Denmark Rejects European Currency

C O P E N H A G E N, Denmark, Sept. 28, 2000 -- 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 beleagueredsingle 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’ssmallest, 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, whilesomber 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 officesat Parliament to concede defeat. Close to tears, he said: “I shallnot 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 theEuropean Union, but we will naturally still fight for Denmark’sinterests.”

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

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 willspark a European Union at different speeds,” he said, adding thatDenmark was unlikely to try another euro referendum for at leastfive 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 notclose the door to Denmark joining the euro in the future.

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

The Danish Central Bank said the economy was fundamentallysound and reaffirmed that the crown would remain tied to the eurowithin the existing fixed exchange rate policy.

German Finance Minister Hans Eichel said the euro zone wouldmove ahead with the “irreversible” process of Europeanintegration.

British Prime Minister Tony Blair, struggling in opinion pollsand facing a possible general election next year that could bedominated by the European issue, said a Danish “no” would nothijack Britain’s euro debate.

Britain and Sweden are the only other two EU states outsidethe euro zone core. Both have pledged to let voters decide whetherto 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 andwe have got our own decision.”

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

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

Shades of Maastricht

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

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

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

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

Many believe Danish rejection of the euro could deependivisions within the 15-nation European Union, with euro zonemembers 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 futureand those left outside will be, let’s say, second-rate members,”said Ralf Pittelkow, former adviser to Rasmussen.