they? Are these fears justified? Is Merkel a bungler? Is Germany doomed to suffer a repetition of high inflation? Or are the naysayers transfixed by a bogeyman from the past that has little practical relevance for the present?

THE TRUTH is that, as Germany reclaims the economic dominance it enjoyed on the Continent during the late nineteenth century, Merkel is proving herself to be one of the most farsighted chancellors in German history. With a personal popularity rating near 70 percent, she is favored to win a new course as federal chancellor in 2013 against Social Democratic candidate Peer Steinbrück. Unlike President Obama—who is regarded in mainstream German economic and policy circles as anathema for his insistence on fiscally loose Keynesian measures—Merkel has not simply opened the economic spigot. The average German voter fears that if a Social Democratic-Green coalition were currently in power, the keys to their financial security would be blithely handed over to their European brethren.

So whatever they may think of her policies, Germans love Merkel’s lack of theatrics. She is her country’s Iron Lady, but she rules with a velvet touch. At a moment when polls show that a majority of German voters oppose bailouts, she has managed to pursue a sensible middle course, neither capitulating to the southern states nor embracing the equally unpopular idea of abandoning the euro. In essence, the Germans would like to have it both ways, and Merkel is ensuring that they will—up to a point.

Enter her finance minister. Wolfgang Schäuble, a protégé of former chancellor Helmut Kohl, is a tough old bird. No one has done more to maintain Germany’s commitment to Europe than Schäuble, who has served in parliament for forty years and was present at the signing of the Maastricht Treaty establishing the euro in 1992. In receiving the Charlemagne Prize this past May, Schäuble said, “Pragmatism and flexibility are usually better than sticking to principles which only produce stalemate.” He joins Merkel in pressing for a resolution to the European sovereign-debt crisis that takes into account domestic political reservations about tying German economic fortunes to the rest of Europe. But there can be no doubting that he and Merkel are following a winding fiscal road and have yet to reach their final destination. Before the June EU summit in Brussels, Merkel declared that “there will be no collectivization of debt in the European Union for as long as I live”—music to the ears of the Free Democratic Party, Merkel’s junior coalition partner, which espouses classical liberal economics and vehemently opposes transfer payments. The Free Democrats have partly managed to recoup their electoral fortunes by adopting populist stands on the euro. But the party has had to watch submissively as Merkel concedes some ground to the rest of Europe while also insisting on tougher controls over the disbursement of funds and internal austerity measures.

And so at the June summit she yielded to the inevitable, assenting to the emergence of what amounted to a banking union. Schäuble has been her point man, reprimanding the head of the German Bundesbank, Jens Weidmann, for questioning Merkel’s decision to push forward with contributing 190 billion euros to the European Stability Mechanism. Schäuble made it clear that Germany will push ahead with further such measures and a tighter European union but only if clear conditions are met, including the creation of a European banking supervisor housed at the ECB. Writing in the August 30 Financial Times, he stated, “It is crucial that the new system be truly effective, not just a façade. We must eschew yesterday’s light-touch approach for good and endow this supervisor with real and clearly defined responsibilities, coercive powers and adequate resources.”

The message seems clear: verify before trusting. With adequate safeguards in place, Germany will not waver in its commitment to both the euro and European integration. To follow the course propounded by Weidmann and others, by contrast, would be to risk a European depression. They are offering moral strictures rather than a plan for European recovery. And they would have Germany shun a role that only it can play in Europe’s ongoing fiscal drama.

The most drastic step Berlin could take would be to increase domestic consumption. Like China, it has been relying on exports. While its trade with European countries has been declining—a sign that, to some extent, Germany has emancipated itself from the vicissitudes of the other lagging European economies—it has dramatically increased its trade with countries outside the euro zone. Its overall trade surplus exceeds 160 billion euros.

In Germany’s past since World War II, economic power has not translated into political power, and in fact the country shunned any serious leadership role. It accepted the euro largely so that it could bury itself in a wider European federation, and there’s no question that the notion of a dominant European role remains somewhat daunting. But in this time of troubles, Germany and its neighbors are beginning to reassess the country’s position at the center of Europe. Still, Merkel has taken great care to signal that Germany’s growing dominance does not mean that it can, or wants to, assume hegemony, which is very different from leadership. Instead, Merkel is reshaping Europe by attempting to export the German economic model, which shuns the Keynesianism of the Obama administration. Consider this index of German economic success: over the past decade, while personal wealth has shriveled in America, it has more than doubled in Germany, from a total of 4.6 billion euros to more than 10 billion. The German national budget is set to be balanced by 2015, and the federal states will be legally obligated to run balanced budgets.

It should not be surprising, then, that Merkel is attempting to create a Europe in Germany’s image, not America’s. A consummate political survivor, Merkel is completing the process of a return to realist political principles, both in domestic and foreign policy, that began with the country’s refusal to participate in the Iraq War. But now the new Teutonic colossus that is emerging in the heart of Europe will affect events as much by what it does as by what it does not do.

