Following the end of World War II, Western European leaders set out to create pan-European institutions that would assure future peace and prosperity on the continent. Those goals were to be accomplished through an ever closer union among European nations. Unfortunately for the founders of modern Europe, such a union never enjoyed broad public support. Thus, even as the EU grew in power and importance, public support for further European integration ebbed away. This lack of support for the EU institutions and growing clamor for the repatriation of powers back to the nation states is at the heart of Europe’s problem with “democratic deficit.”


What is the “democratic deficit”?

In today’s political discourse, democracy is often understood as majoritarian decision-making. That view of democracy is problematic, for, as history shows, majorities too can be tyrannical. Majoritarian rule, therefore, needs to be constrained by separation of powers, checks and balances, constitutional guarantees, etc.

But the term “democracy” has another important meaning – the ability of the electorate to choose and replace the government through free and fair elections. The choice, however, needs to be a meaningful one. What is the point of being able to choose between two or more candidates, if none of them can effect specific policy changes? What is the point of having a vote if the real decisions-makers are unelected, unknown and unaccountable?
Over the years, EU member states have ceded a large number of policy areas or “competences” to the Byzantine bureaucracy in Brussels. Some, including trade and monetary policies, have been ceded completely, in which case elected public officials at the national level have no choice but to implement decisions made in Brussels. Some, including transport and energy policies, have been ceded partially, in which case elected public officials at the national level are limited in their ability to influence decisions made in Brussels. In both cases, the voters’ ability to effect changes of policy through their elected representatives and to hold those representatives responsible in free and fair elections is rendered meaningless.

The problem of the “democratic deficit” is compounded by two inconvenient facts. First, the nation-state remains the basic building block of international, including European, relations. The European states have been evolving separately and, often, in competition with one another for hundreds, sometimes thousands, of years. The Greeks were first unified in the 4th century BC. A relative newcomer, England was first unified over a thousand years ago.

Both have developed a set of unique institutions. The British concept of parliamentary sovereignty, for example, does not exist on the continent.

Second, a pan-European demos does not exist. For a vast majority of European peoples, being a “European” remains a geographical, not a political, distinction. Thus, while European travelers to the United States may say that they are from “Europe,” in Europe they almost always refer to themselves as being from Britain, France, Germany, etc. That is likely to continue, because most people’s identities are not formed by attachment to abstract principles, such as liberty, equality and fraternity, but by cultural, religious, historical and linguistic ties.

Bearing those points in mind, it is crucial to realize that the EU is undemocratic not by accident, but by design. The proponents of “an ever closer union” understand that there is no public support for anything resembling the United States of Europe. Jean-Claude Juncker, the current president of the EU Commission, summed up the decision-making process in Brussels thusly, “We decide on something, leave it lying around and wait and see what happens. If no one kicks up a fuss, because most people don’t understand what has been decided, we continue step by step until there is no turning back.”

Similarly, Valery Giscard d’Estaing, the French former president who presided over the drafting of the European Constitution in the early 2000s, said that “public opinion will be led to accept, without realizing it, provisions that nobody dared to present directly.” When the French and the Dutch rebelled and voted against the EU Constitution in their 2005 referenda, they were ignored and the EU Constitution, relabeled as the Lisbon Treaty, was adopted nevertheless.

Is it any surprise, therefore, that while the EU Commission and the EU Parliament grew in power and importance, the European peoples’ interest and participation in EU institutions have steadily declined? When the first election for the European Parliament was held in 1979, for example, 62 percent of eligible voters cast their vote. In every subsequent election, voter turnout has declined. It reached a nadir, 42.61 percent, in 2014.


Rise of populist parties

Unwittingly, the EU has become a driving force behind the rise of populist parties in Europe. These parties come from across the political spectrum – from the far left to the far right. Often, they have nothing in common, except for their opposition to further European integration and a desire, at the very minimum, to repatriate some of the EU powers back to nation states. They are present in all EU countries and hold, remarkably, one third of all seats in the European Parliament.

While some of these parties are more respectable than others, the EU often paints them with the same brush. Thus, people who happen to believe that the EU is a threat to liberal values, such as democratic accountability, are often treated with as much disdain as people who happen to believe in authoritarianism.

Consider the former vice president of the EU Commission, Margot Wallstrom. While visiting the Czech city of Terezin, which used to be a site of a Nazi concentration camp during World War II, Wallstrom linked the rejection of the EU Constitution to the return of the Holocaust. As she said, “They [opponents of the EU Constitution] want the European Union to go back to the old purely intergovernmental way of doing things. I say those people should come to Terezin and see where that old road leads.”

