Football fever focused global attention on Germany during the first half of last year as the nation hosted the soccer World Cup tournament. This year it was the double whammy of Germany’s dual presidencies of the European Union and the G-8 (group of eight major world economies) that have placed that nation in the world spotlight. These three events have combined to strengthen a renewed national self-confidence in Germany.

Commenting on Germany’s hosting of the 2006 World Cup, the German team coach Jürgen Klinsmann declared in a television interview, “This World Cup was a huge success for the team and for all of Germany. We showed the world another face of Germany” (Spiegel, July 5, 2006). Endorsing Klinsmann’s comment, the German tabloid Bild stated, “[T]he party must go on! We have to keep up the sense of renewal, the self-confidence, the good mood for our everyday lives. This was just the momentum we so urgently need to face the tough tasks ahead.”

Well, it seems the party did go on. Renewed confidence in business investment has powered the German economy forward this year, substantially reducing unemployment, producing a rise in consumer spending and, despite the comparative strength of the euro, leading to a surge in sales of German products overseas.

Strutting the World Stage

From January to June, Germany strutted the world stage with its presidencies of the EU and the G-8. Despite achieving results far short of Chancellor Merkel’s declared expectations, the EU’s 50th anniversary celebrations in March, followed by the G-8 and EU summits in June, did give Germany widespread international media publicity.

In the foreign-policy arena, through some deft maneuvering by Chancellor Angela Merkel—including cuddling up to the United States and standing up to Russia’s President Vladimir Putin—Germany’s star rose to heights unprecedented since the fall of the Berlin Wall.

But there is an element currently on the rise in European politics that has historically proven dangerous for Europe and the rest of the world. Europe is once again swinging right politically. As Stratfor recently observed, “The right has yet to grasp power in Europe, but it will not be long before the conservatives consolidate their hold on the Continent” (June 8).

The danger that looms as a specter from Europe’s war-torn past is that, as Stratfor continued, “A right-leaning Europe could be united under one leader, particularly since the states are brought closer together by common problems such as immigration and economic reform. But it remains to be seen which state will emerge to lead, and in what direction” (emphasis mine throughout).

The most obvious contender is Germany.

Regarding this possibility, Stratfor wrote, “[A] recent economic renaissance has given the country the opportunity to forge a consensus in Europe and to further its own agenda. For the first time in decades, Germany is a full and powerful member of the European community. More important, for the first time in centuries, there is no established political regime in Europe to counter German ambitions” (ibid.).

Germany Speaks—Europe Reacts

Stratfor has a longer memory than most of our foreign-policy merchants. Note this crucial observation of a unique fact of European history: “For now, [Germany and the U.S.] are more or less on the same page …. But do not confuse the temporary alignment of interests with a permanent state of affairs. Sure, the United States currently sees Russia as a rival and Germany as an ally. Yet this situation is an aberration in both U.S. and European affairs. All of European history is a tale of Germany either expanding or being contained” (ibid.).

The big difference this time, in its third attempt within a century to achieve pan-European dominance, is that Germany has used economics, international trade and finance as the main weapons of choice, rather than force of arms. Recent examples of this are two political/economic initiatives enacted over past months and a third currently being discussed—all German ideas—that should further bind Europe together, economically and financially, under Berlin’s aegis.

The first was a move by Merkel (showing more political courage than the previous chancellor, Schröder, who failed on this point) to initiate a long-overdue restructuring of Germany’s corporate tax base. The law, which significantly cut corporate taxes, passed on March 14. Stratfor called it “the latest in a string of planned and coincidental developments [most predating Merkel’s chancellorship] laying a lasting foundation for Germany’s geopolitical renaissance” (March 15).

The second initiative builds on the effect of the German-instigated European means of exchange, the euro, which continues to gain strength in international trade. Further consolidating the German idea of centralized financial control, Berlin has engineered the introduction of an EU-wide unified payments system, the Single Euro Payments Area (sepa). Beginning in January of next year, all electronic payments throughout the EU and the European Free Trade Association will be considered domestic, saving the European economy an estimated 2 to 3 percent of its gross domestic product. “In terms of its dimension and significance, this revolution in European payments is comparable only to the introduction of the euro,” said Hans-Joachim Massenberg, deputy ceo of the Association of German Banks.

Germany’s centralizing economic and financial agenda, through forced implementation of the single European currency, the euro, combined now with sepa, is speeding the death of the long-cherished individual national sovereignty of EU member nations.

But the third initiative may be the most significant, particularly because of the manner in which it entered political discussion.

