BERLIN, GERMANY - JULY 18:  German Chancellor Angela Merkel listens during a news conference with Thai Prime Minister Yingluck Shinawatra at the German federal chancellory on July 18, 2012 in Berlin, Germany. Yingluck, Thailand's first female prime minister, is on her first state visit outside of Asia since she took office in August of last year.  (Photo by Adam Berry/Getty Images)
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03:16 - Source: CNN

Editor’s Note: Paul Hockenos is a Berlin-based writer who most recent book is Berlin Calling: A Story of Anarchy, Music, the Wall and the Birth of the New Berlin. The opinions in this article belong to the author.

CNN  — 

It looks increasingly likely that the German national election on September 24 will secure Angela Merkel a fourth and final term as chancellor. With victory comes a definitive opportunity to distinguish her legacy.

After 12 years in office, she’ll go down in the history books as one of the great German leaders. Today, the country packs more gravitas – economically and politically – than at any time in the postwar era, as well as being a respected middle-heavyweight in world politics.

Berlin dominates the EU, which Merkel’s Germany-first overtures have ensured works to Germany’s benefit above all else.

Yet, for all of Germany’s fortune, Europe is mired in crisis and the EU is more ramshackle than ever since its founding six decades ago.

Merkel’s legacy beyond Germany – as a great European statesperson – will hinge upon her ability, together with French President Emmanuel Macron, to reform the fraught EU, which is the key to so many of the continent’s ills, including migration, the rise of far-right populism and economic stability.

The question looming before the chancellor is whether she will leave behind her a German Europe – an EU designed according to German precepts, in the service of German interests – or a European Germany – a country that understands its well-being as inseparably intertwined with those of its European partners.

The latter must be Merkel’s ambition. Indeed, the chancellor has confirmed that she’s prepared to work hand-in-glove with Macron to put the EU back on its feet. But Merkel, not a politician known for lofty visions, hasn’t revealed her intentions concerning European reform during the election campaign, which has been woefully short of such nuts-and-bolts content as it is.

She certainly realizes that Germany will have to relinquish some of its privileges in order for the EU to serve the interests of Europe as a whole – not a position that would win her conservative votes at home.

Germany is going to have to compromise – and this must begin with the first order of business, which is shoring up the monetary union, the eurozone. Most economists in Europe concur that a common currency requires a full-fledged monetary union, in which the money and fiscal policies of its members are tightly woven together.

This one-for-all and all-for-one euro means putting in place mechanisms that make the strongest in the currency union – those, like Germany, who profit most from the union’s perks – responsible for the weaker members, who profit less from borrowing rates and the euro’s value.

Some Germans will believe that their country already has made compromises when southern European states and Ireland tanked in the aftermath of the financial crisis in 2008-2009. Yet Berlin always stopped short of vouching for the debts of weaker economies – as must happen in a functional monetary union.

Merkel’s conservatives also have plainly said no to deviating from their austerity and tight money policies – German trademarks – which Berlin claims are best for all of Europe, despite evidence to the contrary.

And Germany has steadfastly resisted the easing of interest rates and other expansionary measures to stimulate investment, which could enable the rest of Europe to pull itself out of recession the way Germany has.

It’s an entirely positive sign that Macron appears to grasp what is at stake and, in part, what needs to be done.

Macron has underscored the necessity of more social and fiscal “convergence” in the monetary union, which points in the right direction.

He has floated the idea of a eurozone finance minister and common budget, the latter of which could finance investments to stimulate growth in struggling eurozone countries. It could also mean, Macron has implied, borrowing to do so (thus far, fresh debt has been a strict German taboo.)

Moreover, the French President wants a separate eurozone parliament within the EU, which would handle euro-related issues. Macron says he will announce a “dozen” proposals for the eurozone after the German election.

It’s not crucial for Merkel’s legacy that this reform agenda spring from her imagination. Rather, she must seize the moment to act and pull her own party on board, which will be no mean feat, given its conservatism. Yet she’s run against the grain of Christian Democratic orthodoxy before – on nuclear power, minimum wage, immigration, and other issues – and pulled it off. She can do it again with the right coalition partner. “We will not falter,” she said of eurozone reform in July together with Macron in Paris. “There will be further steps later this year.”

But the euro is not the EU’s only problem child. The union as a whole suffers from a crisis of legitimacy that has caused its popularity to plummet and eurosceptic parties on the far left and right to flourish. Brexit was just one expression of the exasperation with business as usual. A glaring democracy deficit as ever more national powers are transferred to Brussels has other countries too, such as the Central Europeans, crying “enough!” Yet others, mainly in Western Europe, want to accelerate integration.

The EU’s structural problems are so great that what is ultimately needed to fix it is a wide-ranging restructuring of its core bylaws and institutions. But this would require changes in the EU’s founding treaties, which require all 28 members’ legislatures approve them. Merkel knows, though, that there are far too many disparate views among the member states for treaty change of this magnitude to happen.

Thus Merkel and Macron will probably go forward with a “two-speed” EU in which some countries would forge ahead in certain areas, such as defense or European unemployment insurance, while other countries would sit out, perhaps catching up to the “avant-garde” countries at a later point.

The euro, with its 19 members, is one example of such a multi-speed approach. Yet there’s resistance to this too. Smaller countries such as Poland, Hungary and Slovakia fear the two-speed approach would sideline them on all important matters.

Angela Merkel is going to have to convince Germans that they profit when the EU as a whole profits, even when it costs Germany in other visible and immediate ways. This was the secret of postwar (West) Germany’s success and paved the way for German unification in 1990.

The EU stands at a critical juncture, which a European Germany could do much to put on the right path. Everything hinges on Angela Merkel’s conviction that this is imperative.