During the summer, Germany's government completed its move from drowsy, inoffensive Bonn to Berlin, once the hatchery of imperial and Nazi megalomania. The policies being pursued there by Chancellor Gerhard Schroeder's coalition of Social Democrats (SPD) and Greens, in office for a year now, are anything but traditional Teutonic, however. The "Berlin Republic" looks astonishingly American in its foreign and domestic approaches.

Schroeder and his Green Party foreign minister, Joschka Fischer, are living up to official Washington's hopes for Germany that go back decades by taking a broad view of their country's responsibilities in the world outside Central Europe. They have become as comfortable as Americans with the use of military force as a foreign policy instrument. They have sent German soldiers abroad, to the Balkans, to fight and occupy territory for the first time since 1945.

Fischer has moved human rights up the foreign policy agenda, indicating also that Germany will participate in the kinds of "humanitarian interventions" favored by the Clinton administration, such as in East Timor. He has broken with predecessor governments' policies by actively advocating membership in the European Union for Turkey, a favorite American ally.

Consistent with this decline in provincialism is a new citizenship law passed early last summer. It repudiates the traditional ethnic basis of German citizenship, replacing it with a civic basis, as in the United States and other countries such as France. The legislation promises to promote diversity and tolerance, virtues typically American. It may even lead Germans to the realization that, like the United States, theirs is an immigration country.

In other aspects of domestic policy Schroeder's administration has departed even more sharply from the past. The chancellor aims to reduce big government, promote individual responsibility, encourage entrepreneurship and competition -- a program that surprises coming from a Social Democrat whose party has always stood foursquare for the bureaucratic welfare state.

Berlin's program sounds like Washington's in the 1990s; balance the federal budget in eight years; lower the level of federal borrowing; pay down government debt (which has ballooned by 50 percent since 1994); slash taxes, especially for business; and reduce welfare payments.

This will be painful. The government proposes to cut every department's budget by 7 percent next year and to freeze old-age pensions (Germany has a universal, government-financed system) and the pay of civil servants (Germany has a lot) for two years. Some $16 billion is to be hacked out of next year's federal budget.

Schroeder's lieutenants are proposing that Germans, like Americans, rely more on private pensions to supplement the government system. Once a member of Volkswagen's board, the chancellor wants to create a business-friendly environment through tax breaks that decrease labor costs and through market deregulation, which in the fields of telecommunications and energy has already gone quite far.

True reform will be a slog. German society is consensus-minded and risk-averse. It prefers collectivist ways. It is skeptical about the value of disparities in wealth and income. It favors incremental change, not bold strokes. Government and parts of industry too hanker after the traditional approaches, which, until 1993, brought both a strikingly successful economy and "social peace," a political condition much treasured by Germans.

Real reform means tackling wages, hours and conditions of work -- making it easier, Schroeder's opponents grumble, to hire and fire, as in America. Only with more flexibility in the labor market has the government a ghost of a chance of achieving the one essential objective to which it is pledged: a substantial cut, well before the next national elections in 2002, in unemployment from the current level of 10 percent or 11 percent.

Fierce opposition to efforts, for example, to extend working hours in factories and department stores is coming from the powerful trade unions, far more important to SPD's election prospects than they are in the United States to the Democrats' chances. Left-wing SPD members decry many of the reforms as miscarriages of social justice, deserving condemnation precisely because they look so American. Voters seem hostile so far. They have dealt Schroeder's party stinging rebuffs in regional and local elections this autumn.

When will we know that Schroeder is nevertheless winning? Perhaps when Germans can shop until late at night in malls, just as Americans can.

The writer is the founder of the American Institute for Contemporary German Studies at Johns Hopkins University.