So, what are the reasons for the rise of populism in Europe? First, many Europeans, but especially the citizens of ancient and well-functioning democracies such as Denmark, Holland and Great Britain, resent the democratic deficit. They feel that far too many decisions impacting their lives are being made in Brussels by people who are unelected, unknown and unaccountable. This feeling is not as strong in the East, where democratic accountability is recent and deeply imperfect, but it is growing in countries such as the Czech Republic and Hungary.

Second, many Europeans see the EU as having failed in some of its core competences, including monetary and immigration policies. The westerners do not wish to continue “subsidizing” the inefficient south, while the easterners reject immigration from Africa and the Middle East. Calls for “solidarity” between European countries are resented and, increasingly, rejected. In the absence of a pan-European demos, citizens of Germany cannot understand why they should pay to bail out the Greeks and citizens of Hungary cannot understand why they should take in some of the non-EU immigrants who were on their way to Germany.

Third, many Europeans feel a general sense of malaise and decline. To be fair, the blame for Europe’s woes does not rest with the EU alone. The national governments are also to blame. A growing number of Europeans are frustrated by the failure of the EU establishment and of the mainstream political parties at home to address serious problems, including low growth and high unemployment, and increasing immigration and rising debt. By voting for populist parties, they are lashing out against the “establishment.”


Is EU reform possible?

The piecemeal amalgamation of twenty-eight distinct cultures, polities, economies, and histories may well have continued in spite of a growing public distrust of the EU institutions, had the EU lived up to its own rhetoric and delivered prosperity and stability to the European continent. Regrettably, it has failed to deliver either.

Many thoughtful commentators have recognized the need for EU reforms. Many believe that such reform should include at least some repatriation of EU powers back to the nation states. Unfortunately, past experience with EU reform does not augur well for the future.
In 2000, for example, the Lisbon Agenda committed the EU to becoming “the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion” by 2010. Nothing was done to undo decades of EU over-regulation and the Lisbon Agenda was declared a failure in 2009.

The Lisbon Agenda was replaced by a reform program called Europe 2020. “In a changing world,” the former EU Commission President Jose Manuel Barroso wrote in its preface in 2010, “we want the EU to become a smart, sustainable and inclusive economy. These three mutually reinforcing priorities should help the EU and the Member States deliver high levels of employment, productivity and social cohesion.” With four years to go, there is still no sign of “high levels of employment, productivity and social cohesion” or reforms that would bring that happy state of Europe about.

Amazingly, the EU has shown itself incapable of serious reform even when faced with possible disintegration. Former Prime Minister David Cameron’s desire to “fundamentally change” Great Britain’s relationship with the EU met with stubborn refusal in Brussels to consider anything but cosmetic modifications to existing treaties. Considering that the EU refused to reform with the British referendum on EU membership hanging, so to speak, over its head, what’s the likelihood that the EU will reform now that the U.K. has voted to exit the EU?

The real problem for those who wish to see EU reforms is that the EU establishment has a strong incentive to centralize, rather than decentralize decision-making in Brussels. Quite aside from the ideological commitment of the EU bureaucrats to the creation of a United States of Europe, which they may or may not believe in, centralization of power is in their interest. It increases their power and resources.

In their desire to empower themselves, the EU bureaucrats are helped by the Court of Justice of the European Union, which interprets EU laws and regulations in a way that maximizes the centralization of decision-making in Brussels. The ECJ has been a called the “driving force of both market integration and political integration” and is increasingly criticized for not simply interpreting the law, but fulfilling a political program of an “ever closer union.” That is a far cry from the common understanding of the role of the judiciary in a free society – to impartially interpret the law rather than drive the process of political change.


Europe’s greatest achievement?

It is often claimed that the EU expansion into ex-communist countries was one of its greatest accomplishments. As one author notes, “the prospect of European integration created pressure to reform Eastern European economies and strengthen the rule of law.”

That is partially true. In Slovakia, for example, the prospect of the EU membership certainly played a part in defeating an authoritarian and protectionist government, and replacing it with one committed to democratic and economic reforms. In the economically free Estonia, on the other hand, EU membership meant re-imposition of tariffs and a consequent decline in economic freedom.

Still, there is no denying that all ex-communist members of the EU enjoy a higher degree of political freedom than non-EU ex-communist countries, such as Serbia, Montenegro, Macedonia and Ukraine, let alone the politically unfree Belarus. Electoral shenanigans are rare and governments come and go in accordance with the will of the people. That is, after all, why they were admitted into the EU in the first place.

But, when it comes to the creation of “liberal democracy,” the picture is, at best, mixed. In general, the rule of law has improved and corruption declined in ex-communist countries during the EU accession talks. Unfortunately, these salutary trends have stalled since the ex-communist countries entered the EU. Indeed, some evidence suggests that disbursement of Structural and Cohesion funds has exacerbated ex-communist countries’ problem with corruption.

