Sweden Cautions Against Two-Speed Europe

Sweden fears deeper integration in the eurozone could see other countries reduced to “second-class members.”

Swedish finance minister Magdalena Andersson answers a reporter's question, October 2, 2012
Swedish finance minister Magdalena Andersson answers a reporter’s question, October 2, 2012 (Socialdemokraterna/Anders Löwdin)

Deeper eurozone integration risks relegating non-euro countries like Sweden to the status of “second-class members of the European Union,” its finance minister, Magdalena Andersson, warned last week.

Writing in Stockholm’s Dagens Nyheter, Andersson warned against reduced influence for countries outside the eurozone if those countries that share the currency tighten their budget rules and pool economic governance.

“Ultimately, this may also affect the design of the EU single market which is so important for Sweden,” according to Andersson.

The risk is exacerbated by Britain’s renegotiation of its membership terms. As the Atlantic Sentinel reported in May, Germany’s proposal to link its push for a more integrated eurozone with the United Kingdom’s desire for a less closer union could see Europe end up with an integrated core of euro states surrounded by loosely affiliated countries like Denmark, Sweden and the United Kingdom.

Britain’s foreign secretary, Philip Hammond, confirmed last month that such a two-speed Europe was one of his government’s objectives. “We seek reforms that will allow those countries that want to integrate further to do so while respecting the interests of those that do not,” he said.

This would build on the existing architecture of the Schengen free-travel area and the European banking union, neither of which involves the British.

Denmark, which is the only other European Union member state that has a formal opt-out from the euro, supports the British proposals.

Sweden, which is formally committed to one day adopt the euro, is wary. Its Social Democrat-led government is less sympathetic than former prime minister John Fredrik Reinfeldt’s, a conservative who was voted out in September. Sweden, a trading nation like Britain, values the European single market and would likely support British proposals for improving the ease of doing business across European borders, especially for service companies. But formalizing a divide between euro and non-euro states would be risky.

The currency union’s nineteen members account for two-thirds of the European Union’s population and half its economic output. If others countries, like Poland, join, this inner Europe would eventually dominate the bloc.

“All countries must count,” warns Andersson. She suggests a flexible arrangement, one in which new forms of cooperation “are open to all EU member states that wish to participate” while decisions about the single market are always taken by the union as a whole.

Britain could probably live with that. But Germany — which believes the only way to avoid a transfer union in which the richer member states would permanently bail out the poor — may hesitate, seeing flexibility as a potential escape hatch for slackers in the south of Europe who refuse to manage their economies and public finances the way it does.

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