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Politics

Sweden and the Euro

10 September 2003

Sweden and the Euro

By Gwynne Dyer

Apart from the assassination of Prime Minster Olof Palme by a lone loony in 1986 as he walked home from a movie with his wife, politics in Sweden is rarely passionate, let alone violent. The knife attack on Wednesday that killed Foreign Minister Anna Lindh was therefore deeply shocking for Swedes, but it may also be a measure of how upset many of them are at having to choose between their own historic currency and the euro.

Nobody yet knows if Lindh was killed because of her pro-euro position, but it seems likely: she had such a high profile in the campaign which ends with a referendum on the euro this Sunday (14 September) that one newspaper dubbed her the ‘Yes Queen’. Much bigger countries like Germany, France and Italy gave up their own historic currencies without a murmur when the euro was launched twenty months ago, and didn’t even bother with a referendum. But Sweden is different.

Sweden gets so little attention in normal times that when I went there recently I stuffed a bunch of euros in my pocket, stupidly assuming that it was already a euro-zone country. Instead, I arrived in a country where the bank machines still give out crowns and people are caught up in a heated argument about whether to keep it that way or switch to euros. In Gothenburg late last month ‘yes’ and ‘no’ campaigners came to blows, and now this.

Prime Minister Goran Persson desperately wanted a ‘yes’, but his own cabinet was split, with five of the 22 members campaigning for the ‘no’. Families were split, the whole country was split, and though some people kept their sense of humour — one poster shows a couple tied to the railway tracks, with the husband saying to the wife, “we mustn’t miss the euro train” — both sides wound up depending mainly on scare propaganda.

Potential ‘yes’ voters have been told that adopting the euro would destroy Sweden’s ability to choose its own economic policy, and that the result would be the loss of the country’s cherished social welfare system. To many Swedes, that would be tantamount to losing their national identity, so the argument has been bitter from the start. (Hostility to the euro comes mostly from the left in Sweden, whereas it is mainly on the nationalist right in Britain and Denmark, the other two European Union members that have kept their own currencies.)

Prospective ‘no’ voters were threatened with a different kind of disaster: if Sweden doesn’t join the euro, it will become Europe’s odd man out. Twelve of the fifteen existing EU members already use the common currency, and most of the ten new members due to join next year will adopt the euro as soon as possible. So a ‘no’ vote would isolate Sweden, make it loses out on foreign investment, and send it into permanent decline.

Most of Sweden’s industrial giants backed this version of events, but despite all the money lavished on the ‘yes’ campaign the Swedes weren’t buying it. In late August the ‘no’ supporters were fifteen percentage points ahead, and the last opinion polls on Wednesday showed the ‘no’ still winning by 48 percent to 39 percent. The pro-euro forces had been hoping that it would end like Sweden’s referendum on joining the EU in 1994, when the ‘yes’ came from behind to win 53 percent-47 percent, but there was no way that such a huge gap could close by the weekend: Sweden was going to reject the euro. Why?

Because economists and market analysts normally do most of the talking about money, the euro is usually treated as a financial and monetary phenomenon. In reality it is much more an historical and psychological issue — and Sweden’s history and psychology are both quite different from most other places in the EU.

For the richer EU countries, the common currency is mainly a way of ensuring that Europe never slides back into the disastrous internecine wars of the past — but Sweden, geographically isolated and neutral by conviction, has sat out all of Europe’s wars since 1815. For the poorer EU members, adopting the euro is also a kind of sympathetic magic: if we use the rich people’s currency, then we will get rich more quickly too. But Sweden is not poor, and despite its separate currency it has enjoyed a higher growth rate and lower unemployment in recent years than any big EU member except Britain — which has also kept its own currency.

With only nine million people and not much in the way of natural resources, the Swedes have managed to turn themselves into one of the world’s most prosperous and civilised countries, and they are just the tiniest bit smug about it. Unlike Switzerland, which enjoys equal prosperity on an equally improbable base, they have deigned to join the EU, but it was a close-run thing back in 1994, and on the euro it wasn’t going to happen at all. Until now.

Despite the horror that Swedes feel at Anna Lindh’s assassination, the referendum will not be cancelled: to do so would be seen as a surrender to violence. The suspicion in many Swedish minds that she was killed because of her support for the euro could even create enough revulsion against the ‘no’ campaign to swing a narrow victory for the ‘yes’ on Sunday — but it would always be a tainted ‘yes’. There can be no good outcome now.

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To shorten to 725 words, omit paragraphs 3 and 4. (“Sweden…propaganda”)

NOTE: I HAVE WRITTEN THIS IN THE ASSUMPTION THAT THE REFERENDUM WILL GO AHEAD ON SUNDAY. CHECK THE WIRES BEFORE GOING TO PRESS, AS PRIME MINISTER

PERSSON HAS NOT YET CONFIRMED THAT. IF THE REFERENDUM IS POSTPONED, AN ALTERNATIVE VERSION OF THIS ARTICLE WILL BE SENT WITHIN A COUPLE OF HOURS.