The European Commission announced in July that it intends to take a hard look at threats from external sources—notably Russia and China—moving to buy up slices of European businesses. Stratfor commented, “A public musing last week by German Chancellor Angela Merkel was what prompted the Commission decision” (July 20).

What was particularly startling about this was, as Stratfor observed, “the fact that the Commission so quickly took up Merkel’s idea. Merkel’s term as EU president expired June 30, yet here we are three weeks later and her off-the-cuff comments are still setting the agenda …. Fifty years later, Germany has found its voice—and possesses the gravitas to set policy without even making a request. That has got to make a few stiff European upper lips unconsciously quiver” (ibid.).

Note that Stratfor speaks of Germany finding its voice. It’s not so much that Chancellor Merkel made these remarks that triggered the European Commission’s response. In fact, the signs are that Angela Merkel’s leadership of her coalition government may soon be under threat. But it was the fact that Germany spoke that moved the Commission to respond!

Merkel on the Wane

The chancellorship of Angela Merkel has reached its peak. Riding the wave of popularity courtesy of a sequence of foreign-policy opportunities that fell to her advantage, the German chancellor is currently one of the most popular leaders on the world scene.

Her presiding over the EU and G-8 presidencies thrust her into the limelight during the first half of the year. But since mid-year, Merkel has returned to a more mundane agenda—that of keeping her coalition partners under control and her nation’s population content.

Merkel set herself what many thought was an unachievable agenda for her EU presidency. It largely proved to be the case, with her almost sole success being in the area of energy policy, and the prospect of such an agreement was already a given. The energy-strapped EU is between a rock and a hard place, trying to balance its dependence on Russia’s energy sources on one hand against finding reliable sources of supply from the volatile Middle East and unreliable Africa on the other. So reaching general agreement to do something about seeking alternative sources of energy was an easy romp for Merkel.

In terms of economic and social policy, Merkel was blessed with a resurgent German economy during her term as EU president, reducing discontent in both capital and labor. This permitted the chancellor the luxury of seeing much of the rest of the EU seemingly benefit from her government’s economic and social policies.

When it came to obtaining a common agreement and seeking the signatures of the 27-nation EU membership on a declaration of its key values, Merkel was in for a real struggle. The wheels really started to fall off as the 50-year anniversary of the European Union drew near and no such agreement was in sight. All Merkel could achieve was a bland document, the Berlin Declaration, crafted behind closed doors by the chancellor, European Commission President José Manuel Barroso and EU Parliament President Hans-Gert Pöttering, with these three as sole signatories. Hardly a satisfactory result!

Merkel’s next grand opportunity to demonstrate her foreign-policy panache came just over two months later, with Germany’s hosting of the annual G-8 summit. Dovetailing her G-8 presidency with the European Union presidency gave the German leader the opportunity to influence a number of major challenges under consideration by those eight countries which together combine 65 percent of the total world economy. The U.S., Canada, Britain, France, Germany, Italy, Japan and Russia met under Merkel’s leadership in the German coastal resort of Heiligendamm in early June. Also present were representatives of the European Commission and five African nations.

This was the type of forum at which Chancellor Merkel’s foreign-policy skills were supposed to shine. However, the results of the conference, though hailed as a success by Merkel, failed to impress many observers. A Swiss daily reported, “Angela Merkel wanted to fight poverty, give globalization a human face and stem climate change. She succeeded in none of these” (Basler Zeitung, June 8).

In late June came the European Union summit that would bring to a conclusion Germany’s six-month presidency. This presented a final opportunity for Chancellor Merkel to produce a success that would place the stamp of approval on her period in the presidential office.

Even before they arrived in Brussels, the contentious leaders of this unwieldy EU monolith were sounding warning bells about the disputes that would pepper this summit. The summit turned out to be a predictable debacle in many respects, especially with Poland reminding Germany that its Nazi past had reduced its population by a third, so a population-based voting system under the reform treaty would most certainly unfairly favor Germany!

Frau Merkel is now back in her own national domain. And, given the fact that she topped the crest of her wave of popularity mid-year, she has now but one way to go. “‘Merkel is at the peak of her power but it can’t get any better for her,’ said Gerd Langguth, a political scientist at Bonn University and author of a biography of Merkel. ‘Germans are happy with her foreign policy but less than enthused about her performance at home, and that could be a real problem.’ With memories of her government’s unpopular health-care reform still alive in the minds of many Germans, polls show half the population disapproves of Merkel’s domestic performance—a weakness the struggling [Social Democrats] will try to exploit” (Reuters, June 25).

Coalition governments in Germany historically do not last very long. If Merkel’s coalition lasts the remaining two years of its tenure, given the rumbles that already are coming from within its ranks, it will be a wonder to behold. History simply argues against it.

