As forecasters and media focus on how or whether the euro will survive in the year ahead, European democratic politics is also in deep crisis. A lethal mixture of EU weaknesses are coming home to roost: the failure over the years to effectively tackle the European Union's democratic deficit is now in a perilous interaction with the political and economic inadequacies built into the very design of the euro. With the euro crisis taking off in the wake of the 2007 global economic and financial crisis, and with EU governments, dominated by the right, still under the sway of neoliberal ideology and the financial markets, European politics and society are being more profoundly challenged than for many decades.
The mismanagement, both political and economic, of the euro crisis over the last two years is undermining both EU and national democratic legitimacy and vitality and exacerbating pre-existing weaknesses. And at this moment of intense political and economic crisis, few EU leaders have, or at least are communicating, a political vision or strategy for the EU as a vibrant, dynamic, contemporary political project, relevant at home and in the wider world.
Short-term management of national politics rather than a strategic grasp of the likely interaction of European and domestic interests in the years ahead is the order of the day. Even as an elite-driven project the EU is losing political direction, while the EU's sui generis mixture of confederal and federal political structures is also letting it down on both sides. The intergovernmental – confederal – side is increasingly dominated by Germany and France, and so is out of kilter with its more typical broad, relatively consensual approach of coalitions across smaller and larger member states. Yet the legitimacy and role of the more transnational European Commission – and to a lesser extent the European Parliament – has come under stronger challenge in this crisis than ever before.
As trust and confidence in the EU and in national politics and politicians fall across Europe and anger, disaffection and cynicism grow, many warn of the already visible risk of growing nationalism and populism. Giving more power to technocrats – whether in the European Commission or in national unity governments in Italy and Greece – to impose neoliberal austerity programmes throughout the eurozone is very far from being a persuasive route either to rebuilding trust or legitimacy, or to a real democratic and political debate that tackles the political and economic crisis.
The EU is mired in a perfect storm that mixes longer and shorter term political weaknesses, tired economic ideologies, inadequate political leaders, elitist and narrow political discourse at both national and EU level, with publics disaffected by recession, social decline and the posturing of politicians.
Can Europe come through this perfect storm or will the neglect of the politics of European democracy reinforce the narrow neoliberal economic solutions being imposed and so intensify the crisis even more? Some have argued that the heart of the crisis rests in the fact that while the economic solutions to the euro crisis require more Europe – a federal, fiscal union – European politics and publics do not in this period support such a move, meaning any solution to the economic crisis worsens the democratic crisis or vice versa. But this may be mistaken both in the economics and the politics. If the heart of the crisis lies in the politics – including in the politics of the economic policy choices being made – then solutions may lie in the practice, and the dynamism, of democratic European politics, and not in solutions around yet more EU institutional changes and the creation of an austerity union. What is clear is that there is no perfect solution to the perfect storm.
The EU's shaky democratic legitimacy
In its more than fifty years of existence, the European Union has defined itself as promoting peace, prosperity and democracy across its member states and aspiring members. Fully meeting democratic criteria has been and remains a central condition for new members. Yet the EU itself has in many ways always been an elite project constructed, in theory at least, for but not by the people. And so it has often been suggested that the EU does not meet the very democratic criteria it demands of its member states.
The failure to build an adequate democratic EU politics has been increasingly problematic as the EU has acquired ever more powers over social, economic and political life of member states. But the EU's democratic weaknesses have never been more powerfully exposed nor more dangerous in their impact, than through the mismanagement of the euro crisis in the last two years.
There has been much ink spilled over many years in discussing the EU's 'democratic deficit' and many political steps taken to address it. The European Parliament is now much more powerful than two or three decades ago; the European Commission is more accountable to the European Parliament. Ministers from EU member states meeting in the Council of Ministers, now, though very belatedly, agree laws in public not in private – though much of the technical, and some of the political, discussion before passing laws is still behind closed doors. A large media pack sits in Brussels following and reporting on EU politics, including in the last two years on every last shift and turn in the euro crisis. And the EU's 27 member states are functioning democracies.
So is there any reason to say the EU faces a democratic crisis – beyond the immediate one linked to the emergency measures and the rushed, centralised decision-making engendered by the euro crisis ? The answer is yes: it is these longer-term problems of weak EU democratic process and legitimacy that have helped to ensure that a deep economic crisis such as the Union now faces is also a deep political crisis.
