German G8, EU Presidency

Chancellor Angela Merkel takes the reins of the European Union for the first half of 2007, with the main goal of saving the EU's failed constitution and hammering out a new energy security policy for the 27-nation bloc.

In addition, as host of the G8 summit at the Baltic Sea resort of Heiligendamm in June, Merkel plans to put financial market transparency, trademark protection and Africa at the top of the agenda for the club of rich nations.

"This dual role comes at a very historic time in world affairs," said Gary Smith, executive director of the American Academy think tank in Berlin. "Germany and especially Chancellor Merkel have a great opportunity to exert leadership and reach concrete goals."

Mighty Germany

Europe's biggest economy has increasingly been flexing its business, diplomatic and even, for peaceful purposes, military muscle since winning back full sovereignty following German reunification in 1990.

Germany is at the core of the euro single-currency zone and the European Central Bank is building a huge new headquarters in Frankfurt.

Major German corporations have adeptly ridden the wave of globalization and exports have continued to soar during 2006, with the euro hitting near-record highs against the dollar.

Even the sometimes euro-skeptical Wall Street Journal was full of praise in a recent commentary.

"The competition brought on by globalization and the EU's expansion to include 10 new states in 2004 forced a serious restructuring of the corporate sector," the paper said. "… Germany Inc. was at the forefront of this mini-revolution."

Diplomacy matters

Diplomatically, Germany began talking about "national interests" and a "German path" under former chancellor Gerhard Schröder, who provoked the worst post-war crisis in German-American relations by using his Iraq war opposition to help win his re-election in 2002.

This sort of talk -- unthinkable during the Cold War -- has been toned down by current Chancellor Merkel, who nevertheless is sticking to Schröder's calls for Germany to get a permanent seat on the United Nations Security Council.

As the EU's biggest power, Germany already has an upgraded UN status under what is known as "P5+Germany": the five permanent UN Security Council members plus Germany, who are dealing with issues such as the Iranian nuclear crisis.

Military transitions

Germany's military transition is one of the biggest ongoing shifts in the country's global positioning since unification.

The Bundeswehr, or federal armed forces, will in coming years be forged into a 35,000-member rapid-reaction force for global operations, backed by a 70,000-member stabilization force for peacekeeping.

During the transition, Berlin is acquiring heavy airlift planes capable of taking troops anywhere in the world, while at the same time scrapping hundreds of the formidable Leopard II main battle tanks which once faced off against Warsaw Pact forces.

Reforms, however, are slow moving and, at present, Germany still cannot deploy more than 10,000 soldiers for combat or peacekeeping operations -- despite a total troop strength of over 250,000.

"The German armed forces are still structured for the Cold War," said Karl-Heinz Kamp, security policy coordinator for the Konrad Adenauer Foundation, which has close links to Merkel's Christian Democratic Union party.

Germany's military was dissolved in 1945 after the Nazi defeat and only recreated in 1955. Throughout the Cold War, German troops were strictly limited to defensive missions within the NATO area.

Modern missions

It was only in 1994 that German troops were given a green light by the country's highest court to take part in combat missions outside the NATO alliance.

Since then, there has been a steady growth in the number of German military deployments abroad with bigger and bigger missions.

Luftwaffe jets took part in the first German combat operations since 1945 during the 1999 NATO-led war with Serbia to halt ethnic cleansing in Kosovo.

"Never again Auschwitz!" was how Greens Foreign Minister Joschka Fischer convinced members of his own pacifist party to back the historic deployment.

Today about 9,000 German troops are serving on international missions, including with NATO forces in Afghanistan and in the Balkans.

The latest German military mission, deploying forces as part of a beefed-up United Nations UNIFIL force in Lebanon, also breaks new ground as Berlin's first Mideast deployment since World War II.

But Germany still seeks to keep its troops out of combat zones.

Soldiers in Afghanistan are based in the mainly peaceful north and are barred from taking part in fighting in southern Afghanistan with US, British and Canadian forces.

In Lebanon, the Germans refused to send ground troops and instead deployed naval forces based off the coast.

Military spending

Another area where German aspirations for a bigger global role clash with reality is financing. Berlin spends less than 1.5 percent of its GDP on the military -- far less than the US, which devotes 3.7 percent of its budget to the armed forces.

A far higher proportion of the German military budget goes for personnel costs -- and not for equipment.

"The Bundeswehr spends 60 percent of its money on personnel -- something's wrong with that," Kamp said.

Kamp also worries that the three German ministries responsible for global relations -- defense, foreign and development aid -- have felt the brunt of federal budget cuts.

"This means that at a time when Germany's foreign responsibility has grown, we cut foreign spending by 50 percent," he said.