The announcement that Greece is proposing a referendum on the latest bailout deal is causing “dismay and consternation”:http://www.ft.com/intl/cms/s/0/cc377942-0472-11e1-ac2a-00144feabdc0.html#axzz1cSkouRza among the usual suspects, “reports”:http://www.ft.com/intl/cms/s/0/cc377942-0472-11e1-ac2a-00144feabdc0.html#axzz1cSkouRza that markets are troubled by the possibility of a disorderly default etc etc. But perhaps this is the best news that the European Union has seen in two years. At the very least, it’s the first time that we’ve actually seen citizens actually being asked about what they actually want (elections in which they kick the bastards out to see Tweedledum replaced by Tweedledee implementing pretty well the same austerity agenda, despite pre-election promises, don’t actually count).

To put it differently, I imagine that the strong likelihood is that the Greeks will vote ‘No’ to the proposed austerity measures. But I’m not at all convinced that this will result in disorderly default. Instead, I suspect that it will result in people running around in panic for a few weeks, grave pronouncements from senior European politicians about how horribly the Greeks are betraying their European vocation, and then efforts to stitch together a deal which might actually make sense (e.g. enough aid to prevent the economy from crashing as horribly as it is doing, as a quid-pro-quo for genuinely intrusive reformation of the Greek tax collection system). This might in turn provoke an actual real argument over what EU politics should look like post-crisis (because make no mistake – the system that is being articulated on the fly at the moment is likely to have profound long term consequences for the shape of the EU).

Or, to put it differently again, the European Union is at a point where it actually has to start taking enormous – and explicitly political – decisions about what kind of entity it wants to be. I have a long piece coming out in _The Nation_ in a couple of weeks, which talks to how traditional politics has always been a problem for the EU. European politicians have preferred to integrate by stealth rather than public debate. But they cannot do that any more. They have tried repeatedly, and failed repeatedly, to treat the rolling crisis as another, albeit much more complicated, technocratic problem, which can be solved through the usual kind of technocratic solution. As they started to do this, European Union governance shifted from the so-called “Community method” (under which decisions were taken by rough consensus among the member states, with the Commission acting as a kind of neutral buffer), to Angela Merkel’s “Union method”:http://notre-europe.eu/fileadmin/IMG/pdf/Speech.Merkel-english.pdf (PDF) in which the member states1 were supposed to take decisions on their own. This in turn hasn’t worked out very well (Germany and France disagree on quite a lot), leading to the effective governance of the European Union by the European Central Bank (what might be called, for all its “perplexities”:http://www.voxeu.org/index.php?q=node/7158, the “ECB method”). Each of these steps has led to an ever greater remove between actual decision making and democratic control. But, when you are asking people to accept a fundamentally different way of ordering politics than the one that they are used to, lack of democratic input is a problem. What is being debated at the moment is not a technocratic fix to Europe’s problems of economic stability. It is a long term set of institutional arrangements which, if they succeed, will shape Europe’s politics for generations to come, and if they fail will likely take the world economy down with them.

Momentous decisions like this should not be made on an ad-hoc basis. They need democratic legitimation. Here, the German Constitutional Court, which is typically regarded by pro-EU people as a pain in the arse, is absolutely right. Its “Lisbon decision”:http://www.feps-europe.eu/fileadmin/downloads/090701_DE_LisbonTreaty.pdf (summary PDF) reads oddly in some ways – the standard of democracy that it demands is so high that arguably Germany itself does not satisfy it. But its basic claim is undeniably correct. The European Union is not a democratic constitutional order, and no number of technical fixes to the powers of the European Parliament will make it one. Andreas Vosskuhle, the President of the GCC, “recently made a speech”:http://www.bundesverfassungsgericht.de/aktuell/rede-praesident-einheit-2011.html which again pushes the argument that the European Union needs to democratize if it is to grow in competences – but which implicitly suggests that there is a path to democratization (Vosskuhle has elsewhere suggested that Germany too should have a referendum). My rough translation of the most relevant bit:

bq. Europe’s destination cannot simply be decided within elite circles. To reach the best decisions, we must engage in more open and serious debate, in the parliaments of the member states, in the European Parliament, and in the public. Criticism and opposition are part and parcel of how democracy defines itself. And without a vibrant democracy, Europe can grow no wider.

This basic claim – even if it is usually ignored in practice by European politicians – is hard to argue with. I don’t know whether there is a European Union that could be affirmed (after long and painful debates) by both the Greek and German publics. I think that there is, but I’ll grant that these are not the most propitious times for finding out. Then, there rarely is a propitious time for finding out – when things seem stable, no-one has an interest in upsetting the balance.

Still, I am quite sure that unless there is a space for possible agreement, traditionally technocratic solutions will fail. Figuring out whether there is some such space is going to require active politics, of a kind that European politicians are innately suspicious (they systematically have tried their best to avoid consulting the public about major political changes, for fear that the public will “give the wrong answer”:https://crookedtimber.org/2008/06/16/thats-why-they-call-it-democracy/. None of this, obviously, provides a short term solution to the need to come up with some kind of fix. And perhaps, by increasing uncertainty on panicky markets, it will make things worse (equally though, markets appear not to be especially convinced by the multiple kludges we have seen to date). Even so, long term stability requires some form of explicit public buy-in – and political debates over what exactly they want to be buying into. Which is why today’s news makes me a little more optimistic – even if the politics are going to be messy we need more of them.

1 For which read: the big member states. For which read: Germany and France, with a little bit of input from Poland, the UK and Italy. Romano Prodi likes to joke that this too had its own internal dynamic – the Germany-France bilateral relationship was one in which Merkel took the decisions, and Sarkozy held the press conferences.