Sweden's 'no' to euro is partly political, partly economic

Like any satirisation, this one too seems realistic as one ventures into knowing why 56 per cent of the Swedes voted no to swap their currency, Krona, for the euro (while only 42 per cent voted yes).

The poll results of last Monday belied all expectations in the wake of Ann Lindh's assassination by an unknown stabber. As a popular foreign minister, she was in the limelight to contest for the country's top leadership.

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Lindh's strong vouching for the euro notwithstanding, many thought her death would provoke sympathy among common voters and make Sweden a rare euro-user among the otherwise secluded Nordic nations.

That however was not the case. The majority of the Swedes loath corporate capitalism and extreme competition, which is what the withering away of Sweden's own currency would have meant. Hence the negative attitude of the voters toward the euro.

The Swedes are also die-hard lovers of independence and the nation had pursued a policy of neutrality since 1814. This has given Sweden a unique stature of becoming the most advanced nation in Western Europe from one of the most backward ones half a century ago.

A good segment of Swedes also believe that an independent economic policy had helped them nearly double their GDP; which leapt upward from 1.2 per cent in 2001 to 2.5 percent this year. This success came about when the economies of rest of Europe, Japan and the US staggered amid lingering recession.

The global economy's doldrums too have had a profound impact on the poll's outcome. Ann Lindh's death occurred amid intense political polarisation centering the peoples' lukewarm intent to integrate economically with an EU dominated by the vibrancy of the German Deutsch Mark and the political clout of France and the UK.

Despite the EU's massive thrust toward a European integration, Europe remains far from monolithic. And, Sweden is not the only European nation to have faced such a dilemma.

For years, the Britons wrangled among themselves on the issue of sacrificing pound sterling for the euro. Swedes believe the pound had retained its global worth due to the British intransigence to abandon their national currency.

As well, the neutral foreign policy stances of Sweden and Switzerland have earned them the credibility of being 'safe havens for special deposits' by global investors. This has also often put the two at odds with the broader issues of continental integration.

Foremost in that debate was the EU's rigidity in not allowing national budget deficits of EU members to exceed over 3 per cent of the GDP, which many Swede believe to hamstring governments' ability to spend their way out of recession.

And, there are others who think the EU must share some of the burden for the negative vote of the Swedes. Historically, mainstream European powers have had a tendency to push to the sideline the four Nordic nations.

Yet, the Finns accepted the euro while the oil rich Norwegians opted to stay out of the EU altogether. Now that the Swedish indecisiveness is over, the Danes are left to decide their own fate.

The value of Krona has meanwhile fallen substantially since the no vote. In the short run, an undervalued Krona might spur demand for 'made in Sweden' goods in the global market and steer the economy toward further growth.

Conversely, Sweden's economy might falter if regional demands for Swedish goods plummet under political influence of major European powers. And, even if the Swedes can wriggle themselves out of such economic uncertainties, Ann Lindh's memory will haunt them for years to come.

M. Shahidul Islam is a Senior Assistant Editor of this paper.