From Financial Deficit to Democratic Deficit?

The current global economic crisis severely affected the European Union (EU), hitting some vulnerable economies in particular. Accordingly, the EU needed to take action quickly in order to help these economies pull out of the crisis. The mechanism the EU established to pull out of this crisis subjects any financial assistance to strict domestic budget, debt, and deficit discipline for the EU to monitor. This arrangement has been subject to criticism for being counter-democratic. Analyzing the mechanism of EU financial assistance and the decision-making process involved, this article reviews both sides of the debate, addressing legal and economic aspects involved. It reaches the conclusion that short-term and long-term considerations may differ in this respect. From a short-term perspective, this mechanism includes certain democratic elements of decision-making, although they reflect a different model of democracy than the domestic, majoritarian model. This difference is a result of globalization and economic integration. The justification for other, more professional aspects of this mechanism may be that the severe monetary reality necessitates interference by experts to prevent a total collapse of the democracy at stake. The article further draws the due limits for such intervention. From a long-term perspective, though, stability of the Eurozone and strengthening of the democratic aspects involved may necessitate additional economic and legal effort to diminish the “democratic deficit.”