The Deficit the EU Should Really Worry About Is Not Fiscal – It’s Democratic

Earlier in February, the European Commission – the executive arm of the EU – published a report outlining a pessimistic economic outlook and persistent substantial market risks in the region, with the projected real GDP growth rate under 2 percent for 2020. The report came at a time the strength of European institutions is tested not only by poor macroeconomic indicators but also by declining citizen confidence in the ability of supranational governance to be transparent and accountable. According to a 2018 Eurobarometer poll, less than two-thirds of Europeans are satisfied with the opportunities for individual citizens to participate in political life. More alarmingly, voter turnout for the European Parliament elections has fallen by over 30 percent since 1980s and now constitutes only 40 percent of the EU population.

Weakening citizen trust – the main symptom of the EU’s growing ‘democratic deficit’ – and worsening economic performance are, however, not just coinciding with one another by chance. The perceived legitimacy of the EU, more so than that of the majority of political arrangements, is highly dependent on its delivery of satisfactory economic results to member-states. Economic self-interest, as illustrated by Britain’s break from Brussels, is a powerful driver of both regional integration and disintegration. Despite the limitations of examining the European project through a performance efficiency lens, the notion that a single common market – with standardized regulations and supervisory mechanisms – is good for member states continues to prevail in explanations of the EU’s emergence and survival.

The 2010 crisis, low levels of growth, high unemployment, and Italy’s current standoff with Brussels over its 2019 budget all undermine result-based legitimacy of the EU and can leave lasting damage on its authority. National governments and the public might be prompted to question the economic desirability of staying in the Union. While unlikely to follow the path of the UK and withdraw completely, countries can potentially model their conduct after Italy and undermine the internal cohesion of the EU by disregarding its rules.

No less urgent are concerns about the transparency and accountability of the European system of governance, oftentimes perceived as an elitist, unelected technocracy. Many citizens believe that supranational decision-making is becoming only more inaccessible to them due to its increasing complexity. The worsening of regional democratic deficit manifests itself in lower voter turnout and overall weaker citizen support for the European project.

The perceived failure of regional institutions to provide member-states with clear and otherwise unattainable economic benefits and the unresponsiveness of EU governance to the concerns of ordinary citizens both pose a major threat to the continuous success and even survival of the European project. However, the debate surrounding these two shortcomings of the current institutional setup not only tends to overlook the interconnectedness of the two issues but oftentimes portrays democratization of regional governance and economically optimal outcomes as being at odds with each other. From the ancient Greeks to the modern-day libertarians, the ‘short-sightedness and ignorance’ of the masses are cited as the reasons institutional arrangements – especially in spheres so technical as fiscal and monetary policy – should be protected from excessive popular influence if they are to yield desirable results. In the sphere of European economic and financial governance, however, the opposite seems to be true.

The undemocratic procedures by which European budgets and money are managed erode not only citizen confidence but the performance efficiency of European institutions. Greece provides perhaps the most telling lesson in the importance of transparency and accountability in economic governance on the national level, which is no less applicable to supranational institutions. It was, after all, falsification of data on the levels of sovereign debt that triggered the country’s crisis in 2010 and its subsequent spillover into the rest of the eurozone. The Greek government’s failure to accurately report on the country’s financial standing led to dramatic downgrades of Greek government bonds and overall reduced the attractiveness of the country’s financial markets.

That same year, several EU audit institutions published a joined report that acknowledged the importance of fiscal transparency and proper oversight of public finance management in crisis prevention and mitigation. Following the financial turmoil of 2010, a new strategy for the development of the European Monetary Union (EMU) identified “democratic legitimacy and accountability” as one of the five building blocks forming a more robust monetary system. All in all, EU officials seem to be coming to the realization that democratic accountability is more than a just complementary dimension of political legitimacy. It is an essential component of a sound economic and financial structure, upheld by both voter and investor confidence.

The unwillingness of technocratic elites to introduce democratic controls to the procedures that govern EU’s financial and monetary affairs will only strengthen the appeal of populism. Arguments pointing out the benefits of a technocratic form of governance over national economies and public finance are typically underpinned by the assumption that the average voter cannot be trusted with control over her country’s power of the purse. Such contempt for the ordinary citizen is what gives validity to claims like that of Michael Grove, who, at the height of Brexit, announced that the UK people “have had enough of experts.”

