Sweden’s resounding rejection of the euro is likely to have important repercussions for the European Union. Whereas Swedish business may now suffer, euroskeptics elsewhere in Europe have seen their hand strengthened.
Members from the Left Party and the Green Party celebrate in Stockholm after Sunday's vote.
Sweden, with its long tradition of neutrality, has always had a conflicted relationship with the European Union. Despite strong support from the government, the press and business leaders, Swedes overwhelmingly voted against joining the euro on Sunday.
Amid high turnout following the tragic murder of Swedish Foreign Minister Anna Lindh last week, over 56 percent of Swedes chose to keep their currency the krona. Only 42 percent were in favor of becoming part of the euro zone. While Stockholm may now have to face declining influence in the EU, the decision could also have an impact on events far beyond the borders of the Scandinavian nation of eight million.
As to be expected, euroskeptics in Denmark and Britain – the two other current EU members besides Sweden not participating in the euro – were immediately hearted by the result.
“This is proof there is a Europe where one doesn’t have to be a part of economic and currency union,” Danish euro opponent and Socialist party leader Holger Nielsen told the AFP news agency.
Britain vote less likely
Euroskeptics in Britain were also bolstered by the Swedish ‘nej’ to the euro, saying on Monday British Prime Minister Tony Blair could no longer argue the country would be isolated within the EU if it chose to keep the pound. Whereas Denmark rejected joining the 12 nation euro bloc in a referendum three years ago, Blair had hoped to lead Britain into the euro zone by holding a similar vote before the next general election.
But with the British public still against ditching the pound by nearly 2 to 1, the Swedish rejection of the euro is likely to make an already cautious Blair even more reluctant to risk his political future over the issue.
Perhaps fearing the Swedish vote could reverse momentum for the single currency project, European Commission President Romano Prodi said Sweden would “certainly” lose influence in the EU by staying outside the euro zone.
Whereas the 10 nations, mostly from Eastern Europe, that are set to join the EU next May are slated to join the euro whenever the economic conditions allow, Brussels is now faced with the possibility that the three rich nations currently outside of the euro zone will remain so indefinitely. That could delay or perhaps even scuttle the euro entry of already EU skeptical countries like Poland.
Sweden faces "worse opportunities"
Swedish Prime Minister Goeran Persson
Swedish Prime Minister Goran Persson, who led the failed pro-euro campaign, said the country would remain an active participant in Europe, but also admitted “in the long term we will have worse opportunities than we would otherwise have had.”
Besides the risk that foreign investors will now choose to avoid Sweden in favor of setting up shop in neighboring euro zone countries, Swedish firms like telecom equipment maker Ericsson or utilities company Vattenfall may now consider moving operations abroad to save costs.
“People still seem to believe that we live in a Europe with national borders and national currency, but the reality is something else,” said Alf Svensson, leader of Sweden’s opposition Christian Democrats and a euro supporter, according to the Associated Press.
Many Swedes feared that giving up monetary policy to the European Central Bank could endanger the country’s generous welfare system and being locked in to a one-size-fits-all interest rate with growth laggards Germany and France would hurt the economy. But with such close ties to the euro zone, some argue the central banks of countries like Sweden have little choice but to follow the lead of the ECB. “This thing with the euro is rather strange,” Wolfgang Roth, vice president of the European Investment Bank, told Deutschland Radio on Monday. “One could critically say to the Swedes you have to do whatever the central bank decides, but you aren’t allowed to be part of the decision making process.”