View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Lehigh University: Lehigh Preserve Lehigh University Lehigh Preserve Sweden : the model welfare state meets the future Perspectives on Business and Economics 1-1-2004 No to the Euro: The wediS sh Referendum of September 14, 2003 Emily E. Henderson Lehigh University Follow this and additional works at: http://preserve.lehigh.edu/perspectives-v22 Recommended Citation Henderson, Emily E., "No to the Euro: The wS edish Referendum of September 14, 2003" (2004). Sweden : the model welfare state meets the future. Paper 6. http://preserve.lehigh.edu/perspectives-v22/6 This Article is brought to you for free and open access by the Perspectives on Business and Economics at Lehigh Preserve. It has been accepted for inclusion in Sweden : the model welfare state meets the future by an authorized administrator of Lehigh Preserve. For more information, please contact [email protected]. NO TO THE EURO: THE SWEDISH REFERENDUM OF SEPTEMBER 14, 2003 Emily E. Henderson A Resounding No war-torn nations of Europe. (“EUROPA...”) In order to increase cooperation among these On September 14, 2003, Swedes voted in states, their leaders created three supranation- a national referendum to keep their currency, al economic bodies, the European Coal and the krona, in lieu of replacing it with the euro. Steel Community (ECSC), the European The Prime Minister, Goran Persson, called the Atomic Energy Community (EURATOM), and referendum “a clear expression of the people’s the European Economic Community (EEC). In will,” acknowledging that “in this result we can 1993, the Treaty of Maastricht created the see a deep skepticism toward the entire euro European Union (EU) as an overarching gov- project among the Swedish people.” (Cowell, erning structure for the members of these eco- “In a Referendum...”) When all of the 5,976 vot- nomic communities and put forth the outlines ing districts in Sweden had been counted, 41.8 of an economic and monetary union as well as percent voted for the euro and 56.1 percent for new initiatives in international defense and voted against: a resounding defeat for the com- justice. Upon joining the EU in 1995, Sweden mon currency project, and, in some views, did not request exemption from the currency European integration. (Reed et al.) union, like the United Kingdom and Denmark, Sweden’s reaction to the tide of European and thus is legally bound to join the union at integration that arose out of the post-World some time in the future. The results of the War II political landscape has been one of hes- September 2003 referendum show that, despite itation. The great losses of the wars of the early Sweden’s growing ties with Europe in the mid- 20th century spawned a movement to forge nineties, Swedes are far from certain that full closer political and economic ties between the integration, at least in the form of membership 45 in the single currency, is a desirable goal. neutrality and the welfare state. (Gstöhl, p. 59) Sweden’s rejection of the euro suggests Former Minister of Trade Gunnar Lange encap- that, for many Swedes, a decision to adopt the sulated Sweden’s position on European inte- single currency was not an automatic extension gration at the time: “The problem with joining of EU membership. Even though Swedes are, the Six [the EEC] is not primarily an econom- overall, happy with their membership in the ic problem: it is instead foremost a political EU, they are not yet ready to take the next step problem.” (Gstöhl, p. 59) by adopting the euro. This article examines the Many would also argue that despite being reasons behind Sweden’s rejection of the single shrouded in the disguise of a primarily eco- currency and concludes that the outcome of the nomic issue, the euro is as much a political referendum was the result of Swedes’ percep- issue as the EEC or, more recently, as EU mem- tions of how the euro would affect their sover- bership. According to Erik Jones, “Any change eignty, a form of which is unique to Sweden and in the technology of money that transfers con- is discussed in detail below. The analysis con- trol over its creation away from the state or tinues with a projection of the implications of from society is first and foremost a matter of the referendum for Sweden’s economy, inter- political concern. In theory, the European nal political climate, and influence in European Monetary Union (EMU) is apolitical. In practice, affairs. Finally, the article suggests possible it implies a political system in its own right.” effects of the referendum on the EU and (Jones, p. 32) European integration. Swedes seem to be in tune with this notion of the EMU, and the euro, as political Factors behind the Referendum’s institutions. To