What makes technocratic arguments more dangerous is their propensity to shy away from the evident need for greater economic and financial literacy among the populace. Aside from the established associations this form of literacy has with countries’ national prosperity, citizens with a clearer understanding of the issues discussed away from the prying eyes of the public have better chances of becoming legitimate participates in policy debates that affect their everyday lives. It is, of course, unreasonable to expect an ordinary European to acquire the technical expertise necessary to understand all the intricacies of fiscal and monetary affairs of their countries and the EU, yet unelected officials deliberating on vital issues behind closed doors out of an irrational fear of the masses should seem no less absurd.

The Electoral College – The Good, Bad, and Ugly of our Democracy

Although the electoral college is widely regarded as an undemocratic system, and some even advocate its removal, its critics offer scant few alternatives that accomplish the same goals as the electoral college. Around 65 percent of Americans support electing the president solely by a national popular vote, with just one-third of the country still supporting the electoral college. The people advocating for the abolition of  the Electoral College are correct in saying that the Electoral College method is not democratic in a modern sense. The Constitution states that “Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress.” It is these electors who elect the president, not the people. When you vote for a presidential candidate you’re actually voting for a slate of electors, but each party selects a slate of electors trusted to vote for the party’s nominee (and that trust is rarely betrayed).

Some opponents of the Electoral College point out its failure to accurately reflect the national popular vote. This has to be one of the biggest and most known issue with the electoral college - it doesn’t determine who wins by popular vote and sometimes popular vote is different than how the electorate votes. The elections of 1876, 1888, 2000, and  2016 produced an Electoral College winner who did not receive at least a plurality of the nationwide popular vote.

Opponents also say the distribution of Electoral votes in the College tends to favor people in rural States. This is because the number of Electors for each State is determined by the number of members it has in the House (which more or less reflects the State's population size) plus the number of members it has in the Senate (which is always two regardless of the State's population). If you look at the election of 1988, for example, the combined voting age population (3,119,000) of the seven least populous districts in Alaska, Delaware, the District of Columbia, North Dakota, South Dakota, Vermont, and Wyoming carried the same voting strength in the Electoral College (21 Electoral votes) as the 9,614,000 persons of voting age in the State of Florida. Each Floridian's potential vote, then, carried about one third the weight of a potential vote in the other States listed. Another way the Electoral College fails to accurately reflect the national popular vote stems primarily from the winner-take-all system where the presidential candidate who wins the most popular votes in the State wins all the Electoral votes of that State. This makes it extremely difficult for third-party or independent candidates to make much of a showing in the Electoral College. If, for example, a third-party or independent candidate were to win the support of even as many as 25% of the voters nationwide, they might still end up with no Electoral College votes at all unless they won a plurality of votes in at least one State. And even if that candidate managed to win a few States, his support elsewhere would not be reflected.

Despite these shortcomings, the Electoral College does have its benefits. While it is true that almost all states award all their electoral votes to the winner of the popular vote in the state and it is also true that because the Electoral College weighs the less populous states more heavily, it is possible that the winner of the electoral vote will not win the national popular vote. However, critics of the system fail to recognize that this happens very rarely. It happened in 2000 when then Vice President Al Gore had more popular votes than President George W. Bush, yet fewer electoral votes. It also happened 16 years later, in the 2016 election, with Secretary Hillary Clinton receiving more popular votes than President Donald Trump. However, these were the only two times since 1888 where the winner of the popular vote differed from the winner of the electoral college. We also have to consider several factors before just getting rid of this important facet of our republic. We also have to keep in mind that this is a system run by people, so there are bound to be a few flaws in it.

The Electoral College also provides us with a clear winner, with no run offs and no recounts. Let’s say the country had a system where just the popular vote could produce a winner. What would happen if each candidate gets a very close margin of victory, like what happened with President Obama and then Governor Romney in 2012. This could (and probably would) provoke some sort of an outcry and there would be runoffs, unrest, and uncertainty. Presidents Nixon and Clinton, in 1968 and 1992 respectively, both had only 43 percent of the popular vote so they had to rely on the electoral college to determine winners in both cases instead of having to use run offs.

