It appears the current phase of Europe’s debt crisis is entering its last hour. We’ll know soon, but it’s possible the weekend of May 5, 2012, will be remembered as a transformative moment in the history of Europe.

Once again, the nation at the center of it all is Germany.

On Sunday, a noteworthy chain of events will culminate in France’s run-off presidential election. While many of the events in this chain appear unrelated, with each unfurling in its own distinct way in a city or within a government in a different country, they’re threaded through with a common theme: frustration with Germany, and specifically, Berlin’s unrelenting demand for Sparmaßnahmen (austerity).

On Tuesday, millions of Europeans hit the streets in May Day protests that centered on their governments’ efforts to follow Germany’s demand and impose austerity on Europe’s ailing economies. Spain, a nation dancing with default, had the largest turnout, with large demonstrations in 80 cities. Tens of thousands more hit the streets of Portugal. In France, over 300,000 demonstrated in 290 different rallies, more than four times the number that turned out last year. France’s largest union, the cgt, has even told its members not to vote for French President Nicolas Sarkozy, a key Merkel ally and supporter of Germany’s demand for austerity, in Sunday’s presidential election.

Europe’s southern states aren’t the only ones struggling to comply with the German-led quest for austerity. Last week, many were shocked when Mark Rutte, prime minister of the Netherlands—and another key German ally—resigned and announced the termination of his coalition government. Rutte’s resignation came as a result of the Party of Freedom, the right-wing party of Geert Wilders, withdrawing its support for the governing coalition due to disagreements over the imposition of austerity.

If Holland, a stalwart German ally in much better fiscal health than many others in Europe, can’t find a way to enact the austerity Germany is demanding, how in the world are states like Spain, Portugal and Italy ever going to manage it? Meanwhile, throughout Europe national political parties that oppose austerity and the German/EU demand for it are winning votes and gaining political power.

As unemployment lines grow, as revenue shrinks and riots and protests increase, Europe’s national governments are increasingly setting aside the interests of Berlin and Brussels and putting national interests first. European Parliament President Martin Schulz noted the trend toward “re-nationalization” in a speech before the European Commission Wednesday of last week. Facing intense domestic pressure, governments across Europe are turning inward, “arrogating more and more decisions to themselves,” and bypassing EU institutions, including the European Parliament and Commission. For the first time in its history, the collapse of the European Union is a “realistic scenario,” Schulz warned.

European Council President Herman Van Rompuy is also concerned, warning last week that the “winds of populism” are blowing through Europe.

Populist winds will undoubtedly be blowing in Greece this Sunday when people head to the polls to elect a new government. Greece has received two bailouts from Europe, both of which at Berlin’s request were given on the condition that Athens make major cutbacks, lay-offs and slashes to government spending. Frustrated by what they know to be German-imposed austerity, millions of Greeks are ready to rebel. After months of tapping into this widespread, anti-German spirit of rebellion, many of Greece’s marginal political parties—some of which promise to reverse austerity (as do some mainstream parties)—are poised to make historic gains in Sunday’s parliamentary election.

Depending on the outcome Sunday, Athens may have a tough time meeting the conditions necessary to continue receiving bailout money—thrusting Greece, yet again, to the precipice of financial default.

Finally, there’s the run-off presidential election in France, which could have enormous impact on Germany and Europe. From the moment the debt crisis began in 2008, the responsibility of fixing it has rested primarily on the German-French axis. Truth be told, President Sarkozy’s main responsibility has been to embrace the solutions coming from Berlin, giving them added legitimacy in the eyes of Europe and the rest of the world.

If Socialist candidate Francois Hollande is elected, Germany loses its French toady.

That’s not all. When it comes to solving Europe’s debt woes, Hollande’s view is the antithesis of that of Angela Merkel and German public opinion. He’s already stated that he won’t support the fiscal pact as it currently exists. When it comes to Europe’s finances, he said last week, “It’s not for Germany to decide for the rest of Europe.” He also believes that instead of austerity, the solution to Europe’s debt woes is printing and spending more money. “So many people in Europeare waiting for our victory,” he said recently, “I don’t want a Europe of austerity, where nations are forced on their knees.”

