ATHENS – The centrality of Germany to Europe and, more widely, to world affairs has been amply, and often bloodily, demonstrated over many centuries. Indeed, Germany’s strategic position at the heart of Europe, as well as its huge economic and military potential, made it first a prize to be sought, and then, following Otto von Bismarck’s completion of German unification in 1871, a nation-state to be feared. Bismarck’s legacy was a Germany that dominated European politics until the end of World War II.
That legacy is now reasserting itself. After the interlude of the Cold War, during which Germany served as the center of discord between East and West, reunification permitted the reassertion of German power within the context of the European Union and, most notably, the eurozone. Today, however, the question is whether Germany is ready and willing to provide leadership in the conduct of the EU’s affairs – and, if so, to what end.
Europe is currently facing its most challenging crisis of the postwar period. After six quarters of recession, the slump is spreading to the eurozone’s core countries. Unemployment, above 12% on average, is at a record high. In Spain and Greece, more than one-quarter of the labor force is jobless, while the unemployment rate hovers around 60% among young people. Despite harsh austerity, large fiscal deficits persist, and banks remain undercapitalized and unable to support a sustained economic recovery.
Social malaise is deepening as expectations – and actual prospects – for economic improvement are likely to remain poor for the foreseeable future. Faith in the European project is declining, and, given the eurozone’s lack of cohesion, stagnation and recession may lead to popular rejection of the EU, accompanied by serious challenges to democracy, including the rise of neo-fascist parties.