Democracy put to the test

In what looks like a new phase of the crisis, the tensions generated by the euro crisis are starting to destabilise European democracies. Almost two years of doubts and divisions, of a lack of the courage and political vision needed to adopt a European solution, are fuelling popular disaffection – as much towards national democracies as towards the European project itself. As we have seen in Italy and in Greece, the deepening of the crisis has placed political leaders up against the wall. Having seen governments succumbing to international pressures, the fears are now double. If leaders adopt new and more severe austerity measures without compensating stimulus plans to bring about a level of economic growth, the people will end up turning against them and – whether from the streets, the parliaments or the ballot boxes – finishing them off. But at the same time, as Berlusconi and Papandreou experienced, they know perfectly well that if they resist those same austerity measures, the markets will penalise them by raising their risk premiums and forcing external intervention – which would precipitate their downfall, or lead their European colleagues to withdraw the financial support they have been providing (which would precipitate their downfall too).

The failure of traditional party politics to replace political leaders and their ensuing substitution with technocrats adds an extremely worrying element to this from the point of view of democracy. The new Greek and Italian prime ministers, economists with distinguished careers in central banks or European institutions, are quintessential technocrats. The refusal of traditional politicians and existing political parties to sacrifice control of either their past or future decisions to the people by way of early elections or referendums highlights the fact that they are bowing down before the markets; that they don’t trust their own ability to resolve the crisis and, above all, that they suspect their legitimacy has worn out. And so, instead of assuming their responsibilities, they step to one side and call in specialists who – supposedly – lack ideological bias and who – supposedly – know the answers that will bring the country up out of the crisis.

Taking this step creates an obvious danger, as it implies trusting the responsibility to govern a country – one that is facing a grave economic crisis with serious and inevitable social repercussions – to someone whose legitimacy has not been sealed with ballot slips, but rather with the confidence placed in them by the markets and global institutions. The problem is that, on a European level as well as on a national one, technocrats can only legitimise themselves by providing reasonably quick results. In other words, people might be ready to accept temporarily, as a lesser evil, a benign form of enlightened despotism (“everything for the people, but without the people”); but if the technocrats add their failure to that of the politicians of the parties, societies will be tempted to resort to populism (from the left or the right) expressed by strongmen who don’t bother with the details of democratic process.

The deterioration of democracy and the threat of populism do not just hang over certain indebted democracies in southern Europe. While in the debtor countries a large number of people rebel against the imposition of austerity measures from outside, in the creditor countries (Germany, Austria, Slovakia, Finland and Holland), symmetrically, another large portion of the populace rebels against their leaders’ insistence on continuing to finance the bailout plans of countries suffering liquidity problems or insolvency; or, especially, against any solution that involves more power and resources being transferred to the European Union.

In many of these countries there are very influential parties whose anti-Europe agendas are gaining ever more popular support; and so we should not be surprised that many mainstream politicians from those countries are hesitating in ignoring these citizens’ demands and continuing to fund the rescue plans of the countries of the South, which could cost them their positions. The (reported) tears of the Slovakian Prime Minister, Iveta Radicova, at the last European summit – after her brow-beating from Sarkozy for resisting the rescue plan for Greece, aware that her agreement would spell the end of her political career and her party’s fall from government – reveal much about the extent to which the European crisis has become a destabilising factor in national politics. Even in the United Kingdom, which is not a member of the euro, it is feared that the pressure unleashed by the euro crisis to achieve better political and economic unity could have the opposite result, that is, making it impossible to avoid a referendum. With all due democratic legitimacy, many citizens are calling for a referendum in the name of their right to decide the future of their country, and consider that this is being kept from them in deference to elites who think they know what the people need better than the people themselves do.

The crisis is fuelling populism and disaffection in two directions: the citizens of creditor countries fear seeing themselves dragged into a “union of transfers” with the citizens of debtor countries, while the citizens of the debtor countries are ever more suspicious of creditors, whom they see as little more than austerity police providing no alternative political project that might compensate for the erosion of their democracy. It is a vicious feedback loop with obvious and important consequences for the future of democracy and, in parallel, for the European project. The crisis is fuelling populism and disaffection in two directions: the citizens of creditor countries fear seeing themselves dragged into a “union of transfers” with the citizens of debtor countries, while the citizens of the debtor countries are ever more suspicious of creditors, whom they see as little more than austerity police providing no alternative political project that might compensate for the erosion of their democracy. It is a vicious feedback loop with obvious and important consequences for the future of democracy and, in parallel, for the European project.