The Electoral College also keeps a system of fair representation and ensures smaller, rural populations get a say.  Let’s go back to the 2012 Election of President Obama. President Obama swept the urban metropolises, getting 3.6 million more votes that Governor Romney in just Chicago, Philadelphia, New York City, and Los Angeles. If we went by popular vote President Obama would have easily won solely because these places are more populated and areas that aren’t metropolises would have been overlooked. Also, it is not as if the electoral college took away victory from President Obama in this election, as he did get 3.2 million more votes than Mitt Romney which the college reflected.

Our current system also makes sure we get a transregional president. Not one region has power to elect president, so each region and their specific needs are not overlooked. The Electoral College takes the midwest, north, northeastern coast, west, the west coastal, south, etc… into consideration. If popular vote was the decider, two possible situations could arise. Candidates would have to really travel around the whole country multiple times. This means candidates would need a lot more money to finance all this traveling, giving PACs and people with more money more leverage, more pull, and more power in our elections. Or you could see a situation where candidates would have no motivation to campaign in rural and less-densely populated areas, so they would only go to cities. Without the electoral college, no candidate would visit certain states like Idaho, for example. Elections would become more about reaching out for money or the places with the biggest populations and become less need and issue based.

There is also a lot of talk on keeping the electoral college, but changing it. One option for reform that gets floated around is the congressional district plan. The congressional district plan will allow one elector to be chosen by the voters for each congressional district, while an additional two, representing the two “senatorial” are allocated to each state regardless of population, would be chosen by the voters at large. If the vote results in a tie, whichever candidate won a plurality of the district votes would win. If the electoral vote count still failed to produce a winner, the plan would require the Senate and House to meet in joint session to elect President and VP by majority vote, with each Member having one vote, from the three candidate tickets winning the most electoral votes. Nebraska and Maine currently implement the district method of allocating electoral votes; Maine has never used it, though, since all candidates who have won the state swept its two districts, while Nebraska split its electoral votes once, in 2008, when Obama won one district. Breaking up electors by congressional district would get rid of winner take all, but you would need to ensure districts are drawn properly and fairly.

Another plan for reform is the National Popular Vote Interstate Compact. This compact would be an agreement between states to award their electoral votes to the winner of the national popular vote.  The compact is designed to ensure that the candidate who wins the most popular votes is elected president, and it would come into effect only when it would guarantee that outcome. As of February 2019, it has been adopted by eleven states and the District of Columbia. Together, they have 172 electoral votes, which is 32.0% of the Electoral College and 63.7% of the 270 votes needed to give the compact legal force.

The Electoral College doesn’t guarantee the president elect will have received the most popular votes, but it does guarantee we have a president with substantial popular support and their support will not be restricted to one region of the country or to metropolises. In just five of the 58 elections we had, the winner did not have the popular vote so at the end of the day how bad and how undemocratic could this system really be?

The Illiberal West: A New Era for Central and Eastern Europe

In 1989, on the eve of the Cold War’s final chapter, Francis Fukuyama suggested that the world had come face to face with the ‘end of history’ and that the fundamental ideology behind liberal democracy would henceforth be free of any obstacles to global domination. It has become somewhat of a cliché to lambast his theory, but reflecting upon it is important as it succinctly captures the zeitgeist of the post-Cold War era. Many in the West did, and still do, believe that liberal democracy is the single most successful socio-political system; a system which was bestowed upon the people of Central and Eastern Europe in a shared victory over authoritarian Communism between 1989 and 1991. This is part of the reason why liberal democracy’s contemporary losses in the region, notably to Hungary’s Viktor Orbán and Poland’s Jarosław Kaczyński, are often received as a shock. While self-proclaimed illiberal nationalists now lead Hungary and Poland, the sentiment they harness is palpable across almost all the post-Communist states which moved to integrate with Western Europe, indicating a broad regional phenomenon. There are various theories as to why these nations are on their current path, but two principal factors stand above the rest: demographic anxiety and a rejection of what European and Western identity has come to mean.

