 Thank you for taking your time to listen to me. I was asked to speak a little bit about the German, Germany's role in Europe today. And it's evidently true that there has been some major changes occurring in the last couple of years concerning the role of Germany. My proposal was to take up a title of the economist Germany as a reluctant hegemon in Europe. And I hopefully can make the argument that Germany does not want to be a hegemon, not even a reluctant one in Europe. But of course, it has a major role to play in European politics. And it's just right at the moment thinking about how this role will be. Now, the new importance of Germany in Europe is linked, I think, to some element of structure and some element of temperament that will go away again in the future. I mean, it's clear that the Eurozone crisis has given a specific way to Germany, the greatest economy of the Eurozone, to the opinion that I held in Berlin on the future of the Eurozone. And then, of course, we have at the same time the moment of extraordinary weakness of other major European countries. The United Kingdom is turning kind of inwards in a certain sense under Cameroon. That was our impression, it's turning away from the European Union in a certain sense with the perspective of in our referendum in 2017. France is in a moment of extreme political weakness. If you look at the capacities of Manuel Valls and Francois Hollande to influence politics, even in its own countries, but also outside of France, I mean, the relative weight of France is rather specifically low at the moment inside this equilibrium of forces under the European Union. And you have similar problems, economic problems in Spain. You have a deep crisis in Italy. So I think the relative strength of Germany has to be seen that it's also due to the fact that the traditional partners of Germany in the European Union are at a specific moment where their weight is relatively lesser than it used to be, and it will be again in the future, of course. So it's a temporary thing in a certain sense, I think. And then, of course, we have the new geopolitical troubles in the East, Ukraine specifically, which, of course, turns Germany, gives Germany a new centrality in the geopolitical landscape of Europe. It's the foremost Eastern big country in the European Union besides Poland. And because of its economic weight in that area in Eastern Europe, it is, of course, a major actor in the resolution of that crisis, which, again, adds to the impression that Germany is some kind of hegemonic force in the European Union. And then there's the element of change perception by other major countries, the United States. Because of the relative weakness of the other countries and because also of the relative weakness of the European institutions, the Commission under Baroso have been looking around where there's something like a functional political partner in Europe. And they all turn to Germany, the Chinese, the Russians, the Americans. So I think these are some kind of temporary elements that add to the impression that there is some kind of hegemonic situation of Germany in Europe. But the interesting, real interesting thing about it is that Germany at the moment is a very specific moment of its own history. And it's totally out of tune with the mood of the rest of the continent. Now, you have a reluctant hegemon, which is in a totally different situation than most of its major partners. And that's, I think, the interesting constellation of the moment in a certain sense. We have growth in Germany, much higher growth than many other countries in the eurozone. We have sinking unemployment, which, of course, is extraordinary for a country in the eurozone. We have a very low youth unemployment. If you compare that to Spain, where you have 60% youth unemployment in Andalusia or to Italy, where you have, again, 60% youth unemployment in southern Italy, you see that there's a tremendous difference. We have a stable budget situation. We are looking forward to attain the black zero, the budget stable and not deficit budget in the coming years. You have booming consumers spending in opposition to the rest of the continent. And if we look at the opinion poll, there's the socioeconomic panel, which measures also psychological dimensions of well-being in the German population since the end of the 1960s. Never, ever Germans felt as well as today. The life satisfaction has never been so high in Germany as it is today. Now, that, of course, if you would make a similar opinion poll in Italy or in Spain or Portugal, you would have, of course, tremendous in the front, which is at the brink of chronic depression, I think. It would be, of course, a completely different thing. And that's the interesting thing. I mean, Germany is in a very specific moment of its history, and it stands out among the European countries. And the interesting thing is in Germany, it's my interpretation. For the first time in the last 100 years, this country is at ease with itself. And that's a major date, if you're saying. This Germany that has not been at ease with itself always has been a big problem for its neighbors and for itself, of course. But for the first time, for my personal interpretation, this country is at ease with itself. And I will just give you an idea of the depths of the divisions and conflict that this conflict-written country has had in the last six years, not to talk about the part before the Second World War. But if you remember, we had the division of the country. We had a loss of a quarter of the territory after 1945. There had been 12 million displaced people that had to be integrated into the