THIS NEW German self-confidence first began to emerge during the government of Gerhard Schroeder, who served as chancellor from 1998 to 2005. Although Schroeder sent two thousand troops to Afghanistan after the 9/11 terrorist attacks on America, he pronounced a decisive “no” in response to America’s call for help in pursuing the Iraq War—an unthinkable position for a German chancellor during the Cold War. A self-made man, the brash and confident Schroeder was anti-American from the outset. In the 1980s, he protested against the Reagan administration’s rearmament policies toward the Soviet Union. Later, when this sentiment manifested itself in his refusal to support the Iraq War, he was not punished for his stance by the German electorate but was rewarded with a second term. Thus, he proved the popularity of asserting German superiority over what Germans widely considered the benighted Bush administration. And Schroeder was vindicated by his position in historical terms as well as politically, as the war in Iraq ultimately proved to be a disaster. That bolstered Germany’s new realpolitik view, which asserted its national interests in the country’s political arena. With the election of Obama and the departure of the reviled George W. Bush, Germans hoped for a U-turn in American foreign policy. It did not quite turn out that way. The most notable German complaint was with Western participation in the Libyan war, opposed by Chancellor Merkel and her foreign minister Guido Westerwelle. To the incredulity of the Obama administration, Germany abstained from voting on the UN Security Council resolution when it came to endorsing intervention in Libya. Westerwelle told the Guardian, “The military solution seems so simple but is not so simple. It’s risky and dangerous.” He added, “We are concerned about the effects on freedom movements in north Africa and the Arab world. We admired the jasmine revolution in Tunisia . . . but we want these freedom movements to be strengthened, not weakened.” He was ridiculed in Washington at the time, but was he so wrong?

A fresh assertiveness can also be detected in Germany’s relations with Russia. Once more, it was Schroeder who led the way. Schroeder’s stance on Iraq endeared him to Putin, who had served in Dresden as a KGB officer and speaks German well. Schroeder’s relations with Russia became sufficiently close that he was invited to join the board of Gazprom, the Russian global energy company, after his tenure as chancellor ended in 2005. Now Merkel is once more following in Schroeder’s footsteps. In June 2012, at a joint press conference with Putin in Berlin, the two leaders stressed that military force from outside powers could not achieve a lasting peace in war-torn Syria. As Merkel expressed it, “We both made clear that we are pushing for a political solution, that the Annan plan can be a starting point but everything must be done in the United Nations Security Council to implement this plan.” Since then, Germany’s foreign-policy outlook has not changed. Regarding Syria, Berlin believes, as with Libya, that the costs of intervention are higher than those of staying aloof, a stark contrast with France, which is urging Washington to engage militarily in what is turning into a protracted civil war between a secular regime and a largely Islamist opposition.

The ties between Russia and Germany should not be surprising. Historically, Germany has had close ties with Russia dating back to Peter the Great, when German advisers helped revive the czar’s country economically. There was always, however, some resentment toward the efficient Germans. In Ivan Goncharov’s satirical novel Oblomov, the industrious German character is named Stolz, meaning “pride,” and he attempts to rouse the protagonist from his congenital languor. After World War II, relations between Germany and Russia did not really begin to thaw until the 1970s, when Berlin started to pursue détente with the East. Today, Merkel, who speaks Russian fluently, pursues close relations with Moscow based on mutual interests.

As for China, Germany is developing what Merkel calls a “special relationship.” As the Washington Post reported in September, “More than any other foreign-policy effort, Merkel’s growing rapport with the Chinese signals Germany’s willingness to set the European agenda unilaterally.” Germany’s robust trade with China has allowed it to shelter its economy from the commercial troubles plaguing much of Europe. Moreover, it has allowed Germany to develop a balancing partner against America. Yet again, it was Schroeder who set the model for Merkel. But she didn’t take the cue immediately. In 2007, she enraged Beijing by meeting with the Dalai Lama, the claimant to Tibetan leadership, in the federal chancellery in Berlin. Now that is in the past. She has subordinated human-rights concerns to economic interests. Germany expects to reach a trade surplus with China next year, an almost unheard-of feat—total trade between the two countries in 2011 was $190 billion. For German car manufacturers such as Daimler Benz and BMW, China is a vital and lucrative market. As Der Spiegel observed:

The chancellor’s course on China, in fact, has slowly come to resemble the business-first policies pursued by her predecessor Gerhard Schröder. He almost surely approves of the lovely images of her visiting the Airbus plant in Tianjin, where she made a stop just before flying back to Berlin. The factory visit took place a day after a contract was signed for 50 new planes ordered by the Chinese.

Under Merkel, Germany has been no less active in cultivating good relations with Eastern Europe, where it has based numerous factories. This German sphere of influence has been welcomed by the countries that inhabit it, as demonstrated by Polish foreign minister Radek Sikorski’s effusive praise for his country’s western neighbor.

