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EU: Swedish Government Faces Difficult Task In Campaign To Join Euro

The Swedish government of Prime Minister Goran Persson is campaigning to gain a "yes" vote in a 14 September referendum on joining the European Union's common currency, the euro. But the government faces a difficult task, with opinion polls consistently putting the "no" side in the lead.

Prague, 18 August 2003 (RFE/RL) -- Swedish Prime Minister Goran Persson, ever the combatant, confident politician, says his government is going to win the coming referendum on joining the common euro currency.

But there's a problem. A lot of his countrymen do not appear to share his optimism, and the 14 September vote is going to be very difficult for the government to carry.

Opinion polls this month indicate the anti-euro "no" camp has a clear lead of between 9 and 13 percentage points over the pro-euro campaigners. That's a slightly narrower lead than previous polls have shown. But with now less than a month to go before the referendum, Persson will have to achieve a big swing in sentiment among his countrymen -- and fast.

Surveys indicate that between 20 percent and 40 percent of Swedes are still undecided on the euro, and it is these voters that Persson is trying to persuade as he tours by bus around the country.

Why are Swedes so cautious about joining the common currency? They, along with Britain and Denmark, have so far remained outside the euro-zone, which groups 12 European Union countries.

Swedish TT news agency economics expert Magnus Persson -- no relation to the prime minister -- pointed out for RFE/RL that his countrymen have traditionally been cautious about the European project. He noted that when Sweden voted to join the EU in 1994, it was only by the slimmest of margins. The same Nordic coolness applies to the euro issue -- with Swedes, as he put it, wanting to "keep Brussels at a distance."

"I think for most Swedish people it's important that we have control of our own politics, our own financial and taxation powers, and all that. So I guess people are quite skeptical as a whole about the EU," Persson said.

But at the same time, Magnus Persson rejected the idea that Sweden is isolationist. He pointed to its vigorous engagement, for instance, with the three Baltic states -- Lithuania, Latvia and Estonia. "Everybody is very keen and enthusiastic about integration with the Baltic states," he said. "But that is not the same kind of [political] integration. It's more like the Swedish politicians want to have a lot of trade and a lot of cultural integration with the Baltic states, but when it comes to [common] finances, and taxes and things like that, Swedes want to have control on their own."

Another analyst, Claus Papenbrock of Deutsche Bank Research in Frankfurt, also thinks "noneconomic" factors are playing a role in the thinking of Swedes on the euro. "When someone gives up their own currency, it's not just a question of economic benefit or disadvantage. Many people will vote, in part, emotionally. I think the same would have been so in many countries of the present euro-zone. For instance, if there had been a referendum in Germany, the Germans would not have voted for the euro, because a currency is something like a mark of national identity," Papenbrock said.

Of course, analysts agree that economics still plays a key role in the decision. Sweden is one of the wealthiest countries in the world, and many of its citizens question the wisdom or the necessity of abandoning the tried and tested Swedish crown.

"Right now, Sweden in comparison [with the euro-zone] has a big growth rate -- last year its economy grew by 1.9 percent, whereas the euro-zone had only 0.8 percent growth. That's not the fault of the euro itself -- the fact that the euro-zone experienced weak growth rests on other factors. But right now that means it's difficult to make joining the euro appear an attractive proposition for Sweden," Papenbrock said.

There are economic arguments on both sides of the equation. Anti-euro campaigners can indeed point to the fact that with the euro, policy on money matters will pass from Stockholm to the European Central Bank (ECB) in Frankfurt. That means -- for instance, in the setting of key interest rates -- that the ECB will set rates for what it sees as the common good of the whole zone, and Sweden's particular concerns will receive limited attention.

The pro-euro camp, Prime Minister Persson included, can point out how trade is simplified by having a common currency. And given that most trade by euro-zone members is with other euro-zone members, the euro removes the uncertainty of varying exchange rates.

Looking at the question the other way around, one can ask the question, does the euro-zone need Sweden? The answer, according to Papenbrock, is that Swedish membership is "desirable." "Because that would add another stability-oriented country [to the zone] just ahead of the entry to the EU of East European countries.It would certainly be desirable to have not only Sweden but countries ike Denmark and Great Britain on board," he said.

The Eastern candidate countries, who will start joining the EU next year, have been pursuing economic reform for the last decade. Although they have often experienced higher growth rates than present euro-zone members, they are still considered underdeveloped, and structurally weak. For this reason they are not being seen as "assets" in terms of helping underpin the status of the euro.

Unlike Sweden, the East Europeans will not be given an option on joining the euro. They will be required to do so as soon as they fulfill the necessary criteria.