There are many causes for the great crisis of confidence that has hit the eurozone and injected poison into Europe' political ecosystem. Clearly, the eurozone lacked the instruments, the institutions, the economic culture and the political leadership to deal adequately with the worst banking and financial crisis since the 1930s. But the problem has deeper roots than the inadequacy of the edifice known as the eurozone's economic governance. The crisis has escalated into its current dimension because of two big structural problems besetting European and national politics, both of which need to be brought to the heart of the political debate.
The first is the inability of today's system of European government to offer citizens elections which generate identifiable policy choices based on a majority of votes. Yes, voters have the power to elect or unseat Euro-MPs. But that choice scarcely affects many of the most crucial decisions generated by the EU today. There is no connection between the European elections and the policy choices of the EU's most visible body, the European Council. There is little visible impact on the policies and proposals that emanate from the European Commission.
The primary concern is not hostility to the federal power centre which is normal in federal systems governing a large and diverse territory. Federal power in the US is under constant attack from a regionalist populism feeding on resentment against Washington. The EU must get real and accept that a degree of aversion to Brussels is part of the deal of being a Union of 27 member states. The far more destabilising problem lies in the worsening imbalance between a central system of decision-making accruing further power as a result of a major crisis and the ability of the citizenry to identify the levers through which this system can be subjected to democratic control.
The executive powers of Europe's system of governance are distributed between the Commission and the more powerful European Council with its new offspring, the eurozone leaders' meeting. In party political terms, they are organised along the Swiss model of a permanent grand coalition of all the main parties. But there is one vital difference: Europe lacks the democratically and politically crucial Swiss safety valve of quasi-permanent popular referendums. The result is that European voters feel largely powerless to affect major policy decisions taken in Brussels.
This is bad enough in ordinary times. It becomes deeply problematic when extraordinary circumstances such as the current crisis in the eurozone lead to a further transfer of power to an all-party system of European government whose choices override or determine – as they currently must – national preferences. The problem is compounded by the fact that the European Council is essentially made up of 27 national leaders whose first reflex is to favour their narrow interest over the common European good, resulting in debilitating decision-making processes and catastrophically feeble collective policy choices. The system is badly wanting both in democracy and in efficiency.
It is obvious that tackling these weaknesses would not end populism and voter frustration in Europe – nor would it guarantee responsible European politics. But stronger voter participation, real and perceived, would go a long way towards fully legitimising the European Union as the framework within which our biggest collective European challenges must be resolved. It would also generate leaders whose mandate is the collective rather than the national interest and whose strengthened legitimacy facilitates stronger decisions. It is encouraging that proposals are on the table such as the nomination by Europe's largest political parties of a common candidate for the position of Commission President. Progress is possible given political will and creativity.
The second structural problem besetting the politics of Europe is deeper and more dangerous. For the first time in well over a century, Europeans in most of the continent's regions are no longer confident that their children's lives will be materially as good as or better than their own and that their own retirement will be as comfortable as their parents'. This is a fundamental change in the dynamics of our societies and one with huge political consequences.
Since the 19th century, the progressive growth of a middle class enjoying increasing material comforts, barring times of war and economic upheaval, has determined the evolution of our societies and moved hand in hand the rise of democratic politics as the dominant European model. It has allowed mainstream parties to fight elections on the promise of an expansion of the welfare state and of increased prosperity for the vast majority of the population.
The re-allocation of global wealth resulting from the unprecedented competition with producers and wage-earners in countries such as China means that this long chapter of European history has come to an end. There is every reason to believe that the average incomes enjoyed by Europeans will stagnate or shrink until the gap with Chinese and other incomes has substantially narrowed; Germany's current economic success has been paid for with a decade of declining net incomes and rising poverty.
This transformation changes not only the social dynamics of Europe but affects its politics in ways most political parties have not even begun to address. The promise of a materially better tomorrow with higher incomes and better welfare provisions rings ridiculously hollow today, but most social democrats and centre-right politicians in Europe know of no other way to fight an electoral campaign. Our main political parties are choosing to deal with a historic transformation obvious to every voter by doing their utmost to suppress it from the political and electoral debate. This denial of reality is almost certainly one of the main causes of the rise of populism we are seeing in much of Europe today. It is significant in this context that Germany's ideologically well-equipped Greens, who have long warned against planning our future as a continuation of our past, see their share of the popular vote rise substantially.
It is vital for Europe's centre-right and centre-left parties to stop treating the global redistribution of incomes and its consequences for Europe as a phenomenon so ghastly that it is best ignored. Doing so is a manifestly a recipe for their own decline and for the weakening of our democracies.
Europe's mainstream parties must urgently adapt to the challenges of a new century. They must start to compete vigorously for control of the EU's executive powers so as to give voters a sense of participation. They must be outspoken about the rebalancing of global wealth and its consequences for Europe so as to win back ideological credibility. It is as simple as that – and as difficult.
The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of its individual authors.