First, it should be noted that economic decline has not played a significant part in this particular rise of illiberal nationalist sentiment, which makes the root factors of the region’s recent political shift distinct from theories explaining Western Europe’s lurch to the right. Poland, especially, has seen exponential economic growth for the past 26 years, and even managed to escape recession during the 2008 crisis. With GDP per capita growing by 6% on average over the past 20 years, it would be difficult to argue that the populace is suffering from economic grievance. This goes without mentioning that the region actually boasts high income equality, even relative to Western Europe. While Hungary has experienced some economic hardship, such as recession around 2008, the rise in illiberal thought across the region is largely unexplained by economic decline.

To fully understand Central and Eastern Europe in the decades following the end of the Cold War, one must understand its demographics. The Economist estimates that around 18 million people, or 6% of Central and Eastern Europe’s population, have left the region since the fall of the Berlin Wall. Unlike past revolutions, in which the losers form the emigrate population, the end of Communism presented a situation in which liberal minded citizens, the winners, were the ones to depart in mass numbers. This alone has made a significant political and psychological impact on the remaining populations, but the demographic issues do not end there. The area also suffers from an incredibly low fertility rate, with the regional average coming out to a rate of about 1.4 children per a woman (the replacement rate, or the rate at which a population maintains its size, is 2 children per woman). This means that not only has the Central and Eastern Europe lost millions due to emigration, but emigrants are also not being replaced. In other words, the region is growing older and shrinking.

With these numbers in mind, it may be easier to imagine why the surge in numbers of migrants arriving in Europe, starting around 2013 and peaking in 2015, was seen by many as a threat to national survival. While almost none of the migrants arriving in Europe aspire to immigrate to post-Communist states, there was widespread fear that they would, and that nations in the region would be unable to assimilate them or preserve their national identity due to the dire demographic situation. This emerged as a driving factor in the popularity of right wing and nationalist political forces. Illiberalism is closely related to this, as skepticism in the liberal model had already begun due to the demographic impacts integration with the West had on Central and Eastern Europe. However, the perceived failure of Western European nations, seen as liberal role models, to properly deal with the migrant crisis significantly increased support for the rejection of liberal democracy, and married the sentiment to the political right.

This rejection of Western European judgment is something that has been festering for quite some time. Since the end of the Cold War, the region has striven to imitate the West and become a part of the Western world in almost every way. Governments in the region therefore allowed judgements according to Western standards, and the remaining populace often felt as though they were in some ways losers for having not left for the ‘promised land’ further west of them. However, the reality is that post-Communist Europe is very different from the rest of the continent. Social values are an important example, as the region is very much more socially traditional than its western neighbors, and while imitating God-loving Reaganite America was appealing in decades past, the West has since changed. Much of Western European and American society now embrace secularism, LGBT rights, cultural diversity, and liberal social values in general. Illiberal movements in Central and Eastern Europe are a response to this, both in terms of rejecting the idea that the region should imitate nations with different values than them, and that it should be the submissive partner in the imitation game. More specifically, they believe that roles should be reversed, and that traditional Central and Eastern Europe is, in fact, the real Europe that should be imitated across the West. This is elegantly expressed in a quote from one of Viktor Orbán’s 2017 speeches, in which he proclaims, "Twenty-seven years ago here in Central Europe we believed that Europe was our future; today we feel that we are the future of Europe.”

However, the differences between East and West go both ways, and there are some issues with spreading Hungary and Poland’s right-wing illiberal model to the rest of the continent. Most importantly is the fact that Orbán and Kaczyński are selling a model designed to prevent ethnic and cultural diversity, rather than to deal with an already diverse population. Despite this, it is very unlikely that European-wide expansion will be given up on easily. Some illiberal leaders, notably Viktor Orbán, seem to understand that the best way to remain in power is to secure the regions and institutions of which they are a part. As Orbán’s Fidesz party constitutes an important member of the largest parliamentary group in the European Union, the center-right European People’s Party (EPP), it is likely that the European Parliament will manifest as an important battleground in this struggle. More specifically, the battle over the ‘soul’ of the broader European center-right will be crucial, as a center-right more sympathetic to right-wing populist and illiberal movements could greatly shift the balance of political influence in favor of post-Communist states.