German society after the Second World War. The Iron Curtain was running right through the middle of the country, creating extremely militarized borders where Germans were aiming at Germans, where there was a massive amount of tactical nuclear weapons stationed there. And of course, these East-West divide also had its effect on the internal political climate in Western Germany and led to total oppression of opposition in the dictatorship of the GDR. And then we had, linked to the Second World War, this very, up to my opinion, the strongest of all conflicts of post-war Germany, the generational conflict between the generation of the perpetrators and the generation of the later born, which still is a very strongly-finding element, I think, of German politics today, which led to a very politicized human movement in 1968 with a lot of internal conflict in the society and also linked to the terror of the Rotter-Amie Fraktion. And the relatively strong muscle, and up to my opinion, disproportionate reaction of the state in some elements to that threat, which was in reality a bunch of middle-class children with light arms, which was not really something that was endangering its ability of the German society. But you had a climate of, it was called in Germany, the Blyanna Zeit in the 70s, where people really felt that the political climate was very heavy. Now, in the 1970s and 80s, you had the upcoming ecological movement, a very deep divide inside German society about the future of nuclear energy and about the future of the industrial society, which was more, was a much deeper running conflict than in many other countries. In Europe, you had a lot of demonstration here, massive demonstration against nuclear power plants in Barockdorf, in Wackersdorf. We had the demonstration against the Stadtbahnwest, the runway at Frankfurt Airport, which mobilized hundreds of thousands of people. And it was really an element that was a political status identifier in a certain sense inside German society, are you pro or against nuclear power, are you a green one or not a green one? And then we had the peace movement of the 1970s and 80s against the deployment of tactical nuclear missiles and cruise missiles, pushing to by NATO in reaction to the deployment of SS-20 mid-range missiles by the Soviet Union, which again was a deeply divisive thing. And we had, again, 100,000 of people, 500,000 people marching in Bonn against the deployment. That again was creating a very strong internal social divide and political divide in the society. And both of these movements led to a restructuration of the political party system with the creation of the Green Party entering the parliament. And then we had 1990 reunification, which was a wonderful thing, but very quickly led to another kind of division between the Westies and the Aussies, because it came, of course, with tremendous cost on both sides. And if you look at the figures, the GDR was nominally the 10th industrial country on Earth in 1990, by whatever trick of the statistics. But nevertheless, it had a tremendous manufacturing base. This manufacturing industry of the GDR was totally wiped out in the five years after the reunification. Between 1990, 1995, 80% of East Germans lost their job either temporarily or permanently. That's a tremendous upheaval of a society. And this also came with a high psychological cost, because reunification meant also a devaluation of social capital, of cultural capital, of a whole biography in a certain sense of a whole population. And the financial cost to Western Germany, of course, also quite high. I mean, there are different estimates just to give you an idea about the cost of reunification. It stands between 1.3 or 2 trillion euro today. And every day due to social transfers from West to the East, 100 billion euro is adding every year to the bill. So it has been a tremendous effort of the Western part of the country to help the Eastern part to modernize and to come up to living standards at least acceptable after the destruction of the economic base of the country. And then we had, of course, the years of the Hartz reform, which again divides society quite strongly. In the mid-2000s, that was a context where Germany was seen as a segment of Europe. We remember all this debate about the future of Germany. Unemployment was at record levels of the Second World War. And these market and labor market reforms and welfare reforms were seen by many people, again, as a kind of devaluation of their professional biography, their contribution to the welfare system. And it created another political dynamic which led, again, to a restructuration of the political party system with the Linke entering the Bundestag. And for a time being, I would say that the Linke will stay in the Bundestag because they have a relatively solid base in the East. So this country wasn't really at ease with itself for a very long period after the Second World War. And now it looks all miraculously gone. It's a faraway thing. This Germany of today is totally different. The reunification is digested. We have with Joachim Gauck and Angela Merkel two former Aussies as the two leading politicians in Germany. Nobody cares. It's just not a thing. Nobody gives a about it. If you look at the economic and social situation, due to that tremendous investment that has been made by the West in the East, we have today per capita income purchasing power adjusted of roughly 90% in the Eastern part of Germany of Western German levels. Now, that's, of course, that's OK. I mean, it's really something that the living conditions are no longer much different between the East and the West. So