In this photo provided by the German government, German Chancellor Angela Merkel talks with Prime Minister of Greece Antonis Samaras on the terrace of the federal chancellery in Berlin on Aug. 24, 2012. (Guido Bergmann/AP)

Known as the “Iron Frau,” German Chancellor Angela Merkel has come to be viewed during Europe’s debt crisis as an unemotional leader hellbent on cruel austerity and whose favorite word was “no.” But as she quickly, if reluctantly, emerges as Europe’s most influential politician, Merkel has added a new response to her repertoire: “yes.”

In both words and deeds, Merkel has in recent weeks signaled a willingness to embrace more-radical steps in the race to save the euro while sounding a more conciliatory note on the plight of Germany’s troubled neighbors. Her newfound pragmatism, observers say, could prove decisive in resolving a debt crisis that will mark its third anniversary next month.

Political insiders here say Merkel’s shift comes in part because the level of the threat to the euro, and thus to Germany’s own economic ascent, crystallized with the worsening of the crisis in Italy and Spain early in the summer. But if Merkel has given an inch, her supporters insist, she has gotten a mile, with European leaders moving toward a grander economic and political union that could see Germany — a country that has ridden to the height of its post-World War II power over the course of the debt crisis — become even more dominant.

It has thrust in Merkel’s hands the unenviable task of proving to the German public and the rest of Europe that a continent burdened by past conflict has nothing to fear, and everything to gain, from Germany’s rise. In a nation where even the word for leader — “fuehrer” — still conjures dark history, observers cite the new, more magnanimous Merkel as evidence that she is trying to manage those concerns.

Perhaps not surprising, given Germany’s postwar aversion to military intervention, Merkel also has seemed reluctant to push Berlin’s clout beyond economic affairs. She has, for instance, largely left the ongoing conflict in Syria to London and Paris, Europe’s security capitals, much as she did last year during the upheaval in Libya.

But Merkel is taking tentative steps toward flexing Germany’s atrophied muscles, offering tantalizing clues of what Europe would look like under a stronger, more assertive Berlin. The picture taking shape — including that of a nation boldly pursuing what many here are calling a “special relationship” with China — is providing the political establishment in the United States with some mildly indigestible food for thought.

“She didn’t find it helpful what the Americans had to tell the Europeans” on the debt crisis, said Tanja Boerzel, a political scientist at the Free University Berlin. “She will be the one guiding the European response.”

Merkel’s greatest challenges are yet to come. A key ruling by Germany’s Constitutional Court is expected Wednesday, with judges set to decide whether German politicians exceeded the bounds of the national constitution by approving a bailout fund for troubled European countries. In coming weeks, Merkel is also likely to face a do-or-die moment on whether to effectively cut distraught Greece out of the euro zone. Her choices will come to define both her chancellorship and what many here are calling a turning point in German history.

“European integration has allowed a dream of earlier generations to become a reality,” Merkel says in a video spot that is part of an “I Want Europe” campaign launched last month by corporate and cultural foundations here and aimed at frugal German taxpayers who are increasingly skeptical about the price they are paying to save the euro. Her words also seemed to harbor a message for other Europeans worried about growing German authority. “We have it to thank for our peace, our prosperity and our good understanding with our neighbors.”

Navigating Germany’s rise

Yet Merkel, many here argue, is ideally suited to the task of navigating Germany’s climb. A studious, hard-working physicist raised in former East Germany, her decided lack of charisma has made her far less threatening to other Europeans than, say, her predecessor, the flashy and macho Gerhard Schroeder, might have been.

At the same time, critics accuse Merkel of dithering, taking far too long to get a handle on the crisis and having a record that is, at best, mixed. Merkel, for instance, has won accolades at home for forcing German-like fiscal restraint on her profligate neighbors, who agreed to a landmark pact in December enshrining austerity and debt limits into domestic laws. Yet with the agreement just four months from theoretically coming into effect, only 12 of the 25 European Union nations that signed the accord have ratified it.

And although she built a fast ally in then-French President Nicolas Sarkozy, she has been less successful with France’s current leader, Francois Hollande. At the same time, she has found formidable, if friendly, adversaries in Italian Prime Minister Mario Monti and Spanish Prime Minister Mariano Rajoy, whose united front for more aggressive action on the euro crisis is seen as a key reason for Merkel’s shift toward a more pragmatic stance.

“She is acting now because she knows the euro is at stake and losing it would be a catastrophe for Germany,” said Gesine Schwan, president of the Humboldt-Viadrina School of Governance in Berlin. “But one of the problems with Merkel is that she offers no long-term vision, choosing instead to deal with things step by step.”

Inside Beijing’s gaudy Great Hall of the People two weeks ago, Merkel strode down the red carpet for the second time in a year to meet someone with whom she has built an increasingly constructive relationship, Chinese Premier Wen Jiabao.

More than any other foreign-policy effort, Merkel’s growing rapport with the Chinese signals Germany’s willingness to set the European agenda unilaterally. Even as European Union officials were readying an investigation into allegations that the Chinese have been dumping solar panels on the region’s market — hurting European, and especially German, companies — Merkel declared that it was nevertheless in everyone’s best interest not to ratchet up tensions, saying the issue needed to be resolved through dialogue, not legal action.

Merkel has more reason than any other leader in the Western world to say so. Germany has not only become a leading exporter to China, but by the end of the year, one German think tank estimated, Berlin also might achieve the holy grail of commerce: a trade surplus with China.

A balancing act

Yet, if Merkel is beginning to suggest a more assertive Germany, she has also been highly cautious about pushing the bounds. And here at home, she is engaging in a balancing act unlike any faced by her predecessors about what to do with a problem like the euro.

Although she has recently slipped in the polls, Merkel has remained enormously popular with a public that is tiring of the very currency she is trying to save. Indeed, Merkel faces reelection next year even as Germany is questioning just how much it still owes Europe, with the Die Zeit newspaper last week running a front-page photo of Adolf Hitler and asking, “When is the past over?”

To which Merkel has seemed to reply: Not yet. She still fiercely maintains that Germany will write no blank checks, but a shift began in June, when she agreed at a key summit to more flexible uses of European bailout funds after months of trying to keep a tight lid on rescue cash.

That shift has since become more pronounced. Most significantly, Merkel last week defied her central bank chief and former close adviser to back an aggressive effort that could see the European Central Bank buy up government bonds to aid Italy and Spain. The move brought withering criticism from some of her political allies as well as the German news media, with a few wondering whether the Iron Frau had suddenly gone soft.

But though she may be conceding points of nuance in managing the euro crisis, Merkel’s insistence on austerity as the price for aid has succeeded in putting the likes of Spain and Italy in a fiscal straitjacket that largely mirrors the one that Germany has put on itself.

“Angela Merkel is never going to stand up and say, ‘I’m a leader, I want to lead Europe,’ ” said Gerd Langguth, a noted Merkel biographer. “She will push the German agenda without forcing it on the rest of Europe. That is the way this is going to happen.”