PMs bid to soothe voters’ fears

Date: 16/01/1997

By Tim Jones

WORRIED by their voters' growing disenchantment with the EU, the four Nordic prime ministers have decided to tackle the electorate's biggest gripes head-on.

“Every time we talk about European integration in the Nordic countries, we always discuss it as a threat to our welfare model,” said a Danish official. “People think economic integration will lead to lower pensions and higher taxes.”

For this reason, Danish Prime Minister Poul Nyrup Rasmussen has called for an in-depth debate with his Finnish, Swedish and Norwegian counterparts on the perceived threat to their welfare states posed by the EU.

Following a regular meeting of the Nordic Social Democratic Party in Oslo tomorrow (17 January), Rasmussen, Norway's Thorbjörn Jagland, Sweden's Göran Persson and Finland's Paavo Lipponen will hold a welfare summit to counter burgeoning Euroscepticism.

Norwegians rejected Union membership in a referendum just over two years ago, although they remain in the European Economic Area. Having almost scuppered the Maastricht Treaty, the Danes are still highly suspicious of monetary union and closer political cooperation.

Polls published last week showed that Finns oppose membership of EMU by 45&percent; to 36&percent; even though Finland is on course to qualify, while 49&percent; of Swedes questioned said they wanted to quit the Union itself.

In both countries, anti-EU feelings were strongest among blue-collar workers and the unemployed, who perceive the arrival of the single market and the tough budgetary policies pursued by governments to qualify for EMU as an attack on the Nordic welfare model.

At the same time, as the heads of government seek to play down these fears in Oslo, they will remind their peoples that there is no such thing as a single Nordic welfare model.

Attitudes in each country have been shaped by its experiences over the past decade.

At one end of the spectrum is Norway, which has hardly had to worry about the growing costs of welfare provision since it struck oil in the Seventies. Since then, it has become the world's second-largest exporter of oil behind Saudi Arabia. Unemployment stands at just 5&percent; and growth rates have soared. A petroleum fund has been created to set aside oil revenues for the day when it starts to run out in 2030, which will coincide with a peak in spending on pensions and healthcare.

The experience in Denmark, Sweden and Finland has been wholly different. A sharp rise in their budget deficits in the early Eighties resulted in a marked increase in public debt, which had to be cut back in the early Nineties.

“This has changed people's view of the welfare system,” said a Swedish official.

In Denmark, 1 million people rely on welfare for their income and, for many, it has become too expensive to return to work. Under-25s, who until recently had an unhampered right to benefits, must now choose after six months to take work offered by the municipality or enrol on a vocational course.

Although it recently took the markka into the Exchange Rate Mechanism and has the lowest inflation rate in the EU,

Finland suffers from a major unemployment problem. This has led Helsinki to introduce reforms aimed at cutting back highly generous unemployment benefits.

The Swedish government has sharply cut its deficit but the pain will have to stop if the ruling Social Democrats want to be returned to office in the November 1998 elections.