Vote could signal start of two-tier Europe

Vote could signal start of two-tier EuropeSeptember 28, 2000
Web posted at: 6:56 PM EDT (2256 GMT)

By Robin Oakley, European Political Editor

LONDON, England (CNN) -- The political shock was summed up best by Frank Dahlgaard, one of the triumphant "no" campaigners in the Danes’ historic referendum choice. His countrymen, he said, had preferred a big influence over a small Denmark to a small influence in a big Europe.

The country’s political establishment, the government, the major opposition parties, business leaders and trade union chiefs had all urged the Danes to go into the euro. That way, they argued, Denmark would gain some precious influence at the table where decisions would be made which would affect their future. But the people trusted their gut instinct and rejected that advice.

The Danes’ rejection of the euro by an emphatic margin of 6 percentage points is not just a humiliation for their own country’s political leaders. It is a further blow to the embattled single currency. The euro was desperately in need of a psychological boost to help the efforts of the world’s central bankers to give it some stability. It could have been a turning point for the euro. Instead it may be the beginning of a two-tier Europe.


"It is not just a humiliation for Denmark's political leaders it is a further blow to the embattled single currency"
Robin Oakley

Prime Minister Poul Nyrup Rasmussen and all those who had joined him in urging a "yes" vote failed to contain the debate to their chosen ground. In what became a political campaign as much as an economic argument, the ragtag rainbow coalition of campaigners from the far left and far right made it a battle about Danish identity and played on people’s fears that Europe was integrating too far and too fast.

Danes were worried about joining a currency which had lost a quarter of its value against the U.S. dollar in 20 months. They feared for their pensions, and they worried that entry into the euro might see a future harmonisation of tax and social security plans across Europe which would bring an end to the traditionally generous, and expensive, Danish welfare state. They feared a loss of control over their own lives.


"It could have been a turning point for the euro -- instead it may be the beginning of a two-tier Europe"
Robin Oakley

Some "no" campaigners played up those issues. Pia Kjaersgaard of the advancing Danish People’s Party put the emphasis on “identity” issues like immigration and multiculturalism, insisting that the country had given up too much sovereignty already. Danes did not like the European Union’s sanctions against Austria for including the far-right Freedom Party in its government coalition. They regarded that as bullying of a small country. And they did not like federalist talk of European government by Joschka Fischer, the German foreign minister, or French President Chirac’s musings about a Europe led by a Pioneer Group of especially integrated states.

Those kind of issues played more heavily, it seems, with the public than the political establishment’s warnings that Danes' pensions would be more at risk outside the euro with a possible flight of capital and a lack of inward investment curbing the country’s recent prosperity and pushing up interest rates.


"There was some cynicism among voters over the central banks' intervention to help prop up the euro just before their referendum"
Robin Oakley

There was some cynicism among voters over the central banks’ intervention to help prop up the euro just before their referendum.

Rasmussen and his government are unlikely to be toppled for losing the vote. Their main political opponents were with them on the losing side in the referendum. But their authority has taken a knock. If the referendum has proved that the Danes too are part of the new wave of nationalist-identity politics evident elsewhere in Europe, it has also shown the general unwillingness to trust politicians which elsewhere has given rise to street protests over fuel prices.

Politicians across Europe who have taken their peoples into the euro without formal consultation may find there are demands for referendums elsewhere too. But with German public opinion, for example, running 2 to 1 against the euro, they are unlikely to be ceded.

Certainly the two other countries that have promised their voters the chance of give their verdict on the single currency, Sweden and the United Kingdom, are now unlikely to rush to do so. The Swedes will be busy chairing the European Union for the first six months of next year, and British Prime Minister Tony Blair, currently striving to recover from a series of political disasters before going to the polls next year, will be in no hurry to risk his authority even if he is returned to power at the next election some time in the year 2001.


"The vote has been a body blow to those who believed that the spread of the euro was an historical inevitability"
Robin Oakley

The Danes’ rejection of the euro has been a body blow to those who believed that the spread of the euro was an historical inevitability. If 5 million Danes, 9 million Swedes and 59 million UK citizens stay outside the euro, then we will be on the way towards a two-tier Europe, with some of the central and eastern European countries who want to join the European Union perhaps deciding that they can do so without having to join the euro as well.

Squabbles in Europe about how much authority over economic decisions should be exercised by the finance ministers of the Euro 12 , as opposed to the full Ecofin meetings of all 15 EU members, may well see a further delay in the enlargement process. And the triumph for eurosceptics in Denmark will not make it any easier to secure agreement on reforming Europe’s constitution at the Nice summit in December to help prepare the EU for enlargement.