Paying the Nazi Debt.

Imperfect Justice: Looted Assets, Slave Labor, and the Unfinished Business of World War II, by Stuart E. Eizenstat (PublicAffairs, 400 pp., $27.50)

What's wrong with Germany? Berlin's opposition to the Bush administration's Iraq policy had many causes, among them German corporate interests, the desire to revitalize an old alliance with France, and -- certainly -- an unhealthy dose of old-fashioned anti- Americanism. But there's another cause that is often overlooked: Vergangenheitsbewaltigung -- Germany's way of "coming to terms with the past."

Fifteen years ago a German friend of mine considered it an insult to be called "a German." He insisted that he was just "a human being." He would never fly a German flag or sing his country's national anthem. The words "I am proud to be German" were synonymous for him with neo- Nazi slogans. That was then: My friend no longer has a problem with his nationality. He has changed a great deal, and so has his country.

Reunified Germany has become much more assertive. Today's Germany is no longer the pacifist postwar Bonn republic; with our encouragement, Berlin sent troops to Kosovo and Afghanistan, and the number of Germany's troops stationed abroad is now second only to America's. Chancellor Gerhard Schroeder has been emboldened to demand a permanent seat on the U.N. Security Council.

Nowhere is Germany's transformation more vivid than in its capital. Gone is the humble languor of Bonn. New governmental structures, now being built on huge construction sites, display an authority and power worthy of Berlin's Prussian traditions. And not all the "new" buildings are actually new. Many are just being renovated, among them the Foreign Ministry: Germany's global policy is now shaped within the same walls that once housed Adolf Hitler's central bank, and later accommodated the central committee of East Germany's Communist party.

The officials who walk the endless corridors of these historic structures are commonly former revolutionaries, Marxist-Leninists, and Maoists of the 1968 generation best represented by Joschka Fischer and Otto Schily, ministers respectively for foreign and internal affairs. Thirty years ago the '68 generation rebelled against its parents, whom it accused of bearing responsibility for the tragedies of National Socialism; the rebels fought regular street battles to overthrow "fascism" and the West German "police state." Now comes the rebellion against that rebellion. For the generation of Fischer and Schily, discredited parents have become loving grandparents, and the state has turned into the provider of well-paying jobs. Bearing no direct blame for the Nazi past, and having been so openly anti-fascist in their youth, the '68 generation has developed a very different perspective on German history -- a change in perception as radical as the biographies of the ministers themselves.

The old view -- that in the 20th century Germany was the prime source of evil -- has been overtaken by the idea that Germany too had been a victim in the war.

This new thinking has manifested itself in many ways -- notably, in the support of Schily and others in the ruling coalition for a museum in memory of Germans who were forced to leave Eastern Europe as a result of the Allies' 1945 Potsdam agreement. The museum is supposed to draw analogies between the fate of the Germans and that of the Albanian Kosovars, who were forced to leave their homes by the Serbs -- an obvious relativization of Germany's role in the war. Initiatives like this museum used to be despised by the Socialists, and were really popular only on the far right. Not anymore.

The political class is also developing a new symbol of Germany's victimization: the city of Dresden. Commemorations of successive anniversaries of the Allied bombing of Dresden have grown into public rituals. Recently the German press has been preoccupied with the debate over whether the bombardment was a war crime, and Winston Churchill a war criminal.

This metamorphosis in the German mind is seldom given much attention in the U.S. A welcome and noteworthy exception is Imperfect Justice, by Stuart E. Eizenstat, President Clinton's deputy secretary of the Treasury. Eizenstat describes his encounters with German industrialists, Schroeder's officials, and the chancellor himself during the long and difficult process of negotiations on compensation for slave and forced labor of the Third Reich. His observations provide a clear and chilling picture of the new Germans' thinking about their country's past.

Take, for example, Manfred Gentz, the chief financial officer of DaimlerChrysler, who resisted the idea of paying for his company's wartime use of Jewish slaves by claiming that the payments would ultimately have to come at the expense of "our shareholders, many of whom are Jewish." Or consider Count Otto Lambsdorff, Germany's chief negotiator, explaining why men, women, and children who were enslaved on German farms don't deserve a penny: "It was traditional for Poles and Ukrainian workers to come to Germany for the harvests as they still do today."

Eizenstat, a Jewish American whose relatives were murdered in the Holocaust, literally caught a glimpse of this new German assertiveness when he walked into the chancellor's office and saw a photograph of Gerhard Schroeder's father dressed in a Wehrmacht uniform. One cannot help asking: Is this really the only picture the chancellor has of his father?

Eizenstat's account is more than fair to the Germans. He has gone to great lengths to describe the bright side of the talks and their eventual result, the roughly $5 billion settlement reached in 1999; that agreement was an important victory for the slave and forced laborers. But as a participant in the negotiations, I note that Eizenstat has done the Germans a considerable favor in choosing to downplay a particularly unappetizing part of the story: Schroeder's attempt to block Warsaw, Prague, Moscow, and Kiev from taking part in the talks, even though the vast majority of the 10 million slave and forced laborers came from Eastern Europe. Even with the worst details spared, however, the book manages to convey powerfully the nature of Germany's new self-consciousness.

The negotiations on compensation for slave and forced labor were probably Germany's last payments for its Nazi past. They showed just how much the Germans are fed up with being reminded of their nation's crimes, and how they yearn to be "normal." Today's Germany considers itself freed from the evil of its history, which had kept it hostage for almost half a century; its Iraq policy was the logical consequence of the changes that have been taking place within its national temperament over the past 13 years. After a long leave of absence, Berlin is now back, for better or worse, on the stage of the world's power politics.