October 3 marked the twenty-third anniversary of German reunification. But on the eve of assuming the helm of her third government, Germany’s once-and-future chancellor, Angela Merkel, celebrates another unification: that of the German people behind her brand of leadership. Through the power of sheer attrition, she has transformed the political landscape in Germany and, through it, in Europe. Merkel is perched atop the entire European political system like an inert leviathan, judiciously but rarely employing power in a style of leadership that makes an art of “leaning backward” the defining attribute of the Merkel era in Germany and throughout Europe.

A parade of global political and economic leaders has come to Germany recently to critique this form of leadership. They have hoped that a direct and earnest entreaty on Merkel’s home turf might produce some give in the country’s unyielding image of itself in Europe and the world. Poland’s energetic foreign minister, Radosław Sikorski, broke deep-seated Central European taboos with a portentous calculation: “I fear German power less than I am beginning to fear German inactivity.” Billionaire Hungarian-American financier George Soros, in April 2013, issued an appeal against inaction. In calling for a decisive choice between a German exit from the eurozone and the common issuance of eurobonds across the currency area, Soros stated that “the crisis is now threatening to destroy the EU itself. That would be a tragedy of historic proportions, which only German leadership can prevent.”

This past summer, U.S. President Barack Obama stood on the eastern side of the Brandenburg Gate to proclaim: “…I come here today, Berlin, to say that complacency is not the character of great nations.” Sitting on the stage behind President Obama when he delivered his most searing indictment in an otherwise innocuous speech, Merkel applauded politely. She has no doubt been privy to the subsequent chorus of agreement from the international community.

Despite global consensus pushing against it, Merkel’s Germany trudges forward or, rather, remains in place—self-satisfied, reflective, inward-looking. Merkel’s potent political resonance with the population is based on her inherent caution. With some of the lowest birthrates in Europe, Germany’s aging demography might lend itself to even greater exercise of political restraint. After all, the generational center of gravity in Germany is inching upward.

But it is the eurozone crisis that has led to a significant philosophical shift in Germany’s negotiating behavior. For reasons historic, geographic and political, Germans have maintained a nested identity based on layered associations and relations. More than most other states, modern Germany has held as a strategic imperative the necessity of aligning its principal national aims and redlines with those of its partners. Germany’s relations-based negotiating style leaves observers with the sense that Germans are overly accommodationist. This relational negotiating style continues to hold globally, particularly with countries that have a growing economic relationship with Germany. Within Europe and to some extent the United States, however, this logic is no longer applicable.

A new division of labor has developed in Germany’s interstate relations recently. On most strategic questions, decision-making authority has been centralized in the chancellery to the detriment of the foreign ministry. This consolidation of power in the chancellery on seminal questions of foreign policy has been widely noted. Less noted, however, is the new role of the finance and economy ministries as the federführend (“responsible”) ministries in German foreign policy. They have been carving up the world between them.

While the broad strategic strokes of German foreign policy are made in the chancellery, the finance ministry has the lead on Europapolitik and the economy ministry plays a principal role in Weltpolitik. This gives a particular geoeconomic accent to the execution of German foreign policy, be it exclusive concessions on raw materials in Kazakhstan, an unseemly increase of weapons and dual-use exports to authoritarian regimes in countries such as Algeria, Saudi Arabia and (until 2011) Syria, or an emphasis on the Transatlantic Trade and Investment Partnership (TTIP) as the organizing logic for Europe’s relationship with the United States.

“The Tyranny of Greece over Germany”

Harvard scholar Joseph Nye contends that the character of modern political leadership tends to fall into one of two distinctive castes. Transformational leadership places the means of change on forceful personalities and visions, and the ability to mobilize and shepherd public opinion. In contrast, transactional leadership is more reliant on managerial prowess, design and control of institutions imbued with flexibility, and the capacity for self-correction and durable consensus-building among disparate groups. Merkel’s leadership style belongs to the latter category, albeit with one significant caveat: It applies only at the national level, often with caustic effects at the European level.

