At European level, democratic institutions enter into a new constellation. One element involved in this is solidarity: once a constitutional community extends beyond the boundaries of a single state, solidarity among citizens who are willing to support each other should expand to keep pace with it.

According to the scenario I propose, an extended, though also more abstract and hence comparatively less resilient, civic solidarity will have to include the members of each of the European nations. Only in that case would the EU citizens who elect and control the parliament in Strasbourg be able to participate in a joint process of democratic will-formation reaching across national borders.

To be sure, the liberalisation of values, an increasing willingness to include strangers, and a corresponding transformation of collective identities can at best be stimulated through legal-administrative means. Nevertheless, there is a circular, either mutually reinforcing or mutually inhibiting interaction between political processes and constitutional norms, on the one side, and the networking of shared political and cultural attitudes and convictions, on the other side. Old loyalties fade, new loyalties develop, traditions change and nations, like all other comparable referents, are not natural givens either.

A measure of the relative weights attached to loyalties, and thus of stronger identification with one social unit rather than another, is the willingness to make sacrifices based on long-term relations of reciprocity. With the abolition of universal conscription, the test case of war, and hence the absolute claim to sacrifice one's life for the wellbeing of the nation, has luckily lost its force. But the long shadow cast by nationalism still obscures the present.

The supranational expansion of civic solidarity depends on learning processes that can be stimulated by the perception of economic and political necessities, as the current crisis leads us to hope. For the cunning of economic reason has in the meantime at least initiated communication across national borders; but this can condense into a communicative network only as the national public spheres open themselves to each other. Transnationalisation requires not a different news media, but a different practice on the part of the existing media. The latter must not only thematise and address European issues as such, but must at the same time report on the political positions and controversies evoked by the same topics in other member states.

A dangerous asymmetry has developed because to date the European Union has been sustained and monopolised only by political elites – an asymmetry between the democratic participation of the peoples in what their governments obtain for them on the subjectively remote Brussels stage and the indifference, even apathy, of the citizens of the union regarding the decisions of their parliament in Strasbourg. However, this observation does not justify substantialising "the people" or "the nation".

The caricature of national macrosubjects shutting themselves off from each other and blocking any cross-border democratic will-formation has become the preserve of rightwing populism. After half a century of labour immigration, even the European peoples, given their growing ethnic, linguistic, and religious pluralism, can no longer be conceived as culturally homogenous entities.

'If I am not mistaken, Sarkozy and Merkel want to extend the executive federalism of the Lisbon treaty into an outright intergovernmental rule by the European Council.' Photograph: Michel Euler/AP

Moreover, the internet is making all frontiers porous. Within the vast territories of our nation states, the floating horizon of a shared political lifeworld spanning large spaces and complex relations always had to be generated and maintained by mass media, and it had to acquire substance through the abstract flows of ideas circulating through the communication networks of civil society.

To be sure, such a process can only gain a secure foothold on the basis of a shared political culture, however fluid it may be. But the more the national populations realise, and the media help them to realise, how deeply the decisions of the European Union pervade their everyday lives, the more interested they will become in making use of their democratic rights as citizens of the union.

This impact factor has become palpable during the euro crisis. A reluctant European Council is being forced to take decisions that may have patently unequal impacts on the budgets of the member states. As of 9 May, 2009, the council, with its decisions on rescue packages and possible debt restructurings and with its declarations of intent to bring about harmonisation in all fields of relevance for competition (economic, fiscal, the labour market and social policies), has passed a threshold. Problems of distributive justice arise beyond this threshold, for, with the transition from "negative" to "positive" integration, the balance shifts from output to input legitimation.

Thus the logic of this development would also imply that national citizens, who have to accept the redistribution of burdens across national borders, would also want to exercise democratic influence in their role as European citizens over what their heads of government negotiate or agree upon in a legal grey area.

Instead of this happening, the governments are engaging in delaying tactics and the populations are being led by populist sentiment to reject the European project as such. This self-destructive behaviour can be explained by the fact that the political elites and the media are reluctant to draw reasonable conclusions from the constitutional project.

Under the pressure of the financial markets, the awareness has spread that an essential economic precondition for the constitutional project was neglected when the euro was introduced. Analysts are in agreement that the European Union can withstand the financial speculation only if it acquires the necessary political steering capacities to work towards a convergence of the member states' economic and social development in the medium term at least in core Europe, ie among the members of the European monetary zone.

All of those involved are aware that this level of "enhanced co-operation" is impossible within the frame of the existing treaties. The conclusion, that a joint "economic government" is necessary, would mean that European policies for promoting the competitiveness of all economies in the eurozone would extend far beyond the financial sector and affect national budgets as a whole, thus intervening deeply in the budgetary privilege of national parliaments. This long overdue reform is only possible by further transferring competences from the member states to the union, as long as existing law is not to be flagrantly violated.

Angela Merkel and Nicolas Sarkozy appear to have settled some sort of compromise between German economic liberalism and French statism with a completely different intent. If I am not mistaken, they want to extend the executive federalism of the Lisbon treaty into an outright intergovernmental rule by the European Council.

Such a regime would make it possible to transfer the imperatives of the markets to the national budgets without proper democratic legitimation. This would involve using threats of sanctions and pressure on disempowered national parliaments to enforce nontransparent and informal agreements. In this way, the heads of government would transform the European project into its opposite. The first transnational democracy would become an especially effective, because disguised, arrangement for exercising a kind of post-democratic rule.

The alternative is to pursue the democratic legal domestication of the European Union further in a consistent way. A Europe-wide civic solidarity cannot emerge if social inequalities between the member states become permanent structural features along the fault lines separating poor from rich nations. The union must guarantee what the constitution of the German Federal Republic calls the "uniformity of living standards".

This "uniformity" refers only to a range of variation in social living conditions that is still acceptable from the perspective of distributive justice, not to the levelling of cultural differences. Rather, a political integration backed by social welfare is necessary if the national diversity and the incomparable cultural wealth of the biotope "old Europe" is to enjoy any protection against levelling in the midst of a rapidly progressing globalisation.

• This is an extract from Jürgen Habermas's book The Crisis of the European Union: A Response, which will be published by Polity Press in April