Sunday

1st Aug 2021

Denmark stuck in EU treaty quagmire

  • The new Danish PM, soon to take over as captain of the EU ship, will likely require the support of opposition parties to push through the fiscal compact (Photo: President of the European Council)

Days away from taking over the EU's rotating presidency that will be responsible in part for steering through a new intergovernmental treaty, the Danish government has become stuck in a quagmire of resistance to the so-called fiscal compact.

Copenhagen's centre-left governing coalition, led by the Social Democrats alongside the Socialist People's Party to their left and the Danish Social-Liberal Party to their right, does not have a majority in the parliament and must depend on the support of the eurosceptic and hard-left Red Green Alliance.

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In the September 2011 elections, the Red Greens enjoyed the largest gains out of all the parties while the Social Democrats, whose leader Helle Thorning-Schmidt is now prime minister, actually lost a seat.

The Red Greens have come out firmly against the deal, calling for a referendum in which they intend to campaign for the No side, and so the government will need the backing of the opposition Conservatives and Liberals to push through the new treaty.

But the right is also divided on the issue, with the Liberal Alliance, a new libertarian party also calling for a referendum. The hard-right Danish People's Party has come out in favour of a plebiscite as well. Both parties sit on the opposition benches.

Soren Sondergaard, an MEP who sits alongside the Red-Greens and fresh out of a meeting with the Danish finance minister explaining the party's position, told EUobserver why the alliance opposes the government line on the compact.

"We only just had an election where the central topic of debate was how to exit the crisis. There were two options on the table: austerity or public investment, and it was the public-investment side that won," he said, adding that there are also concerns about a transfer of sovereignty, although the fine print has yet to be unveiled.

"If we are going to bind ourselves to such policies, it is clear the people must have a say."

Concerns about sovereignty also came from Anders Samuelsen, of the Liberal Alliance, normally the ideological polar opposite of the hard-left Red-Greens.

"We are calling for a referendum because the issue is too important to be decided by politicians alone," Samuelsen told this website. "It involves a de facto surrender of some of our sovereignty, and we believe the Danish people should decide whether this should happen."

If there is a referendum, the party will recommend a No vote because it believes that the pact links the Danish economy closer to the euro, even if it supports the principles of greater fiscal discipline contained in the compact.

"It is not that we are opposed to the specific economic tools that are suggested. In fact, we believe many of them should definitely be implemented in Denmark. But we oppose giving up the sovereign ability to decide for ourselves whether to do so."

The Socialist People's Party (SPP) sits to the left of the Social Democrats, and with the European Greens at the EU level.

Thomas Nystrom, a policy advisor with the SPP, told this website that his party will stand with the Social Democrats so long as the country's opt-out on the euro is respected.

The SPP disagrees with the Red-Greens that there is no room to manoeuvre in the new fiscal compact.

"We agree that there needs to be a structural balanced budget, and you can do this either by cuts or increased taxation. There is a focus on balance here within the fiscal compact," he said.

"As with the 'Euro-plus pact' [a similar agreement to tighten up centralised EU oversight of fiscal policy], we still think there is some political room for national fiscal policy. National parliaments can still decide."

Although even here, the SPP signalled its concern over the fiscal compact's requirement of a balanced budget inscribed in constitutions, defined as no structural deficits above 0.5 percent.

"Does this mean every year, or over the medium term? We will have to see after an analysis of the text."

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