[LINK] "Straightening Europe’s crooked timber into a democratic eurozone"

[rfmcdonald]

Open Democracy's Mathew Lawrence considers at length how to improve democratic governance in the European Union, or at least the Eurozone.

The Eurozone’s nemesis – the ongoing Greek debt crisis – has once again returned to centre stage. With Greece’s existing bailout package expiring in just nine days time, today in Brussels the Greek government and its creditors – the ECB, the IMF, the European Commission and the Eurogroup - are meeting in a last-minute attempt to find a deal that can avoid default.

Much is at stake. Without an agreement, Greece risks defaulting, potentially triggering an exit from the Eurozone that could cause economic turbulence across the world economy. For the Greek people, meanwhile, the conditions of the bailout continue to extract a heavy social cost: unemployment has spiralled to 26 per cent, and food consumption has fallen by 28.5 per cent since austerity measures have been introduced. Both sides desperately require breathing space.

Yet whatever the outcome, the latest day of drama is unlikely to be the last. For the intransigence of the crisis is underpinned by a central contradiction: what is necessary is near-impossible politically. Critically, while monetary union necessarily involves losing - or pooling - some form of sovereignty, the creation of the Eurozone and its various coercive economic instruments has not been matched by political or fiscal union, with little democratic accountability or control over the decision-making institutions of the Eurozone. Central to any efforts at reforming the EU must therefore be grasping the nettle implied by the creation of the Euro: the economic logic of monetary union must be matched politically. Monetary union requires deeper fiscal and banking union which in turn requires greater political union.

This necessity – of deeper integration to overcome the debt crisis matched by more effective democratic decision-making within the Eurozone’s structure - is near-impossible, however, in a Europe deeply divided between the interests of creditor and debtor states and their different political economies, between the ‘core’ dominated by Germany and the ‘periphery’ of southern Europe.

Nonetheless, a way forward must be found, both to resuscitate the effective power of the democracies of the debtor states of the Eurozone and to strengthen the economies of Europe more generally. For in an effort to sustain the single currency, the governance regime of the Eurozone has transformed in recent years, progressively neutralising democracies across the debtor states of southern Europe and undermining their right to oppose decisions imposed upon them by a technocratic-led centre. For example, the European Semester System (2010), the Euro Plus Pact (2011) and the Fiscal Compact (2012) have steadily eroded the ability of debtor states within the Eurozone to control their tax and spend decisions, the very stuff of democratic government.