Rising Challenges to Democratic Legitimacy in the Euro Area

Photo by Wolfgang Sterneck on Flickr

BOSTON — While the crisis in the sovereign bond markets has calmed down in the wake of the European Central Bank’s decision to step in with potentially unlimited bond purchases, the political challenges in the euro area are growing. Democratic legitimacy across the euro zone is under threat in at least three respects.

Firstly, democratically elected governments are less and less able to influence key economic and social developments such as growth and employment. They have handed monetary and exchange rate policy to European institutions, without creating other instruments for macro-economic policy making such as a euro-area budget or Europe-wide economic and labor policies. Moreover, monetary and financial market integration induces a bias towards supply-sided policies in order to attract investment and prevent corporations from relocating. A number of governments are reducing tax-financed welfare spending, which tempered inequality and helped build stable democracies in the post-war period. Unions meanwhile face tough choices of accepting lower wages and less attractive employment conditions or seeing jobs move out of the country.

At the same time, there are no European tools to provide social protection to citizens and there is little chance that member states will introduce such instruments and financial means in the near future. The erosion of previous levels of social security and regulation threatens the political stability of some national democracies. It also threatens to delegitimize the European Union, which is increasingly seen as the cause of low growth rates, restrictions on public spending, and high unemployment, rather than as a solution.

Secondly, some interventions in member states’ domestic policies are perceived as having little democratic legitimacy. This is particularly true for countries under International Monetary Fund and European Union programs, but also for countries that did not request financial aid in exchange for conditionality. The interference of unelected and unaccountable bodies risks intensifying problems of legitimacy. If governments choose to break the rules, it poses yet another threat to those member states that actually abide by the rules and take financial risks by adopting European rescue mechanisms.

Thirdly, key decisions were taken at emergency summits with little transparency and accountability. The European Parliament was discarded while national parliaments were able only to give their consent after the fact — at such a high price for dissent that this was often not a realistic option. Meanwhile, political leadership and communication was too weak to explain the choices to national publics in a convincing manner.

The effects of this growing Democratic Disconnect will only be seen fully in a few years’ time. Increasing unemployment and poverty, social unrest, rising populism, and decreasing support for and trust in European institutions and policymakers already now put at risk many features of the European liberal order. These developments will be more difficult to reverse than the current economic challenges facing the EU and any further integration will have to address the problem of democratic legitimacy. Top-down proposals, such as installing a democratically controlled European economic government and strengthening the European Parliament, need to be accompanied by bottom-up democratic regeneration. More vibrant civic deliberation should help foster a joint understanding of common challenges and joint answers, including policies in the field of education and mobility that enable Europeans to act as European citizens.

Europe’s democratic malaise is a consequence of frustration with elite consensus politics that provide few real alternatives. However, protests provoked by the crisis have also failed to articulate coherent and comprehensive competing visions that could be filtered through representative institutions. The recent social mobilization against governments does not suggest that the civic component of liberal democracy is in good shape. In fact, these developments entail a risk for the euro zone’s progress. If policymakers see the demos as a demon that is increasingly accepting of populist arguments, weak governments may simply cease to push for strengthened democratic accountability in Europe.

Daniela Schwarzer is a non-resident fellow at the Transatlantic Academy, an initiative of the German Marshall Fund of the United States in Washington, DC.