The democratic deficit in action.

Photographer: Patrick Hertzog/AFP/Getty Images

Europe's Choice: Euro or Democracy

Clive Crook is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was chief Washington commentator for the Financial Times, a correspondent and editor for the Economist and a senior editor at the Atlantic. He previously served as an official in the British finance ministry and the Government Economic Service.
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This week, the European Central Bank started buying bonds under its new quantitative-easing program. Last Thursday, its president, Mario Draghi, declared that a stronger euro-area recovery had begun even before the QE policy was actually under way. January's announcement that QE was coming had been enough, he said, to lift spirits and get the economy moving.  

Draghi could plausibly claim to be the most important policy maker in Europe. And if you believe in democracy, that's a problem. The U.S. Federal Reserve has a lot of operational independence, but it's accountable to America's voters through its obligation to report to Congress; more than that, it feels and must respond to the pressure of U.S. public opinion. The ECB's connection to citizens of euro-area countries is far more distant.

QuickTake Europe's QE Quandary

Its standing is quintessentially European -- and an illuminating aspect of Europe's much-noted "democratic deficit." This wider lack of democratic accountability, together with the economic stress induced by the euro system, could eventually destroy the entire European project.

The democratic deficit isn't an unintended by-product of European integration. From the start, Europe's political elites have advanced their ambitions for the EU in the face of popular skepticism, if not outright hostility. Gestures to democratic legitimacy would be offered, but a persistent goal has been to take policy making out of politics. This suppression of democracy was seen as a good thing in its own right: The less voters were involved, the better the results would be.

In principle, that idea was defensible. However, when it came to the euro -- the EU's most ambitious and least-wanted project -- the results didn't play along. Europe's single currency has been a catastrophe. It deepened and prolonged the recession. The ECB's optimistic new forecasts call for growth of 1.5 percent in 2015. That would be good by the standard of the past seven years, but not by any other. Even by 2017, euro-area unemployment is projected to be only a sliver below 10 percent -- and in some of the worst-hit countries, it will be double that.

The democratic deficit is something that Europe's citizens seem ever less willing to put up with -- and the failure of the euro project isn't the only reason. Anger is mounting because the deficit has turned out to be even bigger than the system's architects envisaged.

The European Union was intended to be a peculiar if not unique arrangement. The idea was to make it for the foreseeable future neither one thing nor the other -- not a federal union like the U.S., nor a confederation of fully sovereign states, but something in between. There would be a European level of government, with a powerful executive branch, the European Commission. An elected European Parliament would work in concert with semi-sovereign national governments to provide democratic accountability.

The parliament's powers have been enlarged a bit over the years but, relative to most national legislatures, they remain puny, and voters aren't much interested. This was foreseen; what wasn't foreseen is the increasingly perverse division of civic labor between the European Parliament on one side and national parliaments on the other.

In principle, you'd expect elections to the European Parliament to provide a forum for debate on Europe's economic policies, and national elections to look hard at the evolving constitutional relationship between nations and the EU. On the face of it, this would appropriately match issues to competences.

Until recently, the opposite has happened. On the whole, Europe-wide elections have dwelt on the future of the EU's institutions -- a question over which the European Parliament has little say.  Meanwhile, Europe's economic policies have been contested mainly at the national level -- where, again, legislators are constrained.

As Peter Mair put it in "Ruling the Void: The Hollowing of Western Democracy":

The result is simple. The choices in both channels become increasingly irrelevant to the outputs of the system, and the behaviour and preferences of citizens constitute virtually no formal constraint on, or mandate for, the relevant policy-makers. Decisions can be taken by political elites with more or less a free hand.

This enlarged democratic deficit therefore exists on two levels -- European and national. It isn't just a matter of lack of accountability in the EU; national parliaments, in effect, have further diminished themselves by letting the constitutional questions slide and engaging most energetically in areas where their competence has been pruned back. They've played to their weaknesses, you could say.

Mair drew a further implication:

[We] are afforded a right to participate at the European level, even if we may now choose to avail ourselves of that right less frequently; and we are afforded the right to be represented in Europe, even if it is sometimes difficult to work out when and how this representative link functions; but we are not afforded the right to organize opposition within the European polity. There is no government-opposition nexus at this level. We know that a failure to allow for opposition within the polity is likely to lead either (a) to the elimination of meaningful opposition, and to more or less total submission, or (b) to the mobilization of an opposition of principle against the polity -- to anti-European opposition and to Euroscepticism.

Fixing the single-currency system requires more Europe -- that is, an enlarged European layer of government. Without a fundamental rethink, more Europe will widen the EU's unsustainable democratic deficit still further. Here is the fatal contradiction that Europe's governments can't bring themselves to face, let alone resolve.

If you ask me, Draghi's celebrations were a little premature.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Clive Crook at ccrook5@bloomberg.net

To contact the editor on this story:
James Gibney at jgibney5@bloomberg.net