In Europe, people wonder about Germany's economic power

Every summer, southern Europe's tourist spots look forward to the arrival of planeloads of Germans on holiday. But this year encounters between Germans and their hosts have become loaded.

In Knossos, in Crete, Giorgios Papadopoulos, a tour guide, interrupts his explanation of Minoan matriarchy to ask a visitor from Berlin about the relationship between Germany's finance minister and its chancellor: "What's up between Schäuble and Merkel?"

Like many Europeans after July's bitter bailout negotiations over Greece, he has become intrigued by the internal workings of a country he sees as trying to "dominate" the European Union.

To Germans, such outside fascination with their domestic politics is new, and it makes them uncomfortable. The U.S. may be used to foreign scrutiny. But the rise of "Berlinology" frightens Germans. They have no appetite for becoming Europe's "leader." Given their past, Germans do not want to seem domineering.

Yet they often do.

The anxiety stems from a summit on July 13, when Germany led eurozone countries in forcing Greece to accept tougher reforms and more austerity in exchange for a third bailout — even though Greeks had just rejected them in a referendum. Wolfgang Schäuble, the finance minister, suggested a "temporary" Greek exit from the euro. Both he and Angela Merkel, the chancellor, ruled out a haircut of Greek debt, claiming it would violate eurozone rules. Germany was thus seen to use the power of its purse to force its vision on weaker members.

It was a "public diplomacy disaster," said Thorsten Benner, director of the Global Public Policy Institute (GPPi), a Berlin think tank. "Germany is seen as the harsh, heartless hegemon of the eurozone, ready to bully small countries into submission."

France, however skeptical of austerity, wants to preserve its position alongside Germany in the E.U.'s "tandem." The Spanish and Portuguese governments took Germany's side regarding austerity, having survived it themselves. And northern and Eastern Europe are in many ways more Germanic than the Germans.

The Baltic states, Slovakia and Slovenia have had to cut their own budgets sharply and think the Greeks should too. Threatened by Russian intervention in Ukraine, even Poland has yearned lately for a more assertive German role. Many Britons are hoping for Merkel's help in reforming the E.U. In short, there is no crisis in Europe that can be solved without Germany.

Nonetheless, Berlin's ministries react to any suggestion of German hegemony with vehement head-shaking. Since the 1950s "all the E.U.'s institutions were designed to assure that no country could dominate," notes one official defensively — especially not Germany. Germans observe that Merkel must constantly compromise with her counterparts — even on July 13, when Francois Hollande, France's president, made her forswear Grexit to reach a deal.

Their mighty Bundesbank gets the same single vote on the European Central Bank's governing council as every other eurozone country and often fails to impose its will. To its own citizens Germany is, at best, first among equals.

To many Germans, this situation seems familiar. It is the same dilemma the historian Ludwig Dehio described after the country was first unified in 1871. Germany became "too big for a balance of power in Europe and too small for hegemony," he wrote, "not powerful enough to impose its will on the continent, but at the same time powerful enough to be perceived as a threat by other powers." After reunification in 1990, German historians worried that this pattern could repeat itself.

What has changed recently is that this "post-national mentality" has gone, worries Jürgen Habermas, a philosopher. During the July summit, the country "gambled away in one night all the political capital that a better Germany had accumulated in half a century," he thinks. Many on the center-left fear that Germany is now "post-post-nationalist." Joschka Fischer, foreign minister from 1998-2005, laments that "from now on Germany will primarily pursue its national interests, just like everybody else."

Many Germans on the center-right deny such a turn to realpolitik. They think they are just insisting on following common E.U. rules and find nothing nationalist about that. Indeed, it implies that Germany and other countries should cede more sovereignty. Schäuble, the German most vilified in Greece, has argued since 1994 that some member states should form a federal "core." He now advocates giving the eurozone a common finance minister and budget.

But others in his camp, the Christian Democrats (CDU), assert a more naked self-interest. Each time the party submits a Greek bailout to the Bundestag, the number of defectors increases; one in five voted against the July compromise. Bild, Germany's largest tabloid, stokes German resentment that foreigners are exploiting their past guilt to "blackmail" them.

Germany is back in its old dilemma: too weak for hegemony, too large for balance. No other country can think of imposing solutions, but Europe will not allow Germany to do so either. That may mean that the E.U.'s biggest challenges — from immigration to preventing a British exit and fixing the euro — will continue to go unmet.