The European Union has developed as the most integrated regional body in the world, while stopping some way short of becoming a fully federal United States of Europe. It is part confederation – a UN-like, intergovernmental body – and part, federation, in some ways as integrated or more so than the US. It is this compromise mixture of confederal and federal that both makes the EU unique, complex to understand and, crucially, that makes it in many ways a democratic compromise. In the end, especially in the absence of really talented, effective politicians, this compromise leads to a fatal democratic weakness.
Both sides of the democratic compromise now face challenges. For democratically-elected governments to come together in intergovernmental fora and agree, for example, a free trade pact is legitimate and fairly easy for publics to understand. But as more and more powers – from aspects of labour standards, parts of criminal justice, passport controls, through to national budgets – have been shifted over the years to the EU level, the practice of using intergovernmental meetings and summits backed up by technocratic monitoring and implementation, started to create a distance from EU citizens made up of complexity, lack of transparency and accountability.
Attempts to tackle these growing democratic weaknesses have focused on the more quasi-federal EU institutions – the Commission and Parliament. They have faced their own legitimacy problems: while the Commission is not elected (though it gets a European Parliament stamp of approval) – turnout for European elections has fallen, in an ironic symmetry, as the Parliament's powers have increased over the years. Commissioners are officials or technocrats, not elected politicians, yet they have extensive political powers – and in effect share the role of a quasi-European government with the EU's 27 heads of government in the European Council.
While the European Parliament plays an important scrutiny role, the Commission does not come under the same sort of public, media and political scrutiny that politicians and governments face in national democracies. Falling voter turnout for European Parliament elections, and the remoteness of its proceedings from EU citizens, means it lacks the legitimacy that national parliaments have. So an attempted increase in the institutional and structural machinery of EU democracy has been met with a resounding thumbs down in terms of interest and participation from EU citizens.
Federal Europe as the perfect democratic solution?
In the face of the EU's democratic deficit, and especially in the midst of the euro crisis, European federalists have argued that the solution is a truly federal Europe . On paper this looks perfect – creating a federal state solves many (though not all) of the problems of the euro crisis, and it would create a perfectly democratic structure away from the inevitable imperfections of the confederal-federal mish-mash of the present. The only problem is that eternal democratic challenge – the wishes and beliefs of the public (so notable by their absence in some key federalist solutions to the euro crisis, that they bring to mind Brecht's oft-quoted remark that it would be easier 'to dissolve the people and elect another').
Democracy does not work by designing new structures neither demanded nor accepted by the public, separate from existing states and democratic cultures, processes and practices. And there is nothing to indicate that today most EU publics want to integrate into a fully federal EU political entity. Rather there is – as reflected in the EU's own opinion polling – falling trust in all the EU institutions (Council, Commission and Parliament), together with growing nationalism and euroscepticism in many countries.
But this tradition of creating a theoretically more democratic Europe for the people even if they do not seem to want it has deep roots in the EU elites. The attempt in 2002-2003 to draft a European constitution was the boldest and most open attempt to democratise the Union and to really engage the EU publics in that process. But despite the inclusiveness of the convention drafting the treaty (with national MPs, MEPs and government representatives from all member states), it never really engaged the publics. So it stumbled on the central and hardest EU challenge of how to build a genuine pan-European dynamic politics with active, participating citizens – how to create genuine, live democratic process and practice, not just the structures.
When in 2005 the French and Dutch publics dramatically rejected the constitutional treaty in national referenda, the EU elites retreated to technocratic, elitist obscurantism. After two years' 'reflection', almost the entire content of the constitutional treaty was introduced in a more technical, hard to follow, way into the EU's existing treaties, relabelled as the Lisbon Treaty and then passed by governments and parliaments while avoiding any new referenda except in Ireland. The Irish 'no' vote in 2008 was rapidly followed by a second referendum in 2009 – producing a 'yes' – and the Lisbon treaty came into force at the end of 2009.
