The Euro is Saved but What About Europe?

Considering the unpredictability of fear-driven markets the eurozone is not yet out of the woods. Neverthless,  it doesn’t seem unreasonable to say that Europe has ridden out the worst of the storm. The piecemeal rescue process has not been pretty, but the sum of measures taken – the incremental build up of a firewall, the six pack, the fiscal pact, and the ECB’s interventions – have brought us to a point where the dissolution of the euro seems unlikely.

Not to say that all is well. Greece might still default, while Spain, Portugal, and Ireland will likely face years of grinding recession. The EU Member States as whole will continuously need to demonstrate their willingness to slash budgets – if for no other reason than to soothe fickle bond markets. But even with this being the case, the talk surrounding the eurozone is shifting out of crisis mode and into longer term discussions of how to stimulate growth.

But what does the way in which we have reached this point mean for the future of the EU? As many commentators have pointed out, the fluidity of the crisis has provided an opportunity to shape the EU.

I for one am not enthusiastic about the path we have chosen out of the crisis. Yes, the economic governance of the EU has grown with leaps and bounds. This was an absolute necessity for the viability of the eurozone and the EU as a whole. But few would say that enhanced economic governance has been coupled with enhanced democratic accountability.

The fiscal pact has demonstrated that intergovernmental decision making is the preferred method. This decison making method leaves the average European with very little oversight over the process. It also leaves plenty of room for short-sighted national interests to carry the day, or at the very least contributes to a sense of unfairness when binding decisions are passed after some or another remote summit.

The intergovernmental method has resulted in some ugly examples of technocratic governments being forced upon the citizens of Greece and Italy, resulting in animosity toward those states (read Germany) that are perceived as the enforcers of unjust austerity. It goes without saying that Greeks and Italians do not vote in German elections. Perhaps their willingness to suffer austerity would be greater if they had a say in matters.

The dynamics of European integration contains an unfortunate paradox. Integration is desired for the prosperity it brings, but also feared because it implies rule by distant Brussels. Due to the dislike of all things Brussels, Europeans tend to favor national control over EU decisions, which makes decision making opaque and convoluted. This in turn reinforces the feeling that Brussels is inefficient and technocratic – and therefore we must favor more national control! This is an unfortunate dynamic that the crisis has done nothing to change.

The weakness of the euro is fundamentally linked to the EU’s lack of democratic legitimacy. Europeans are simply not willing to provide the democratically deficient EU with a say in how their money is spent. In a sense, although some of the immediate problems of fiscal coordination have been met, the crisis has reinforced the fundamental weaknesses of the EU: The lack of fairness and accountability associated with decision made at the European level.

To break the cycle, a link must be forged between the EU’s economic governance and European democracy. A democratically accountable EU could be given the power to tax, the ability to spend “its” money, and also be held accountable for the way in which it does so. This could assure the Germans that they aren’t alone in footing the bill, and give the Greeks the sense that the powers-that-be can ultimately be held accountable.