German Chancellor Angela Merkel has been making the rounds in Western countries that are trying to turn up the diplomatic heat on Iran and see her country as a key power source. Just last week she was in the US, visiting President George W. Bush's ranch in Crawford to talk Texas and tactics. She came out of those meetings making the case for further action on Iran, an encouraging sign to those who have long chided Germany for weighing down European efforts to strengthen Iran sanctions. Despite having taken some similar rhetorical positions to other European countries that want to use economic sanctions to dampen Iran's nuclear ambitions, Germany has been the most ambivalent member of the EU triumvirate on the issue. There are many reasons - financial ties, energy issues, politics and, ironically, German's post-World War II character itself. But all that might be about to change, as Germany is sending out signs that it is prepared for bolder action. "The threat posed through the nuclear program of Iran is indeed a serious one. We both share this view," Merkel declared in Crawford. "If the talks with the representatives of Iran and Mr. [Javier] Solana, as the representative on the European Union side, do not yield any results, then further steps will have to be made." Specifically in relation to Germany, she said, "Germany needs to look somewhat closer at the existing business ties with Iran." Days later she met with French President Nicholas Sarkozy, who has been supporting strong unilateral EU sanctions since taking office in May. After their discussion she told reporters, "On the issue of Iran, there is a great deal of agreement." And in recent days, there have been signs that a shift is under way, with reports coming out of Germany that the chancellor is planning more pressure on German companies to cut their business with Iran and that the Foreign Ministry is considering EU sanctions independent of the UN, whose own consideration of further sanctions is currently stalled. If so, it could mean a significant change in the way Europe deals with Iran. "Germany holds a lot of the cards," according to Washington Institute for Near East Policy senior fellow Michael Jacobson, who explained that its presence could be decisive in swinging the rest of the EU behind efforts by France and the UK to impose its own tough sanctions regime. "It would be a big step forward if they could get another round of EU sanctions in the absence of another round of UN sanctions." UNTIL NOW, Germany has been supportive of efforts to sanction Iran - certainly more than Russia or China - through the UN Security Council. Until now, though, Iran has defied the resolutions and their punitive measures and continues to defy international demands to stop the enrichment of uranium. There's also been a significant decline in the amount of business that Germany is doing with Iran. While Germany has been one of its leading trading partners (though the country represents only 0.45 percent of Germany's exports), trade decreased by about 20% in the last year, according to the German Federal Office of Statistics. Some of that is due to government initiative, as Germany has cut the financial incentives it provides to encourage companies to do business in Iran by discontinuing export credits for Iran investments and cutting export credit guarantees by some two-thirds in the last two years, to â‚¬500 million. But Jacobson, an expert in sanctions and national security issues, said more of the economic falloff has been due to decisions by the companies themselves. As the US Treasury has made it less appealing to have ties with Iran by designating leading banks for supporting terrorism and WMD proliferation and highlighting the financial risks of doing business with a regime facing international sanctions, German financial institutions have been increasingly reluctant to do business in Iran. The latest casualty appears to be telecommunications giant Siemens, which according to news stories now plans not to undertake any new business there given the US strictures. "The feeling is that the German financial sector has at times been more forward leaning than the government," said Jacobson, who described the Merkel administration as "going back and forth" when it comes to taking strict measures regarding Iran. "They play it sort of down the middle," he said, explaining that they're not the instigators of action when it comes to Iran sanctions but that they're generally willing to follow along in a multilateral or international framework. "Germany is pretty much in the position of followership as opposed to leadership within the top six related to the negotiations at the UN," was how Europe expert Simon Serfaty put it. That has meant that while tit is supportive of UN sanctions, it is less comfortable with unilateral EU action. For one thing, Germany has long argued that it's not the most effective way of cajoling Iran to change its behavior. Germany contends that any steps taken without international consensus leaves gaps for other countries to fill; the UN, with Iran policy lead by the P5+1 (the permanent Security Council members and Germany) is the only appropriate conduit because it alone leads to universal action. The German federal statistics not only show that German trade has shrunk, they it show that trade between Iran and China has grown by 40% and between Iran and the United Arab Emirates by 20% to overtake Germany in 2007. German sources stressed to The Jerusalem Post that "our strength lies in the unity of the six. If we split it will be Iran that will benefit. The Security Council must stand in the center of our efforts." But Serfaty said that issues other than strategy are at play - particularly the economy. That economy is dependent on oil imports from Iran more than other major European countries with their own energy resources, including nuclear power. "They are more sensitive, more vulnerable to this," explained Serfaty, the senior fellow for the Washington-based Center for Strategic and International Studies' Europe Program. And with the German economy struggling now, any decrease in trade, even if marginal, is viewed with worry. That could have ramifications on the political scene, where Merkel's conservative party is dependent on business support. And more generally, Serfaty said, the Germany economy is largely based on exports and external markets for its health: "Germany needs a stable environment. It just cannot afford instability that reduces the demand for what it produces." Therefore, war - or even the hint of it - is viewed with deep consternation, a consternation that is only intensified by Germans' general distaste for military action. "The Germans are a people who simply do not like the idea of war or the idea that force might be used under any circumstance," he said, because war for them "awakens memories of the first half of the 20th century." Those memories have created a system that constrains the centralized government, Jacobson noted. "There's resistance in Germany to government intervention and an overly strong government," he said, meaning broad multilateral action can be more palatable to the public. And so Germany's World War II aggressions make the country take a more passive approach against Iran, which Bush warns might set off World War III with its quest for nuclear weapons. Unilaterally upping the sanctions ante could be interpreted as facilitating a march to war, Serfaty said, and that is something Germany wants no part of. "There is a fundamental question: What do you fear more, a nuclear Iran or a war with Iran?" Serfaty answered that for Germans, "what they fear most is a war with Iran, and conditions that would lead to that war." As one German official told the Post, "There is a dual-track [approach]. Diplomacy, and sanctions if diplomacy doesn't work. There is no other option on the table for us." Whatever its causes, the Germans' hesitancy on Iran has caused "frustration" in many quarters, according to Jacobson, who served as a senior adviser in the Office of Terrorism and Financial Intelligence at the US Treasury. But now those who have been frustrated are hopeful that Germany's recent statements mean it has come around. "The recent reports about Iranian progress on the nuclear program are presumably making them - and most everyone else - very nervous about the timetable here," Jacobson said, adding that Germany with others might want to turn up the pressure on China to go along with sanctions and might see raising the specter of unilateral EU activity as a way to do that - as well as means of taking action should China prove recalcitrant. Also, he said, "they probably would like to stay on the same page, if possible, with the UK and France - their other two main European partners on the issue." The report Solana is expected to issue "will apparently be critical of the Iranians, making European unity more likely." The German desire for multilateralism and consensus, after all, means that the country wants to work with its friends and allies to take action. And there is another lesson for Germany in World War II - the need to protect Israel. Merkel said as much at her speech before the UN General Assembly in September. "Each and every German chancellor before me has shouldered Germany's special responsibility for the existence of Israel. I, too, pledge to live up to this responsibility that our history has bequeathed us," she said. "It is one of the fundamental principles that guides my country. In other words, Israel's security is non-negotiable for me as German chancellor. And that being the case, we have to do more than pay lip service to it." The remarks were intertwined with her comments on Iran's nuclear ambitions. On that, she said, "If Iran were to acquire the nuclear bomb, the consequences would be disastrous - first and foremost for the existence of Israel, secondly for the entire region and ultimately for all of us in Europe and the world who attack any importance to the values of liberty, democracy and human dignity. That is why we have to prevent Iran from acquiring nuclear arms."