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Denmark’s decision
The government is in real danger of losing next month’s referendum on joining the single currency, writes Quentin Peel. Financial Times, August 16, 2000

When Poul Nyrup Rasmussen, the Danish prime minister, decided five months ago to call a referendum on joining the euro, it was never intended to be a gamble.

The Danish economy was looking very healthy, industrial production was booming, and unemployment had halved from double figures to about 5 per cent. In a country that has always shown a distinct inclination towards Euroscepticism, there was a small majority in all the polls in favour of joining the single currency. The moment seemed too good to miss.

That was in March. Today the decision looks distinctly high-risk. With less than six weeks to go before the voters must decide, on September 28, the result is far too close to call. Even by May, the polls were showing a lead for a No vote. Now, two polls say Yes and the others say No, but the differences are well within the normal margin of error, with many voters still undecided.

Memories have been revived of Denmark’s Maastricht referendum in June 1992, when the Danes refused to ratify the treaty laying the foundations of the single currency. The decision brought political progress in the European Union to a standstill for a year, while the Danish government negotiated a special deal, including an opt-out from the euro.

”I think we can do it again,” says Jens-Peter Bonde, a member of the European parliament and leader of the June Movement campaigning for a No vote. ”That is what we are hoping for.”

On the face of it, a No vote this time would not change much. It is not a vote on a new EU treaty. It would merely confirm the country’s position outside the euro-zone, along with Sweden and the UK. It would not even change the government’s economic and monetary policy of shadowing the euro.

Indeed, the belief among Danish voters that they can reject the euro without putting their prosperity at risk is one of the most powerful arguments fuelling the No campaign.

”A large part of the electorate does not believe there will be any significant economic consequences from not joining the monetary union,” says Jorn Thulstrup, director of Ifka, a political research institute. ”Lots of people don’t think it is an important decision at all.”

In reality, the political consequences of a Danish No could be dramatic, both in Denmark and the wider EU. It would probably stop the Swedish government going ahead with its tentative moves towards a referendum of its own on euro-membership. It would make the task of Tony Blair, the British prime minister, in overcoming the anti-euro majority in the UK far harder. It could also further undermine international confidence in the currency.

A No vote could also greatly complicate the negotiations on a new EU treaty, supposed to be finalised at the Nice summit in December. ”If we get a No on September 28, Denmark may well be tempted to be bloody-minded at Nice,” says Lykke Friis, senior research fellow at the Danish institute for international relations.

That in turn could affect the EU’s enlargement negotiations over the admission of countries from eastern Europe. Other EU members, such as France, see a positive outcome to Nice as an essential condition for widening EU membership.

Although pressing ahead with enlargement is one issue on which Danish voters agree, they remain unconvinced that their referendum campaign is going to change matters.

”The main question the government has failed to answer is why we should have this referendum at all,” says Ralf Pittelkow, former political adviser to Mr Nyrup Rasmussen. ”We thought things were working well. Voters want continuation. What will decide the outcome is which side is best at convincing them that a Yes or a No represents continuation of the present.”

By now, the Yes campaign ought to be way out in front. It includes all the main political parties of the centre - the ruling Social Democrats and Social Liberals, and the opposition Liberals, Conservatives and Centre Democrats. Ranged against them is an uneasy coalition of the far-left and nationalist right.

The Yes campaign is also backed by almost the entire Danish business establishment, a majority of trade unions and most of the media. Yet the last Gallup poll last month showed a No lead of 46 to 42 per cent, while TV2’s Megafon poll reported at the weekend 45 to 42 per cent in the same direction.

”So far, we have obviously been inadequate in telling them of the advantages of joining the euro,” says Klaus Hestbaek Norskov, chief consultant on EU affairs at Dansk Industri, the Danish employers’ federation.

Danish voters do not follow their party leadership when it comes to European matters. According to Ifka, almost 48 per cent of those who voted for the Social Democrats in 1998 intend to vote No in the referendum, against less than 34 per cent planning to vote Yes. On the right, there is less conflict: 58 per cent of Liberal voters and 52 per cent of Conservatives are also Yes voters.

Nor are voters treating the referendum as one simply about the euro. ”It is the old argument that we are moving towards a European state,” says Ms Friis. ”We have always had the argument about more [European] union, or less union.”

This will be the Danes’ sixth European referendum since 1972, when they voted to join the then Common Market. But although the arguments appear the same, the voters have changed. Where once the agricultural population of Jutland was overwhelmingly in favour of the EU, it is now much more negative. But the urban population of Copenhagen has switched from negative to positive, according to John Iversen, campaign manager for the Social Democrats.

Nor are many of the anti-EU campaigners seeking outright withdrawal, as they used to.

”Eighty per cent of Danes are in favour of the common market, and 80 per cent are in favour of closer co-operation,” says Mr Bonde, who has set up a campaign office in the basement of his home in the Copenhagen suburbs. ”But when you talk of making a state in Brussels, it is 80 per cent the other way.”

Mr Bonde is a lifelong leftwinger - he was a member of the Communist party for nearly 20 years. On the left, another rallying cry against EU integration is the threat to Denmark’s generous welfare state. Their argument is that economic and monetary union will lead inexorably to political union, and dilution of Denmark’s traditional culture of high taxation and high benefits.

Yet some Danes say they are seeking to defend a myth. Danish public services, such as health and education, are no longer as efficient or effective as they used to be, says Mr Thulstrup. But no politician, on the left or right, dare admit it.

On the right, the Danish People’s party has raised the bogey of a threat to Denmark’s monarchy. The ostracisation of Austria, since the inclusion of Jorg Haider’s far-right Freedom party in government, is also being used to rally support among nationalists.

In contrast, the Yes campaigners sought at first to fight on purely economic issues. In recent days, however, they have appeared to shift their ground. They still argue that membership of the euro is essential to protect the Danish economy in times of international financial crisis. But they also argue that by voting to stay out of the currency, Denmark would lose influence in the EU - an influence towards more welfare, not less, more ethical policies, and a swifter move to open the doors to new members.

Members of Dansk Industri are asking for more information on the political importance of the single currency, and not just its economic advantages, according to Mr Norskov. ”It is about Denmark and Europe,” he says. ”We say that as well. But it is so unpredictable, the last five days could decide it.”

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