Beyond the Democratic Deficit: Possibility, reality and perception in today’s EU

Real sovereignty, understood as the ability for the nation-state to meaningfully pursue its interests, was facing obstacles even before the birth of the EU (Obstfeld et al., 2004). The gold standard for one, which was the foundation of the world economy at the beginning of the last century, set important constraints on states to off-set the negative impact of crises. It unravelled as the Great Depression hit in 1929 because, as Rodrik (2018, p. 48) writes, “the high interest rates required to maintain the gold parity became politically unsustainable in view of domestic unemployment”. Friedrich Hayek, one of the most famous free-market advocates in history, sees in economic liberalisation an opportunity to actually limit the state’s ability to have a say. He reflects that “if goods, men and money can move freely over the interstate frontiers, it becomes clearly impossible to affect the prices of the different products through action by the individual state” (Hayek, 2012, p. 258).

The process of European integration has exacerbated the issue further by pursuing a very high degree of economic integration in the face of which the pooling of some sovereignty was necessary. Due to integration’s history piecemeal and state-dominated approach however, this pooling happened in incongruent ways. Some have also spoken of a “dual constitution” to describe this confusing governance structure that has emerged from the historical process, a concept we will explore further in the next articles (Fabbrini, 2013). The principle is nevertheless self-evident: given that political elites in member states depend on their national constituencies, they are rationally disinclined to give up potential power.  The consequence is a system in which there is constant conflict among parts on who is effectively sovereign (Brack et al., 2019).

At the same time, real economic integration into a fully-fledged single market is still a mirage, in large part precisely because the seat of sovereignty remains contested in so many areas (EESC, 2022). Even though, at least in this field, the Treaties are relatively clear that Brussels should have the necessary competence, real implementation remains far away (see TFEU, Article 3.1). It suffices to say that Germany and France account for almost 80% of the subsidies granted under the temporary crisis framework set-up by the Commission in the wake of the Covid-19 crisis (Vela Hanke, 2023). The scheme was supposed to end in December 2022, but has been extended. While sovereignty might have been pooled then, some countries appear to have, at least informally, given up more than others. The current debate on a European response to the U.S. Inflation Reduction Act (IRA) may throw the single market even more off-balance if no common EU-level solution is found (Moya, 2023). 

Having accepted this, the outcome of the Greek bailout saga, and especially that of the 2015 referendum, are no surprise. While theory suggests that European democracy should have been preserved given the pooling of sovereignty for the establishment of a common market, the truth is very different. The reality is that democracy is the main victim of a system where its principal object, namely the state, has been increasingly emptied of its ability to effectively shape the destiny of its people. Abstention from elections, or general political apathy, is one of the consequences of lower trust levels in national democratic institutions (Oxenham, 2017). Citizens are less and less prone to believe that the institutions that govern them are able to improve things. 

We therefore face a situation in which European states have become “empty shells from a political/policy standpoint” (Rodrik, 2018, p. 67). There cannot be a meaningful political project based on a traditional democratic “demos” within the state, since the distribution of sovereignty is fluid and often determined by (geo-)economic factors. It has been notably proven that economic integration leads to more similar political positions between parties, and that this in turn decreases voters’ turnout levels (Steiner & Christian, 2012). As much research in this area has already shown, “social-democratic solutions are unattainable in a world in which impersonal and unaccountable financial markets shape the rules. In such an environment, states compete with one another for capital investment. To attract capital, national policies converge, characterised by spending cuts, lower taxes, balanced budgets, and a general weakening of the state’s productive and redistributive capacity” (Hellwig & Samuels, 2007, p. 285).

Rising economic inequalities also contributed to lower trust in institutions (Rothstein et al., 2005). In Europe, the (incomplete) single market has contributed to this deepening gap (Bouvet, 2005), and the result can only be a vicious circle. As Rothstein and Uslaner (2005, p. 31) succinctly put it: “social trust will not increase because massive social inequality prevails, but the public policies that could remedy this situation cannot be established precisely because there is a genuine lack of trust.” Even though we have seen that states already have their hands tied in many situations, lower turnout caused by mistrust on this basis means power is more easily concentrated among the few (Martin, 2003). We could for instance look at the long-standing issue caused by tax havens in Europe and elsewhere (Politico, 1998). A fundamental requirement of a fair single market should be fair fiscal and re-distributional frameworks. Nevertheless, an EU agreement for a minimum big business tax only came in recently after prolonged deadlock, and it has been criticised for being too accommodating of tax havens’ interests (Oxfam, 2022).

Even if “richer” EU countries, such as Germany, appear to be more able to pursue real interests, it doesn’t mean that the latter reflect the democratic expression of a majority. Only 9% of Germans consider China as a trustworthy partner, but this didn’t prevent the federal government from going ahead with the sale of a terminal at Hamburg’s port, a critical EU asset (Scholz, 2022; euronews, 2022). The state, a traditional arena for political contestation, that institutional and ideological construct through which political possibility becomes reality, has been torn up by the forces of globalisation which it itself promoted and sustained (Novy, 2020). 

Nevertheless, and to one’s great surprise, the nation-state seems to be rather well and alive. This is the most fundamental paradox that plagues today’s global and European governance. As many have shown, the states are the gatekeepers of integration and the majority of decisions made at EU level (Weiss, 2005). To mention a different but related case, the WTO’s remarkable fall into increasing redundancy highlights the centrality of the nation-state system, whereby supranational rules and organisations are but a projection of their power that stop being relevant once they threaten national interests (McBride & Siripurapu, 2022; see also van Kreij, 2022). 