it's also in the daily life of the people. It's totally digested. Nobody asks any longer, are you from the West or from the East? It's a factor that has become irrelevant. And then, of course, the economy is stable. Unemployment is sinking. We are the export world champions. And that's always a source of pride for Germans. And I think also the Germans have found a new positive form of identification with their country. They see it, if you look at opinion polls, as a country where it's good to live, that's a threatened paradise, as one market researcher has formulated it. And they see themselves also as a force of good in Europe and in the world. That's extraordinary. Germans, because of the experience of the Second World War, never saw something as a force of good. And now, there's this kind of mild patriotism that has been sprung up, I think, in 2006 with the European soccer championship. For the first time, people put out German flags without being seen as close at Nazis or things like that. And I think this mood of a relaxed patriotism, which is embedded in a strong pro-European feeling, would really describe the mood of Germany today. And of course, there's positive feedback from the outside world. There's the sense of respect that people think Germany gets from the outside world. There's this wonderful opinion pulled by the BBC, according to which Germany is the most popular country in the world. They would not have thought so. But it was, of course, good to read it. Now, OK, the question is, how stable is the current situation? But that's interesting saying. I think, if you look at the decisive factors, economy. Economically, I think it's more sound that many people have. And it's sustainable that many people have sort of. We always had doubts about the sustainability of this export-led growth model that has established itself in Germany after reading about in the last 15 years. But I think I have the impression that it really continues to function. And it's due to the fact that Germany has established itself quite intelligently in the midst of the globalized economy, where the center of dynamics, of course, is shifting to the emerging markets. But Germany, with its exports in manufacturing goods, equipment, et cetera, is very well placed to profit for the time being for even a longer period of reshaping of the world economy, where billions of people in reality are just entering the industrial age in Asia and in Latin America. And as one German manager has formulated it already 10 years ago, saying, China will, of course, become the factor of the world. But it will be the Germans who build it. And in that perspective, there is, I think, for this kind of economic model that Germany has developed in the last two decades, there's still a solid base. And then, of course, we have these weak demographics in Germany. We have a very low birth rate, which leads to sinking unemployment, which is a good thing, of course, psychologically. The labor market situation where we, for young people, quite good in the decades to come, which, of course, is an important factor for people to feel OK, they don't have a generation of worries about what's going to happen to my children. And if you don't have too massive immigration to Germany, the labor market situation will be excellent for a very long time. And then, of course, German corporations and small and medium enterprises are extremely strong at the technologically financial level. They have lots of money stashed away. They're investing massively in research and development. And there are many hidden champions among the smaller enterprises in the world market. If you look at the European EU Innovation Index, you will see that Germany is among the leading countries and among the great countries, bigger countries, the leading one. So also, the technological base of the German export model seems to be very strong. Politically, the country seems extremely stable. This great coalition we have at the moment is the perfect political expression of this pacified mood of the German population. We don't wish to have major strife and conflict in the political area. They don't feel that there's a necessity for that. And in reality, we have an old party government in Germany. If you take together the various levels of governance in Germany from the federal level to the regional level and the local level, all parties are in some kind of coalition government, which is each other. There is no outsider in the political system in the end. Or, to a certain degree, all of the parties in the Bundestag are involved in governmental and administrative functions. In it together, it's run by all party government, which again expresses quite a lot this pacified mood of the German society. And then there's no major cultural and social conflict to be seen. Of course, you've heard about Pegida and all these things. I think even the immigration question is most probably the most difficult one. With the long run, the most problematic potential at the moment is not an issue, because the labor market is functioning quite well. There has been no terror attacks long in France or in the United Kingdom. So even that question is a tricky one, seems to be at the moment not a very difficult one for the German society. Now, what does this mean for Germany's partner in Europe? It's clear that we are living in a changing environment, in that sense. And the German political elite is well aware that it has to change its modus operandi in a certain sense. Germany's political elite or Germany's modus operandi in the post-war, Second World War area, was punching below her weight in a certain sense. That