Denmark eyeing referendum on euro - Main contents

EUOBSERVER / BRUSSELS - The EU's economic convergence plans are forcing Denmark to reconsider its euro opt-out, with a referendum on "modernising" Copenhagen's relation with Brussels possibly taking place by June.

With plans for a "Competitiveness Pact" currently being drafted by EU institutions to replace a Franco-German draft on pensions harmonisation and constitutional "debt brakes", Denmark does not want to be left out of the decision-making process, due to not being in the single currency.

After meeting a group of MEPs on Wednesday, Danish Prime Minister Lars Lokke Rasmussen i said his countrymen should reconsider the opt-outs in a referendum, especially since Denmark will take over the EU's rotating presidency on 1 January 2012.

"There are both the euro pact and the presidency, issues which make it relevant to consider whether we should modernise our relations with the EU," he was quoted as saying by Politiken daily newspaper.

The referendum may take place before the summer in order to give Mr Rasmussen a clear popular mandate when he participates in a June summit where EU leaders are set to decide on the competitiveness pact.

"It depends on what the pact will consist of exactly, but clarity [in a referendum] may be needed," he said, while stressing that he has no intention of trying to "sneak" Denmark into the euro.

"Currently, there is a no to the euro that is in place and that limits the degree to which we can be part of eurozone co-operation," the premier explained.

Danes rejected adopting the euro in a referendum held in 2000.

But this time around, poll figures indicate a slight majority in favour of scrapping all three Danish opt-outs (the euro, EU defence policy and justice and home affairs).

Dubbed the "Big Bang model", a referendum on all three opt-outs may be more successful than holding a referendum just on euro adoption, with 45 percent of Danes in favour of this move, according to a Megafon poll carried out in February. But the margin is still narrow, with 43 percent opposing it and 12 percent undecided.

A strong advocate for Denmark's euro-accession is Belgian Liberal MEP Guy Verhofstadt i, who points to the fact that the country's economy is already fully integrated into the eurozone and that the Danish krone is pegged to the euro.

In addition, he believes that there is a need for a small country like Denmark to counter-balance Germany and France who "dictated" the competitiveness pact being currently drafted for the 17 member-strong eurozone.

Scrapping the EU opt-outs could also serve the Liberal premier ahead of general elections in the autumn as both opposition parties are internally split on the issue.

But some Danish politicians warn against holding a referendum. They point to Mr Rasmussen's low popularity suggesting voters may use the opportunity to sanction the government.