White cross, black mark? Swiss direct democracy comes under the spotlight again. Photograph: rytc

The Swiss are used to deciding on difficult issues at the ballot box. And Europe is used to observing this direct decision-making with a mix of admiration and disgust. This has now changed, and profoundly so. Following the popular vote on November 29 on banning the construction of new minarets in the country, the Swiss must learn how to deal with, and decide on, issues that reach far beyond their own national borders. For the rest of Europe, the Swiss popular vote has become a litmus test of modern representative democracy.

As a mini-Europe in the middle of the continent, with 20+ "member states", several official languages and comprehensive basic rights, the country has long been a testing ground for new political trends and developments. Switzerland's representative democratic system is a permanent work in progress, offering citizens a series of direct tools which give them a political role in the agenda-setting and decision-making process.

The country's political system holds up a mirror to society, indicating problems and sometimes also solutions. This is something that does not exist, at least not to the same extent, in states where representative democracy basically means elected government. With the notable exception of the very late arrival of female universal suffrage in 1971, many ecological and social trends, but also anti-immigrant and now anti-religious ones, have surfaced first in Switzerland because of its initiative and referendum system.

However, there are many challenges linked to reconciling the issue-related will of the voters in one popular vote with the comprehensive system of checks and balances in a modern democracy. Is Switzerland's strong committment to international law compatible with the still essentially unchecked right of Swiss voters to decide on all issues at the ballot box?

The decision to ban new minarets in the country, which obviously was based less on the proposed changes to planning rules and much more on emotional rhetoric against "foreigners", has sparked an important debate. The Swiss must find a way to marry their beloved popular rights of modern direct democracy with their equally appreciated participation in the international community, which makes them subject to binding international law, notably the European Convention on Human Rights. Its voters must now answer the question: how can our direct democracy become truly modern?

The strong international reactions to the November 29 poll are another reminder of the extent to which Europe and the world are increasingly interlinked. The minarets vote addressed an area that is highly sensitive for most European countries: the difficult relationship between religious groups, which must learn not to politicise their own beliefs. A few years ago, the so-called cartoon crisis in Denmark illustrated the dangers of this and offered a glimpse into a future dominated by extremist forces – on both sides – outside the political process. The Swiss vote showed what can happen when extremists make use of a well-developed democratic process.

But while the cartoon crisis increased tensions, the minarets result can contribute to limiting them, if important lessons are learned from it. It may be the case that existing structures of representative government are not effective enough in mirroring the wishes and fears of many citizens. A system that is essentially based on indirect forms of citizens' participation risks becoming a channel for extremist forces, profoundly challenging the democratic foundations of our societies. The question Europeans must now ask themselves is: how can our representative democracies become truly representative?

After the November 29 vote on minarets, both Switzerland and its European partners urgently need to upgrade their democracies.