Last, but not least, consider the impact of EU regulations on ex-communist countries. Productivity across the EU differs widely. In 2015, for example, GDP per capita in Luxembourg, the EU’s richest state, was 14.9 times higher than that in Bulgaria, the EU’s poorest state. In contrast, GDP per capita in North Dakota, which is America’s richest state, is only slightly more than 2.1 times higher than that in Mississippi, America’s poorest state.

By definition, regulations emanating from Brussels must be applied equally throughout the EU. Unavoidably, regulations that add to the cost of production have a more deleterious effect on less productive ex-communist countries than on more productive Western European nations. Eastern countries are growing increasingly resentful of regulations, which are often made to enhance the already high standards that exist in the West and which are often meant to protect the interests of Western producers.



I started my career as a believer in the European integration process. Over time, I started to see the costs as well as the benefits of the EU. Later, I have come to believe that the costs of EU membership far outweigh its benefits. While this was a gradual process, one event convinced me that the EU has become pernicious and must be stopped. That event was the EU’s handling of the French and Dutch referenda on the EU Constitution in 2005.

After the people of France and Holland rejected it in their respective referenda, the EU establishment relabeled the EU Constitution as the Lisbon Treaty and adopted it nonetheless. This act of supreme arrogance convinced me that the EU establishment held the people of Europe in utter contempt and that it would stop at nothing in order to pursue its agenda of an “ever closer union.” It showed me that the EU bureaucrats see themselves as a class of wise experts who know how society ought to be organized. The memories of my childhood behind the Iron Curtain flooded back.

And that brings me to my final point: does an “enlightened” class of technocrats have a right to make people free or happy or, simply, better off? There is no guarantee that, if the EU implodes, the people of Europe will make the “right” choices. I can just as well imagine Prime Minister Boris Johnson’s Great Britain becoming a global free trade superpower and President Marine Le Pen’s France hunkering down behind a wall of protective tariffs. But, I would rather see individual nation states make “wrong” choices than to see Europe as a whole suffer a massive systemic failure.

And I fear that Europe is on the road to a systemic failure. Large parts of Europe suffer from low growth, high unemployment, rising deficits and stratospheric debts. To make matters worse, tensions between the people of Europe are rising. Some feel that they are being forced to adopt policies they do not like, while others feel that they have to subsidize people with whom they have nothing in common. The EU has become a large pressure cooker with no safety valve. The EU could turn down the heat by repatriating many of its competences back to the nation states. That, alas, is not in its nature. As such, the EU risks blowing up in an uncontrolled way. If that happens, everyone will lose.

Previous articleMervyn King: ‘The End of Alchemy: Money, Banking, and the Future of the Global Economy’ (Norton 2016)
Next articleGrey matters
Marian Tupy

Marian  is the editor of He specializes in globalization and global wellbeing, and the political economy of Europe and sub-Saharan Africa. His articles have been published in the Financial Times, Los Angeles Times, Wall Street Journal (U.S. and Europe), The Atlantic, Spectator (UK), Weekly Standard, Foreign Policy, Reason magazine, and various other outlets both in the United States and overseas. Tupy has appeared on The NewsHour with Jim Lehrer, CNN International, BBC World, CNBC, MSNBC, Al Jazeera, and other channels. He has worked on the Council on Foreign Relations’ Commission on Angola, testified before the U.S. Congress on the economic situation in Zimbabwe, and briefed the Central Intelligence Agency and the State Department on political developments in Central Europe.

Marian Tupy
Senior Policy Analyst
Center for Global Liberty and Prosperity,
Cato Institute,
Washington, DC, US

T:  +1 (202) 789 5200
E[email protected]


Cato Institute

The Cato Institute is a public policy research organization — a think tank — dedicated to the principles of individual liberty, limited government, free markets and peace. Its scholars and analysts conduct independent, nonpartisan research on a wide range of policy issues.

Founded in 1977, Cato owes its name to Cato's Letters, a series of essays published in 18th- century England that presented a vision of society free from excessive government power.   Those essays inspired the architects of the American Revolution. And the simple, timeless principles of that revolution — individual liberty, limited government, and free markets — turn out to be even more powerful in today's world of global markets and unprecedented access to more information than Jefferson or Madison could have imagined. Social and economic freedom is not just the best policy for a free people, it is the indispensable framework for the future.

In an era of sound bites and partisanship, Cato remains dedicated to providing clear, thoughtful, and independent analysis on vital public policy issues. Using all means possible — from blogs, Web features, op-eds and TV appearances, to conferences, research reports, speaking engagements, and books — Cato works vigorously to present citizens with incisive and understandable analysis.


Cato Institute
1000 Massachusetts Ave., N.W.
Washington, D.C.

T: (202) 842-0200
E: [email protected]