Read between the lines of that statement. This man isn’t merely campaigning for leadership of France, he’s making a play for leadership of Europe. In another recent address, Hollande told supporters that “the people of Europe expect that we, the people of France, will provide Europe with another perspective, another direction, another orientation.”

They say Hollande lacks personality and charisma. Well, he makes up for it in audacity. He sincerely believes the rest of Europe wants him elected so France can replace Germany at the helm of Europe!

That’s never going to happen. France lacks both the financial health and political muscle to replace Germany as the arbiter of this crisis. Nevertheless, France’s dissension under Hollande could throw Europe into financial and political turmoil. Spiegel Online reported recently that “for France’s neighbors and the fight against the sovereign debt crisis in Europe,” Hollande’s election “will set everything back to square one” (emphasis added).

As you can see, Europe’s financial crisis isn’t even close to being over—though it is likely entering a new, more exciting, more dramatic, more sobering chapter!

It’s possible, likely even, that the convergence of these events—the widespread resistance to German-imposed austerity, the renaissance of nationalism, Spain’s imminent default, the collapse of the Dutch government, and the inconveniently timed national elections in Greece and France—will produce a moment of historic importance. As this unfolds, don’t take your eyes off the nation at the center of it all.

As Ambrose Evans-Pritchard wrote, “The epicenter of Europe’s political crisis may soon be Germany itself.”

We must watch for Germany’s response. It will have a colossal impact on Europe, and on the rest of the world.

From the moment Europe’s debt crisis began, Berlin has managed to maintain the precarious balance between rescuing drowning eurozone states with bailouts, while not abandoning its Teutonic principles of wise financial stewardship. Until now, Berlin’s solution has been to give bailouts, but with strict conditions. But the ferocious backlash against austerity, both on the street and within national governments, is not only making Germany unpopular, it’s threatening to catapult Europe much deeper into crisis.

Soon, it will be impossible for Germany to sit on the fence.

Conditions will force it to make a momentous decision.

It has two basic options. First, it can stick to its guns. This means refraining from giving bailouts, or confining its support to rare, insufficient, halfhearted bailouts that come saddled with strict conditions. This will continue to arouse the ire of its counterparts and isolate Berlin further. More importantly, given the level of debt and the pervasiveness of Europe’s debt woes—not even Germany has near enough money to bail everyone out—the decision by Berlin to remain tight will mean that it has accepted the inevitable financial collapse of one or more eurozone states. Maybe Greece, Portugal or Spain—perhaps all three?

If Germany allows states to default, we can expect the eurozone, the euro, and possibly even the EU as it is constituted today, to fracture and crumble too. This would come with many painful consequences for Berlin. But it would also come with an enormous opportunity. As Europe’s largest, healthiest economy, Germany would be left with the responsibility of rebuilding Europe!

Second, Berlin can compromise, or at least give the appearance of compromise. As events converge and the possibility of an all-out meltdown grows, Germany could choose to throw its weight behind the far-reaching solution that many believe will rescue the likes of Spain, Greece and Portugal, soothe the financial markets and bolster global confidence in the long-term viability of the EU and its institutions. The essence of this solution is further fiscal integrationand more centralized control, and it will only work if Germany is on board and leading. Even now, many experts believe the current situation could soon result in a German-backed euro bond.

If Germany decides to double down and throw its full weight behind the EU by agreeing to such far-reaching measures as a stronger central fiscal authority, a debt union, and a euro bond, you can be sure it won’t come cheap to the rest of Europe. Berlin will never underpin the EU, putting its own financial well-being at stake, without first extracting major political and financial concessionsfrom those it is rescuing.

The moment it extracts these concessions, Germany will become the unchecked and absolute power in Europe!

It’s hard to exaggerate how important it is that we watch events in Europe, especially in Germany, in the time ahead. In particular, events seem to be converging this weekend, when the French and Greeks head to the polls. Europe’s debt crisis is likely to intensify after this weekend. As it does, Germany will find itself under extreme pressure to act decisively and with dramatic, far-reaching measures.

It’s hard to know precisely what Berlin will do. What we do know, however, is that conditions are about to bring out a side to Germany that we haven’t seen in a long time. Stay tuned! Only time will tell, but the weekend of May 5, 2012, could be a major milestone in the prophesied emergence of the final resurrection of the German-led Holy Roman Empire!