EURO CRISIS RAISES QUESTIONS OF POWER RELATIONS AND LEGITIMACY

Back on 9 December 2011, the Eurozone heads of state and governments agreed on a 'fiscal compact', automatic correction mechanisms in the event of deviation from the target of 0.5 percent of an annual structural deficit of nominal GDP, and a deepening of fiscal integration. They also agreed on stronger policy coordination and governance under the enhanced cooperation procedure, and on the strengthening of the EFSF (European Financial Stability Facility) through leveraging, and the objective to have an operational European Stability Mechanism (ESM) by July 2012. There will be no involvement of the private sector, but the voting rules in the ESM will now include an emergency procedure. A qualified majority of 85 percent can decide that financial assistance is needed when sustainability of the euro area is threatened. An international agreement is scheduled to be signed in March 2012.

Giving up powers to the EU level on how to design and allocate budgets is posing serious difficulties in some member states. The leak of the Irish budget proposal by the Bundestag's Finance Committee before presentation to the Dublin Parliament caused outrage in Ireland. It hammered home that Ireland's sovereignty is compromised. The French and Austrian governments have encountered parliamentary opposition in enshrining the so-called golden rule into their constitutions. In France the opposition party has already announced that these reforms on 'abandoning sovereignty to a European technocracy' should not be negotiated until after the elections in May and June 2012. But it is not only within the Eurozone states where the crisis raises questions of power relations and legitimacy. The adoption of the 'six pack' of economic governance allows the unelected European Commission to ask for changes in national budgets and, if not implemented, to call for punitive actions. Already the EU's Economic Affairs Commissioner Olli Rehn has warned Belgium, Malta, Hungary, Cyprus and Poland to align their national budgets with the bloc's new stricter budget rules with possible sanctions if they do not comply. Under new sanctions regime, a country that is not doing enough to reduce its deficits and debt will have to pay an interest-bearing deposit of 0.2 percent of GDP, which could eventually turn into a fine. The new rules also make it harder for countries to block sanctions against their partners.

The non-elected EU's executive is now taking a much more active role in policing member state's budgets. However, the key challenge of the present crisis is reconciling the external supervision of and significant constraints on national budgets with a legitimate decision-making process that is accepted by the electorates. As an illustration, the latest letter dated 5 January 2012 from Mr. Olli Rehn, Vice-President of the European Commission to Mr. Steven Vanackere, the Belgian Minister of Finance about Belgium's 2012 budget forecast clearly shows who the boss is: ' Should the actual adoption of measures not be possible at this stage, writes Mr. Olli Rehn, as an alternative I would be prepared to consider the creation of a budgetary reserve... by freezing (at least temporarily) some additional budgetary expenditure in the 2012 budget.... Given that the Commission intends to adopt the necessary EDP decisions on 11 January 2012, we would need to receive the information on concrete additional measures and/or budgetary reserve by the end of the week, latest by Monday morning".

The Belgian people who ultimately will be the one impacted have no say in the matter. Finally after 500 days Belgium got a government with a designated Minister of Finance who is not accountable to the Belgian people but instead is a de facto subordinate of a non-elected European Commission official from Finland. How long will people support such modus operandi??? As long as EU Commissioners are not democratically elected, they are not responsible to or representative of the people, nor can they be voted out. The people who are pulling the strings in the Eurocrisis (except for Ms. Angela Merkel, Mr. Nicolas Sarkozy and Mr. Jean-Claude Junker) are not democratically elected: Mr. Mario Draghi (President of the European Central Bank), Mr. José Manuel Barroso (President of the European Commission), Mr. Herman Van Rompuy (President of the European Council), Mr. Olli Rehn (European Commissioner for Economic and Monetary Affairs).

Either the EU will move towards more federalism along with democratically elected leaders or the electorates in the EU countries will challenge the raison d'être of the present EU institutional structure. Already populist parties throughout Europe are knocking on the door.