Armin Steuernagel may be just 25, but he already wears many hats. He has started food and e-commerce companies, co-founded a nongovernmental organization and is involved in politics. Describing himself as an entrepreneur and economist, Steuernagel takes pride in his native Germany, home to what he says are increasingly innovative and multicultural cities such as Hamburg, Munich and the capital, Berlin, where he resides.
“These places are now international hubs, cities that are incubating innovation,” Steuernagel said during a phone interview from Berlin.
Such an environment is what attracted Alexa Clay as she searched for a place to base herself for researching and co-writing the book, “The Misfit Economy.” She considered New York and San Francisco, but the American landed in more affordable Berlin, where she shared working space with artists and startup entrepreneurs.
“I wanted to be in a place that is culturally creative,” Clay said, speaking over the phone during a book tour stop in Brazil. “Berlin is a city where there are a lot of artists but there also is an emerging startup scene that’s still fairly nascent compared to a place like San Francisco, but has surpassed London in terms of investment capital.”
Steuernagel’s and Clay’s high opinion of Berlin and Germany is shared by many others. The country, home to Europe’s largest economy and whose leaders are playing pivotal leadership roles on global flashpoints ranging from refugees, the conflict in Ukraine and the European debt crisis, is seen as the world’s best country, according to the results of the Best Countries rankings. People view Germany as the best country for fostering entrepreneurship, and rank it high for the power it wields and the quality of life it provides its citizens. Undergraduate tuition has essentially been waived at many of the country’s public universities.
Globally, the country’s leadership — in the form of Chancellor Angela Merkel — is as popular around the world as the leadership from the U.S., according to a Gallup poll. Its unemployment rate, below 5 percent, is among the lowest in the European Union. That contrasts to the 11 percent unemployment rate in the country when Merkel took office in 2005.
Germany’s economic strength is built upon its network of small and medium businesses known as “Mittlestand.” The country is seen as a model for the way in which it trains workers in apprenticeships following secondary school education. Such training programs are part of a larger institutional system that helps foster innovation in existing companies, says Dan Breznitz, who holds the Munk Chair of Innovation Studies and is a co-director of the Innovation Policy Lab at the Munk School of Global Affairs at the University of Toronto. While Americans envision innovation as inventing a new technological gadget, Germans typically express innovation by improving on an existing practice.
German brands are some of the best-known in the world, with BMW and Mercedes-Benz leaders in automobiles and Siemens in industrial equipment. But Germany’s famed engineering prowess suffered a black eye in 2015 after Volkswagen admitted that it rigged millions of its vehicles to avoid U.S. environmental regulations.
The country is successfully using soft power abroad through political, economic and cultural channels, says Dan Hamilton, executive director of the Center for Transatlantic Relations at Johns Hopkins University.
“The Germans are punching above their weight in those areas,” he says.
Partly by default, Germany has emerged as the leader in Europe. France, traumatized by deadly terror attacks at the beginning and end of 2015, is grappling with how to confront terrorism, solve serious economic problems and find its way out of political polarization. In the United Kingdom, the public and its leaders are revisiting a familiar debate: Its relationship with the European Union. Other countries across the continent are similarly focused inward.
That leaves Germany, a country that has rebounded from the global financial crisis with a strong economy and a political culture that emphasizes unity, as the continent’s undisputed leader.
Germany’s ascendance as a world leader comes largely from the work of Merkel. Only the third German since World War II to hold the chancellorship for a decade or more, Merkel has shown decisive leadership on several issues. That is a change. Traditionally, Germans are consensus seekers who have chosen multilateral strategies over acting in a singularized manner. The country’s “culture of reticence,” as Hamilton describes it, is born from its 20th century history, when it tore itself and the continent apart in two world wars.
“It’s a different political culture, in a way, than in the U.S.,” Hamilton says. “The Germans, given their history of instability and fractured politics … these things haunt them. They have seen what instability and political polarization does.”