different people in different Outcome places and different times, sovereignty can denote a variety of ideas. One may argue that in Sweden’s rejection of the euro must be Sweden during the later half of the twentieth evaluated not as an independent event but in century, sovereignty was inextricably bound to the greater context of European integration. the notion of the Swedish Model, that is, From the beginning of the post-war period, Sweden’s unique approach to the social welfare Sweden, like other northern European nations state that developed out of post-war Europe’s including the United Kingdom, Denmark, need for full employment with price stability. Finland, Iceland, and Norway, was reluctant to Largely based on the work of two Swedish acquiesce to calls for the forging of suprana- Confederation of Trade Unions (LO) econo- tional European institutions. (Ingebritsen, p. 5; mists, Gosta Rehn and Rudolf Meidner, the Gstöhl, p. 50) In 1951–52, the first such supra- Swedish Model sought to reduce wage-cost national organization, the European Coal and pressures by keeping aggregate demand below Steel Community, was established under full employment production levels as well as to the guidance of Jean Monnet and Robert create a more equal society through a large wel- Schuman. Belgium, France, Germany, Italy, the fare system and a “wage policy of solidarity.” Netherlands, and Luxembourg were the origi- (Silverman, p. 70) The latter policy dictated that nal six ECSC members. When this body proved workers doing the same types of jobs at large, successful, albeit limited by the scope of its nar- highly efficient firms would be paid the same row industrial focus, the six members of the wages as those doing the same types of jobs at ECSC formed two additional supranational small, less efficient firms. If a firm could not be organizations, the European Atomic Energy profitable under these wage restrictions, it Community and the European Economic would be forced to close, allowing the workers Community, in order to establish stronger ties to be redistributed to other firms. between their respective economies. (Harrop, According to Meidner, the development of pp. 15–16) Sweden’s reluctance to join the EEC, this policy is largely based on Sweden’s long- according to some the most important of the standing self-image as a “‘people’s home’ — a supranational bodies (Harrop, p. 16), stemmed place where all Swedes could be treated like from its determination to preserve Swedish members of a family and where such values as 46 equality, cooperation, helpfulness, and securi- 1980s, and, in turn, to relinquish many aspects ty would prevail,” an image due in no small part of the Swedish Model. Lee Miles has proposed to the success of the Swedish Model during the the “Swedish Diamond” as a framework for con- 1970s and ’80s. (Silverman, p. 70) By the late sidering this factor, as well as several others that 1990s, however, Rudolf Meidner saw his pro- he believes have influenced Swedish policies gram disintegrate under foreign pressures: toward European integration over the post-war I think that what is left of the period. (Miles, p. 17) These include Sweden’s Swedish model is the feeling, only level of attachment to corporate procedures for the feeling, among people and with- policy making, its highly consensual democrat- in the labor movement that we must ic political system, and its neutral external envi- return to higher employment and ronment. These three factors served as obsta- that there are ways to do it with- cles to Swedish integration with the European out inflation. At this moment the Community until the 1980s. At that time, Swedish government is totally com- according to Miles, economic factors gained mitted to the European Monetary Union rules. But there is a chance greater emphasis in the Swedish government’s that there will be no EMU in the near decision-making process, pushing Sweden future, and that the Swedish govern- toward EU membership. (Miles, p. 44) This ment’s extreme commitment to give movement was expedited by a severe econom- the highest priority to price stability ic recession in Sweden from 1990–1993, dur- can be modified. I think we can at ing which the nation’s GDP per capita fell to least give the same priority to full twelfth in the 1991 OECD survey (from third in employment and try to find solutions 1970). (Miles, p. 194) As a result of this event, to make full employment and price many Swedes began to believe that joining the stability compatible. (Meidner in European Community would increase its inter- Silverman, p. 70) national competitiveness and thereby help to In Meidner’s eyes, the EMU is clearly at preserve Swedish jobs as well as the welfare odds with the Swedish Model.