Timothy Snyder, writing in the New York Review of Books, delivers a detailed review of the paths that lie before leaders in Europe’s capitals as they consider how best to respond to a persistently challenging financial crisis:
This is because fiscal policy is at the very core of a democratic system, and the EU is not yet democratic. People wish to know that they are paying taxes to a government they voted into office, with the institutions and powers that go with that task (a treasury, an elected executive, an accountable legislature); and that these revenues are then being spent on themselves and on people with whom they identify and share a political community. But, despite recent increases in the authority of the European Parliament, the EU does not have an elected executive that can make fiscal decisions, nor a treasury that might carry out such policy.
At the moment the EU is veering between two possible responses to the crisis, each of which forces fiscal policy away from the populations of its member states. Either European leaders will find some stopgap to further centralize revenue and expenditure, without consulting their citizens. This might alleviate the crisis in the short term, but will eventually cause the populations of the wealthier members to rebel, as indeed the Germans and Finns already seem to be doing. Or, more likely, the EU will continue to edge towards a system in which a fiscally sound German-Polish-Baltic-Scandinavian core dictates to a more shaky periphery, which will likely bring popular rebellions there. At the moment Greek voters can change the parties who rule them, but cannot change fiscal policies. These are decided in Berlin. Thus we have the emergence of pantomime republics.