Various global crises, however, have forced Germans to rethink their place in the world. Germany has acted as the key negotiator with Moscow in implementing diplomacy and sanctions over Russia’s aggression in Ukraine. Its leaders have traditionally been reluctant to deploy its military abroad — the country did not join the U.S.-led military intervention in Iraq and it abstained from the 2011 U.N. Security Council vote establishing a no-fly zone over Libya. But it did send troops in the Balkans to enforce the Dayton Accords. Following last November’s terrorist attacks in Paris, German leaders agreed to deploy soldiers to Mali to provide relief to France in that country’s fight against the Islamic State. Germany also is providing weapons and training to Kurdish troops in the fight against ISIS in Iraq.
On the migrant crisis, Merkel last August suspended the so-called Dublin Regulation — the EU’s procedure for determining which member country is responsible for processing asylum applications — for Syrian refugees. Critics inside Germany and across the EU said her decision was partly responsible for fueling the refugee crisis — more than 1 million refugees entered Europe in 2015, four times the number in 2014. Merkel eventually conceded Germany’s welcoming arms have limits and later reinstated the rules, but she famously defended her initial decision: “If we now have to start apologizing for showing a friendly face in response to emergency situations, then that’s not my country.”
“She is someone who represents the conscience of her country in a positive way, and is seen as someone who can bring people together,” Hamilton says. “She’s taking some leadership in those areas that in past years the U.S. would have done — or the U.S. and EU together, with Germany sort of just playing its role.”
Merkel enjoys strong public support at home but her tough stance supporting austerity measures during the eurozone crisis has created resentment abroad. A Gallup poll last year showed Greeks as most likely to see Germany as their country’s greatest threat.
Germany’s geographic location as a crossroad in Europe places it as the focal point for the tension across the continent between the forces of integration and disintegration, a tension fueled by deepening anxieties over terrorism and a refugee crisis unprecedented since World War II. Both issues threaten the idea of a unified Europe without borders.
“Keeping Europe together is really much of Merkel’s challenge for the next year, with the refugee crisis being the headline,” Hamilton says.
At home, the refugee crisis poses a growing domestic challenge for the chancellor, who at the beginning of the year rejected calls to place a limit on admissions for 2016. The refugee issue also is fraying the public’s nerves and exposing a darker mood over foreigners. A string of New Year’s Eve attacks against women in the city of Cologne was largely blamed on foreigners and days later led to retaliatory attacks against a group of Pakistanis and a Syrian in that city.
Additionally, Germans are getting older and there are less of them, a long-term trend that threatens the government’s system of social service guarantees. Leaders will need to consider ways technology can help an aging society. But technological advances may raise new challenges for a country that has kept its unemployment level comparatively low.
“An interesting question for Germany now is where the babies being born now will be,” says the University of Toronto’s Breznitz.
Those German babies are likely to work in many places, says Steuernagel. A digital economy, he says, means being ready to work in many countries and have multiple part-time jobs — a departure from the German model of working a full-time job at one company for several decades.
And while Germany excels at innovation today, a growing concern is whether it missed the digital revolution. Steuernagel says government leaders need to act with greater urgency to adapt laws to foster innovation and lure investment from abroad.
“We are getting more and more on the train of this digital age,” he says. “But the politicians and regulators have a strange relationship with the Internet. They are not really understanding, as I perceive, that there is actually something coming that is disrupting with the way how markets function much more than they can think of.”
One of Merkel’s boldest decisions is to move the country’s sources of energy toward renewables in a bid to reduce greenhouse gases. Following the 2011 Fukushima disaster in Japan, the chancellor announced that the country would abandon nuclear sources by 2022, setting lofty goals for reliance on solar and wind sources in the coming decades.
“They put a national bet on the proposition that Germany can break the link between the production of wealth and the consumption of resources,” Hamilton says. “That is a transformative bet. If Germany can show how to do that, it will remain world class. And it’s invested its entire economy basically into that.”
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U.S. News Ranks Germany No. 1 originally appeared on usnews.com