IF GERMANY is to become the indispensable nation described by Sikorski, however, it will need an internal cultural shift, given the weight of its Nazi past. But, as the World War II generation disappears and the memory of a divided Germany fades, attitudes also change. Perhaps nowhere can this change be discerned more acutely than in Germany’s relationship to the burden of a history that prompted it, during the Cold War, to adopt a cautious and self-effacing role. The memory of the Holocaust, something that, in stark contrast to Japan, the German government and schools constantly emphasize, has hardly faded away. But it has acquired a more ritualistic quality as its meaning has become more ambiguous for a younger generation of Germans, whose own parents often have no direct connection with the crimes of the past. As the writer Bernd Ulrich asked in a lengthy essay in the August 30 weekly Die Zeit, “When will the past pass away?” After arguing with his son about whether it was a bad idea to sing the first stanza of the German national anthem, “Deutschland uber alles”—his son saw no problem with it—Ulrich concludes, “The entire package of the past that I once received will not be able to be transferred with the same contents and weight.” Many Germans also now are looking more closely at their Prussian past, as reflected in the building boom taking place in Berlin, once the capital of a small Prussian duchy that successively defeated Denmark, Austria and France in expanding itself into a European superpower. This building boom is no mere facelift but major surgery that is centered in important ways on the Prussian past. The former East German Palace of the Republic, which is where the old Volkskammer, or People’s Chamber, met to rubber-stamp Central Committee decisions, has been demolished and is slated to be replaced by a replica of the old Hohenzollern palace. Three facades will emulate the old baroque exterior, while the interior will have a more modern stamp. The approval of the project by the Berlin Senate testifies to a lingering nostalgia for the better side of Prussia and its legendary leader, Frederick the Great. It was Frederick, an exponent of the Enlightenment, who almost singlehandedly created the incorruptible Prussian bureaucracy that remains a guiding example for a number of Germans today.

It is also striking that on the Unter den Linden boulevard, the German History Museum just concluded an exhibition devoted to Frederick the Great’s three hundredth birthday. (There is also an exhibition in nearby Potsdam, where Frederick retired, called “Prussian on Celluloid: Frederick II in Film.”) The Berlin exhibition, which is subtitled “revered, revised, reviled,” focuses on the Prussian king’s shifting image over the centuries. As one walks into the exhibition, it features a tableau that would have been unthinkable a few decades ago, one that the Berliner Zeitung called “unbearable”—unbearable because it smacks of reverence for the Prussian past rather than critical detachment.

In a vestibule that has something of the feeling of a religious shrine, Frederick’s death mask and his final gown, complete with remaining bloodstains, set the tone. The exhibition points out that Frederick’s image was exploited by the Nazis to justify ruthless expansionary policies that he would never have sanctioned. Then in the 1960s, the German Left attacked Frederick as indeed a Nazi forerunner. This intellectual movement was led by the egregious Rudolf Augstein, founder of Der Spiegel, who wrote a book in 1968 suggesting that Hitler represented the culmination of Frederick’s militaristic vision. As the exhibition demonstrates, this is a primitive view of Frederick as well as of Prussia, which emphasized personal rectitude, loyalty and high ideals. The recognition that those ideals were traduced by Nazism is now gaining currency in a Germany that feels comfortable discussing a topic that was largely taboo in the postwar era.

This is an important reason why Germany feels increasingly receptive toward taking a leading role in Europe. Yet, observers such as George Soros, who worry that Germany isn’t moving quickly enough to quell the crisis, are sounding alarms. Writing in the New York Review of Books, Soros declared, “In my judgment the best course of action is to persuade Germany to choose between becoming a more benevolent hegemon, or leading nation, or leaving the euro. In other words, Germany must lead or leave.”

But it will never leave. The ultimate effect of the euro crisis is to accelerate, not retard, efforts toward more integration. Eleven European foreign ministers, led by Germany’s Westerwelle, have endorsed a paper that calls for the creation of a European currency fund and even moots the possibility of a European army. Impossible? Perhaps a German-led European army will someday march into a country such as Syria to impose order. After all, it would have seemed far-fetched just over a decade ago that Germany would send troops beyond its borders and into the mountain redoubts of Afghanistan.

A profound shift, then, is taking place in Germany. Germans are becoming accustomed to it. Their neighbors are demanding it. The outlier isn’t Germany; it is America. Merkel has remained studiously deaf to Obama’s importunities for cooperation on both economic and foreign policy. For America, which has viewed Germany for decades as a pliant ally, the changes may become unsettling. Thus, it may be America that has a German problem, not Europe. Increasingly, Europe sees a German solution.

Jacob Heilbrunn is a senior editor at The National Interest.

Image: א (Aleph)

Image: Pullquote: As Germany reclaims the economic dominance it enjoyed on the Continent during the late nineteenth century, Merkel is proving herself to be one of the most farsighted chancellors in German history.Essay Types: Essay