During the referendum that was marred four days earlier by the assassination of Anna Lindh, the Foreign Affairs Minister, the majority of the Swedish refused their country's entry into the Economic and Monetary Union, and as a result, the introduction of the euro in place of the Swedish Crown. Adversaries of the European currency won 56.1% of the votes cast against 41.8% in favour of the euro. The participation rate rose to 81.2% i.e. 2.2 points more than during the general elections on 15th September 2002.

After the announcement of the Foreign Minister's death Göran Persson, Prime Minister decided to go on with the referendum as planned on 14th September to prove "that violence cannot stop the democratic process." However the electoral campaign had been stopped. The newspapers did not print the latest written debates, notably the one in which the Foreign Affairs Minister was due to participate on TV along with Göran Persson and Carl Bildt, the former Prime Minister.

Some political analysts wrongly thought that the assassination of the "pro-euro" Anna Lindh might finally sway the opinion of a great number of Swedes, and above all Swedish women, who were still hesitating about voting in favour of the euro, i.e. 15% of the electorate according to the most recent opinion polls. Although there was a sharp rise in favour of the "yes" vote, the chaos at the end of this campaign, which was struck by the violent shock of the minister's death, was quite distinct in the eyes of the population. The election results did finally correspond with those announced by all the opinion polls during the entire campaign, i.e. a clear victory for those against the single currency by more than 14 points.

The Prime Minister admitted defeat before the official results were even announced. He might undoubtedly be criticised for having launched his campaign too late and similarly for not having sufficiently gauged Swedish scepticism vis-à-vis the European Union and the euro in particular. Before the referendum Sten Andersson, former Foreign Affairs Minister even said that he had never seen such a bad electoral campaign in his life and that he was not sure he was going to vote "yes"' on election day. In addition to this Göran Persson did not succeed in coping with the divisions that emerged within his own party, forcing him to call some of his ministers abruptly to order - a move that was unpopular within the population. The Swedish, who are used to consensus also seem to have found it hard to form a true opinion given the explosion of the traditional political divisions on the question of the euro. Hence columns published in the press, which were jointly signed by the Foreign Affairs Minister, Anna Lindh and, on the one hand, the chairman of Ericsson Carl-Henric Svanberg and the former Prime Minister Carl Bildt on the other, only added to the confusion of public opinion.

Göran Persson also repeatedly made clumsy declarations maintaining on 29th August that if the "yes" vote won the referendum, membership of the Economic and Monetary Union might not occur in 2006 as previously planned but that it would happen much later "when the situation was suitable". A small sentence that intimated that "yes" was not really "yes", giving the country's entry into the EMU the image of a risky and even dangerous wager. The Prime Minister also tried to hurry the Swedish into voting in favour of adopting the euro by saying just a few weeks ago that there would be no new referendum on the single currency before 2010 if the "no" vote won on 14th September.

Finally the liberties taken by Germany and especially France in terms of the Stability and Growth Pact - since both countries did not respect the rules that they themselves decreed - did not help in boosting Swedish confidence - a people who are very respectful of the rules as they are their commitments and who are very much in favour of collective discipline. In Berlin the Prime Minister even criticised Paris and Rome for their excessive deficits: "If they had behaved like Sweden, Finland and the UK and others during the 1990's by preparing their economies for the slump, we would not have this situation today," he declared on 2nd September in the Financial Times.

The Swedish are very much scarred by the economic crisis they went through at the start of the 1990's. At that time public finance reached a deficit of 12% of the GDP and the unemployment level rose to 9% of the working population. The country then launched major structural reforms in order to stabilise public finance. Today they are proud and happy at the return of prosperity and the continuation of the Welfare State - the Swedish are reluctant to endanger their way of operating and to lose control of the monetary policy, forgetting slightly that although their healthy economy results from their own effort, it is also a consequence of their integration into Europe.

The division of economists and politicians on the question was so great that voters also found it difficult in deciding clearly on the advantages and inconveniences of the single currency. Those in favour and against the euro could not agree on one point i.e. whether the adoption of the European currency was good for exchange rates. However some said that an increase in inflation was inevitable since Swedish interest rates would rise to 2.75%; their present rate being 2% i.e. the level of the Central European Bank, whilst others maintained exactly the opposite. According to those in favour of the adoption of the single currency, the euro would lessen the dangers associated with the exchange rates and would boost trade. According to its adversaries the loss of control of interest rates and the impossibility of floating currency freely might lead the country into serious financial difficulties if there was an economic crisis. In addition to this the Left (Left Party and the Greens) who were against the single currency, believed that the Economic and Monetary Union represented the first stage in the creation of a federal Europe to which these parties are definitely hostile. Those in favour of the euro, who for their part saw in joining the Economic and Monetary Union a deepening and strengthening of their European commitment, did not manage to convince the majority of the population of the advantages the single currency might bring and the need for their country to abandon another part of its sovereignty in order that it might have greater and better influence over European decisions.

Sweden's "No" to the euro will not be without effect on Denmark and the UK, the two other countries in the EU who are not members of the Economic and Monetary Union. The impact of the Swedish refusal on the ten new members of the EU is more difficult to gauge. The governments of these states might however start their negotiations with the countries of the Euro Zone with greater confidence. On 8th September, the Central Banks of Poland, Hungary and the Czech Republic called on the EU to relax the criteria necessary for entry into the Economic and Monetary Union.

Although the Swedish "No" is bad news for Europe, it remains that we might hope that this refusal will finally enable the acceleration of reforms to the Economic and Monetary Union that are absolutely necessary.

Results of the referendum on 14th September 2003 on Sweden's membership of the Economic and Monetary Union

Participation : 81,2%

Source Agence France Presse