Sweden sees role as EU model

Sweden takes over the EU’s six-month rotating presidency on July 1 at a time when its liberal, green agenda seems out of step with growing Euroscepticism and calls for protectionism in the bloc.

“Sweden faces one of the most uncertain and complex presidencies in recent years,” says Mark Rhinard of the Swedish Institute of International Affairs.

Swedish policymakers say the agenda of their presidency will be hostage to whether the Irish vote in favour of the Lisbon reform treaty in a referendum expected in September or October. That could either clear the way for the EU to streamline how it makes decisions or throw the process into disarray.

Nevertheless, they believe Sweden’s experience could offer lessons to other European countries. Sweden’s handling of its banking crisis in the early 1990s has attracted widespread interest from policymakers and economists elsewhere.

“We learnt a tough lesson about what a gigantic budget deficit means and how difficult it is to restore sound public finances,” Cecilia Malmström, Europe minister, said. “We have been careful about falling into that trap again.”

The government has been fiscally prudent at home and a vocal opponent of loosening and protectionism elsewhere. Ms Malmström says signs of a domestic recovery while other EU countries face rising deficits prove Sweden took the right path.

Sweden’s export-oriented economy was initially one of the worst affected by the global downturn, with gross domestic falling 5 per cent in the fourth quarter of 2008 compared with the previous quarter. However, in the first quarter of this year GDP fell only 0.9 per cent and economists forecast Sweden will be one of the first EU members to recover because of its strong manufacturing sector.

“We need to raise taxes and cut expenditures [in Europe] rather than increase the stimulus,” Fredrik Reinfeldt, prime minister, said on Tuesday. “This is the shift we will now see.”

Sweden’s presidency will focus on reviving the Lisbon agenda – an economic reform plan unrelated to the treaty – to boost EU competitiveness, which will create jobs over the long term, Ms Malmström said.

Sweden, consistently rated one of the most competitive countries, believes that its liberal but socially protective policies could provide a model for the rest of Europe, not least its reform of taxes and benefits to improve work incentives.

Preparing the EU’s position ahead of the summit on climate change in Copenhagen this December will also come under its presidency. “Sweden has a great name on environmental issues,” says Mr Rhinard. “This will really play in their favour.”

Ms Malmström accepts that the “very enthusiastic climate mood has been watered down a little by the economic crisis”, as countries consider the potential costs. However, she said Sweden provided a good example, having had a carbon tax for three decades. “Sweden combined strong climate responsibility with economic growth,” she says. “You can combine them, there’s no need to just have one or the other.”

Sweden – once seen as an Eurosceptic country – also believes it is an example of how to overcome apathy towards the EU.

While turnout in this month’s European parliamentary elections was a record low, Swedish turnout rose five percentage points and its Eurosceptic parties fell back.

The government credits efforts by politicians to bring the EU into everyday debate as well as a school information campaign.