Swedish Social Democrats back plan to delay euro-zone membership

Date: 18/09/1997

TO OUTSIDERS, it may have seemed as if last week's congress of the governing Swedish Social Democrats was more like a Christmas celebration.

For it appeared that Prime Minister Göran Persson's party had made several deals with the smaller Centre Party to lift some of the burdens the government has placed on Swedish taxpayers in recent years in order to get the country's finances back on track.

The proposed changes to Sweden's economic policy announced last week and discussed at the party congress could be seen as the normal adjustments which occur every year when a government is about to propose its new budget.

But there were two other decisions taken at the congress which together could contribute to an unfortunate signal being sent to the outside world - a fact recognised by Finance Minister Erik Åsbrink during the event.

Those two decisions were the congress' endorsement of the government's view that Sweden should not participate in the EU's economic and monetary union from the planned 1 January 1999 start date, and a surprising resolution adopted by delegates stating that the fight against unemployment was more important than keeping a balanced budget.

This resolution, proposed by Swedish MEP Sören Wibe, was adopted by the congress against the advice of both the prime minister and the finance minister. Åsbrink warned party members that it would send “a wrong signal about Sweden's economic policy” to the outside world, but this failed to stop delegates voting it through.

By contrast, the decision that Sweden would not be among the first wave of euro-zone members was a ringing endorsement of the government's position. It came after Åsbrink repeated his arguments as to why his country should stay out, insisting it would be wrong to join the euro-zone when a large section of public opinion was strongly against it and characterising the single currency project as “unsecure and risky”.

Delegates agreed, even though a poll conducted shortly before the congress and published by Dagens Nyheter surprisingly showed that a majority of Swedes were actually in favour of their country joining EMU, even though a majority of Social Democratic voters were against.

The decision taken by the party congress is not, however, the end of the matter.

Persson will now have to present a proposal to the Swedish parliament this autumn to get its support for the government's policy of not joining EMU at the start.

The task is giving the prime minister and his civil servants enormous headaches, given that this decision cannot break the terms of the Maastricht Treaty and that Sweden did not secure an EMU opt-out like the UK and Denmark when it joined the Union.

All this means that the government's lawyers will be busy in the coming months devising a formula to keep Sweden out of the euro-zone without incurring the wrath of its Union partners.