German Chancellor Angela Merkel is always good for a little variety whenever European leaders pose for their traditional group photo at summits. Sometimes she wears a blue blazer. At other times she is in beige. Sometimes the chancellor stands next to French President Nicolas Sarkozy, while at other times she positions herself next to Luxembourg Prime Minister Jean-Claude Juncker.

But one thing has consistently been the same recently: Merkel stands in the middle. To some extent, the protocol reflects German national policy and the chancellor's favorite position, namely that the Germans should not be standing on the sidelines in Europe.

Merkel will position herself in the middle again at this week's summit of EU leaders in Brussels, but this time image and reality are hardly compatible. A deep divide runs through Europe, and Merkel is more isolated than ever within the circle of the EU's 27 heads of state and government.

The chancellor sees herself confronted with the charge that she has focused exclusively on national interests in the euro crisis. Last week, in the German weekly newspaper Die Zeit, Juncker accused Merkel  of "un-European behavior" and "simplistic thinking."

The premier of the Grand Duchy is not alone in his criticism. Many European leaders resent Merkel for the fact that Germany has recently been less flexible and not as enthusiastic about the EU as it used to be. Germany's understandable desire to not become Europe's paymaster doesn't give it the right to be its taskmaster, say critics from Lisbon to Helsinki.

Making the Markets Nervous

Ironically, Merkel and Finance Minister Wolfgang Schäuble have been everything but successful in their efforts to reform the monetary union. To save the euro, they wanted to establish a new procedure to deal with debt crises in the euro zone. But nothing will come of it. The decisions European leaders plan to make this week will have little to do with Berlin's original plans.

There are two reasons for the Germans' lack of success and loss of support. Merkel and Schäuble are depending too heavily on solidarity with France. They are seeking to align themselves with Germany's most important neighbor, as they did last Friday at the German-French summit in the southwestern German city of Freiburg, while ignoring the fact that Paris mainly pursues its national interests with little regard for sensitivities east of the Rhine.

An even more serious problem is that Merkel and Schäuble often disagree. The two politicians send out very different signals in Brussels, which makes their partners -- and the financial markets -- nervous. Worse yet, it weakens the German negotiating position, because the chancellor and the finance minister often make themselves vulnerable to being played off against each other.

The last two Christian Democratic cabinet ministers from the era of former Chancellor Helmut Kohl hold completely different views on European unity. Merkel, a native of the former East Germany, sees the EU from a purely rational point of view. She feels that it is indispensible, because the best way to promote German economic interests in the age of globalization is within the European framework. She has no affinity for the emotional side of European unity.

'I'm Pleased about the Crisis'

For Schäuble, however, European unity is a matter close to his heart. He likes to be seen as the last old-school European. Because of his past, he feels that Germany has a constant obligation to champion closer ties among European countries.

For Schäuble, almost no price is too high for the noble goal of a United States of Europe. He even manages to see a silver lining in Europe's debt crisis. "During crises, we move forward," he said recently to a German and French audience, "which is why I'm pleased about the crisis."

Merkel, on the other hand, felt compelled last week, once again, to play the naysayer. This was partly the doing of her finance minister, of all people.

'Schäuble Sees the Big Picture'

The occasion was the ongoing discussion of euro bonds. Eurogroup Chairman Juncker had introduced the idea of these group bonds. Under the concept, cash-strapped member states could use the bonds to refinance, at favorable rates, debt worth up to 40 percent of their gross domestic product.

Merkel was categorically opposed to the idea. "We are firmly convinced" that the European treaties "do not allow euro bonds," she said at the beginning of last week. A uniform interest rate would eliminate an "important competitive element," Merkel added. The truth, however, is that she fears voter resentment, because European bonds would be much more expensive for the German treasury than national bonds.

The reason is that good borrowers like Germany and poor borrowers like Greece would be paying the same interest rates, with the result being that Germany would be forced to pay higher borrowing costs than it does today. Only a 1 percent rise in interest rates would result in more than €10 billion ($13.2 billion) in additional expenditures in the national budget.

