Swedes, Danes May Reconsider Euro Rejection

A month into European monetary union, Scandinavian skeptics appear to have concluded that their rejection of the euro might have been rash.

Seismic shifts in support for the new currency have been recorded by pollsters in Denmark and Sweden over the last few weeks, and the change of heart is expected to lead to a push for both governments to eventually call for new votes to reconsider the matter.

Although they met all financial conditions for taking part in the European Union’s adoption of the common currency, Denmark and Sweden opted out of participating in the euro’s initial phase on Jan. 1 because their populations feared an erosion of sovereignty.

But the successful launch of the euro and recent reminders that business is increasingly international have encouraged rethinking among the voters as well as their leaders. Though the euro has lost ground slightly against the dollar since its launch, the public increasingly sees it as a long-term advantage.

In Copenhagen, the Greens Analytical Institute, which has been polling Danes on the issue every month for three years, tracked a turnaround in favor of European monetary union (EMU) last month. Support soared from 43% in December to 50.4%--the first-ever majority showing, said project analyst Jens Nicolaisen. Two other polling institutes last week replicated those results.

An even sharper rise in support for the euro has been recorded in Sweden, although it has not reached a majority. The TEMO polling institute charted a leap from 35% support late last year to 46% at present, said Hans Alfredson, an analyst for the firm’s international department.

Danes voted in 1993 to opt out of currency union. But Prime Minister Poul Nyrup Rasmussen now hints that he may call for a new referendum, although no specific date has been discussed, said Lars Mortensen, a media advisor for the prime minister.

Such votes are purely advisory, but support is politically necessary for the government to proceed. And now that the euro is a reality in 11 of the 15 EU countries, Danes can better see its value and the risks of cutting themselves off, said Leif Beck Fallesen, editor of the Boersen financial daily newspaper in Copenhagen.

“There has been a drop in Danish [economic] growth, and people may be connecting it with the decision to stay out of EMU,” Fallesen said.

“The government wants another referendum, but it has to be sure of winning this time. Danes have a very bad habit of voting ‘no’ on referenda,” Fallesen said. “This is a very strange country. In most of the world, voters don’t trust politicians, but in Denmark the politicians don’t trust the voters.”

Business has been a strong backer of the euro for Denmark throughout the decade-long debate. But trade and commerce organizations have been fearful of making too strong a public case for joining EMU lest they alienate voters who have so categorically opposed the idea until now, said Peter Vesterdorf, legal analyst for the Danish Federation of Small and Medium-Sized Enterprises.

Meanwhile, foreign investment in Denmark is dropping, and the pace of mergers involving Danish companies has slowed, developments that the public thinks may be attributable to failure to adopt the euro.

“Not having the euro is mostly a psychological barrier, but it is having real effects,” Vesterdorf said.

Although Denmark chose to sit out the first round of currency union, it has taken the half-step of linking the Danish krone to the euro via an EU mechanism that keeps the Danish currency within a specified close range of the euro’s central parity rate.

Sweden is expected to reconsider the euro at a more leisurely pace. Social Democratic Prime Minister Goran Persson expressed support for monetary union for the first time last month, but his backing is clearly lukewarm and his party’s special congress to discuss the euro has not been scheduled until spring 2000.

“We are still going to wait and see and have a discussion with the Swedish people,” said Gumilla Rohlen, a spokeswoman for Persson. “There is more discussion in the public now, but this is not being led by the government.”

What is driving the renewed public debate on the euro are the increasing reminders that Sweden’s industries are already integrated into the world economy and that staying out of the euro zone could hurt in the long run, said Alfredson of the polling institute.

The move of retailer IKEA and of some of auto maker Volvo out of Sweden has underscored these concerns, as did the announcement last week that Ford Motor Co. would acquire Volvo.

“People understand more now, since the euro was introduced, that Sweden is connected with other European economies,” the analyst said. “They see the headquarters of major companies moving out of Sweden, and deals like the Ford purchase of Volvo show people here that our economy is international.”

If the euro continues to hold up its value well against the U.S. dollar--providing political clout to the EMU countries as well as greater economic stability--Swedes may push their government to call another vote, Alfredson said. But he, like other observers of his country’s slow evolution toward integration, doubts a referendum is sooner than two years away.

Because Sweden and Denmark meet the economic qualifications for joining the monetary union, their governments could adopt the euro at any time.

Britain and Greece are the other two EU nations not participating in the monetary union.

No major change in sentiment has yet been identified in Britain, though the country is widely expected to eventually adopt the common currency.

Greece has not met the standards to join.