The eurozone crisis is yet again a painful reminder of how challenging it is to reconcile democracy and capitalism when the political institutions are lacking. It is now the self-appointed troika – the IMF, the European Commission and the European Central Bank – that decides the Greeks’ future living conditions.

The temporary rescue funds are established outside of the Lisbon Treaty and the Stability and Growth Pact. The funds are set up as a voluntary loan agreement among the eurozone countries. It is thus an intergovernmental, ad-hoc arrangement and it is the above-mentioned troika, which ensures that the measures are implemented.

These institutions have never been voted upon. In addition, French President Nicolas Sarkozy and German Chancellor Angela Merkel lack a European mandate. Nevertheless, these and others heads of governments have agreed upon a series of financial, economic, social and wage policies that affect the well-being of very many Europeans. Such issues belong, according to the Lisbon Treaty, to the remit of the member states.

When George Papandreou opted for something as obvious as a referendum, it resulted in an outcry. Why could the citizens not express their opinion, even if this only meant a choice between two evils, between plague and cholera? The citizens could not be allowed a say because doing so takes time. Greece would be bankrupt before the referendum could be carried out. Uncertainty and falling stock markets would push interest rates upwards. It would ruin banks and undermine state finances.

Italy would probably also be on the verge of bankruptcy before the Greeks would have settled the case. So it is not just the Greek citizens who should participate in a referendum, but also Italian and all other European citizens.

The crisis affects all Europeans and beyond. Democracy requires that all affected parties can be heard. All those subjected to the law should be allowed to have a say in its generation! It is the European Parliament and a European-wide referendum that are the right paths for the management of the eurozone crisis.

The European political architecture is in many ways impressive. It is an attempt to politically catch up with economic globalisation. The supranational institutions that have been established – a parliament, a council, a court and an executive commission – can decide upon common European problems. The only problem is the lack of competencies in the most important fields.