Denmark Rejects European Currency

Denmark rejected the euro in a historic referendum today, with opponents of the single currency saying the vote was a snub to Europe’s elite.

With 96 percent of the votes counted, the anti-euro “no” vote was put at 53.1 percent against 46.9 percent for a “yes.”

The result is likely to dent confidence in the beleaguered single currency and could reshape Europe’s political landscape.

But European Union leaders and monetary chiefs were quick to dismiss the impact of the referendum. French Prime Minister Lionel Jospin said Denmark was a small nation and a “no” result posed “no problem” for the euro.

The euro fell below 87.80 cents as the “no” count stacked up, but economists said the currency’s downside was limited by the threat of central bank intervention.

For the second time in less than a decade, one of Europe’s smallest, richest, but fiercely independent nations had thumbed its nose at those trying to drive the EU toward closer integration.

‘A Snub to the Elite’

Jubilant anti-euro campaigners heralded a win, while somber government ministers, who had fought hard to make Denmark the 13th member of the euro zone, warned the result could split Europe in two.

“This is a great victory for the Danish people … and a snub to the elite,” said Pia Kjaersgaard, leader of the far-right, anti-euro Danish People’s Party.

“Danes have said a clear “no” to developing a United States of Europe,” she told reporters.

Prime Minister Poul Nyrup Rasmussen emerged from party offices at Parliament to concede defeat. Close to tears, he said: “I shall not try to hide the fact that I am disappointed with the result.

“It was a defeat for me, it was a defeat for us,” he said, adding that Denmark now risked being sidelined within Europe.

“It will be more difficult for Denmark to work within the European Union, but we will naturally still fight for Denmark’s interests.”

Projected turnout from about 4 million voters was 86-87 percent.

Finance Minister Mogens Lykketoft told Reuters that a “no” vote risked ushering in a two-tier EU.

“One can only fear that this “no” to joining the euro will spark a European Union at different speeds,” he said, adding that Denmark was unlikely to try another euro referendum for at least five years.

European Leaders Shrug Off Vote

France, which currently holds the European Union presidency, said the euro zone group respected the Danish vote, which did not close the door to Denmark joining the euro in the future.

European Commission President Romano Prodi regretted the result but said Denmark’s role in the Exchange Rate Mechanism — a precursor to joining the euro — would not change.

The Danish Central Bank said the economy was fundamentally sound and reaffirmed that the crown would remain tied to the euro within the existing fixed exchange rate policy.

German Finance Minister Hans Eichel said the euro zone would move ahead with the “irreversible” process of European integration.

British Prime Minister Tony Blair, struggling in opinion polls and facing a possible general election next year that could be dominated by the European issue, said a Danish “no” would not hijack Britain’s euro debate.

Britain and Sweden are the only other two EU states outside the euro zone core. Both have pledged to let voters decide whether to join the euro in the next few years.

Asked if the Danish result would delay a British referendum, Blair said: “No, it doesn’t. Denmark has got its own decision and we have got our own decision.”

Swedish Prime Minister Goran Persson blamed the weak euro for the Danish result and said he did not expect any knock on effect in Sweden.

“The result will have no impact in the short run. The important thing for Sweden … is employment, the phase of the economic cycle and wage negotiations. That’s what we have to look at,” he told a news conference in Stockholm.

Shades of Maastricht

The projected result almost exactly mirrored the shock results of a 1992 referendum when Danes rejected the Maastricht Treaty — the blueprint for monetary union.

That vote shook confidence in the single currency project and prompted a financial crisis that saw the pound and lira expelled from the Exchange Rate Mechanism.

Nothing on that scale is expected after this latest referendum, the first time a European Union state has had the chance to vote on the euro.

But the repercussions could rumble far beyond the borders of this small, north European coastal state.

Many believe Danish rejection of the euro could deepen divisions within the 15-nation European Union, with euro zone members forging ahead with closer ties and leaving the euro “outs” in the slow lane.

“I think the euro zone will be the power engine in the future and those left outside will be, let’s say, second-rate members,” said Ralf Pittelkow, former adviser to Rasmussen.