The voters know it’s not the economy, stupid
Britain should learn from the experience of Denmark that joining the European single currency is a political issue
Quentin Peel, FT, August 20 2000

When Tony Blair returns to London from his holidays in sunnier climes, he would be well advised to look at what is happening across the North Sea - in Denmark.

The country is having a referendum on the euro in six weeks’ time, and it is anybody’s guess which side will win. If Danes vote no, it will not make Mr Blair’s task any easier when he tries to persuade the sceptical British to opt for the single currency as well. Even if they vote yes, the campaign has already thrown up some lessons that the prime minister ignores at his peril.

The most glaring fact to emerge so far, to the discomfiture of the Danish government and all the Yes supporters, is that it is not the economy, stupid. It is politics that will decide the outcome in September.

The Eurosceptics in the No camp argue that the issue is not only whether to abandon the Danish krone for the euro. It is whether to take another giant stride towards political union in Europe. The government’s efforts to make it a purely economic debate seem to be failing.

Of course, the only question on the ballot paper is whether Denmark should join the euro. One might be forgiven for thinking that was an economic issue. The government thought so, and put out a 560-page report arguing the case in mind-numbing detail.

But the report has sunk almost without trace, along with the economic arguments. The question Danes are still asking themselves, 27 years after they joined the European Community, is what sort of Europe they want, and whether they really feel part of it. On this they are still deeply divided.

Other EU member states may regard the Danes as thoroughly tiresome and ungrateful. After all, they have done extremely well out of their membership. Their per capita income is second only to Luxembourg, but they have been substantial net recipients of EU funds until the last couple of years. Yet a large sceptical minority persists.

As in Britain, pro- and anti-EU attitudes cut across traditional political party lines. The ruling Social Democrats are probably the most schizophrenic, with the party leadership now firmly in favour, but the grassroots much more sceptical. Asking questions about Europe in referendums is embarrassing and uncomfortable, because party discipline crumbles.

The way Denmark has become locked into its referendum cycle shows what a potentially destabilising democratic tool it can be. It began in 1986, when Poul Schluter, the then Conservative prime minister, decided to appeal to the voters to support the Single European Act - the constitutional underpinning of the single market - over the heads of a sceptical parliament. He won the day, but must have rued the consequences. For he was still prime minister when the voters rejected the Maastricht Treaty at the next referendum in 1992.

He promptly lost power to the Social Democrats, under Poul Nyrup Rasmussen, who negotiated no fewer than four opt-outs for Denmark from the Maastricht treaty - on defence, justice and home affairs, European citizenship, and the euro - in order to win the next referendum in May, 1993. But he did so only by promising that none of the opt-outs would be given up without another referendum.

So this one on the euro is only the first of many. Each will revive the whole debate about Denmark and Europe. Even if they lose this time, Denmark’s Eurosceptics will have other chances.

The pro-EU camp has consistently made one big mistake. It has tried to deny on each occasion that ever-closer co-operation within the Union was on the agenda. Each move, it has tried to suggest, was the last step towards ”political union” - words that arouse the same sort of knee-jerk hostility in Denmark as ”federalism” does in Britain.

For fear of the Eurosceptic backlash, they have tried to play down the bigger picture of European integration. Each time there is another constitutional step towards integration - the Single Act, Maastricht, and Amsterdam - they have said it would be the last. The result is that many Danish voters may be tempted to vote no because they feel misled.

The same is true on this occasion: Mr Nyrup Rasmussen and his colleagues have been trying to suggest it is only about the euro, and that economic and monetary union does not imply further political integration. They sound exactly like Mr Blair and his friends. They are all wrong. Of course Emu is a huge step towards political union - not to some monolithic state, but certainly to much closer co-operation.

The argument about the economics of the euro in Denmark is pretty thin, because the Danish government has been shadowing first the D-Mark, and now the euro itself, since 1982. Interest rates used to follow the Bundesbank, now they follow the European Central Bank. Denmark is already as good as in; it merely lacks a seat at the top table.

The No campaigners are right that the vote is about Denmark’s commitment to the EU. But they are wrong about most other things. They say the EU will eventually force Denmark to spend less on its welfare state. But the evidence suggests that its public services are already becoming bureaucratic and inefficient: they are not the envy of the world, as Danes fondly fancy. It will not be Brussels, but Copenhagen, that will demand reform.

The right-wingers argue that joining the euro is the first step towards eventual abolition of the monarchy. That is pure populist nonsense but, sadly, some people seem to believe it. No doubt Eurosceptics in Britain will try to use similarly far-fetched arguments when it comes to a referendum. But that is not the real danger.

The lesson Mr Blair should learn is that it is counter-productive to pretend that the euro is only about economics. The voters know better. He should be out there arguing in favour of European integration, before it is too late.

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