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EA home page » News » From the democratic deficit to a democratic default?
From the democratic deficit to a democratic default?
By Giandomenico Majone

this article is part of the paper "A blessing in disguise? What the Euro Crisis tells us about the democratic deficit and the future of post-national Europepresented at the Conference “The UK in Europe’s Economy and Europe’s Economy in the World”, part of the Transeuropa Festival. London, 19 May 2012

As the results of the Greek elections of 6 May 2012 confirm, already today the basis of democratic legitimacy within the euro zone has been reduced to a vanishing point with the emergence of Germany as the sole would-be rescuer of the euro--a concentration of powers justified by the claim that the survival of “Europe” depends on the survival of the common currency. As the German chancellor likes to put it: “Wenn der Euro scheitert, scheitert Europa”. The EU is not, of course, identical with Europe, but the important point is that the EU is supposed to be a free association of sovereign states enjoying the same rights and duties, and united by the principle of loyal cooperation. In fact, the concentration of decision-making powers in a few hands has reached such a level that the other national governments are becoming seriously concerned. In the past, “intergovernmentalism”—a process in which the member states predominate—was opposed to “supranationalism”--a process in which the European institutions enjoy political autonomy and authority.

Today the supranational institutions—EP, Commission, Court of Justice—seem to have lost much of the influence they had even in the recent past; but also intergovernmentalism--having been reduced, first to the Franco-German dialogue and then to Germany monopolizing the conversation about the future of the common currency-- has lost its collegial character. Unsurprisingly, the other member states are not pleased about such developments. A recent indication of the prevailing dissatisfaction with this new turn in EU governance is the resignation of the head of the Euro Group, Jean-Claude Juncker. The Luxemburg prime minister--who in January 2005 became the first permanent (i.e., non-rotating) president of the group of finance ministers of the euro zone—resigned in April 2012 to express disapproval of the fact that all key decisions on monetary policy are now taken in complete disregard of the collective opinion of the Euro Group. It is true that such decisions have to be taken in a crisis situation, but it is equally true that the most important commitments made now--such as the obligation to respect the strict budgetary conditions imposed by the Fiscal Pact—concern not only the present but also future governments, as well as future generations. In fact, the Fiscal Pact is an international treaty, subscribed by twenty-five sovereign states, and as such it may be modified only by unanimous agreement—a very high hurdle. Precisely for this reason, some German politicians have raised the issue of the constitutionality of the Pact.

Already some years ago, a few long-time official participants in the EMU project stated privately that some form of fiscal federalism--i.e., a more federal European structure with centralized redistributive policies of taxing, borrowing, and spending--is a certainty in the long run, although this was at the time a publicly taboo idea (K. McNamara 2006). Since the beginning of the sovereign-debt crisis such voices have become more insistent, and openly articulated. Thus, Jacques Attali--founding president of the European Bank for Reconstruction and Development and former adviser to French President Mitterand--believes that the only possible solution to the present crisis requires the political courage of implementing a plan that includes the establishment of a European Ministry of Finance; the issuing of European Treasury bonds that would stretch out the debts payments of Greece, Portugal, and Ireland; and assessing a broad-based European Value Added Tax that would raise the necessary funds to repay the debt. In the 1980s monetary union had been advertised as being the royal road to political union: Now closer political union is considered to be necessary in order to save monetary union: a good illustration of the paradox of the tail wagging the dog.

Paradoxes aside, the defenders of EMU at all costs claim that the present debt crisis can be solved only by expanding the democratic deficit of the EU to a point where, given the state of public opinion, it may become politically unsustainable: a democratic default. The results of the Greek elections of May 2012 provide convincing evidence of the seriousness of the risk.
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