Part II
Sweden's 'NO!' to EMU

   The referendum outcome was widely interpreted as a triumph of grassroots democracy over a nearly united economic, political and media establishment that enjoyed an enormous advantage in financial resources, media access and institutional power as it attempted to bribe and bully the populace into voting ”Yes”— just as it had succeeded in doing with the 1994 referendum on membership in the European Union (see "Doubtful Referendum").

The "Yes" side began utilizing its advantage at the very start of the campaign by insisting upon a misleadingly simple referendum question. The three parliamentary parties opposed to the EMU had suggested the following wording: "Do you feel that Sweden should adopt the euro as its currency and transfer the national Bank of Sweden's decision-making authority to the European Central Bank?"

But those three parties— Centre, Green and Left— account for only twenty percent of the seats in the Riksdag (parliament), and they were overruled by the four parties in favour of joining-- Social Democratic, Conservative, Liberal and Christian Democratic-- whose leaders decided that the question on the ballot would read: "Do you feel that Sweden should adopt the euro as its currency?"

Clearly, the "Yes" side did not want to remind the voters of the larger issues involved, and it used its eighty-percent majority in the Riksdag to ensure that they would not be mentioned on the ballot.

In terms of financial resources, there was no contest. The Confederation of Swedish Enterprise, which is dominated by the major corporations, was the chief bankroller of the "Yes" campaign. Confederation officials refused to divulge how much they were investing in a favourable outcome, but it emerged afterward that it was at least SEK 500 million (over $60 million at the current exchange rate).

That may be compared with the SEK 120 million of public funds divided among the two campaigns-- 64 million to those in favour and 56 million to those against the EMU. There were also many other, generally smaller, sources of financing. It would be difficult or impossible to precisely calculate the total amounts involved. But it is estimated that, as with the 1994 referendum on EU membership, the "Yes" campaign enjoyed a financial edge of 20 to 1 or more.

There was also a sizeable disparity in terms of media coverage. A survey of the 38 most important newspapers found that, during one week of the campaign's final stages, leading figures from the "Yes" side were mentioned in a total of 6,069 news stories, while their counterparts from the "No" side were mentioned in only 1,939. The ratio for paid advertising was 99 to 1 in favour of the "Yes" campaign.

Another study, focusing on the news content of sixteen leading newspapers, found a clear bias for "Yes" arguments in twelve. Two were somewhat balanced, and the other two had no clear profile. None was biased in favour of "No" arguments.

In addition to that, proponents of the EMU controlled nearly all the major institutions of society, including the Riksdag, the government, the most powerful business organizations and the media. That advantage was exploited in numerous ways, including a media circus featuring Prime Minister Persson's colleagues from Finland who were brought in to sell the Swedes on the EMU.

They came in the closing weeks of the campaign and were granted much attention by the press as they spoke of favourable economic trends which they attributed to the EMU. They did not mention Finland's stubbornly high unemployment rate, heavy cuts in social benefits and public services, the steadily widening gap between the rich and the poor, or the opinion of the national bank's director that the EMU "probably has nothing to do" with more positive developments. Nor was it mentioned that the Finnish people were denied the opportunity to vote on the EMU; the irony of autocratic Finns being brought in to influence a democratic process on the other side of the Baltic was barely noted in the press.

Not invited to participate were Göran Persson's colleagues in Denmark, a much closer neighbour geographically and in several other respects. The problem with the Danes, of course, is that they have honoured democratic principles and twice rejected the EMU, despite dire warnings that economic disaster would surely follow. In fact, just about everything has become better (see Part III). The Swedish prime minister and his EMU bedfellows were understandably reluctant to call attention to that reality, especially since their campaign was based to a large extent on the same kinds of dire warnings that have failed to materialize in Denmark.

Contributing factors

Given the overwhelming advantage of the "Yes" campaign in nearly all areas, nearly everyone was astonished by the outcome of the referendum, and especially by the size of the defeat. With the benefit of hindsight and survey data, it is possible to identify several contributing factors.     
One was a persistent lack of enthusiasm about the European Union, in general. Since joining, Swedes have been among the most sceptical and critical within the EU, partly because the "Yes" victory in the 1994 referendum on membership was widely regarded as the result of threats, manipulation and vastly superior resources. When the same pattern became evident in the EMU campaign, many voters appear to have reacted negatively.