It was a technocratic triumph and a democratic disgrace. Despite the fact that the Lisbon Treaty introduced some democratic improvements – the Council voting on laws in public, clearer accountability of the Commission, a stronger role in law-making for the European Parliament – the EU's democratic legitimacy and credibility was seriously wounded. The elites had attempted to engage with European citizens, been rebuffed, and decided to carry on anyway but in a deeply cynical, obscurantist fashion. This preference for elitism, technocracy, and partial democratic structures, rather than a political understanding of and preference for live, functional and functioning democracy with engaged, critical citizens holding those in power to account, and respected by those in power, is at the heart of the EU's democratic problem.
Euro crisis – stormy politics and economics intertwined
It is this failure to practice and push for such dynamic, participative political processes – and to respect their outcomes and nature – that makes the EU's democracy so much in deficit, not just the inevitable limitations of its unique confederal-federal mix. And so it is the inept management of the euro crisis by the leaders of this weak, elitist EU quasi-democracy that has led to the gravest political crisis in the EU's history.
The unfolding of the euro crisis has exposed the weaknesses of European politicians, policies, and democratic structures and legitimacy. The debt crisis in Greece has been so mismanaged since the start of 2010, that the survival of the euro is now in question, and with many rightly questioning whether the EU itself could survive the collapse of its central political and economic project with all the shockwaves that would provoke.
Democracy – that cornerstone of the EU and its member states – has been rudely pushed to one side, as the EU leaders rush from summit to summit. Yet the neglect of democracy has not produced successful euro or economic crisis management. And as a result, failing economic policies are now intertwining with democratic crisis and political fracturing across the EU, as the economic crisis becomes a deep crisis of European Union itself . It would be hard to imagine the EU in a worse place after two years of crisis mismanagement, than if it had perversely and deliberately set out with the goal of deepening and broadening the crisis.
There are many elements to the mismanagement of the euro crisis. But while debates have mushroomed over the economic choices, and the failing attempts to instil confidence in the apparently unbiddable financial markets, political and media attention has focused much less on the political and democratic failings. But these failings have been many and their impact will be felt in the years ahead in both national and EU politics.
When economic crisis hits people, affecting their lives and livelihoods, impacts on societies and on public goods, and changes political priorities and agendas, legitimate and genuinely functioning democracies come into their own. Debate, political and policy argument, media and public scrutiny, the rule of law, the defence of rights, political accountability – these are all crucial elements of social and political cohesion. At a time when tough decisions are being taken, mistakes made, services cuts, and jobs being lost, if politicians and governments and/or their political systems are not legitimate, then mistrust, disaffection, and protests will soar. Simplistic explanations and nationalist solutions finding easy scapegoats to blame will prosper – as reflected in the increasing strength of populist parties from Finland to the Netherlands to Hungary.
Yet in the face of the euro crisis, European political solidarity has fractured both within the eurozone and across the wider EU. The only show in town over the last two years has been the bilateral meetings between Angela Merkel and Nicolas Sarkozy, with Merkel clearly mostly dominant – German economic power for the first time in the EU's history giving Germany a starkly predominant political power. Summits of the 27 and of the euro 17 have come and gone as the crisis intensified, but the position of Merkel, her demands for budget discipline and austerity – a stability union or so-called 'fiscal union' (really an austerity union) – have driven EU policy-making.
This dominant German position is not absolute. At the December 2011 summit, amidst the chaos of the UK veto of a new 'fiscal union'/discipline protocol to the Lisbon treaty, Merkel's wish for a whole new treaty was rejected. But it is a strong and asymmetrical dominance. EU summits – meetings of leaders, meetings of ministers – gain legitimacy not simply from taking place, or through a notional adherence to EU rules, but by genuine inclusive decision-making processes taking place and being seen to take place. German leaders over the years above all used to understand that – creating alliances with smaller member states, working not only in Franco-German tandem, but where possible with the UK and Italy and others. Messy political processes of compromise and consensus-building may not have enthralled the European publics but they indicated that all countries had a say, a role in bargaining, a responsibility for the outcome. And yet throughout 2011, the pre-meetings of Merkel-Sarkozy – and the meetings of the even more technocratic 'Frankfurt Group' (including Merkel, Sarkozy, the head of the ECB – Mario Draghi, the head of the IMF – Christine Lagarde, the head of the Eurogroup – Jean-Claude Juncker, and the EU two presidents – Barroso and van Rompuy) – were clearly much more important in driving strategy and decisions than EU summits or eurozone summits, let alone any debates or arguments in the almost invisible (in the media) European Parliament.
