The European Parliament elections qualify it as democracy.

The EU also consisting of democracies should not cause confusions. Conider the first and third largest democracies, India and the USA: both consist of states that hold their own elections. The same way Britain is a democracy while having other levels of democracy, that is regional elections in Scotland and Wales and North Ireland and local elections, too. The UK is also interesting because democracy comes in combination with undemocratic elements -- e.g. the Queen, the Lords, and temporary statutory rule in North Ireland.

_{*Lunatic*, n.
One whose delusions are out of fashion.}

BTW, not all democracies have (had) constitutions -- the EU has founding treaties and rights stemming from them --, and the EU does have a defense force, even if in a prenatal state.

_{*Lunatic*, n.
One whose delusions are out of fashion.}

The European Union has full statehood, and then it's the question whether you can have a democracy without having a state. But you do have citizenship of the European Union, which comes with a number of privileges. To name a few:

• Voting and standing as a candidate in communal elections in the country of residence
  
• Optional voting and standing as a candidate in European Elections in the country of residence
  
• Fall-back use of any Member State's diplomatic and consular services when travelling abroad
  
• Freedom of movement within the European Union
  
• Anti-discrimination rights (that are interpreted broadly by the European Court of Justice)

The democracy of the EU could also be criticised because the European Parliament doesn't have a right to decide over all areas of legislation. Still, I think that the co-decision procedure covers most of the legislation that we see. Furthermore, the areas where the EP doesn't have more than advisory role require a unanimous decision by the Council.

From 2009, the MEPs will also finally be getting the same pay.