It is, finally, hard to characterize as anti-nationalist a political idea that asserts Europeans are a single people, united by a culture, whose manifest destiny is to form a single state with its own flag, anthem, currency, citizenship, foreign policy, armed forces, parliament and government. In every other context people who believe this kind of thing are called nationalists. If therefore the EU is the latest incarnation of European nationalism rather than an antidote to it--as its supporters claim--it should surely receive more skeptical scrutiny than it has done until now.

Particular skepticism should be directed towards the democratic credentials of this new Euro-nationalism. The traditional nation-state rooted in a shared language and culture has proved to be the most--indeed the only--reliable incubator of democratic government accountable to the people. Multiculturalism is hostile to majority rule in principle and yet has produced no plausible substitute for it except for power-sharing arrangements like those in Northern Ireland, which require an external umpire to enforce them. And as the Europeans admit with their phrase the "democratic deficit", the EU has still not developed an acceptable democratic structure. Its proposed constitution, for instance, retains the extraordinarily authoritarian arrangement whereby an unelected and largely unaccountable commission has a monopoly on initiating legislation.

Some defenders of the EU claim that this admittedly undemocratic provision is offset by the increased powers of the European parliament. But this greatly exaggerates the representative nature of the Euro-parliament. Though formally democratic by virtue of being elected, it has no continent-wide European public opinion to which it might be accountable. It debates in several languages--some of its key terms, such as "federalism" and "subsidiarity" mean quite different things in the different languages. It consists not of European political parties but of alliances of national political parties that represent quite different political attitudes in their respective countries. It is divided not by continent-wide political philosophies--there are none--but either by national concerns or by the interests of the EU political elite, including itself. And it is elected by a very small percentage of the eligible voters in elections that turn not on European issues but on the fortunes of national governments and opposition parties. The fundamental problem underlying all these difficulties is that there is no single European demos--no European people united by a shared language, culture and history--which the parliament can represent and to which it is accountable. Living under the same European institutions is not enough. And no demos, no democracy.

Many proponents of the "European Idea" resist the notion that a shared language and culture are necessary components of nationality and democracy. When faced with the question of what holds the state together, they offer two answers: liberal institutions and social-democratic transfer payments. Under liberal institutionalism (Michael Ignatieff's "civic nationalism" seen from another angle), citizens are held together by a strong state which protects citizens and their rights and enables them to go about their business peacefully. They therefore owe the state their loyalty. Unless it brutally oppresses constituent groups, they have no right to secede and found their own state.

Yet this position presents almost as many problems as doctrinal nationalism. As Noel Malcolm points out: How strong is a state going to be if people are taught to think of it merely as a geographical area containing a certain number of human beings endowed with rights? If such a state holds in small nations against their will, it is likely to be further weakened by the reality that not all of its citizens will in fact be loyal. And as the recent fates of Yugoslavia and Czechoslovakia illustrate, a velvet divorce will sometimes have happier consequences than a loveless marriage maintained by force. It is probably no accident, as some people used to say, that the United States, founded as it is on the principle of popular consent, has until recently taken great care to inculcate the national language and a common culture in both immigrant and native-born citizens.

According to the second answer--financial flows--governments promote national solidarity first by transferring resources from favored to disadvantaged groups and, second, by encouraging all citizens to participate in entitlement programs, like Social Security, that subtly promote an ethic of equal citizenship. As long as the state retains the fiscal ability to keep the checks flowing, it can maintain national cohesion even without a shared national identity rooted in culture and language.

But what happens when the treasury runs out? The costs of financial flows are rising rapidly in the advanced world because of aging populations. Research shows that those paying the costs of financial flows are more willing to fund government transfers if they are linked to the recipients by the ties of sympathy and fellowship that exist in a shared national culture. The more diverse a society is, the less willing it is to spend money on welfare. In the new globalized economy, the fiscal costs of transfer payments will be easier to avoid by emigration, capital movements and competition between governments to attract scarce capital investments. So the time is approaching when financial flows, far from being a method of sustaining national harmony, will become a positive threat to it.

Social democratic states are already responding to these pressures by seeking to ensure that neither individual nor corporate citizens can escape their controls. They seek to close tax havens, transform trade agreements into vehicles for extending regulations, impose taxes on international financial flows, establish international regulatory bodies, "harmonize" regulations upward in bodies such as the EU, and so on. As a result, transnational bodies gain new powers, NGOs gain influence over more decisions, and international civil servants gain more profitable careers. It would be a rash man who bet against such a constellation of forces--and against the global social democracy that they imply. In effect governments are forming cartels--the EU is one such--to maintain near-monopoly prices for their services.

But these large cartel structures suffer even more fiercely from the same defects as "economic" states. They are remote, undemocratic and unsupported by a shared culture and language--indeed, they are bitterly divided by such factors. So they are likely to exhibit even more fissiparous tendencies than afflict the states forming them. What they will mainly transfer upwards is crises.

Both transnational political structures divorced from democratic consent and national political structures that are not rooted in a shared culture and language are likely to prove fragile and while they last, disruptive. Why governments and public intellectuals should have decided that they are morally obliged to erect both states and international agencies on exactly the opposite assumptions is a mystery. If they stick to this course, however, one day it will become a tragedy.