The Danish EU presidency: Bridge over troubled water

Summary

The current climate of lasting crisis stands in marked contrast to Denmark's last EU presidency, held in 2002, at a time of European optimism with the recent introduction of the euro and preparations for the biggest-yet wave of enlargement.

The current presidency is the seventh for Denmark, which joined the European Communities in 1973, along with the UK and Ireland.

The stint will represent a great challenge for Helle Thorning-Schmidt, who became Denmark's first female prime minister when her 'Red Alliance' narrowly beat the incumbent centre-right government in October. Thorning-Schmidt leads a government of four coalition parties with 89 seats in the 179-seat parliament against 86 for the opposition.

The election represented a small but significant victory for European integration as Thorning-Schmidt, a College of Europe graduate, has removed national border controls reinstated by the previous government and pledged to remove some of the country's opt-outs from EU policies.

Thorning-Schmidt's European connexion notwithstanding, it appears that her presidency agenda will be overshadowed by the financial crisis. The Danes, not members of the eurozone, have indicated they will not play a central role in the elaboration of the response to sovereign debt crisis and in particular the drafting of a new treaty to enforce fiscal discipline.

The Danes nonetheless hope to move forward on other items important to them. These include improving the EU's environmental standards and making progress in negotiations on the 2014-2020 European budget.

Issues

A Europhile in Copenhagen

Prime Minister Helle Thorning-Schmidt's narrow electoral victory in Denmark had an immediate impact on EU affairs: Denmark made a U-turn, removing border controls, installed in what the former cabinet said was a bid to halt illegal goods.

These border controls were put in place by the previous centre-right government, whose ruling majority had been dependent on support from the anti-immigration Danish People's Party. Germany and the European Commission had strongly objected to the border controls, as they were seen as contravening the Schengen treaty governing free movement in Europe.

The government has also re-instated, for the first time since 2002 and Denmark's last EU presidency, the position of minister for European Affairs, held by Nikolai Wammen. And it also plans on holding referendums to remove the country's opt-outs from EU policies in home affairs and foreign policy.

European affairs have played an important role in the new Danish prime minister's political career. Thorning-Schmidt is the first graduate of the College of Europe to become a head of a government. Her experience as MEP between 1999 and 2004 is also notable.

While other 'eurocrats' have since come to power in the member states – including Prime Ministers Mario Monti in Italy and Lucas Papademos in Greece – Thorning-Schmidt is the only one who can claim an electoral mandate.

Thorning-Schmidt's European connexion also goes into her family ties. Her husband, Stephen Kinnock, is the son of Neil Kinnock, a former leader of the British Labour Party and European commissioner.

Deepening eurozone crisis

In her inaugural address to the Folketing (Danish Parliament) on 4 October, Thorning-Schmidt said: "The primary task for the Danish EU presidency will be to ensure that we in Europe take joint action to put the economic crisis behind us. We must strengthen the basis for responsible growth and employment."

The economic situation has not improved despite three European Council summits to address the eurozone sovereign debt crisis. Europe's economic situation looks almost certain to deteriorate significantly in 2012. European Central Bank President Mario Draghi has repeatedly warned of "high certainty" and "substantial downside risks" in the near future.

Similarly, numerous analysts have made specific negative prognostications. Deutsche Bank economists expect the eurozone economy to shrink 0.5% in 2012. Other analysts have identified data suggesting the eurozone already began contracting in the last quarter of 2011. This will put additional strain on governments as the economy shrinks and tax revenue declines as a result.

At the same time, the crisis has pushed European leaders to take unprecedented and rapid moves towards a new treaty, likely to exclude the United Kingdom. The treaty is likely to dominate EU news for the first months of the presidency.

However, Denmark's role in elaborating the institutional response to the eurozone crisis is limited by the country's small size, its non-membership of the euro area, and the growing importance of European Council President Herman Van Rompuy.

Wammen, the Danish minister for European Affairs, said just days before the country took over the rotating presidency from Poland: "We expect the president of the European Council to play the leading role in drafting the new agreement."

Denmark opted out of the single currency after voters rejected it in a 2000 referendum by a margin of 53.2% to 46.8%. Opposition to the single currency in the country has risen dramatically in recent months.

The country is reportedly divided on the proposed 'fiscal compact' and the government has said it will not hold a referendum on joining the eurozone in the immediate future.

Remembering 'green growth'

Danish Ambassador to the EU Jeppe Tranholm-Mikkelsen has said that environmentally friendly growth would have been the top priority of the presidency were it not been for the eurozone crisis. The Danes have nevertheless put a heavy emphasis on progress in this area.