So just at a moment of crisis, when the legitimacy of EU institutions is vital, the European Council has become unbalanced and Germany-dominated, with France also influential – and the Frankfurt Group in the shadows behind them. And yet the decisions taken are impacting directly and harshly onto several member states’ economic, political and social policies and outcomes. These austerity-only policies are creating downward spirals of lower demand, greater debt and are directly leading to the impending eurozone recession. But while in the UK, Prime Minister David Cameron imposes similarly mistaken policies of excessive austerity and rising unemployment, he has some legitimacy in doing this from both his election and the functioning of the UK political system (though not by any means a perfect one, given the nature of the UK coalition).
But in the eurozone, Merkel's or 'Merkozy's' austerity policies are imposed through EU summits, and the technocratic European Commission, and the non-European IMF, onto other EU countries – creating political and social mayhem in Greece, and severe economic tensions and decline in Italy, Spain, Ireland, Portugal and others. There is little legitimacy in any of this, and much political tension and backbiting even across the EU's 27 leaders.
In 2011, the democratic failings went even further. When George Papandreou infuriated Merkel and Sarkozy with his ill-timed but still democratic decision to have a Greek referendum on the austerity programme, his fate was rapidly sealed – not only by Merkozy anger and pressure, but also with unprecedented calls from both Commission President Barroso and economic and monetary affairs Commissioner Olli Rehn for a national unity government in Greece. This technocratic intrusion into national democratic politics was an extraordinary sight – and showed key EU leaders and officials without apparently any concern as to the democratic and political impact, and legitimacy, of their pronouncements and use, and abuse, of power.
The pressure of markets, and of Merkel and Sarkozy, also drove in part the fall of Berlusconi. And while constitutionally in both Greece and Italy, the establishment of technocratic governments was voted for by MPs, the political dynamics that led to these outcomes showed both national and EU democracy in a bad light. If national political systems are so weak that in moments of crisis they move to 'enlightened despotism' that is grave enough – without the serious, inappropriate intrusion of non-national actors into national politics.
Is an Austerity Union a democratic one?
After the UK veto of a new protocol to the Lisbon Treaty, at the December 9, 2011 summit, the start of 2012 sees the other 26 member states focused on producing a new intergovernmental treaty to impose or re-impose fiscal discipline on eurozone members. Key aims include ensuring greater automaticity of fines for member states that break budget rules, and the inclusion of 'balanced budget' rules into national laws where possible at constitutional level.
One of the most disturbing sights throughout the euro crisis has been the failure to see a coherent European political challenge to the neoliberal, recession-inducing austerity policies and cuts that Merkozy and the Frankfurt Group have dictated. There are some voices of opposition – whether from French Socialist candidate Francois Hollande, or the Social Democrats and Greens in Germany. But they have failed to cut through into political debates in any serious way. The new intergovernmental treaty being drafted, and the conclusions of the euro 17 summit as early as on October 26, 2011, demand that austerity policies are put into national law, preferably into constitutions: this is one more extraordinary pre-empting of political processes and dynamics. Democratic politics, whether at national or EU level, require political diversity, a range of political choices, not the imposition of contested and high impact policies as a constitutional requirement. If this shift goes through, it adds layer upon layer to the failings of democratic legitimacy and of democratic processes, both at national and at EU level, that the euro crisis has both created and exposed to view.
Meanwhile, the European Commission has been assessing eurozone member states' national budgets, demanding changes , and threatening fines, where it deems the rules risk being broken. Eurozone governments signed up to these processes, and some form of budgetary discipline has always in theory been part of the euro process. But that does not mean that an unelected official – Olli Rehn – has an adequate democratic mandate or legitimacy to overrule elected governments. Passing such control to a European technocrat in the context of the EU's entrenched democratic weaknesses ensures his legitimacy is questioned or rejected by the public in affected member states. The likelihood that a country failing to cut its budget could face a Greek or Italian-style imposed national unity government has been called by one commentator a 'constitutional monstrosity'.
What European future?
The European future looks bleak. The austerity policies being implemented to tackle the markets' loss of confidence and to ensure the survival of the euro may do neither. If the euro, does survive, the eurozone will be in a severe recession, with economic and social decline particularly severe in the mostly southern member states (Italy, Greece, Spain, Portugal, and also Ireland, Hungary). Moreover the austerity measures are likely to exacerbate the underlying and deepest economic problems of the eurozone which is its wide range of, and diverging, competitiveness across countries.
