OPINION: EU policy has helped create this crisis by sealing off discussion of the political problems thrown up by austerity

THE DEBATE on ratification of the fiscal treaty in Ireland is now in its final phase. Given the economic and technocratic content of the treaty it is not surprising that most of the debate to date has focused on the economic costs and benefits to Ireland of a Yes or No vote.

But the important changes in the economic management of the euro zone also pose very significant challenges for politics.

The European crisis is as much a crisis of politics as economics. The current paralysis of the Greek political system demonstrates the point very clearly. EU policy has actively contributed to this crisis by effectively sealing off discussion of the political problems thrown up by austerity.

Budgetary policy is at the core of traditional democratic politics in Europe but the management of the euro zone is increasingly being effected not through democratic institutions but via a centralised and depoliticised form of technocratic fiat. The “stability” narrative has triumphed over the need for legitimacy as the crisis in Europe has deepened.

Ivan Krastev, the eminent political scientist, argues that we have now arrived at a point where national governments have politics but are no longer in control of policy, including budgetary policy, which is moving via the fiscal treaty and other measures to the EU level.

On the other side of this divide the European Union has policies but no politics, since decisions are increasingly being made by technocratic managers rather than directly elected representatives of the European public. The euro zone crisis has thus amplified an existing problem – the absence of both a European citizenry and a transparent European level political process.

In electing a new government in 2011 Irish voters changed the political parties who rule them but that Government has proved powerless to change the underlying fiscal approach, which has been decided in Berlin and Frankfurt. Where Eamon Gilmore, in electioneering mode, proclaimed that it would be “Labour’s way, not Frankfurt’s way” we know now that the opposite has been the case.

Greek voters threw out the parties that they associated with austerity. But all this has done is paralyse Greek politics, leading to a new electoral poll: the EU has remained unyielding in its demands on Greek fiscal retrenchment.

It is important to point out that the fiscal treaty represents a dramatically significant break with the existing EU governance architecture. Chancellor Merkel, in particular, has favoured moving from the traditional “community method” to what is termed the “union method”. The “community method” is the EU sphere where laws are enacted by the Council of Ministers (representing member state governments) in conjunction with the European Parliament (representing citizens).

These laws are enacted on the basis of proposals generated by the European Commission, which is enjoined by the treaties to act in the European interest. Implementation and compliance is in the remit of both the commission and the European Court of Justice; national public administrations also play an important role in a system that revolves around a search for consensus.

But this “community method” (which has served Irish interests so well over 40 years of membership) has now given way to the “union method” of decision-making. France and Germany effectively reconfigured their approach to EU governance as both Chancellor Merkel and then French president Sarkozy wanted more De Gaulle and less Monnet, more intergovernmental decision-making (where they could dominate) and less of the supranational collectivism that distinguished the community method.

The weakening of the position of the European Commission, already apparent and made explicit in the rules governing inter-institutional responsibilities in the fiscal treaty, is a particular concern for Ireland and other small states, as the commission has always acted to defend the integrity of the community method and to ensure that the rights of small states are protected.

Turning from the EU level back to the national level, it is clear that the democratic process is also threatened by the different ways in which the austerity measures linked to the treaty are encouraging the advance of far-right nationalist alternatives to the centrist or consensus parties charged with (and closely identified with) implementing EU fiscal rules.

The recent collapse of the coalition government in the Netherlands provides a frightening example of what the adoption of the treaty portends for politics in the member states of the euro zone. The Dutch government collapsed because of a disagreement between the coalition partners over how to cut the budget deficit from 4.3 per cent to 3 per cent, as EU rules now demand.

Geert Wilders of the far-right Freedom Party cleverly positioned himself as the defender of the interests of the Dutch people against the ECB and EU mandarins making these “impossible” demands on the Dutch people. Wilders is thus in prime position to take advantage of the public mood of anger with the EU (and their Dutch “supplicants” in the mainstream political parties).

Similarly, in Greece, the recent parliamentary election saw the anti-immigrant and fascist-revival Golden Dawn party win 21 seats. The two centrist parties, New Democracy and Pasok, saw an unprecedented collapse in their support and Greece is now in a situation not unlike that of the Weimar Republic in the early 1930s: the political system is so fragmented and polarised that decision-making becomes impossible.

The vastly increased vote for the far right is to a large extent based on this sense of disconnect between the national and EU levels and the sense that national level political representatives are powerless in the face of a decision-making system dominated by a narrow stratum of EU-level technocrats.

The EU did not create the problem in Greece but its approach to the debt crisis has made things far worse than they might have been. The pattern here is one that will be repeated in other jurisdictions once the fiscal treaty is enacted across the euro zone: the rigidity of EU fiscal rules triggers a monumental row in the domestic politics of a member state, which, in turn results in parties of the far right gaining significant traction with the electorate.

Where governments are punished with fines for breaking rules on deficit and debt levels, the risk of provoking a national backlash against the EU is strong. Far-right parties that will claim, like Wilders, that the EU constitutes an intolerable presence in the democratic life of their nation, will have every incentive to structure their approach to politics around opposition to the EU. Thus the treaty threatens to widen the democratic deficit that characterises EU politics and may even drive some member states into the hands of fully-fledged far-right governments.

The treaty constitutes a significant deepening of European integration in the economic and budgetary sphere, but without any concomitant steps toward legitimation through either national or EU democratic institutions. Neither the Oireachtas nor the European Parliament will have any input into decision-making or the crucial scrutiny of deficit and debt levels of the participating states once it is signed.

This should prompt us to reflect on a crucial question: is there any place for democracy in a regime of bureaucratic oversight designed to appease markets?