Schäuble's rejection of the Juncker plan, on the other hand, wasn't as clear. In fact, upon closer inspection it wasn't a rejection at all. During a dinner with Schäuble at the "Capriccio" restaurant in Berlin's upscale Grunewald neighborhood on the Friday before last, Juncker himself gained the impression that the German finance minister was in fact open to his ideas. "Schäuble sees the big picture," says one Juncker confidant, "while Merkel only sees half of it."

'Pie in the Sky'

This was evident in the minister's broad-minded public statement. He made it clear that he believes that euro bonds would only be possible if, in return, the members of the euro zone surrendered more sovereignty over their national budgets to Brussels. Although he did not see majority support for such a step today, this could change in the near future, Schäuble said. "If you give us a few months to work on it," he added, "I think it stands a chance."

Schäuble's considerations and the entire debate over euro bonds have triggered sheer horror in the ranks of his own party, the conservative Christian Democratic Union. CDU budget spokesman Norbert Barthle maligned the plan as "pie in the sky," while CDU floor leader Volker Kauder called it "completely wrong." "Those who are unwilling to comply with the debt limit domestically can't agree to euro bonds in Europe," says CDU economic expert Michael Fuchs.

An alarmist mood has also taken hold in the Christian Social Union (CSU), the CDU's Bavarian sister party. "Euro bonds are just a code name for cash-strapped euro countries blatantly reaching into the pockets of German taxpayers," fumes CSU general secretary Alexander Dobrindt. But there are also more thoughtful voices. "In light of the massive changes in the euro zone, a joint consciousness in fiscal and financial policy must be developed," says Hans-Peter Friedrich, head of the CSU's national committee.

Wishful Thinking

Chancellor Merkel was not amused by Schäuble's wishful thinking. At a meeting last week, she urged the finance minister not to pursue the matter any further.

But the two were already at odds once again at a coalition summit last Thursday evening. After the decisions on the agenda had been reached, the leaders of the CDU/FDP coalition government met at the Chancellery to discuss the consequences of the euro crisis.

The details of the discussion showed how far deliberations on enhanced European coordination on budgetary and financial matters have come. Schäuble argued in favor of achieving closer political cooperation with the 15 other euro-zone countries. Others countered that this would have to be done within the framework of the entire EU. Merkel held back and did not support her finance minister.

The divide between the two first became visible when Merkel and Schäuble argued in March over whether the International Monetary Fund (IMF) should be involved in the bailout package for Greece. Schäuble was against IMF involvement, arguing that the Europeans should solve the problem without intervention from Washington. Merkel, on the other hand, did not want to dispense with the IMF's expertise. She prevailed.

The differences of opinion between the chancellor and the finance minister have long been the topic of the day in Brussels. "Everyone knows that Merkel and Schäuble aren't on the same wavelength," says Markus Ferber, head of the CSU's group in the European Parliament. "People get the impression that it's possible to drive a wedge between the Germans at the negotiating table."

The Deauville Disaster

Not surprisingly, the Germans are not prevailing as often as they would like in the poker game over the euro in Brussels. For example, the German government has not managed to gain acceptance for many of its ideas on how to avoid future debt crises. The ideas encountered resistance among many partner countries, and even Germany's close ally France proved unreliable.

At their summit meeting in the beach resort of Deauville in mid-October, Merkel abandoned her proposal to automatically punish notorious debtor countries with monetary fines or the withdrawal of their voting rights. In return, President Sarkozy supported Merkel's plan to require private-sector lenders, like banks and financial investors, to share the cost in the event of a national default.

The Deauville deal turned into a disaster. Merkel's actions alienated the few northern European countries that had supported her sanction plan. Since then, the Netherlands, Sweden and Finland are no longer necessarily on Germany's side during negotiations in the Brussels. Merkel acted "without consulting the small countries," says Teija Tiilikainen, director of the Finnish Institute of International Affairs. And Austrian Foreign Minister Michael Spindelegger says: "The message that was conveyed, namely that two people had sat down together and reached an agreement and that everyone else was expected to fall in line, was fatal for the Union."