As I’ve blogged before, I’m kinda tired of writing about the eurozone debt crisis. The results of the once again ”crucial” European summit that starts today are fairly predictable: announcements of more, even radical, fiscal discipline and sanction mechanisms across the European Union (or the eurozone), a further integration of tax and labour market policies, and no hopes whatsoever for an expanded role of the ECB in the form of it acting as lender of last resort or as issuer of eurobonds. Everything that Germany wants, happens.
In other words: in order to please the financial markets, only one of the structural deficiencies of the eurozone is being addressed: the disparity in budgetary policies across member states. The other ones - the existence of separate bonds markets and the absence of a true central bank, which leads to Europe’s heightened exposure to the judgment of financial markets and credit rating agencies - are not addressed at all. All this because of Germany’s fear of inflation.
The European debt crisis is now starting to become a democratic crisis as well. This is happening on two levels. First, in order to please the financial markets, “reforms” and budget cuts are being imposed on southern European countries at huge social and economic costs without the population having any say in it. Elected politicians are removed not by elections or the people on the street, but replaced by so-called “technocrats” under pressure of the financial markets. Moreover, across the entire eurozone radically tightened fiscal discipline, which will have a huge bearing on social and economic policies, is being imposed without the population having any say in it; once again, to please the markets. The German, i.e. the conservative/(neo-) liberal policy solution for everything – fiscal discipline, budget cuts and market reforms - is imposed throughout the eurozone by Diktat.
Whether you like this particular economic policy package or not (I’m personally not against it), there’s no escaping the fact that the past months we’ve witnessed a huge shift in sovereignty from democracy to the market. Financial markets dictate what must be done; and it is reinforced by those policy-makers in charge who happen to walk in tune with those markets.
The second level at which democracy is under attack is in the transfer of powers from the national level to the European one. It is by now accepted that the only solution for the eurozone is a further federalization of fiscal, social and economic policies. The European Commission (EC) is likely the institution that will benefit the most from this. Yet, whether you are in favour of the European project or not, the EC is ultimately a technocratic institution; it is a super-regulator that issues “directives” and “regulations” to be imposed uniformly across member states without interference of national parliaments. The European Parliament (EP), the only European institution that is truly democratically legitimized (but only by a minority of voters), does not have the right of initiative; it is the barely legitimized EC that is the one policy ”motor” of the European Union. This situation will only be exacerbated by the current eurozone crisis.
In short, there’s a double crisis of democracy going on: one in the shift of decision-making power from the political sphere to the market, and a second in the transfer of powers from the national level to a barely legitimized European one. In between, the voice of the people is crushed. Particularly worrying is the talk, to be heard here and there, that “democracy” really is just one way to govern a country, that it was a nice experiment, but that it doesn’t really work in an age of globalized financial markets and much-needed technocratic European governance. Have we now really entered a 1930s-style “crisis of democracy”? Is the democratic principle itself being questioned?
To me, the need for a more unified Europe if the single currency is to be saved is clear. But the democratic deficit is getting painful. German solutions mean a half-hearted attempt to create a fully functioning economic zone, but an almost complete transfer of fiscal discretionary powers to an incompletely legitimized supra-European entity. Is that what we want? Do we have any say in that? In my view, the democratic level of the European Union is to be deepened if any of this is the result of current talks. This would mean a broadening of the powers of the EP to become a fully-fledged representative body with legislative powers, as well as finally some concerted effort on the part of European and national policy-makers to promote European democratic institutions amongst the populace. The ECB should also really be allowed to function as a central bank.
Otherwise, the result will be something we have now, but even more overbearing. A soft kind of technocratic regime, composed of an intricate byzantine web of committees, networks, councils and summits and a super-regulator, governed by one particular budgetary philosophy, all the while constricting national discretion to formulate policies, that is whipped from here to there by the financial markets. Even if this solution is, for now, accepted by those financial markets, I don’t think it will hold in the future. And there is no place for democracy in it either.