News analysis: Danish public divided over support to euro zone debtors, analysts question further bailouts

08:41, February 16, 2011      

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The Danish population is neither for, nor against, giving more financial support to cash- strapped euro zone countries, a public opinion poll revealed Tuesday.

But Danish analysts are questioning the wisdom of bigger support packages to euro zone countries facing a sovereign debt crisis.

The poll, commissioned by Denmark's Jyllands-Posten newspaper, and conducted by Ramboell Analyse, a consultancy, asked whether Denmark should provide further financial support to cash- strapped euro zone countries, with an aim to stabilizing the European economy.

According to Jyllands-Posten, Some 44.6 percent of respondents said 'yes' to supporting the euro zone, and 47 percent said 'no', while the remaining 8.4 percent were undecided. A Ramboell spokesperson told Xinhua that the poll was carried out last week, and sampled 1,000 people.

FIFTY TO FIFTY

"The Danes have always been more-or-less 50 percent for, and 50 percent against, helping the euro zone," said Professor Jesper Rangvid, Institute for Finance, Copenhagen Business School, in a telephone interview with Xinhua.

"You can say it reflects the general attitude towards Europe itself: that Danes are more-or-less split."

Rangvid acknowledged that Denmark has problems with budget deficits and public spending, but was relatively better off than euro zone countries.

"Our deficits are not big compared to Portugal, Ireland, Spain and Greece. And the reason why our interest rate (on government bonds) is low is because we are viewed as a relatively stable country." This awareness of core stability could explain the evenly balanced poll result.

Denmark is a member of the 27-country European Union (EU) but not of the 17-member euro common currency zone. It voted to retain use of its own currency, the Danish krone, in a referendum in 2000.

So far, Denmark's payouts to stricken EU states have been rather limited. Along with all 27 EU members, it is liable to pay into a 60 billion euro fund, which is part of a staggering 750 billion euro financial rescue package jointly funded by euro zone members and the International Monetary Fund (IMF), and established in 2010. Denmark also offered 400 million euro in bilateral loans as part of a rescue package for Ireland's economy last year, in addition to its share of loan payments made to Ireland via the IMF and EU.

TYPICAL PROFILE

Derek Beach, Associate Professor in Political Science at Aarhus University also believes the divided opinion is normal for Denmark, and that it reflects the economic profile of Danish voters.

"Usually, you see 30 to 40 percent of voters who are very much in favour of EU integration, and it's not surprising that they say they are in favor of saving the euro," he told Xinhua in a telephone interview.

Beach added that, in Denmark, this group is primarily composed of people who have "a strong, personal and economic interest in the euro being a stable currency." Typically, this would mean a well-educated male who works in the private sector.

This analysis is borne out by an ideological split apparent in the polls. 86 percent of those who normally vote for Denmark's left-wing Radical Party would support financial guarantees for distressed euro members, but 73.9 percent of respondents who normally vote for the right-leaning Danish People's Party (DPP) would refuse help.

Beach explained this is because the Radicals are a pro-EU party, while the DPP is not. DPP voters tend to work in less skilled, public sector jobs, and "If there was a fully-integrated work market in the EU, they would risk competition from low-wage immigrants from other EU countries," Beach clarified.

EURO TROUBLE

Moreover, Beach believes Danes have become more wary of the euro since the 2008 financial crisis, when "People saw the euro as being 'safe' against speculators."

"But since the problems started surfacing with Greece, the polls have gotten significantly worse," he observed, referring to Greece's EU approved bailout in 2010.

Therefore, there is reason to believe that the poll reflects wider concerns about small, open, and economically strong EU members like Denmark, bailing out larger, but poorer neighbors within the EU.

On Monday, euro zone finance ministers meeting in Brussels announced that they are considering establishment of a 500 billion euro permanent rescue mechanism for the debt-riddled euro zone, which could take effect in 2013. The plan is subject to approval by EU leaders.

"I am one who tends to believe that we should restructure Greece's debt," Rangvid told Xinhua in response to this development. "Sure, we can keep on increasing the aid, but if at the end of the day Greece cannot pay back, then that is where one should start solving the problem, rather than simply increasing the fund."

Still, Rangvid believes Denmark has the means to continue supporting the euro zone should the need arise: "If there are some countries that should be able to bear this burden of guaranteeing euro zone countries, then we (Denmark) are in a relatively good position."

Source: Xinhua

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