An opinion survey prior to the EMU referendum found that 25 percent of those who had voted for membership in 1994 were planning to vote against the EMU in 2003, while only eight percent of those who had voted "No" in 1994 were now in favour of the EMU.
For most businesses, joining the EMU is not a good idea. . . . Trade with the EMU area would probably increase, but the fastest growing markets are located elsewhere, in Asia and North America. I believe that our trade with those dollar-based areas will suffer if we adopt the euro in Sweden. In recent years, the euro has fluctuated against the dollar more widely than has the Swedish krona-- and those large fluctuations are not good for trade.
Rune Andersson,
Chairman of Electrolux

Yes or no to the EMU is first and foremost a question of power and politics, says Göran Persson these days, now that he has figured out that empty promises of more jobs in the public sector and lower rents have no credibility. And of course he is right. There will be shifts in political power-- it will move away from the Swedish parliament, and away from the influence of the Swedish people. It will be exercised to a greater extent by the political elite in an agreeable continental atmosphere, sheltered from bothersome public scrutiny.
Sture Eskilsson, former director of Swedish Employers' Confederation and a key figure in the 1994 "Yes to EU" campaign


Given that background, it is entirely possible that the enormous resources of the "Yes" campaign may have been more of a handicap than an advantage. This time, there was greater awareness of the huge financial gap than in 1994, and the issue was mentioned frequently.

Another important factor was that there were more defectors from the establishment on this occasion. A number of prominent business and political leaders deviated from the party line to argue persuasively against joining the EMU. This undoubtedly strengthened the oppositional resolve of uncertain voters-- especially those who normally vote for the pro-business Conservative, Liberal and Christian Democratic parties.

Of particular significance were the five cabinet officials, including the Minister of Industry and Commerce, who opposed the EMU. Prime Minister Persson was compelled to tolerate their presence in his government due to strong anti-EMU sentiment within his Social Democratic Party. But when he ordered them and all other officials to refrain from active participation in the "No" campaign-- breaking a previous pledge to allow open debate-- the tactic backfired. The wayward ministers obediently kept their mouths shut, for the most part; but Persson's heavy-handed censorship generated both negative publicity and resentment among the party faithful.
Confusing message

That performance was fairly typical of Persson who, as prime minister and leader of by far the largest political party, was the key figure in the entire campaign. In addition to his restrictive view of democratic debate, his efforts to explain the virtues of the EMU were marked by confusion and contradiction.

For one thing, he had to eat his own words on the subject. Prior to his sudden conversion, for example, he had noted that, "The EMU can make the EU into a nation-state"-- a development that he (at least publicly) and a sizeable majority of the po
My observations of how the EU functions in practice, in everyday life, leads me to the conclusion that one should be careful before handing additional policy areas over to the supra-national decision-making process within the Union. . . . I find it hard to see the value of a macho currency that leads to needless unemployment in our country because bankers in Frankfurt and Paris decide to engage in a prestige competition against the dollar. . . . Since I do not want to see the EU develop into a federal state, I find it very difficult to detect any convincing reason to surrender control of monetary policy. Nor do I understand how an increased risk for inflation and unemployment in Sweden can promote peace in Europe. . . . Sweden's influence within the EU should be used to promote flexibility, public trust and increased openness. As far as I can tell, a monetary union does not contribute to any of that.
Leif Pagrotsky,
Minister of Industry
and Commerce

pulation oppose. His observation that the EMU does not constitute an optimal currency area has been previously noted.
None of that changed in the years prior to the September referendum. If anything, the dangers Persson underlined have become even more evident. That, combined with the persistence of strong EMU opposition detected by opinion polls, may help to explain why Persson's campaign message was confusingly inconsistent. He started out by emphasizing the economic advantages of the EMU, which were said to include economic growth and stability. But that failed to have any effect on public opinion, most likely due to the problems noted above.

He then shifted focus, arguing that the EMU was an instrument for ensuring peace throughout Europe and that Sweden must contribute to that noble cause. But that had no observable effect on opinion, either, quite possibly because the connection was not very clear. "Is there anyone who seriously believes," asked a prominent EMU opponent in the business community, "that France and Germany, or some other EU countries, are going to start a war because Sweden remains outside the EMU?"

As voting day approached and the polls showed no sign of relief, Persson became so desperate that he and his associates started offering special deals on an almost daily basis. For example, it was said that joining the EMU would lead to the creation of 100,000 new jobs in the public sector-- a remarkable assertion, given that the ECB is constantly leaning on all EU countries to cut taxes and public spending. Another enticement was that a typical household would save an average of SEK 30.000 annually; but no such windfall has been observ
Prime Minister Persson
ed in any of the current EMU member-states (quite the contrary), and it soon became apparent that the calculations for this offer were based on wishful thinking  

Persson also agreed to the establishment of a "buffer fund", a special reserve to be set aside as insurance against any economic problems that might result from joining the EMU; of course, that proposal merely confirmed the risks involved. Another move was to declare that "Yes" to the EMU did not necessarily mean joining right away; Sweden could wait, said Persson, until circumstances became more favourable. But that offer was so vague and so blatantly manipulative that it, too, failed to have the desired effect.

Meanwhile, EMU opponents plodded along with a low-key grassroots campaign which at times was barely visible, but which obviously had an effect. "They have the money, but we have the arguments", was the proud boast of the "No" campaign, and the results seemed to confirm that assessment.
Part III . . .  

Part I
Part IV