Nordics debate need for euro’s shelter from crisis

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Europe’s Nordic states yesterday (26 February) debated in Iceland whether to keep their own currencies or seek shelter from the global crisis in the euro zone.

Danish Prime Minister Anders Fogh Rasmussen said the crisis was fuelling support among Danes for joining the euro zone, declaring that he could decide this year on whether to hold another referendum on euro membership after a ‘no’ vote in 2000. 

“The financial crisis has made the costs of staying outside visible: both the economic and the political costs,” Rasmussen told Reuters on the sidelines of a Nordic regional summit about globalisation, held about 40km from the Icelandic capital. 

Sweden’s Prime Minister Fredrik Reinfeldt said Swedes’ views towards the single currency were “affected by what is happening” and cast doubt on the established political consensus that the euro issue should not be revisited until 2012. Swedes rejected joining the single currency in a 2003 referendum. 

Norway ‘will not change attitude’ 

A report prepared specially for the annual Nordic Council meeting spelled out challenges facing Sweden, Denmark, Iceland, Norway and Finland and recommended more debate about the merits of staying outside the relative safety of the euro zone. 

“If crises in the new global environment [become] too powerful, the shelter of a larger economic region might have additional benefits,” said the report by the Harvard Business School and Handelsshogskolan in Stockholm. 

But oil-rich Norway is in no mood to revisit the EU issue. 

“This (crisis) is not changing our attitude and approach to the European Union. It’s not on the agenda in Norway,” Prime Minister Jens Stoltenberg told Reuters. 

Support for EU membership surged in Iceland in the wake of its financial collapse, but a decision on starting potential membership talks with Brussels will largely depend on the result of April’s snap parliamentary election. 

The two parties in government are split over EU entry and Prime Minister Johanna Sigurdardottir signalled a tack away from the liberal economic policies she believes created the crisis, despite still backing closer Nordic cooperation. 

“Globalisation and the unlimited flow of capital have shown their dark side,” Sigurdadottir told the summit. “We must make sure the interest of the public […] is not sacrificed for globalisation,” she added. 

The report said the Nordic states, which traditionally offer an extensive welfare system paid for by high taxes, should now boost incentives for entrepreneurship and competition on domestic markets to stave off the worst of the global crisis. 

It said the Nordic region was well positioned to lead the field of renewable energy development, from Norwegian and Swedish hydropower to Danish wind farms and Iceland’s geothermal resources, but they had to work together to remain a force.

“More alignment of regulations would enable […] a more integrated Nordic market for energy and environmental projects, with benefits for competition and innovation,” it said, adding that rivalry would increase as more US and European countries shift towards renewables to counter global warming. 

(EURACTIV with Reuters) 

With the exception of euro member Finland, the traditionally go-it-alone Nordic countries have independent currencies. 

But as the downturn has spread and hit the affluent region, weakening their currencies, the idea of adopting the euro has returned in Denmark and to a lesser extent in Sweden. 

Norway and Iceland are not in the European Union, a fact that probably accelerated the crisis in Reykjavik when its three top banks collapsed last October. 

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