The Greek Crisis and Democracy in the EU: Two Views
The Greek crisis is being seen as a conflict between national democracy and EU governance, particularly after the Greek public rejected continued austerity demands in last weekend’s referendum. Is the answer to the standoff to be found in the political leadership in national democracies or in more EU democracy? Two different takes.
Don’t Blame Democracy
by Rachel Tausendfreund
BERLIN—After the Greek people went to the polls last weekend and offered up a sound rejection to the demands of their European partners, Greece’s Prime Minister Alexis Tsipras returned to negotiations feeling legitimized to demand a better deal for his voters. Angela Merkel, cheek still smarting from the Greek “no,” meanwhile also has voters to answer to — and they are no more eager to finance the supposed spendthrifts on the Ionian Sea than they were a week ago. Does this spell death by democracy for the euro and the European project? No. In fact, democratically legitimate standoffs are precisely why the EU exists.
There is no shortage of complaints about the EU’s “democratic deficit” — but these complaints ignore that democracies themselves have a deficit that the EU is meant to address. Democracy is a far from perfect system. Beyond the borders of one state’s democratic dictate, the shortcomings become all the more evident.
Democracies are inherently chauvinist. It makes perfect sense that Greek voters would reject harsh austerity policies that have seen a GDP fall of 25 percent over the past five years and unemployment rise just as high. It is perfectly legitimate, and indeed “democratic,” to put the choice for more austerity to the public. It is equally understandable and legitimate for taxpayers in Germany or Finland to reject sending money south. How to resolve conflicts between two democratically legitimate positions? The EU is how.
Brussel’s lowest common denominator policies are frequently maligned, and often rightly. Yet “lowest common denominator” is just another term for compromise. You start with two, or nineteen, opposing positions, and end with something no one loves, but everyone can live with. And compromise is not easy, which is why the denominator is often low. But we would not need the EU if it were easy. Yes, Tsipras’s victory in the referendum renewed his legitimacy at home, but that does not pit Greek democracy against the EU in any novel way, though it is a more obvious case than most. French and Dutch voters rejected the EU constitutional treaty, and if asked to vote on it, many of Europe’s publics would reject taking their share of the refugee burden faced by the southern EU states (and member state governments have accordingly said no to mandatory resettlement quotas). If this is a battle between democracy and Europe, it is the battle that is common, and is supposed to be there — and not because the EU is anti-democratic, but because democracies need to be helped to be more cooperative among one another.
Still, there is something beyond compromise as a technocratic processes of identifying the Venn diagram of Europe’s conflicting wills. What can move us beyond a lowest common denominator, beyond the short-term, self-centered democratic will, is political leadership. If democratic will is fallible, it is also malleable. Winston Churchill convinced a war-weary British public in the 1940s that the fight against Fascism was necessary and worth the massive sacrifice of life and treasure (after all, the U.K. essentially bankrupted itself for the war effort). This was not a natural position for Britons to take; they were led there. It is equally hard to imagine that democratic will drove the U.S. government to give $13 billion (in 1948 dollars) to Europe as part of the Marshal Plan. Americans supported, or at least accepted, the effort because their officials made a convincing case for it. Democratic will is not always wise. Nor is it firm.
A possible deal is again on the table, one that has at least some support outside of Athens. There is still a good chance to escape the standoff. Tsipras, if he chooses to, can lead Greece on a demanding path of reform — though debt-restructuring might still be necessary. The Greek public wants to stay in the euro and they have been paying a painful price for five years to make it possible. The referendum, despite being a “vote for sovereignty” does not give Tsipras legitimacy to be utterly intractable. Not if he wants to be part of the EU. Merkel, too, will have to lead her public if she believes accepting the new deal is wise. “If the euro fails, Europe fails” she has said. Convincing her voters will be more difficult now than it would have been if Berlin has staked a “whatever it takes” position at the outset. And yes, a deal poses a political risk for Merkel. It might also require a bit of uncharacteristic grandiosity. But Grexit poses its own risks for Merkel, as she will be given the burden of responsibility for the failure of the past years’ crisis policies, and for much of whatever fallout follows. If it were not venturesome, it would not be leadership. And if it did not involve painful compromise, it would not be European.