was the tricky area. And that period is gone. It's about to go away. And I think in Berlin, there's a high degree of awareness that this is about to happen. That Germany has to reconsider its role in the European Union and as a responsible medium power as Volker Pertus, the director of the Institute for International Studies recently called it as a responsible middle power in world politics. That we have to assume new responsibilities and the debate about these new responsibilities and full swing in reality inside the political elite in Germany. We have the review process of the Ministry of Foreign Relations for trying to redefine the role of Germany in foreign policy in the next decade. You have the Weißbuch process, a white book about defense, which is drafted by the Ministry of Defense in the coming two years. And there, of course, it's all about searching the role of Germany in the shifting and ever more turbulent world that is actually emerging. Of course, we have a major debate how to manage Russia. The whole, I think, model of our relationship with Russia, which was based on the idea of complementarity between these resources, rich country, big country in the East, and the technology rich country in the West. And they have energy, and we need energy. That was a kind of idea of complementarity between the two countries. And that has all gone down the drain in the last 18 months, I think, in a certain sense. And there's a huge amount of insecurity in German foreign policy elites. And also in the economic elite, how to deal with Russia and how to establish a stable peace order which must, in the end, include Russia in Europe. Nobody really knows how to deal with that. But it's a factor that inspires, of course, a more intense debate over Germany's role in the past. And then we have, of course, a growing insecurity in the German political elite, how to best manage the European destiny of Germany. I think the European destiny of Germany was one of the fundamental underlying concepts that has been guiding German policies since 1945. And much of that master plan for the future of Germany in Europe, not much of it, but part of it have become under question in the last two, three years. There is growing EU skepticism expressed in public opinion polls, evidently also in Germany. And there are objective, clear, objective economic and fiscal problems inside the euro zone. And there is yet no clear plan how to manage these problems of the construction of the euro zone. The economic effects of the euro, the euro has on the weak economies inside the euro zone. The problems of France evidently, problems of Spain evidently, the problems of Italy evidently. It's not only Greece, and it's kind of over-in-depthness. The real problem for the euro zone will be what's going to happen to France, what's going to happen to Italy, what's going to happen to Spain, which are major industrial forces and they're losing strength in the euro zone. Because they have lost very economic base of their productive model, which was based on devaluation of their currency over the last decade. Now, link to that is the problem that Germany is not willing to be the paymaster of Europe. Now, we want to be, we want to manage this European destiny of Germany, but we want, on the other side, Germans don't want to assume the role of being the paymaster of Europe. That's also very clear expressed in the opinion polls. And if you look, for example, at the Coalition Treaty, how the Coalition Treaty of the Grand Coalition frames the problems of the euro zone. It's always framed as a problem with the others. They have a lack of competitivity. They have to deal with that. That's the only way to get out of this situation of crisis. And there's not so much in the Coalition Treaty in the sense that Germany will pay a higher contribution to the consolidation of these problems. So there's a massive insistence on structural reforms, and not on Germany being willing to enter into a logic of a transfer union, to be much more willing to enter into the logic of a transfer union. Of course, there's a certain willingness to sustain, to help transformation processes in the weaker countries. But it clearly comes with some limits in the understanding of the German population, also the political class. But there is still politically a willingness of massive further transfer of sovereignty, at least at the elite level. It's not at the population level, but at the elite level, I would say. Freak Everton Foundation not only had this type of external boroughs, but we have also massive civic education programs inside Germany where our colleagues have in a daily contact with just ordinary citizens. Debating about Europe, one of my colleagues who is responsible for the internal education thing, she summarized her experience at the seminars of FAS in Germany on the European Union, on problems in the euro zone. She said, if you look at Germany today, the elite is afraid for Europe, and the population is afraid of Europe. And so that's, at the moment, a little bit of the situation. And this puts limits to what Germany can do in financial terms to stabilize the situation in other countries. So what are the challenges for the specified Germany-reluctant hegemony? They're essentially European, up to my opinion. And the elephant in the room is, of course, economic. Germany is clearly over-dependent on export. It's the economic model of Germany sustainable, thanks to the growth of the emerging markets or the outside European economy. But still, it's over-dependent on exports. The share of experts in GDP rose from 24% in 1991 to 46% today. I mean, in Ireland, this