'Sweden should support Cameron's EU vision'

There are several reasons why Swedes should support calls for reform of the European Union championed by British Prime Minister David Cameron, argues Mats Persson, president of the Open Europe think tank.

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British Prime Minister David Cameron gave one of his most anticipated speeches on Wednesday; a speech about the country's relationship with the EU.

The debate in Britain about the EU may seem foreign for a Swede, but the speech will have enormous consequences for the rest of the EU and for Sweden in particular.

In order to resolve the debt crisis in some of the eurozone countries, solutions were proposed involving everything from common financial and banking regulations to a common budget.

Both the UK and Sweden are thus faced with a new and existential dilemma: should we participate or not?

Swedish Minister of Finance Anders Borg has made the correct assessment that Sweden should do as the British and stay out of the banking union agreed to by EU leaders in December.

But in the wake of the crisis, there is now a risk that the EU will become a political extension of the euro area, at the expense of the EU internal market.

As a result of the stranglehold taken over the economy, the eurozone countries can start writing rules for all EU countries by using their built-in majority in the EU decision-making machinery.

Examples of these rules are the future capitalization requirements for banks, where Sweden's line so far has been to protect taxpayers against potential bank collapses.

Other countries on the continent want to have different rules.

Such a "club within a club" would force the British out of the EU. Sweden may then have to choose between joining the common currency, which up to 80 percent of Swedes oppose, or being relegated to a second-class member of the EU.

To avoid this situation, Sweden must now, along with other like-minded states, actively work to create a space in the EU for the countries that do not want to join the euro, but still want to be active members, as well as for a new, more flexible model for the EU.

We at the think tank Open Europe served as a sounding board for Cameron when he was writing his speech.

In this speech, he used strong words directed at his European colleagues: the status quo in Europe is simply not an option. Cameron pointed to three challenges: the euro crisis, the EU's declining position in the global economy, and the need to anchor European cooperation among voters - a need that is most acute in the UK, but found in many other places as well.

He promises a fundamental reform of the EU if he is re-elected, followed by a referendum on whether the country should remain an EU member.

An EU without Britain would be bad news for Sweden.

The single market would shrink by 15 percent and hurt Swedish growth. Swedish exports to the UK, which last year amounted to nearly 140 billion kronor ($21.4 billion), would likely be exposed to trade barriers.

Approximately 160 billion kronor would disappear from the EU budget, which must be made up for in part by even greater contributions from Swedish taxpayers.

Sweden would also lose its by far most important ally for a liberal and outward-looking Europe.

Without Britain, Europe's free trade bloc of Sweden, the Netherlands, and Denmark loses its ability to block unwanted decisions in the EU Council of Ministers in matters determined by so-called qualified majority.

Europe's centre of gravity would be moved sharply in a more protectionist direction. The British, with their place in the UN Security Council, would constitute something of a second European voice in matters of global peace and security. The legitimacy of the EU would be reduced.

So how should Sweden deal with these challenges?

Firstly, the Swedish government needs to realize that the British are not the core problem, nor are Cameron's attempts to reform the EU.

The biggest threat comes instead from the countries that refuse to admit that the EU as it stands today is no longer up to scratch. With or without Cameron at the helm, Britain will eventually hold a referendum on EU membership.

According to several opinion polls, a majority of Britons already want to leave. If voters are forced to choose between being sucked into the gravitational field of the euro pact, or having no Europe at all, the British will likely say "no, thanks."

However, if new, better-adapted terms for the EU are presented as a viable option, all the surveys show that most Britons want to remain.

But there is another important reason why Sweden should back up Cameron's EU vision. It is consistent with what most Swedes instinctively know. The EU is basically a strong and good idea, but must change if it is to remain globally competitive and regain the confidence of Europe's voters.

Above all, Sweden must work to make the EU more flexible. One cannot sit in Brussels and use the same standards when making decisions that affect big and small. Countries may need to work at different levels in different areas. This is by far the best way to reconcile the need (perceived or actual) for more joint decisions in the euro area, with the strong feelings among voters in countries such as Sweden and the UK that the EU meddles too much.

Where there is a clear democratic or economic case for the EU to do less, it must be possible to roll-back power from Brussels to the member states. Membership in the EU can't be a one-way street from where members can never return no matter how wrong they think decisions are.

For example, rules about working hours are best managed nationally or locally, not in Brussels, where 27 very different labour market models are gathered under one roof. Environment policy needs more overarching goals and fewer detailed aims. It is important to stop the often remarkable regional subsidies where money circulates between the rich countries of Europe. Not to mention agriculture subsidies, which are in need of a major overhaul.

At the same time, the EU should continue with what it does best: enabling and maximizing free trade and the free movement of people, services, capital, and goods.

In order to save EU cooperation, Sweden must now take on the role of a bridge between Berlin and London, in a new Anglo-German dialogue, based on international trade, sound finances, and respect for the rules.

But for this to happen, Sweden must modernize its own EU debate. It is as if Sweden still clings to an old world view, where the EU is all about Yes or No.

Some leading centre-right politicians still seem to think that criticism of the EU's everyday means they "aren't supporting the vision."

That's nonsense.

On the contrary, now the path is open for a third way for the EU, between an uncritical yes and an old-fashioned no. This third way has been brought to the forefront by economic and strong political forces.

So the question for Sweden is clear: now that Europe is going through fundamental changes, should Sweden continue to advocate for a centralized 1950s-model for the EU, designed for six similar economies?

Or should Swedes instead develop ideas for a new flexible, democratically sustainable and competitive EU structure, ready to tackle this century?

It is this light that Sweden should view David Cameron's speech and Britain's fight for change in the EU. Sweden has nothing to fear, but everything to gain, if it plays its cards right.

Mats Persson is the president of Open Europe, a think tank with offices in London and Brussels set up by leading UK business people to contribute positive new thinking to the debate about the future direction of the European Union.

This article was originally published in Swedish in the Dagens Nyheter (DN) newspaper. Translation by The Local.