Does Germany dominate Europe and the smaller European states? Why does
it not! Questions like these have stimulated Peter J. Katzenstein to
draw up a balance sheet of united Germany's relations with its Europea
n neighbours. By emphasizing the concept of 'semi-sovereignty' at the
domestic level and 'associated sovereignty' at the international one,
Kanenstein's book draws attention to institutional aspects which affec
t German policy. Soft and indirect power, rather than direct influence
, have been a predominant feature in Germany's policies towards Europe
. The present review essay presents the major findings of this importa
nt book and makes three critical comments (all from an institutional p
erspective). It suggests, first, that the concept of semi-sovereignty
is biased towards the constraining effects of institutions rather than
towards their constitutive importance; second, that the concept of in
stitutional embeddedness underestimates the importance of institutiona
lization; and finally, that the book leaves the issue of small-state b
ehaviour underexplored. In conclusion, this review essay looks ahead a
nd hints at the increasing divide between the smaller and the larger s
tates in the EU. Germany's dilemma in this respect is to make multilat
eralism effective, yet to avoid the impression that its reform proposa
ls are an effort to institutionalize German hegemony.