The essence of democracy is that the people govern themselves. And so, although a great number of citizens do not understand the details of the causes, consequences and possible solutions of the euro crisis, they do have one thing clear: if democracy means the freedom to choose, the freedom of choice in our democracies today is severely limited. The recent electoral campaign in Spain offers clear proof of the dilemma entrapping national politicians in all of Europe: in practice, they know very well that the solutions to the crisis lie outside our borders. Whether jobs can be created in Spain or whether credit can be restored to businesses depends, among other things, on the type of measures the European Central Bank adopts; on the agreements Spain can reach with Germany and others to stimulate demand; on whether Spain can direct the European budget towards heavy investment; or on whether Spain create taxes on financial transactions and carbon emissions. But, logically, to win the votes of the Spaniards, the candidates have had to make citizens believe the solution to the crisis is in their hands and that they even have room to manoeuvre in deciding how much austerity to apply and at what intervals.

While democracy (as the capacity to self-govern) evaporates on a national level, it doesn’t reappear anywhere else, least of all where it ought to – in Europe. On the contrary: instead of reinforcing democracy in Europe, the crisis is bolstering technocracy on two levels: on the national level, putting into power technocrats with extensive experience in Europe, and on the European level, strengthening the authority of the technocrats, via the Central Bank or the European Commission, to supervise EU governments.

As shown by the recent proposals of the president of the European Commission, José Manuel Durão Barroso, to reconfigure the responsibilities of the Commissioner for Economic and Financial Affairs, Olli Rehn – to protect him from the pressures of other commissioners (apparently only sensitive to the governments of their countries of origin) and to give him new powers to intervene in the budgeting and economic management of the member states – the euro crisis is triggering the implicit, back-door expropriation of that same freedom to choose that defines democracy; and all of this with no debate about or analysis of possible consequences. That the always over-prudent Barroso and his commissioner Rehn allowed themselves publicly to request a government of national concentration in Greece without observing that the utterly downtrodden citizens of Greece still have the right to a minimum of democratic dignity, shows us just how far things have gone. In the eyes of many, this Europe of austerity, where a Portuguese and a Finn can, without backing from the ballot boxes, recommend who should govern a country, looks suspiciously like the International Monetary Fund that camped out in Latin America in the 1980s, imposing economic adjustments without being accountable to anyone.

It is clear, then, that the euro crisis and the crisis of democracy are intimately related, and that one cannot be resolved without the other. While the current crisis unfolded in the wake of the financial crash triggered by the collapse of Lehman Brothers in 2008, the euro crisis originated in a double error of design. Many said at the time that, as well as imbalances in the public sector, imbalances in the financial sector should be addressed, and some control exerted over the loss of competition and the deterioration of member states’ balance sheets. But in the boom years, these errors of economic and political design were ignored – because there is nothing more legitimising than that something is running smoothly. In the event, from an economic point of view, the euro was launched without backing from a European treasury and a common fiscal policy. And in the same way, a monetary and economic union was born in the absence of a political system that might enjoy enough legitimacy to back it up.

Concern for democracy in Europe, which emerged following popular resistance to the European project – France and Holland’s rejection of the European Constitution in 2005 following referenda and the euroscepticism peaking at the European elections of 2009 – has been dismissed as an inconvenience. The boom that many European countries, including Spain, experienced in the last decade had to do with the design errors in a euro that flooded many economies with cheap money and fuelled inequality; in the same way, the current recession has to do with the design of the monetary union and with a European Central Bank that is focused on inflation rather than growth and employment, and that is unable to do anything but patch up the crisis instead of solve it once and for all.

In a buoyant European Union, democratic concern had little more than an aesthetic quality. But when mistakes in the design of an economic and monetary union start to affect seriously the daily lives and future prospects of tens of millions of people, to undermine their capacity to self-govern and to erode the quality of democracy, concern for how Europe is governed must be returned to the heart of the debate.

We find ourselves in a situation unprecedented in the history of democracy. Historically, democracy has only existed on two levels: the Greek polis and the nation state. As we know, there was no transition from one to the other, nor any coexistence between the two forms: one disappeared and the other emerged centuries later. What we are faced with now is the troublesome jostling of democracy on a national level with the emergence, on a European level, of new centres of power, of new guidelines for decision-making that affect the central nucleus of democracy. The problem is that just as the mechanisms that made democracy function in city states were not adequate for governing nation states, representative democracies today are showing themselves incapable of managing, effectively and democratically, the system that is emerging in Europe.

The great achievement of Europe, its real legacy, is the creation of open societies run by governments in the service of citizens and subject to democratic rules. By definition, all rules are imperfect, as they are designed by fallible humans acting with only a limited awareness of a changing reality; and so these rules have been built up through hard work, with trial and error. Now, the maintaining of the essentially democratic nature of our societies depends on which rules of the game we impose on ourselves, at the European level, in order to resolve the crisis.

Those rules can either strengthen democracy in Europe or strengthen its demise on a national level. That is why, in the final analysis, this crisis is political, and why its solutions are political and not technical; it is why they should not be managed by technocrats, in individual member states or in Europe, but by the people and their legitimate representatives, at the national and the European level.