As Merkel's Power Ebbs, Europe's Peril Grows

The nativism that’s swept much of Europe is threatening her in Germany, with huge consequences for the EU.

- Alan Crawford

From her seventh-floor office in Berlin, Angela Merkel is surrounded by uncomfortable relics of Germany’s 20th century history. To the east lies the Reichstag building, hollowed out by fire in 1933 in an act of arson the Nazis used as a pretext to cement Adolf Hitler’s hold on power. Next door stands the Swiss Embassy, one of the few buildings in the city center to survive World War II almost intact. The line of the Berlin Wall marking the Cold War boundary with communist East Germany is just to the north.

The barbarity represented by those daily reminders has underpinned Germany’s you-first approach to neighbors and allies since the federal republic was created in 1949. Germany even gave up its fabled deutschmark, a totem of hard-earned postwar affluence, to forge a monetary union and satisfy French and British fears over its post-reunification muscle.

Now all that risks being cast aside. Like many of its neighbors, Germany is threatening to turn inward. The new Italian government’s questionable commitment to the euro may be the current cause of consternation among European Union officials and investors—from Christine Lagarde, head of the International Monetary Fund, to Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc. But the real black swan is Germany and the prospect of a yawning vacuum in the 28-nation bloc. Don’t forget: Germany, which started the deadliest war in history, sits at the center of a continent that— barring the past three decades—has known little but conflict and tumult for centuries.