is not so impressive, I think. I figure I would assume that we have an even higher proportion of experts with GDP. But for such a big economy as Germany, it's a tremendous figure, in reality. And also, and if you look at jobs, 24% of the jobs depend on experts, compared to 17% in the mid-1990s. So there's a real trend that Germany becomes ever more dependent on experts. And since the introduction of the euro, it turned out to be also something like a beggar by neighbor policy within the European Union. Because a big part of the German export surpluses is the result of inter-European trade. If you really count the figures, the accumulated export surplus of Germany since introduction of the euro from 2000 to 2013 in the inter-European trade is 1.74 trillion euro. That's a lot of money. That's jobs not created in Spain, Italy, France, et cetera, but created in Germany, at the risk of 1.74 trillion euros. And economically, this might be sustainable. But politically, it's not sustainable. You cannot live in this kind of interdependency, like European Union, with having that kind of beggar by neighbor policy economically. I think that will not be sustainable in the long run. And it's amazing to see, to what degree, the German political and economic elite refuses to discuss the issue. Whenever I ask a question to ministers or journalists or leading managers, it's not a problem, it's not a topic. That's really, I think, but they may be right economically, but they are not right politically. The European Union will not survive eternally, let's say, to that kind of policy. So I'm quite convinced. Now, at the same time, we have a relatively low domestic demand. We have 20 years of wage restraint in Germany. And we have a massive redistribution from income from the income of work to capital income. So that has led to a quite flat domestic market, which hopefully will be re-denimized a little bit by the legal minimum wage that has been introduced now. But it's, of course, a problem for our neighbors that our inputs could be much higher if we had a higher domestic demand in Germany. And we have the question of relatively low public investments in Germany, but it's relative, I would say. But still, Germany could do most probably a little bit more to dynamize also the European economy. So I think that are the real economic challenges for Germany to how to get the problem solved. I don't know. Now, my conclusions for today. About a week ago, I received an invitation for a Klausowitz Strategie Gespräch on Bismarck's 200th birthday. Now, that rang, of course, any type of alarm bell in my head. In 1990, when reunification came, and from the South from Munich, we were not so sure what to make out of this reunification. We were deeply afraid that with reunification all the ghosts of Prussian great power ambitions, anti-Slavism, authoritarianism, might step out of the cupboards where the GDR had locked them in or out of their graves whatsoever. So, and now it turned out to be a much more friendly country, this reunified Germany that we were afraid as young men and women in 1990. And the German public opinion is extremely pacifist and anti-militaristic if you look at any kind of opinion post. So I think even the Klausowitz Strategie Gespräch will not lead to a kind of militaristic interpretation of the future of Germany. But it's interesting, nevertheless, that things like that exist. And then there's a kind of reassessment on the role of Bismarck currently in the public debate, former Chancellor Schröder has made an interview in the Spiegel where he tries to reinterpret in a social democratic way in the role of Bismarck, which is quite interesting as an intellectual exercise. But, well, he did it. But, and so we are at the moment also asking in the midst of a generational change, which leads to some open question marks, I think. History guilt for the tremendous crimes of the Second World War and the Nazi regime was the central motivator of German politics till today. And it is waning, the sense of history guilt just for biographical, biological reasons. The younger generation, we are now at the beginning of a new area of the generation, Schröder Merkel, which has not been so strongly influenced by that feeling as generation that has grown up in a country that is a normal member of the world community, respected and well seen even by its neighbors that will take over the control of the country in the next 10 years. And it will be interesting to see what this would mean for Germany's role, especially what this would mean for Germany's role inside the European Union because the European destiny, this strong wish to shed the historic tone, identity of a German national or nation and to be reborn as good Europeans was a very strong element, psychologically, in the political motivations of two generations of possible, or three generations of possible political leaders in Germany. And this will, I'm quite sure this will become bigger. And the other side, the younger people, that's my impression, are much more open, much more pro-European psychologically. They, the generation Erasmus, they have studied abroad. They are used to travel freely inside Eastern and Western Europe. Germany's in the midst between these two worlds. They know Eastern Germany quite well compared, for example, to Spanish or French, young people. So they will be pro-European. The question is, how will they interpret it, this pre-pro-Europeanness in the decades to come? But I think in the end, it will be a rather peaceful country at ease with itself and at ease with its neighbor that is about to take shape in the midst of Europe. Thank you very much.