Why a resounding yes would be music to the ears of Persson and Blair

Date: 14/09/00

By Tim Jones

POUL Nyrup Rasmussen is not the only one holding his breath as 28 September approaches.

Six hundred and twenty five kilometres to his north-east, Swedish Prime Minister Goran Persson will be biting his nails and 1,150 km south-west, the UK's Tony Blair will be glued to his television screen.

Whatever they may say - and both are keeping their mouths zipfast-shut - the last two euro-holdouts are hoping for a decisive victory for the yes camp, fearing a no and dreading the narrow two-point win indicated by the latest Gallup poll for Berlingske Tidende.Getting his political bedfellows to support euro-zone membership has not been an enjoyable ride for Persson and his ruling Social Democratic Party, which was rocked by the 1998 election results that forced the SAP into its worst showing since the Twenties and handed over swathes of former voters to the former Stalinists of the Left Party.

It took a heady cocktail of patience, stubbornness and bullying to talk the party's March 2000 congress into voting by 234 to 113 in favour "in principle" of euro-zone entry.

Memories of the fearsome austerity imposed on Sweden's economy when the krona was pegged to the now-defunct ecu are still fresh in the minds of leftist activists.

Persson is trying to sell the euro as a protection against isolation, arguing that if 'little' Sweden does not join, it will be left alone in the middle of the euro and dollar trading blocs.

"I am convinced that EMU is the best protection against the growing power of global market forces and it is essential if we are to have an active say in policy," he told delegates at the congress.

Recent events have helped his case no end. Even though the country's economy is one of Europe's fastest growing and inflation has been capped below 1.5%, the krona has been driven to a 15-year low against the dollar in line with the euro. And, because technology companies are out of favour with stock market investors, Ericsson - the world's number three mobile-phone manufacturer - is predicting reduced profits. The company accounts for nearly 40% of the Stockholm market.

The left is certainly listening. Last week, blue-collar union confederation LO voted in favour of euro-zone membership after a fiery debate.

If the Danes, with their historic, geographical and welfarist links with the Swedes, take the euro road, there is little doubt that Persson will use this to drive a yes campaign in his own country.

Blair's dilemma is different. Unlike Persson, he still has not come out in favour of membership. The British premier has instead agreed a form a mantra with his powerful Finance Minister Gordon Brown which the government repeats endlessly - the UK is ready to join if certain conditions are met. While Brown's opponents in the cabinet are gagging to break their silence and campaign for the euro, they have not yet dared to surface. But Foreign Minister Robin Cook drops hints and Northern Ireland Minister Peter Mandelson briefs favoured journalists against Brown's cautious strategy.

A Danish yes may unleash them but even a no, says a government official close to the euro debate, could see the pro-euro crusaders emerge.

"I think we could see them arguing that the no happened because Rasmussen joined the campaign too late; they will not want to make the same mistake here."

So far, all the best songs have come from the opposition. A Danish no would embolden them; indeed, Tories have been campaigning in Denmark. And only last week, New Europe - a self-styled pro-European but anti-euro movement - launched its poster campaign to keep the UK out of the 12-nation zone. New Europe is headed by David Owen, formerly British foreign minister and EU representative in Bosnia. Blair is coming under pressure to present the case for the euro or leaving the stage empty for the no campaigners to fill.This concern has been voiced most strongly by Ken Jackson, the leader of the engineers' labour union and a Blair ally. "The consensus from Denmark is that we should not be frightened of engaging with the public about the benefits of being in Europe," he said in a keynote speech. "Autumn will be a key campaigning time and I think the euro will be the dominant theme. We do need a clearer line - many inward investors are very worried that the government is not committed enough to joining."

Simon Buckby, campaign manager for the pro-euro Britain in Europe lobby, and an aide to Minister for Europe Keith Vaz have been monitoring the yes campaign in Denmark.

Both argue that the strongest lesson is that the pro-euro camp should argue both the political and economic cases for membership at the same time..