Democracy versus the Eurozone

Jun 1, 2012 Daniel Gros

The EU is a voluntary quasi-federation of sovereign and democratic states in which elections matter and each country seeks to determine its own destiny, regardless of the wishes of its partners. But it should now be apparent to everyone that the eurozone was designed with a very different institutional arrangement in mind.

BRUSSELS – The European Union is a voluntary quasi-federation of sovereign and democratic states in which elections matter and each country seeks to determine its own destiny, regardless of the wishes of its partners. But it should now be apparent to everyone that the eurozone was designed with a very different institutional arrangement in mind. Indeed, that design gap has turned out to be a major source of the monetary union’s current crisis.

Last October, Greece’s then-prime minister, George Papandreou, proposed a popular referendum on the second rescue package that had just been agreed at the EU’s summit in Brussels. He was quickly told off by German Chancellor Angela Merkel and former French President Nicolas Sarkozy, and Greeks never voted on it.

But, less than a year later, the referendum is de facto taking place anyway. In a union of democracies, it is impossible to force sovereign countries to adhere to rules if their citizens do not accept them anymore.

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0 Comments on this paragraph, 9 Comments on this article

Ross Clem Sep 4, 2012

Perhaps it will be financial markets that become the "enforcer" of debt obligations. A sovereign country and its people must honor their debt obligations in order to receive funding.
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Asgeir B. Torfason Jun 5, 2012

The case is more complicated than "In a union of democracies, it is impossible to force sovereign countries to adhere to rules if their citizens do not accept them anymore." The example from Iceland is illustrative, two referendums on whether to pay the minimum depositor insurance guarantee amount to UK and Netherlands for the bankrupt Icesave. If the citizens of the island do not accept the rules that granted them access to the common European market, then the case is now solved in EFTA court (as the majority of the voters did not, twice, want to accept an agreement of a solution).
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Zsolt Hermann Jun 4, 2012

This is why the true solution to maintain the Union is a deeper integration, and eventually a supra-national democratic arrangement when all governance is lifted above individual nations.
And while this might sound crazy, or political suicide in the present climate, in reality we already live in such arrangement while maintaining an illusion that we have some national sovereignty.
We can vote, change governments seemingly but our lives have long decided and lead by global international interest groups, financial institutions, the election campaigns are decided solely by money and media influence, the public is simply played with all over the world. We all covet the same global products, celebrities, culture, and physically and especially virtually we are interconnected and intermingled on multiple levels.
Today there is no nation that can be independent sustaining itself due to our mutual dependency.
If we removed populist politicians, and the inciting mass media from the picture the general public would have no problem living in a global network, voting for supra national parliament if given a global education program explaining the nature of our interconnected and interdependent system we find ourselves in today.
So democracy is not impossible, simply we have to change the level we apply it to.
And then on such foundation all other systems would have sustainable future.
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H Gerken Jun 4, 2012

"As long as member states remain fully sovereign, no one can fully reassure investors that in the event of a eurozone breakup, some states will not simply refuse to pay, or at least refuse to pay for the others. " - That was the principle of the EU treaties which are now broken. Nations do not take the debt of others. But now that the EU contract is broken, crediotor nations insist on austerity as a condition. When France wants to give carrots without stick to other unreliable nations that is fine to me, as long as it's their own carrots.
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H Gerken Jun 4, 2012

Come on, the referendum was complete craziness. When you are in an emergency rescue situation and try such games the doctors give you an injection.
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david blake Jun 3, 2012

It is ot simply that "even" the Commision is fallible. So is the ECB. And the great failure of democracy in Europe is that when the ECB is wrong, democracy can do nothing about it.
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Thomas Lesinski Jun 1, 2012

...except printing money ?
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andrea naldini Jun 1, 2012

The issue proposed is well-known, but is not correctly presented. The lack of democracy is in the decision making process not in its implementation. When a representative european government will exist and decide the problem will be fixed. Till that moment, Italy and Spain have the same responsibility of Germany.
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Michael Heller Jun 1, 2012

Daniel Gros:

I agree with the thrust of your argument. But it's important to remember that political representatives are elected to govern, and there is a significant period of time during which decisions can be made without consulting the "sovereign people". Those representatives are formally and legitimately empowered to sign treaties in Europe. Fortunately we are modern and don't live in direct democracies. The basic issue here is the strength and expertise of the leadership, and the extent to which that leadership is prepared to take advice and act rationally for the good of nation rather than simply in accordance with the political cycle. Ironically the overburdened welfare states of Europe are committing collective suicide because of the dictates of the very political cycle that created them.
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