Euro stirs Danish sovereignty fears

Date: 31/10/1996

By Ole Ryborg

DANISH sensitivity to any perceived loss of national sovereignty is raising an unexpected obstacle to the legal agreement required to introduce the euro.

In the wake of initial opposition from Copenhagen to EU plans to retaliate against the US Helms-Burton Act directed at companies doing business with Cuba, the euro is now raising Danish hackles.

Copenhagen has already used the EU's monetary committee to warn the European Commission privately not to base the draft legislation needed to introduce the single currency on the Union's catch-all Article 235.

Diplomats also warn that plans to create a Union agency to fight racism could run into similar problems.

The irony is that the Danish government is not opposed to the measures themselves, but in all three cases has registered its opposition to the choice of Article 235 as the legal basis for Union action.

This gives the Council of Ministers the power to decide unanimously to “take the appropriate measures” if the Union considers action is necessary, but is unable to find the appropriate legal justification for doing so elsewhere in the treaty.

The unexpected hardening of Copenhagen's stance has been largely provoked by the decision of the Danish high court in August to allow a legal challenge to Denmark's relationship with the Union.

The case is expected to run for at least two years and, in large part, is based on the use made by EU member states of Article 235.

Since Denmark joined the Union in 1973, it has been used more than 600 times and, during the Eighties, provided the main legal basis for the introduction of EU policies on the environment, health and culture.

The Danish constitution allows the government to agree to a limited transfer of national sovereignty in its dealings in various international organisations.

But the 11 Eurosceptics now challenging Denmark's ratification of the Maastricht Treaty through the courts claim that the article has been invoked so extensively that the limited transfers set out in the country's constitution have effectively been breached.

Faced with this unexpected legal challenge, the Danish government is now constructing its defence and is keen to keep the use of Article 235 to a minimum.

It is this which lies behind the strong recommendation from Denmark's justice ministry that it should not be used as the legal basis for the euro, as suggested in recent Commission proposals to introduce the necessary laws.

The Maastricht Treaty foresaw the need for specific provisions to ensure the introduction of the single currency, under Article 109 L(4). But this cannot come into play before the start of the third phase of economic and monetary union, scheduled for January 1999, and it is now widely accepted that to ensure stability on financial markets, the mechanisms for the creation of the euro must be in place before that date.

The situation is even more embarrassing for the Danish government since the country has already negotiated an opt-out from a single currency and thus would not necessarily be directly affected by the arrival of the euro.

Despite the legal difficulties ahead, Danish officials stress that their government is prepared to investigate a range of options to prevent the domestic controversy over Article 235 from blocking the creation of the single currency.

The chances of finding a way out of the potential legal impasse increased this week when Denmark and its EU partners agreed legislation to counter the United States' anti-Cuban laws.

Earlier, Danish Foreign Minister Niels Helveg Petersen had demonstrated the depth of feeling in his country over the issue by blocking the proposed EU counter-measures, instead of taking the more usual course in such situations of abstaining and then challenging the legality of the decision in a subsequent action before the European Court of Justice.

Faced with Danish opposition to the use of Article 235, EU foreign ministers in Luxembourg this week turned to Article 220, which enables member states to negotiate with each other to secure for the benefit of their nationals “the protection of per-sons and the enjoyment and protection of rights”.

They also strengthened the intergovernmental, as opposed to communautaire, elements in the EU's response. Whether this will provide a model for resolving Danish difficulties with the euro legislation remains to be seen.