"I think very little of talking up the threat of World War III, and especially of demands for more money to arm NATO," 95-year-old Schmidt told the top-selling Bild daily.
"But the danger that the situation gets ever more tense, as it did in August 1914, is growing day by day."
The outspoken elder statesman of German politics added: "The situation to me seems increasingly comparable" to the eve of war a century ago. "Europe, the Americans and also the Russians are acting the way author Christopher Clark describes the start of World War I in his very readable book, like 'sleepwalkers'."
The best-seller "The Sleepwalkers" by Australian historian Clark re-evaluates the eve of WWI, focusing on how clueless the leaders of Europe's great powers were about the carnage of the first industrialized war that would follow.
Schmidt, a Social Democrat from the northern port city of Hamburg, was German chancellor from 1974 to 1982. He remains a frequent commentator on world affairs, known for chain-smoking on TV while sharing his opinions.
The ex-chancellor also launched a broadside against the European Commission, charging that it should dabble less in world politics, of which he said "most commissioners understand very little".
"The latest example is the attempt of the European Commission to annex Ukraine, and also to try to draw in Georgia. Just a reminder: Georgia lies outside of Europe. This is megalomania, we have no business being there."
He added that "the officials and bureaucrats in Brussels … are confronting Ukraine with the apparent choice of having to choose between West and East."
Railing further against the EU apparatus in Brussels, Schmidt also said the European parliament, which will be renewed in a May 22-25 election, should launch a "putsch" against the executive to assert its power.