European democracy is fraying at the edges and being weakened day by day by the mismanagement of the euro crisis. A leap to a federal EU allowing the European Central Bank to be a lender of last resort, eurobonds to be issued to cover much of the member states' debt is surely the answer, say some. Others argue that, democratically, federalism is needed so that the European political system matches the scale of economic and monetary powers now accumulated at EU level.
But unless a federal EU implemented a major, 'New Deal'-scale recovery programme, it could not tackle the problems of high unemployment across the EU, depression in Greece, recession elsewhere and continuing divergent competitiveness.
Politically, the fracturing relationships across EU governments, and the mistrust and disaffection of EU publics and growing euroscepticism, suggests there is no political dynamic or legitimacy for a push towards federal EU structures. To recognise the lack of public support for such a move is not to condone the deeply worrying rise in populist and nationalist policies in many EU member states; rather it is to recognise (as Habermas has argued) that it is not possible to impose a federal democracy, it must grow out of genuine civic solidarity at European level, and out of a genuine pan-European political culture, not an elite culture. And it must be argued for, democratically and with political vision and persuasion and honesty – all characteristics noticeably in short supply throughout the euro crisis.
A more democratic, and politically effective, route out of the still intensifying political and economic crisis the EU faces would be to work with the existing political and institutional structures the EU has but, crucially, to do that in a spirit and practice of real democratic politics, with real attention to legitimacy, to equality across member states, to the importance and role of national democratic politics. This would require a huge shift in political leaders' and politicians' mind-sets and behaviour. The euro crisis would have to be genuinely politically managed by the euro 17, in liaison with the EU 27 (or 26 if the UK really wants to sit on the margins) not by Merkel, with Sarkozy and the Frankfurt Group at her heels. But that would require a shift to imaginative, strategic, political and democratic leadership of which the current 27 leaders have shown themselves incapable.
Austerity policies, even if adopted, should not be enshrined in constitutions out of the reach of democratic politics. EU leaders and other politicians should be focused on citizens, on society, on the practice of politics at least as much as on placating the markets. Opposition politicians should be coordinating effectively across the EU, creating really dynamic credible debates on alternative policy strategies. Governments and opposition should be engaging with the often youth-led protests and calls for a different approach visible across the EU.
The European Commission should be playing its role of considering the pan-European interest – rather than focused on overplaying its hand as technocratic enforcer of austerity rules irrespective of, or superior to, member state politics. And all these players should be acting to ensure as dynamic, democratic political processes and debates are occurring as possible, both given the centrality of democratic legitimacy in the midst of crisis and not least given the well-known limitations of the EU's confederal-federal mixed model.
The euro crisis could be managed differently – both the economics and the politics. But at the current political conjuncture, the chances of EU leaders and other politicians shifting their priorities and behaviour to ensure genuinely functioning national and European democratic processes look remote indeed. EU leaders are divided, focused on their short-term national political careers, with none of them showing serious strategic or forward-looking European political imagination, or real conviction about the intertwining of national and European interests, let alone a real concern for the perilous economic and political state of much of the EU. And so, for now, the downward economic, political and democratic spiral looks set to continue.
 Fritz W. Scharpf "Monetary Union, Fiscal Crisis and the Pre-emption of Democracy" London School of Economics LEQS paper no 36, 2011
 See for example: Andrew Duff "Federal Union Now" Federal Trust, 2011, Joschka Fischer "Europeanising Europe" Project Syndicate 2011, Guy Verhofstadt "Only a finance minister and full fiscal union will do " Financial Times 28 Sept 2011
 Eurobarometer no 76, 2011
 Jose Ignacio Torreblanca "Democracy put to the test", European Council on Foreign Relations, 2011
 Jose Ignacio Torreblanca "Democracy put to the test", European Council on Foreign Relations, 2011
 See for example "Belgium rushes to find cuts after EU warning" Financial Times 9/1/2012
 Martin Wolf "A disastrous failure at the summit" Financial Times 13/12/2011
 Jurgen Habermas "Europe's post-democratic era" The Guardian 10/11/2011