Rachel Tausendfreund is GMF’s senior editor, based in Berlin. Follow her @thousandfriend.
EU Public Goods Require a Stronger EU
by Daniela Schwarzer
BERLIN—The political crisis in and with Greece demonstrates that the political system of the eurozone is not sustainable for a monetary union. While peace still prevails on the continent, dire economic and social conditions have generated resentment between EU countries and against the EU. Loud voices in the Greek debate blame the euro and the interference of European institutions or other governments for their suffering. Likewise, national tax payers in Germany struggle to understand why they should agree to new rescue packages and a debt relief if another country is not playing by the rules everyone agreed to.
The democratic disfunction of Europe has not gone unnoticed by national political parties, and not only in Greece. It is one of the reasons why right-wing populists and nationalist left-wing parties in several member states advocate an exit from the euro, and more broadly a repatriation of competencies from the European to the national level. The claim is also being made that national parliaments are the true sources of legitimacy and the best venue for democratic decision-making.
If one believes that giving up the euro and dismembering the European Union is the right way forward, then renationalization and repatriation may have a valid point. If one thinks, however, that global interdependencies, power shifts, and limited resources mean that member states have lost the capacity to meaningfully determine their fate alone, then the EU actually needs to be stronger and we need to improve democratic decision-making to stop the erosion of legitimacy in European policymaking.
The EU system was built on a system of negotiations between national democracies, leading to compromise, which is often the lowest common denominator. Only determined political leadership from national capitals and often supranational institutions can bring about more ambitious European decisions (see Rachel Tausendfreund’s comment). For decades, this has worked. Today, this is no longer enough, mainly because of the euro.
The single market and the euro have created public goods that affect all European citizens, including macro-economic developments like inflation, financial stability, growth, and, as a consequence, employment. With a single currency and monetary policy, these public goods can best be provided when joint decisions on the EU level are taken alongside national decisions. If public goods exist, European citizens together should be able to determine the large orientation of policies that affect them all.
For example, in an internal market that also shares a single currency, it is impossible for a single member state to implement an expansionist macro-economic policy. If such a policy is chosen, the effects spread across borders and stimulate demand in neighboring countries. But while the neighbors benefit from the higher demand, the initiating government alone is stuck with the higher deficit. At the same time, the introduction of the single currency and the integration of markets means that the externalities of one government’s irresponsible decision are felt by the others. This is why a complex system of rules and surveillance mechanisms has been devised, but it needs to be grounded in democratically legitimate structures.
Another example is financial stability. A liquidity or banking crisis in one country, as we have seen, can destabilize other member states, as well as the eurozone altogether. Under this pressure, a mechanism was designed that provides liquidity to governments and banks, based on national contributions and guarantees. National taxpayers’ money has been used to help other member states. It is nearly impossible to communicate to the public that this not only benefits the recipient country, but the eurozone as a whole. As the crisis with Greece has shown, it is no longer sustainable for national parliaments or referenda to act as veto players and endanger the existence of European public goods. The current system has encouraged political polarization and a loss of trust, and hurt overall economic prosperity. The existing rescue mechanisms require European resources and European decision-making on how to spend them.
Decisions of national governments affect citizens in other member states and need to be monitored. More needs to be done, though, to equip the eurozone with the capacity to actually provide the public goods that come with the creation of the single currency in a more efficient and democratic fashion. The debate has started, for instance on eurozone fiscal capacity. Today, budgetary policy remains under the control of national governments, but these only represent partial interests and can never speak on behalf of the whole eurozone. If we were to move ahead with the creation of a fiscal capacity for the eurozone, we would also need to install democratic decision-making structures on the European level.
This would not entail a “Superstate EU.” Only where European public goods are affected would the geographical spread and the decision-making level need to be aligned. For this, the concept of a European Republic has been coined. In other areas, compromising between national positions can continue to be the norm. And in other cases, the EU can do less while national or regional entities take the lead. But either way, we can no longer leave sole authority for European public goods to national governments.
Dr. Daniela Schwarzer is GMF’s senior director for research and director of both the Europe Program and the Berlin office. Follow her @D_Schwarzer.
The views expressed in GMF publications and commentary are the views of the author alone.