Broader strategic developments are also important to note when regarding the future of this region, especially as Chinese funds increasingly make their way into the scene. As a wealthy and authoritarian power, China’s rise may provide an opportunity for illiberal nations to reduce their reliance on Western Europe and the United States. Although some countries, such as Hungary, Slovakia, and Bulgaria, express sympathy towards Russia, the area’s traditional influencer is unlikely to regain significant inroads in the region due to financial constraints, as well as historical grievances with important local actors, notably Poland and Romania.

If China does signal greater interest in Central and Eastern Europe, Western Europe and the United States may need to consider more dynamic responses in order to retain their level of strategic influence. This could take the form of certain concessions, such as reduced criticism of the region’s disregard for “European values”, of which both Poland and Hungary have been accused in the form of article 7 procedures filed against them by the European Parliament. This would resemble treatment towards Ukraine, or Saudi Arabia, which are not liberal democracies yet retain Western strategic support. Another possible strategy is an aim at the deeper roots behind this issue - demographics. Financial and political support for pro-natalist policies in the area could significantly boost the image of Western Europe and the United States in the eyes of the local population, along with a reduction of the demographic anxiety playing a significant part in this phenomenon.

History has come back to post-Communist Europe with a vengeance. This is true both in Fukuyama’s terms, but also as regarding the essence and flavor of the illiberal revolution taking place there. While Poland, Hungary, and other nations in the region have their differences, they are united in a common experience of demographic devastation, a search for identity, and fear in a rapidly changing world. This has lead to a rejection, in various degrees, of the liberal democratic model and the definition of Western identity in terms of social liberalism. This does not mean that Central and Eastern Europe has necessarily been “lost”, especially if Western European and American policymakers begin to demonstrate an understanding of the root causes of these developments, and adapt to them accordingly. However, they should also understand that the region is unlikely to return to its immediate post-Cold War state of mind, and this is ultimately a new era for Central and Eastern Europe.

Crisis in Nicaragua

In a letter blaming President Daniel Ortega for driving the country into a “state of terror,” Nicaraguan Supreme Court justice, Rafael Solís, resigned. According to The New York Times, Justice Solís explained that President Ortega did not follow through on his suggestions to negotiate and was pushing Nicaragua down the same path as the Somoza dictatorship they helped overthrow in the 1970s. “The country is not doing well. What is coming is worse,” he warned. With Nicaragua headed in a downward spiral, the United States has begun to step in. It is clear that something needs to change in Nicaragua, but United States intervention may not be the right option.

President Ortega played an important role in the Nicaraguan Revolution. As maintained by The New Yorker, he led the Frente Sandinista de Liberación Nacional — the F.S.L.N., translated to the Sandinista National Liberation Front — in overthrowing the Somoza regime. Due to the Sandinistas’ communist ideology and ties to the Soviet Union, the CIA created the Contras, a rebel group that The New Yorker said ultimately “led to the economic devastation of Nicaragua and the collapse of the Sandinistas’ hold on power.” When President Ortega resumed power, he had created connections with powerful people who helped keep Nicaragua going.

Consequently, the catalyst for the latest “state of terror” began when Venezuela’s economy collapsed and reduced aid to Nicaragua, according to an article by The Economist. The Washington Post said that for a long time, “Hundreds of millions of dollars in cheap Venezuelan oil provided by Hugo Chávez’s government padded the budget and boosted social programs.” After losing the influx of oil and subsequently the aid, Nicaragua’s Social Security Institute was running out of money, so President Ortega proposed some reforms to sustain it. However, the plans announced April 2018 included reducing pensions for retired workers and increasing employer and worker contributions to social security.

In response to the controversial idea, protests broke out and police responded with a strategy that Amnesty International described as “shoot to kill.” Hundreds of people died, mainly due to the police and militias. In addition, World Politics Review said that “at least three public hospitals refused to treat people who were gravely injured during the demonstrations” and “tens of thousands of Nicaraguans have fled into exile.” Many protesters who remained in Nicaragua were arrested.

