Chancellor Merkel has long been urged to pursue a bolder European agenda, moving beyond the incremental crisis-responses of the last years. She has now given a glimpse of her thinking, suggesting that the EU Commission should get much enhanced powers to police national budgets. What is missing once more, however, is an indication of the overall direction of the EU. It cannot be burdened with ever more responsibilities and powers without re-thinking its architecture.

Indeed every new power given to the EU increases the pressure towards the creation of a ‘political union’ with stronger democratic accountability. This pressure is building fast from another corner as well, raising even more complicated questions about the EU’s democratic legitimacy. The EU is becoming increasingly involved in policy areas that many consider the holy grail of national sovereignty, such as the independence of the judiciary, the rule of law, constitutions, electoral frameworks, media laws and minority protection.

How did this come about? The short answer is: Hungary. When Prime Minister Orban’s Fidesz party used its two-third majority in parliament to completely re-engineer the country’s political system, it not only undermined European standards of democracy and the rule of law, but it also destroyed an underlying assumption about the European project, namely that once a state joins the Union, its democratic credentials can be taken for granted.

This has created what is often called the ‘Copenhagen dilemma’: when states are EU candidates they are monitored and vetted by the European Commission on the basis of the Copenhagen criteria of democracy, the rule of law, human rights and minority protection. Once in the club, however, the Commission largely ceases its monitoring. The situation in Hungary has painfully exposed this gap, which the EU is now trying to fill.

The policies of Fidesz affect the credibility of the EU abroad. Europeans rightly told Egypt’s Muslim Brotherhood that democracy does not mean that electoral majorities have carte blanche to enact whatever policies they like, while Prime Minister Orban claims exactly this right for his majority. Recently he suggested that hypothetically there would be no legal obstacle to stop his party from introducing torture in Hungary. The Hungarian situation is even more problematic for the EU as it undermines its foundation as a club of democracies. Furthermore, each EU member state functions in the Council as a co-legislator for the Union; should one member cease to uphold democratic standards, the legitimacy of the entire law-making process is affected. This is a case where one bad apple spoils the barrel.

While Article 2 states that the Union is founded on shared values, including democracy, the rule of law and human rights, EU institutions lack the necessary tools to enforce these shared values. The Council can suspend the voting rights of a wayward member, but this is considered a ‘nuclear option’, and the Council is the least likely institution to take action. After all, member states must cooperate daily on complex policy issues and are therefore unlikely to take disruptive measures against one of their own. Hungary has been severely criticised by the Commission, the EU Parliament, the Council of Europe and even the US administration, but the Council has remained silent.

The EU Commission can nibble at bits of a democracy problem. In Hungary it became involved in media legislation, but currently it neither has the mandate to confront rule of law and democracy challenges, nor does it monitor and report on such developments systematically.

The European Parliament has been the most active EU body, but it is a political institution. Its July resolution on Hungary, which severely criticised the policies of Fidesz – a right-wing party – was carried mainly by social-democratic and liberal members, while conservatives abstained or voted against the resolution.

Other options are being discussed, such as empowering the EU’s Fundamental Rights Agency, the European Court of Justice or the possibility of creating a new institution altogether. While the Commission is understandably cautious to move into these delicate political areas, it is clear that the EU will get involved. It cannot ignore the deterioration of democracy in one of its own member states. The current institutional cacophony should be ended and one EU institution should be empowered to monitor and address democracy crises in members states. The rule of law demands that any such decisions could be subject to appeal in the European Court of Justice.

The magnitude of such a shift cannot be exaggerated. One only need think of the decades-long battle of federal administrations in the US against racist Jim Crow laws in the southern states to imagine the tension that such vertical conflicts on values and sovereignty can trigger. Greatly expanding the EU’s authority on political issues would finally bring the underlying logic of the European project into the open.

The European founding fathers devised an economic union to achieve the political purpose of ensuring peace in western Europe and to bolster its democracies. Economic integration served as a means to a political end. Now political tools would be added to achieve this purpose. With the EU playing an ever-greater role in economic matters, fiscal issues and questions of democracy, the question of a political union has become unavoidable. The new German government and its European counterparts should not duck it any longer.