Sweden Seeks Signal From Britain

Goran Persson will be watching intently when Gordon Brown explains the results of his five tests for British euro membership today. Sweden's social democratic prime minister is facing the fight of his political life as his country debates whether to adopt the single currency or not.

With three months to go before the referendum, and an unprecedented No camp poll lead of 18 points, London is very much on his mind.

"I am quite sure the British will send a clear signal about future membership and that is enough for us," Mr Persson told the Guardian. "To be outside the core of economic cooperation is to go for second-degree EU membership and to be marginalised."

"I think we will decide to join," predicted a middle-aged man drinking lager on the city's waterfront. "The Finns were worried about price rises but they have the euro and are doing better than us."

Yet winning the argument will be an uphill struggle: the poor state of the eurozone economies, especially Germany's, is bad news for the Yes camp. And if Tony Blair and his iron chancellor can prudently wait and see, why can't 9 million Swedes?

Scandinavia's largest country has much in common with its neighbour across the North sea. It too joined the club late, in 1995. Five of its six biggest trading partners are outside the eurozone. But "Brussels" has been less of the term of abuse it is in the UK since Mr Persson ran a successful EU presidency in 2001.

Sweden's decision matters to others. If it votes yes on September 14, Denmark is likely to follow suit. And with the 10 incoming EU members obliged to adopt the euro, that would leave Britain alone outside.

Mr Persson, unlike Tony Blair, has no paralysing feud with a powerful finance minister. But domestic politics and European choices are as intertwined in the Riksdag as they are at Westminster.

Since calling the referendum last winter, Mr Persson has muzzled anti-euro cabinet critics and faced charges of silencing dissent.

Leif Pagrotsky, the trade and industry minister, has pledged not to campaign for the No side.

But he makes no secret of his belief that retaining national control over monetary policy is more important than avoiding currency volatility outside the eurozone. "We should not take a decision today to guard against the unexpected," Mr Pagrotsky argues. "We can wait."

The core of Mr Persson's case for joining is that the growth and stability the eurozone can deliver is the only way to maintain Sweden's generously funded welfare system.

Last week, addressing the country's second largest trade union, his pitch combined altruism and self-interest, the winning recipe for small countries as they ponder European choices. "Why," he asked, "should we stay out of something we are already qualified for?"

Mr Persson makes much of the need to avoid isolation: the Yes campaign lapel badges also bear the words "safety and togetherness" - a message that belies the complexities and risks of the decision.

It is already clear that a famously consensual society is bitterly divided over the euro. The media, complain No activists, is behind membership and the powerful Federation of Swedish Industry is expected to spend millions of krona on the campaign.

The Greens, the Left party of former communists, and the Centre party cannot match these resources. But they clocked up a big advantage when LO, the biggest union, stayed on the euro fence after the government refused to set up an emergency buffer fund to protect jobs and welfare.

Sweden's swing constituency is women, aged 40-60, in the public sector, where the government's not so secret weapon is Anna Lindh, the popular foreign minister.

For Gunnar Lund, deputy minister of finance, the case for joining is blindingly self-evident. "In a few years all the countries round the Baltic will be using the euro," he says. "Why should just we - and the Russians - stay out?"

Lars Ohly, a Left party MP, has a blunt response: "Every time the European commission or EU finance ministers talk about Sweden they say we must cut taxes, encourage enterprise and reduce our welfare sector.

"They never talk about reform or social injustice. They have an exclusively pro-business and neo-liberal agenda."