12/03/2012 09:14 GMT | Updated 12/05/2012 06:12 BST

Democracy and Globalisation Have to Reconcile for Euro to Survive

Few Europeans in northern countries understand that to keep Greece economically alive (for now) is in their own interest. A domino effect unleashed by a chaotic Greek default will have devastating consequences. It is better for everyone involved to show solidarity with Greece in a form of 'enlightened self-interest'. At least, for the time being. Leaders need to erect a cordon sanitaire around Greece before plunging in the knife. For this they will need to implement pension, job market, and other social-economic reforms. Meanwhile, the European bank sector has to build up buffers to cope with a Greek downfall.

Unfortunately, the marriage between democracy and solidarity is on the rocks. Tensions between 'project Europe' and the tenets of democracy are sky high and rising. In a perverse way this democratic deficit makes it easier to support Greece, because the major, centrist parties - that for the time being hold most power - are still sympathetic to the idea of European integration.

The problem is that people are not. Many are losing faith in the traditional middle-of-the-road parties. Citizens feel disenfranchised while their leaders strike opaque deals in Brussels behind closed doors. Seemingly, many politicians have low moral standards; witness the many corruption and other scandals in Germany, France, Italy, etcetera. They certainly don't seem to have the answers to the problems posed by globalization. Owing to this widespread dissatisfaction it would be a disaster if European decision-making is rendered more democratic by involving voters to a greater extent. More democracy will not foster solidarity. Quite the opposite; it would heighten the chance that the EU will disintegrate.

As voters become increasingly alienated from the temperate mainstream parties they seek out more extreme territory. The successful fringe parties on either side of the political range - Geert Wilders' PVV and the Socialist Party - in the Netherlands are illustrative. In addition, there is no longer a continuum of well-defined leftwing and rightwing parties. Rather, the political pattern has become circular. On the inside we find the moderate politicians of the center. In the outer orbit, new-fangled and ambitious politicians are staging attacks. They take their pick from leftwing as well as rightwing stances. Wilders' party is very rightwing when it comes to immigration yet his social-cultural and many of his economic viewpoints are left of center. This eclectic program represents a pure form of populism.

Europe has not yet reached the point of no return. The centrist - pro-European - parties will rule the roost as long as they manage to constrain populists and (literary) buy the banks time to build up buffers. If so, eventually Greece might be able to default in an orderly fashion and the financial markets can heave a sigh of relief. Next, Europe could experience tentative growth. Such a positive scenario can only unfold if politicians find a way to address the main political-economic issue of our time. Namely, how to dissolve the tensions between national democracy and globalization. Trade, communication, and financial interaction have created strong ties between national economies all of which have become mutual dependent. It also implies that countries are no longer in control of their economic destiny as they face many cross-border issues that can only be tackled through international collaboration. So far, the requisite structures for this do not exist. A combination of economic entanglement, all-powerful global markets, and the impact of large market movements greatly restricts the scope of action of politicians. The threat of populism confines them additionally.

Political trends are heading in the wrong direction. Most politicians do not pay enough attention to the tension between the worldwide economic system and the needs of national electorates. Or if they do, their ideas reek of mercantilism, protectionism, nationalism, and sometimes authoritarian tendencies. Growing inequality, faltering democratic systems, and major economic setbacks could well combine into an ominous recipe for political-economic turmoil in years to come.