Old World Order - Germany

Population: 80 million
Area: 357,000km2
GDP: $3.6 trillion
GDP (per capita): $42,000
United Nations Security Council Veto: No

The numerous German states were unified in the late 1800s under the brilliant leadership of Otto Von Bismarck. The first century of its existence was tumultuous, its expansionist politics helped cause WWI and were the primary cause of WWII. Both wars ended with defeat and humiliation for Germany. Thankfully the Allies learnt how to deal with a defeated Germany and the Germans seemed happier to assume a smaller role in the world than they had previously desired. 

At the moment Germany is doing rather well, its lack of housing boom and export led economy meant it has been able to weather the recent economic crisis. It is the largest country entirely in Europe with over 80 million people (15th largest in the world). Its economy is the fourth largest, behind only America, China and Japan. Germany's economy is also growing, considering the circumstances this is quite a feat. Yet there are dark skies approaching Germany's future. 

For the first decade of the Euro's existence, Germany benefitted greatly as it made exporting to the European periphery easier. Unfortunately crisis in the PIIGS (Portugal, Ireland, Italy, Greece and Spain) could spread to Germany.  The northern Euro nations, especially Germany, have demanded that, in exchange for bailouts, the countries must impose harsh austerity. This had proved disastrous for the economies of the countries who are in a worse financial state, despite the bailouts Greece still risks default. If Greece goes then a domino effect could occur on the other PIIGS countries which would devastate the world economy, particularly the Eurozone. German banks that lent a lot to the PIIGS would default if the Germans did not bail them out.

Another risk to German power (and GDP) is its shrinking population. By 2050 Germany is expected to drop to 21st in the world rankings, with 71 million people, just marginally more than Britain. That would mean Britain would have the largest population in Europe by 2060. This is beneficial to Britain, not so much to Germany.

Germany's most serious threat originates outside of its borders, in the Eurozone periphery. I've already discussed what the problem is, so here I will concentrate on the solution. To solve the crisis will require the agreement of the Eurozone countries (there's 17 of them) and possibly the whole of the EU (28 nations) and help will probably have to come from the IMF and/or World Bank (the whole planet). Oh dear. Even just getting the agreement of the 17 Eurozone nations is difficult enough. What Germany needs to push for is more fiscal integration, which it has been doing, and economic stimulus in the problematic regions, which it has done the exact opposite. The Germans seem unwilling (like much of the rest of the world) to learn from the lessons of history that stimulus works and austerity fails.

To sum up; Germany faces two major challenges, a declining population and trouble in the Eurozone. The Eurozone challenge can be fixed - If German leaders recognise their mistakes and rectify them.