Next, already swarmed with disapproval towards the government, President Ortega was accused of ordering extreme acts to suppress the media. According to Gulf Times, President Ortega blamed “hate-sowing coup-mongers” for the violence — yet reports dispute that statement. Notably, an article by The Daily Beast reported that the Nicaraguan government tortured a detained protester, Dania Valeska Alemán Sandoval, in order to get her on tape confirming the word of the government. The Daily Beast quoted Sandoval: “They brought one of my compañeros and put him on his knees and put an AK47 to his head.” Later, BBC reported that Carlos Fernando Chamorro, a popular Nicaraguan journalist, was threatened by the government and proceeded to flee to Costa Rica. The New York Times claimed that the government also “expelled teams from two branches of the Organization of American States that were investigating allegations of human rights violations” and shut down certain human rights groups and independent media outlets within the country. Nicaraguans are extremely hesitant to let outside groups meddle in their internal affairs due to the devastating intervention by the United States in the past, however, their own government is not doing them any favors.

Even before some of these incidents were uncovered, many Nicaraguans criticized President Ortega and called for moving up the 2021 elections. It became evident last year that Nicaragua was not moving in a good direction. Nicaraguans worried that the country would repeat history and suffer through a civil war, as evident by the resignation letter of Justice Solís. The economy worsened and World Politics Review stated that the country’s GDP decreased by 4 percent in 2018, even though Nicaragua was already one of the poorest countries in Latin America. To top it off, Nicaraguans felt threatened by their government. For example, Havana Times described how “the presence of police in cemeteries all over the country alarmed Nicaraguans who had arrived to leave flowers on the graves of their deceased family members” and ended up witnessing the arrest of Alex Vanegas, “who remains in jail despite a judicial order for his release.” The Global Observatory clarified that a new Nicaraguan anti-terrorism law “is being used to criminalize political dissent.” People in Nicaragua and abroad noticed the need for change.

Due to the situation, Havana Times quoted people from the “first meeting of leaders of Nicaraguan organizations and groups in the world” supporting United States and other countries’ sanctions against violators of human rights in Nicaragua. Later that month, as stated in The Washington Post, the United States imposed sanctions on Nicaragua’s national security advisor and President Ortega’s wife, Vice President Rosario Murillo. Along with the announcement, Treasury Secretary Steven Mnuchin said, “Vice President Murillo and her political operators have systematically sought to dismantle democratic institutions and loot the wealth of Nicaragua to consolidate their grip on power.” Two months later, Reuters reported that the national security advisor of the United States, John Bolton, announced sanctions placed on Nicaragua’s petroleum company: “Through sanctioning PdVSA, the United States has also sanctioned Nicaragua’s ALBANISA, the government’s joint venture with PdVSA and slush fund of the corrupt regime of Daniel Ortega.” BBC said that the European Union threatened to place sanctions on Nicaragua as well. From an outside perspective, it may seem like implementing more international sanctions is the responsible course of action. However, Nicaragua’s ‘state of terror’ stemmed from a crashed economy and further sanctions may just contribute to the existing problem.

Despite protesters and international pressure, the Nicaraguan government revealed in late January that they are implementing the reforms, as reported by World Politics Review. According to NPR, President Ortega claimed to have scrapped the idea after the pushback from protesters, but World Politics Review reflected that “His resolve only appears to have strengthened amid the crackdown” from organizations and governments around the globe.

As France 24 pointed out, President Ortega needs to “understand that if he continues down this path, the only thing that will happen is he will bury his party and every possibility that his regime survives politically," explained sociologist Oscar Vargas. President Ortega has put himself at risk of falling from power in the same way as his predecessor. Furthermore, The Global Observatory explained that the issue in Nicaragua started a bigger complication in the region: “Costa Rican authorities recently revealed that more than 20,000 Nicaraguan citizens have applied for asylum in that country, raising alarms about a potential new refugee crisis in Central America.” Over the past year, it has become undeniable that President Ortega and the Nicaraguan government forced their country into a critical period. Although something needs to be done, it is likely that international action will be detrimental. The United States should hesitate to step in, especially given its dark history with intervention in Nicaragua.