Power and Legitimacy in the Eurozone: Can Integration and Democracy Be Reconciled?

Abstract

The title of this contribution — and more importantly the question in the subtitle — were suggestions of the editors of this timely and important collective volume. My answer to the question is a deeply qualified ‘yes’ — there are indeed ways to reconcile integration and democracy even in the context of the Eurozone crisis, although not in the manner suggested by several of my fellow contributors. This reconciliation implies three elements in European public law. First, it points to the need, at least in extremis, for substantive constitutional limitations on the scope of authority delegable to the supranational level, consistent with the demand of preserving democracy on the national level (this likely precludes, most importantly, proposals to shift expanded fiscal capacities — taxing, spending, and borrowing authority — to the European Parliament). Second, even as to more limited and otherwise constitutionally delegable powers (e.g., in the area of fiscal discipline/surveillance), there must still be some form of ongoing nationally mediated legitimation (‘oversight’, if not ‘control’), of supranational action. And third, each participating state in the EMU, as a responsible ‘democratic’ actor in an otherwise ‘demoi-cratic’ enterprise, bears some liability for the design flaws that led to this crisis, as well as the considerable ‘legacy costs’, both political and economic, which those flaws have engendered.

With these elements in mind, I conclude that supranational surveillance of national budgets, as well as certain aspects of banking union (supranationalized bank supervision, harmonized bank resolution rules), are consistent — perhaps barely — with the demands of democracy-preservation on the national level, based on a so-called ‘pre-commitment’ theory of European integration. By contrast, moves toward an autonomous fiscal capacity in the EU — that is, taxing, spending and borrowing authority, accompanied by a transformation in the role of the European Parliament (in short, some form of ‘political union’) — would likely be a step too far. To take such a step, not only would a profound constitutional transformation become necessary in a number of member states, not least Germany. But more profoundly there would need to be a fundamental political-cultural transformation in prevailing understandings of what constitutes ‘democracy’ in Europe and where it is located (national vs. supranational). I do not envision such a transformation in the near term, nor do I think one could be easily engineered in the manner advocated by the most strongly pro-European elements of EU legal-elite opinion. Nevertheless, consistent with the democratic responsibility of each EMU state severally in the Eurozone crisis, there must be some form of burden-sharing in the ‘legacy costs’ of the EMU’s flawed design, which to date have been borne almost entirely by the ‘debtor’ countries. Greater burden-sharing of legacy costs by ‘creditor’ countries (likely in the form of debt restructuring rather than outright transfers) is entirely consistent with the democratic responsibility of each participating state in the EMU and, indeed, is arguably essential to the ongoing effort to reconcile integration and democracy in the Eurozone.

However, unless the crisis greatly aggravates to the point that it poses once again an existential threat to the common currency, a significant amount of burden-sharing may not occur — certainly not at the level commensurate with the legacy costs themselves. Because of the member states’ failure to recognize shared democratic responsibility for the crisis, one could expect pressure on the European Central Bank to continue playing something of a ‘heroic’ role in combating threats to the survival of the Euro through an array of non-standard measures which, unfortunately, carry with them significant challenges in terms of democratic legitimation of the supranational central-banking technocracy. Consequently, without the member states stepping up to their shared democratic obligation to address the mutually-inflicted legacy costs of a deeply flawed EMU, the only other option is a technocratic solution centered around the ECB, which would have the ironic virtue of being both sub-optimal to addressing the crisis while also being democratically questionable.

Keywords: European Union (EU), European Monetary Union (EMU), Eurozone crisis, democratic legitimacy, demoi-cracy, European Central Bank (ECB), banking union