Updated: Jan. 12, 2012

The economic slump and the debt crisis that followed has put Germany into a position of European leadership that is unprecedented. For decades, Germany has been the continent’s biggest economic power, but it tended to underplay its role. Now, the post-Berlin Wall generation seems to accept Germany’s assertiveness in a way that the postwar generation could not, and the weakness of other countries has created an opportunity to use that newfound confidence.

Still, the country feels more put upon than swaggering. And the country appears deeply divided about how to handle the debt crisis, with Chancellor Angela Merkel pressured on all sides to take steps to preserve the unity of the euro zone, while anger grows among the German public about the need to bail out countries seen as spendthrift. Germany may be the only European nation that is large enough and rich enough to cover the debts of its struggling neighbors, but its citizens are reluctant to be the source of the bailout.

In September 2011, Germany’s Parliament voted to approve an agreement European leaders reached in July to expand the euro-zone bailout fund. Mrs. Merkel kept her “chancellor’s majority’' together, if barely. The vote appeared to provide her some breathing room after a divisive debate within her own parliamentary bloc that has weakened her grip on power at a critical moment.

Meanwhile, the German recovery and export rebound that followed the global recession appears to keep chugging along, although prospects for growth have been lessened by the austerity policies that Germany pushed for so hard, both at home and abroad. After a slowdown in the summer of 2011, the economy once again surprised experts, growing an unexpectedly healthy 0.5 percent in the third quarter and 2.5 percent higher than the year before.

The German economy expanded faster than any other Group of 7 nation in 2011, official data showed on Jan. 11, 2012, but the stress of the euro crisis and a slowing global economy appeared to be weighing on output.

Germany expanded by 3 percent in 2011 from 2010, according to the Federal Statistical Office in Wiesbaden. It noted, however, that the growth came mostly in the first half of 2011, and estimated that the economy actually contracted by about 0.25 percent in the fourth quarter from the prior three months.

But investors fleeing the euro crisis continue to seek refuge in German assets, which are considered the safest in the euro zone.

The battle over how to navigate the financial crisis illustrates Germany’s emerging post-cold-war identity as a country less focused on the past. Though Germany has plenty of problems to grapple with at home, it has become less obsessed with its historical crimes and more enthusiastic about its economic model, its culture and its improved standing in the world.

At the same time, Germany’s continued prosperity has helped fuel growing anger in countries like Greece and Spain against what is increasingly viewed as harsh German domination. More and more, Germany is cast in the role of the villain, whether by protesters in the streets of Athens or by exasperated politicians in the halls at the Group of 20 meeting in Cannes, France.

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Blows to the Economy

When the bottom fell out of the world’s financial system in late 2008, Germans spoke of the crisis as essentially not theirs, but rather the product of excess in New York, Paris and London. It was with great chagrin that Mrs. Merkel was forced a few months later to bail out a series of prominent German banks.

On some counts, the downturn has been less pronounced in Germany, in part because of government subsidies that kept workers in their jobs. But the problems of its neighbors, and of trading partners around the world, took an unexpectedly steep toll.

In 2009 Germany sustained the worst annual decline in its trade balance since figures were first gathered in the 1950s. Although German exports still outpaced imports in 2009 by 136.1 billion euros, or $187.6 billion, the surplus in 2008 was 178.3 billion euros.

The decline in German exports was most acute inside the European Union, Germany’s largest market. Exports to the bloc fell 19.1 percent in 2009, to 503.5 billion euros. Exports to countries not in the European Union fell 17.1 percent, to 299.7 billion euros.

Germany and the Euro

The creation of the euro zone hinged on Germany’s decision to join it. The move was widely seen as an act of self-sacrifice by the country with the continent’s most rock-solid currency, the deutschemark, and a bid for a greater leadership role.

The fear had always been that sooner or later Germany would have to bail out one of its more profligate neighbors. In early 2010, the countries in the euro zone that had been hardest hit by the downturn faced mounting doubts about their finances. As a result, the more prosperous members like France and Germany came under pressure to take some action to prevent damage to the currency.

Reluctant German leaders found themselves under pressure to help Greece remain solvent, or risk watching markets attack one weak member after the next, from Portugal to Spain to Italy, threatening the stability of the euro. Mrs. Merkel and her ministers declared themselves dead set against what they considered a bailout, until they finally approved a $40 billion loan package on April 11, 2010.

That package proved inadequate to calm the markets, as did a 110 billion euro three-year plan put together weeks later. Anger at the perceived bailouts played a role in Mrs. Merkel’s Christian Democratic party poor showing in a regional election in early May — results that cost her control over the upper house of Parliament.

A Shaky Coalition

In June 2011, the chancellor faced calls from opposition leaders for new elections, as bickering within her governing coalition led to growing speculation in the German news media that a collapse of her government could be imminent.

The week prior, the government had proposed nearly $100 billion in budget cuts by 2014, intended to slow the growth of the country’s debts. On June 30, in another blow to Mrs. Merkel, it took three ballots for her handpicked candidate for president, Christian Wulff, to be elected, as rebels in the governing parties took advantage of the secret ballot to vent their frustrations, turning what should have been a rubber-stamp victory into a demonstration of her coalition’s weakness.

Six months later, Mr. Wulff was engulfed in scandal over his handling of questions about a private loan worth 500,000 euros, or about $650,000. He borrowed the money from a friend named Edith Geerkens in 2008 to buy a house. At the time, Mr. Wulff was premier of the state of Lower Saxony. When asked by government officials if he had business ties to Ms. Geerkens’ husband, Egon, a wealthy businessman, Mr. Wulff said no.

The nation’s highest-circulation newspaper, Bild, learned of the loan in December 2011. Mr. Wulff subsequently left a voicemail message with Kai Diekmann, editor of Bild, threatening “war” against the newspaper if it printed the report, which Bild then did.

The uproar surrounding the president has threatened to engulf Mrs. Merkel. If Mr. Wulff were to resign, it is unclear who would succeed him. Under German law, the decision whether to remain in office rests solely with the president, except in cases of proven illegal action.

Murmurs from the Right

The kind of mainstream far-right parties so common in the rest of Europe are nowhere to be found in Germany for reasons related to its Nazi history. But the anti-Islam and anti-immigrant ideas that have taken root across the Continent burst into the mainstream German debate in 2010 when a book by an executive with Germany’s central bank, Thilo Sarrazin, that blamed Muslims for “dumbing down” Germany sold more than a million copies. The national discussion culminated with Mrs. Merkel’s declaration at a party conference in October 2010 that multiculturalism had “utterly failed.”

That same month a study by the Friedrich Ebert Foundation, an organization affiliated with the left-wing Social Democratic Party, found that nearly a third of Germans believed that foreigners were there to take advantage of the welfare state, and that close to 60 percent of those surveyed favored restrictions on the practice of Islam.

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