Friday, October 03, 2003

Drawing Conclusions From the Swedish Vote

The more one looks into it, the more difficult it is to read last weeks Swedish vote as a vote about the euro. In too many people eyes the euro and the EU seem to be one and the same thing. It may well be that many Swedes were voting about their perception of large state 'arrogance' rather then the economic issues in hand. This has unfortunate consequences, since when the euro goes well, the EU seems to go well, but, and here lies the danger, if the euro does not go well, the focus of resentment could become the EU itself, and that would be a tragedy.

Whether Sweden has made the right decision is debatable. From an economic point of view, there are things to be said on both sides. In some ways, Sweden is the ideal euro candidate: a small, open and internationally competitive economy, with more than most to gain from exchange-rate stability across Europe. On the other hand, the euro area is performing badly, partly because its economic-policy rules have been poorly designed, whereas Sweden is doing well. A vote to wait and see, if that is what it was, makes sense. Sweden can adopt the euro later, if it seems to be losing inward investment, or if the policy rules are mended, or if the euro area's performance inspires. In this, no is not for ever. Yes is—or that is the idea, anyway.

In fact, however, Sweden appears not to have been voting to wait and see. Arguably, the country was not even voting about the euro, as such (see article). So far as one can tell, the vote reflects a verdict on the economics of the single currency less than it expresses deeper suspicions about what the European project implies for Sweden's sovereignty and for the future of its democracy. This matters for Europe as a whole, not just Sweden, because people in many other countries have similar doubts—and because many of them, just like the Swedes, will shortly get a chance to say so.

Next month the European Union embarks on an inter-governmental conference (IGC) whose task is to finalise the proposed new European constitution.............The point is that the new constitution, once it emerges from the IGC, will need to be ratified by every government in the Union. In several countries, it is already understood that ratification will be subject to referendum. Pressure for a referendum is mounting elsewhere too—notably in Britain, whose government has pledged to deny a vote to its citizens, despite the fact that more than 80% of voters say they want one.
Source: The Economist

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