Euro Nightmare

I write my column Euro Nightmare in TCS Daily on 11 September 2003.

Even before tragedy struck, Swedish politics had gotten ugly

The tragic murder of Sweden's foreign minister Anna Lindh, by a still unknown assailant in central Stockholm, has wreaked havoc on the debate leading up to this weekend's vote on whether the country will join the euro.

Despite the killing, the referendum will take place on Sunday as planned. Political violence is rare in Sweden (if it is the case that the Lindh stabbing was politically motivated) but not as rare as it once was before the murder on Prime Minister Olof Palme in 1986. The antiglobalist riots in Gothenburg in 2001, and various murders and bombings by left-and right extremists (mainly among themselves) have changed that.

The murder of Anna Lindh was in an eerie way a fitting conclusion to an electoral campaign that seldom discussed the euro itself to begin with.

At a first glance the issue in itself seems straightforward, and based on economic considerations. It is certainly a complicated economic question, and one could wonder why the politicians chose to put this question up for a referendum. In a parliamentary democracy, elected politicians should decide these complex questions but leave the decisions on citizens' private lives to themselves.

But actually the referendum seemed even more complicated when it was discussed in the campaign. It is unfortunately, in its theme and mood, a repetition of the 1994 referendum on joining the EU. When Swedes voted, by narrow margin, to join the Union the debate on the nation's future role in Europe stopped abruptly. Both sides in that earlier referendum argued from the standpoint that a vote for them would be a vote of stability: jobs would be retained in Sweden, the welfare system would not have to change. Changes, it was argued, would be necessary if the adversary won.

Thus, mentally, many Swedes did not actually join the EU. But of course many changes in Swedish society happened the years following accession. The isolated, economically affluent "moral superpower" of Palme was no more. In fact, there was the nagging suspicion that Sweden had become a rather small and quite poor member (with only Spain, Portugal and Greece behind it) of a much bigger union, which is of course the sad truth but very much contrary to the self-image of the establishment and large parts of the population.

As a result many of these debates resurfaced in the euro referendum.

There has long been a sense that Swedish politics operate in a vacuum; the government seldom seems influenced by discussions in society, and there is a painful lack of political alternatives to the preservationist politics of the Social Democrats.

One might say it's "better late than never" that a debate finally started about Sweden's role in Europe, the future of Sweden's economy, the new European constitution, global solidarity, EU expansion, globalization, free trade, and other changes in the 21st century. But all this has also made the political discussion incomprehensible to the voter. Indeed, these are important questions that must be discussed, but they are not questions for an electoral campaign in which very clear options are needed for the voters to decide upon. Thus the polls have shown one of the highest numbers of undecided voters recorded in any election.

Many perceived the EU referendum in 1994 as a test of loyalty, with the right and the Social Democrats in favor of joining, and the left and Greens against. But the more diversified climate of opinion today, with more widespread insecurity and plurality of options, has split many of the parties on the euro question. In fact the public view of the EU contains a bit of a paradox: the left wing regards the EU as something that mainly pushes capitalism, while the right wing sees it as strengthening the role of politics in society. To this one can add an increased sentiment of anti-establishmentarianism in the public and the media, and since the EU and the euro have been seen by many as a project of the elite this has favored the "no" side. This could certainly change now, since Lindh was deeply engaged in the "yes" campaign, and the undecideds might well vote "yes" as a gesture of sympathy.

The party divisions also produced a rather "dirty" campaign, with accusations that the "yes" side was actually Nazis who wanted a EU super state, or that the "no" side was actually communists who wanted to isolate Sweden. As a liberal, I am worried that many divisions among liberals in the campaign will not heal so easily afterwards, not just because of very harsh words but also because a very real division of interests. And since the division of opinions has been deepest among the right-wing parties, the most worrisome part of the euro referendum campaign has been the lack of a major, credible, liberal and pro-free market alternative. If the "yes" side wins, it will be perceived as a victory for the policies proposed by Social Democratic Prime Minister Göran Persson. If the "no" side wins it will be perceived as a victory for the policy of the Persson government's political partners; the Greens and the reformed Communist Party.

The belligerent state of the campaign again failed to produce positive visions for the future, which was further damaged by the extensive use of PR-firms on both sides that decreased the general credibility of the debate, especially their tactics to build special interest group support for their side. Is the euro really a "gay" issue? Is it an issue for old pop stars and entertainers to discuss? Just adding new groups to position themselves on your electoral platform does not per se build credibility.

Now, the track record of the Swedish krona has not been that good. The extensive use of inflationary politics in the 1970s and 1980s debased the currency, and since the collapse of the krona in 1992 it has lost more than a third of its value.

And this is probably the most important conclusion for Sweden, that it is perhaps not the name of the currency that matters most, but the monetary policy that is behind it that affects the economy and the rest of society. A bad policy from the Riksbanken (the central bank) will hurt us as much as a bad policy from the ECB. If the Swedish economy falters it is because of other, deeper and structural, reasons that cannot be properly addressed in a referendum.