The current structure of the Eurozone leaves weaker member states with too little influence over important economic decisions. This is the conclusion of political theorist Stefano Merlo in his research on the democratic shortcomings of the Economic and Monetary Union (EMU).
He argues that decision-making within the Eurozone is too concentrated in the hands of unelected institutions and financial markets, leading to some countries being dominated by economic forces without meaningful input. To address this, Merlo advocates for reforms that would enhance democratic control and ensure that all member states, regardless of their economic strength, have equal influence over their shared future.
Power inequality in the EMU
According to Merlo, the current rules of the EMU create a power imbalance: during times of crisis weaker economies are dependent on financial markets and technocratic institutions, while stronger economies exert more influence over policy. National governments are often unable to respond independently to economic crises due to the strict European budgetary rules, while key decisions are made by institutions such as the European Central Bank (ECB) and the European Commission, where citizens have little direct influence.
Recommendations
To make the Eurozone fairer and more democratic, Merlo presents three key recommendations. First, the ECB should act as a true ‘lender of last resort’ to prevent weaker economies from being targeted by speculators. Second, the EU’s strict fiscal rules should not be legally fixed but politically interpreted and democratically contested at both the national and the EU level. Third, independent fiscal councils should not dictate how much debt a country can take on but should instead provide transparent analyses to better inform parliaments and the public.
Accountability
Merlo’s recommendations align with broader debates about the future of the Eurozone. There is a growing call for EU institutions to be more accountable to citizens. Merlo emphasizes that if the Eurozone wants to strengthen its democratic legitimacy, reforms are needed to create more balanced power relations within the EMU. “My research not only provides a critical analysis of the current situation but also offers a vision of how the Eurozone can function better in the future without citizens and member states being dominated by economic and political power blocs.”
Merlo defends his PhD March 5 at Vrije Universiteit Amsterdam