As Greek Prime Minister Alexis Tsipras stands off against the so-called Troika, questions abound about the future of his country.
But there should also be pressing questions about the future of the European Union. The shaky legal foundations of the EU have been laid bare by this crisis.
Over the past few months, Greek officials and representatives of the Troika have indulged in a succession of tit-for-tat exchanges masquerading as negotiations.
These are only the latest proof of the failure of the EU’s political and legal structures to effectively mediate conflicts and resolve differences between members.
The negotiation of a new Fiscal Compact, the creation of multiple bailout funds, and the (potentially illegal) expansion of the European Central Bank’s (ECB) mandate all failed to solve the problems that sparked the crisis in the first place.
Now, five years after Greece’s first bailout, solidarity and trust between citizens, governments and EU institutions are in desperately short supply.
All of this indicates that the euro crisis is a crisis of EU constitutionalism. The union has failed to strike the right balance between democracy and technocratic governance. It has failed to balance the needs of citizens and states in a highly diverse supranational polity.
German academic Fritz Scharpf famously asked 16 years ago whether EU governance could be both effective and democratic. Right now, it appears to be neither.
Democracy down the drain
Developments in Greece illustrate the EU’s shortcomings. On June 28, the Greek government announced the imposition of capital controls, including bank closures and a 60 euro-a-day limit on withdrawals from cash machines.
This followed the ECB’s decision earlier in the day to maintain Greece’s emergency liquidity assistance at current levels, when much more would have been needed to resupply Greek banks.
From a democratic perspective, it is deeply troubling that such an important political decision was left to the central bank, which is meant to be above politics. The ECB’s assumption of a leadership role in the crisis is equally concerning from a legal perspective, given its narrow mandate.
The decision by Tsipras to call a referendum is also interesting. A cynical reading would be that the prime minister is trying to shift responsibility for his failure to secure acceptable bailout terms onto the Greek electorate. Indeed, former prime minister George Papandreou tried a similar tactic with a previous bailout in 2011, but was forced to call off his referendum, under pressure from the French and German governments.
It looks as though Tsipras’ referendum will go ahead, and he is calling for his country to vote against the EU’s demands. But this appeal came just hours after a letter was published in which he said he would concede to most of the Troika’s requests.
The Greek government has been arguing that allowing the Greek people to decide is the proper, democratic approach but this claim is questionable. Referendums are a blunt tool because they take a range of complex questions and reduce them to a simple “yes” or “no” answer. Holding the referendum barely a week after it was announced doesn’t allow much time for people to properly consider the issues, either.
Moreover, if democracy really is the key concern, then one may ask why the preferences of citizens in the other euro states aren’t being taken into account, when the bailout involves their money too.
Changing the leopard’s spots
Despite everything, the Greek government still wants to stay in the euro. Finance minister Yanis Varoufakis has even threatened to take the EU institutions to court to block a Grexit, since it is not permitted by the EU treaties. Given that the euro crisis has been a five-year-long unravelling of the EU’s legal order, this threat is almost comical.
Whether or not Greece holds a referendum (and regardless of the result), the EU will still be in crisis. Solving it will take major legal reform – including an overhaul of the ECB’s powers and formal recognition of the Eurogroup of finance ministers, which is one of the eurozone’s most important institutions, but which remains an informal body (as Varoufakis discovered, much to his annoyance, when they had a meeting without him).
Admittedly, all this is unlikely to occur. The lack of trust within the EU, its inability to deal with other pressing concerns such as the migrant crisis and the conflict in Ukraine and the surge in populism in many member states will all make it harder for a rational discussion of the EU’s future to take place.