While it may appear as a contradiction to the arguments presented above, it would be misleading to interpret it as such. Indeed, it is precisely here that the wedge between political reality and possibility becomes evident. Let’s ask: what is this “national interest” that needs to be protected at all costs, and what makes it “national”? If one can answer this question, the following would be: who is the object of these interests or, in other words, who belongs to the “nation”? The formulation and achievement of a common desirable outcome, or political potential, cannot properly happen because the object of political interest is fragmented and kept divided by national borders. The Universal Declaration of Human Rights, for instance, recognises “the right of every person to leave any country, including his/her own, and the right of every person to return to the home country” (Wickramasekara, 2008, p. 1249). However, with the power over migration affairs still remaining tight in the hands of states, it is debatable to what extent such potential rights are actually guaranteed. 

Migration is an especially good example in this case, because while increased economic liberalisation has opened borders to the free flow of capital, services and goods, in the majority of situations borders remain hardly porous for human movement (Wickramasekara, 2008). It is implausible, therefore, to claim that arbitrary restrictions on migration flows are due to special “national interests”, since then it would beg the question on why the free flow of capital, goods and services are not. Indeed, immigration pressures are intimately related to the high-income gaps that exist between countries, and whose causes in today’s hyper-connected global economy are surely not down to one single nation-state (Milanovic, 2012).

A recent referendum in Switzerland asked the Swiss if they wanted to curb the free flow of EU citizens through their country. Even though this initiative was rejected, it provides some food for thought. Indeed, increased economic and social interconnection within a system where democratic accountability is fundamentally constrained within national borders creates a strong tension between the so-called “will of the people” and the less-defined “will of the others” (Euractiv, 2020). There is no debate that the free movement of persons should be a no-brainer within a single state, even though it may lead to worsening inequalities. Nevertheless, crossing the Swiss border between Chiasso and Sagnino can be legitimately and unilaterally interdicted without having some of the affected constituency, such as the Italian frontalier, having a say in the decision.

To be sure, authoritarian countries that restrict internal migration, like China, are hardly seen as a model of governance. In fact, some have demonstrated that the dynamics of migration policy in China reflect deeper neoliberal paradigms that aim at engineering “competitiveness” in some areas by decoupling economic integration from freedom of movement (Zhang, 2018). Without drawing exaggerated parallels, this phenomenon helps us understand the way in which the current state-system, by which global politics is organised, is co-opted by this neoliberal, Hayekan ideology for maintaining constant disorder and hampering both real accountability and effective government (Marsili & Milanese, 2018).

In spite of these inconsistencies, the nation-state is more and more called upon to save the situation. Draghi’s technocratic government in Italy was followed by a wave of far-right votes that christened Giorgia Meloni as the country’s first female Prime Minister. Even though running on a softened platform, Meloni’s coalition brings together the strongest ethno-nationalistic and “sovranist” voices in the political spectrum (Dilmore, 2022). Marine Le Pen also recently came very close to becoming President of France, committing to bypass European law to favour French “sovereign interests” (EURACTIV, 2022). This surge in nationalist-populist parties in the polls is a demonstration that, faced with difficult situations whose culprits are hard to spot, voters prefer to take a step back and put their hopes into an emboldened national decision-making apparatus. 

This “paradox” is generated by swayed political perceptions. To understand them, we need to rely on a third triangle. For those who voted for Meloni or Le Pen, sovereignty is still fully in the hands of the nation-state, globalisation and economic liberalisation are on full throttle and the “People” (however defined, but always within the national boundaries) have the ultimate right to shape policy. On the backdrop of both our theoretical and real triangles, it is easy to see how this is wishful thinking at best. To be sure, and in line with the aforementioned issue of political disaffection, a survey in 15 EU countries in 2001 found that nearly half of those interviewed “believe their governments cannot control globalisation” (Hellwig & Samuels, 2007, p. 284). This notwithstanding, the appeal exercised by nationalist parties throughout Europe is a sign that public expectations are still anchored to the notion that national democratic-majoritarian processes will be able to deliver effective policy outcomes. Research in this field moreover supports the idea that, for many people, the EU is still a “consortium” rather than a supra-national identity, where states are the primary carriers of responsibility and power (Baglioni & Hurrelmann, 2016). This in spite of the fact that, by its design, the Union is neither fully the one or the other (Phelan, 2012).

Bringing it all together, it is clear that where efforts are needed in the EU and beyond is in bridging the distance separating the current, real triangle and the theoretical, ideal one. In the latter, where two sides out of three are to be chosen and successfully aligned, true democratic politics can exist next to a complete single market. The stepping stone is however an overcoming of the nation-state dogma, so that integration can reach to the bottom of where it is actually needed and create a political arena for effective change. Because it will be very difficult for governments to act in this direction, naturally relying for their power on their national constituencies, public perception of the current state of affairs will be a key catalyst of this change. 

“Nationalist” parties today in Europe have been elected on a manifesto which they will fail to implement if they do not look beyond their national borders and consider other constituencies. By claiming to “make their nation stronger” by creating a “Europe of nations”, far-right politicians across the continent are signing up for a contradiction in terms, since in the current circumstances the strengthening of one nation will make the other weaker (Monti, 2019). What Europe needs is a fundamental rethink of existing paradigms in the international political economy. Its history of integration has been plagued by assumptions around the importance of the nation-state and by little attention to the essential interconnectedness between economic, political and social factors. Ultimately, this goes back to Polanyi and to a system in which economic exchanges are dis-embedded from their socio-moral context (Cangiani, 2011). Re-embedding them should be a priority for Europe, and especially because there already is a growing sense among citizens in the EU that they face common issues that transcend borders and that need common arenas to be tackled successfully (Ayoub & Bauman, 2019).

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