Waiting in the Wings

In the event of the Merkel coalition collapsing, there is a highly successful, politically polished, conservative Catholic premier from Bavaria whom it appears will have time on his hands following his retirement at the end of September: one Edmund Stoiber.

Earlier this year in Berlin, I interviewed one of the six Bundestag vice presidents, Gerda Hasselfeldt, a member of Stoiber’s Christian Social Union (csu). I asked her about the future of a retired Stoiber. “A return to the present functions or related functions is hard for me to visualize,” she responded. “On the other hand, I also cannot imagine that he will occupy himself only with his hobby, namely soccer. … What is he really going to do afterward?”

“Perhaps a European Union post?” I offered. Frau Hasselfeldt responded, “I don’t exclude that there are also interesting positions in the national or international arena to which he may bring his rich experience and also his ready vitality.”

Hasselfeldt’s musings are interesting in light of a report from the Eurasia Daily Monitor, which, commenting on Stoiber’s July visit to Russia’s President Putin, observed, “Apparently, Stoiber seeks to ascend to international status as a mediator of sorts, following his scheduled retirement in September 2007 after 14 years in office” (July 9).

Of special interest in regard to Stoiber mulling his future was his outspoken statements made in Moscow concerning German foreign policy. These statements publicly placed him at odds with Merkel on the issue of America’s desire to place an anti-missile defense structure in Poland and the Czech Republic. In a sign of possible things to come, the Bavarian premier declared, “The position of Germany, of its government, in any case my [Bavarian] government’s and my party’s position, is entirely clear: We are in favor of the [Russian] solution.” However, as the Monitor pointed out, “Stoiber is not known to have been authorized by the German government or by the csu to speak on their behalf, and the Bavarian government is not authorized to conduct foreign policy” (ibid.).

Obviously Stoiber was not fazed by such details.

His outspokenness in Moscow certainly does not indicate that retirement is on the mind of the “pit bull” of German politics! Stoiber would have loved to have had the foreign affairs post in Merkel’s coalition government, but all that was on offer from the chancellor was the sticky economics portfolio. Stoiber declined, and his domestic political star has been sinking ever since. Yet perhaps he has his eye on a higher office: the job of leading the entire European Union!

“Putin coyly remarked that his secret services could not figure out why Stoiber was retiring. However, it is common knowledge that the Bavarian leader is losing his rivalry with Merkel within the main governing party and is sometimes playing spoiler against her. Apparently, Putin hopes to play on such rivalries, both within the cdu/csu and between the latter and its junior coalition partner, the Social Democrats, where Schröder-era holdovers retain a strong influence on foreign policy” (ibid.).

It just so happens that the EU reform treaty that has emerged for debate from the German presidency of the EU has created two new positions, each of which may be of interest to Stoiber: an EU foreign minister, and a permanent EU president. Should Stoiber be offered the foreign minister post, it could provide an ideal platform for him to place some runs on the board to then tout for the top job of EU president at a later date. Then again, perhaps this highly successful Bavarian politician, cast in the mold of his mentor, Franz Josef Strauss, intends to take nothing less than the top job.

Will Chancellor Merkel’s lasting legacy be the creation of the very office that will empower the prophesied leader of a globally dominant European power? The indications are that we may not have to wait long to find out!

In the meantime, Germany’s foreign-policy initiatives are clearer as each month goes by, especially with the government signaling that it will strengthen Germany’s role in the Middle East peace process, recent moves to intervene in the dispute between Russia and the West over Kosovo, and intentions to increase German involvement in Africa. Then there’s the increasing deployment of German military forces in both combat and support roles on foreign soil. Germany’s fighting forces, contained within Germany’s borders up to the time of the Balkan wars, are now deployed in numerous theaters throughout Europe, Eurasia, the Mediterranean and Africa, not to mention their training bases in Canada and the U.S. The German High Command—which was once supposedly banished by post-World War ii leaders, never to rise again—has been reactivated. Voices within the German government are now calling for the nation to drastically increase the size of its military as a major contributor to a European armed force.

All of this newfound power behind Germany’s increasingly strident political voice reminds us of an observation made by Stratfor earlier this year, at the mid-point of Germany’s presidency of the EU. Commenting on the achievements of Germany’s reconstruction since unification in 1991, Stratfor’s European analyst declared, “Taken together, these structural changes are creating a new Germany that is geographically and economically united, and politically confident—something that Europe has not seen in decades. That just leaves Germany without one other thing it has not seen in decades: a robust military” (March 15).

Given the bloody history of past German “robust military” forces, much more than just stiff upper lips may quiver at the prospect of a revival of such an institution!