In the eurozone crisis, Germany has been the primary driver of a shift in EU policymaking from the “Community” method—a supranational approach driven by the Commission and based on consensus—to what Merkel referred to at a 2011 College of Europe speech as the “Union” method—an intergovernmental process centered at the Council, where relative state power drives decision-making. The result has been two-fold: 1) It has repatriated decision-making authority preponderantly to the German governing coalition; and 2) It has led to an ossification of decision-making. The German government’s aim has not been to concentrate authority wholly in the chancellery, but to limit European decision-making primarily to its domestic framework. Germany has a “tradition of divided authority,” in which power is spliced between the chancellery, Bundestag, federal Länder, the constitutional court, Bundesbank, and German public opinion. This leads to a gradualist approach to policymaking. It is within this diffuse, but managed, power constellation that today’s German government feels most comfortable conducting its Europapolitik.

From 2010 to 2012, German policymaking on crisis management in the eurozone was defined by four characteristics. These characteristics are: 1) the primacy of austerity as a policy proscription followed distantly by structural reform promotion; 2) delayed decision-making driven by domestic political timetables in Germany; 3) lowering expectations on the eve of major political junctures such as EU summits and post-summit initiative clawbacks; and 4) vague and undeveloped hints at future political union in Europe. Since the onset of the 2013 election season, these four guiding principles have held.

Merkel continues to insist that budget cutting and growth are complementary and should be at the heart of crisis management. At the same time, the 2012-13 debate around banking union has been a case study in the third principle, as Germany has insisted on watering down the scope of the European Central Bank’s (ECB’s) banking supervision, delayed and limited enforcement, and nationalized risk. The foot-dragging on banking union is currently the central fault line in eurozone policy, just as acute fiscal pinches in the eurozone South and intra-European macroeconomic imbalances were previously. Using the example of American leadership in the management of Iraq in 2004, Nye
states that “…the moral flaws were not simply in the prison guards, but also in the leaders who failed to monitor a flawed institutional framework.” This same logic could be applied to German leadership’s failure to adequately address the flaws in the EU’s incomplete architecture. ="#axzz2izzgbpa2">

Germany’s ambivalence to Europe, coupled with the U.S.’s gradual political withdrawal from the continent, has left a vacuum in Europe, one that has been tenuously filled by the ECB. The post-Lisbon EU and its institutions have been rendered less powerful as a political entity and as a normative body. The EU’s normative decay and the economic downturn has weakened Europe across four dimensions, all of which could affect U.S. strategic interests on the continent. First, it has weakened the soft power that the EU has traditionally exercised through enlargement, the EU’s most potent foreign-policy instrument in the region (Turkey, Ukraine). Second, it has led to a democratic backslide as several recently acceded states have rolled back facets of the acquis communautaire (Hungary, Romania). Third, it has indirectly contributed to regional friction in states with strong regional identities (Spain, Belgium, the UK). Finally, it has accelerated the erosion of the traditional Volkspartei structures by insurgent parties of the extreme right and left. This process has made coalition-building unwieldy at the national level (Greece, Italy, Spain) and will also impact the political landscape in the European Parliament after the 2014 elections.

Decoding Atlanticist Germany

Germany’s conduct with its Atlantic partners has demonstrated a similar disinclination towards shaping public opinion. Merkel curates opinions across the German population, finds the center, and then adroitly occupies it. Sometimes this leads to alarming decisions for Germany’s partners and allies. Germany’s 2011 abstention from the vote on UN Security Council Resolution 1973 authorizing the protection of civilians in Libya that ultimately led to Muammar Ghaddafi’s removal from power has been almost universally maligned. The recent decision to delay adding Germany’s signature to a joint statement on Syria at the September G20 summit in Saint Petersburg that “condemned in the strongest terms” the Syrian regime’s use of chemical weapons plays into the same narrative that informed Germany’s decision-making in Libya.

U.S. policymakers, baffled by Germany’s willingness to buck western consensus in the eurozone crisis and the Western alliance, have grappled with how to form a more solid strategic relationship with today’s Germany. The U.S. has used all of the symbolic arrows in its quiver recently to woo the Merkel government. She was invited to speak before a 2009 joint session of Congress and was given a White House state dinner in 2011. President Obama, as previously mentioned, also visited Berlin to speak at the Brandenburg Gate at Merkel’s side, a symbolic hat tip to her statesmanship right in the midst of Germany’s election season. Perhaps most importantly, the Obama administration has given its full support to a long-held goal of Germany foreign policy: a trans-Atlantic free-trade agreement. The TTIP is a strategic project of Merkel’s Germany, the foundations for the pan-Atlantic trade zone having been laid during Germany’s 2007 EU presidency with the establishment of the Transatlantic Economic Council (TEC).