The Danish authorities pride themselves on their country's environmental achievements, notably in the field of renewable energy. In 2010, 33.1% of Danish electricity production came from renewables, nearly two-thirds of this through wind power.

This is a sharp departure from Denmark's presidency predecessor, Poland. The latter is heavily dependent on coal, is expanding the exploitation of shale gas, and faced controversy for its support for fossil fuels in the context of the presidency. These stark differences have been criticised by some analysts for contributing to the incoherence of six-month presidencies.

In February 2011, the Danish government published an Energy Strategy for 2050 which would include total independence from coal, oil and gas by that year. This has been praised by NGOs such as the WWF, but the proposal has not yet been approved by the Parliament.

The presidency has said it wants to raise consideration of environmental issues in various EU policy areas - including agriculture, fisheries and transport. But perhaps the most significant issue to be addressed is the review of the Energy Efficiency Directive.

Environment Minister Ida Auken recently called for the inclusion of binding targets for energy savings, notably for the refurbishment of buildings. The Danes have also said they will use the predicted scenarios in the Commission's 2050 Energy Roadmap to push for their energy efficiency goals.

Budget talks

The continuing negotiation of the EU's 2014-2020 budget ('multiannual financial framework', or MFF in EU jargon) will also be a significant item on the presidency's agenda.

Speaking at the European Policy Centre think tank, Tranholm-Mikkelsen said that, contrary to Copenhagen's previous expectations, the negotiations would probably not be finalised under their presidency.

"It has become evidently clear that this will not be concluded in June, everybody has been telling us that," the envoy said.

Instead, the negotiations will probably end during the Cypriot presidency in the second half of 2012. The Danes hope to have a substantive if not final agreement on the budget's direction at their presidency's final Council summit on 28-29 June.

The Commission's budget proposal presented earlier this year included controversial plans to provide the EU with its own tax base ('own resources') and shift funding towards research. The latter was fleshed out as the €80-billion Horizon 2020 programme. However, it is uncertain whether member states will accept new ways of financing the European budget and they may opt to continue favouring existing programmes.

Diplomats had previously warned that a budget compromise in the first half of 2012 would be impossible due to France's presidential elections to be held in the spring and the importance of EU farm policy to the country, of which it is the biggest beneficiary. The EU's Common Agricultural Policy currently makes up over 40% of the EU budget, by far its largest item.

Positions

Prime Minister Helle Thorning-Schmidt's October inaugural address to the Danish Parliament put heavy emphasis on her country's upcoming EU presidency. She listed green growth, research and the single market as areas in which her government will push for a greater role in the EU budget.

"In general, we will enhance Denmark’s involvement in the EU. I am certain that we will get more out of cooperating with our neighbours on, for example, cross-border crime than by building new inspection facilities at the Danish border. The government also wishes to abolish the Danish opt-outs: the opt-out on defence and the opt-out on Justice and Home Affairs," she said.

Speaking to the media in Brussels in December, Minister for European Affairs Nicolai Wammen said: "Let me be frank with you. Denmark has been taking over its presidency at the most difficult of times. But still we are looking forward to the job."

"We see it as a key task of the Danish presidency to [unite] the countries that are inside and those outside the eurozone. So if you will allow me to bring the lyrics of an old Simon and Garfunkel song, Denmark would like to be the 'bridge over troubled waters'," he said.

Ulrich Bang, director of European Affairs at the Danish Energy Association, says Denmark's six months at the helm of the EU will be critical to whether the bloc can fulfil its energy efficiency goals.

"If European decision-makers do not create clarity over the medium-term and long-term target during the Danish presidency, the necessary investment framework for large-scale and long-term green investments will not be in place. To do nothing is not an option. It is just choosing an extension of a fossil-fired energy system," he said.

Piotr Maciej Kaczyński, a research fellow at the Centre for European Policy Studies in Brussels, said that Denmark, along with Poland and Cyprus, are failing to cooperate in the framework of their 'trio' of presidencies. Denmark is succeeding Poland in the rotating presidency, and Cyprus takes over in July.

He argued that the Danes only became interested in EU affairs with the election of their new government in the autumn and, as a result, they had been little involved in setting the trio's common goal.

"Nobody in fact was interested. They had those 14 preparatory meetings or so – nice – and produced an 18-months programme, but it's not their programme, it's the Commission's," he said.

Timeline

• 1 Jan. 2012: Denmark takes over the rotating EU presidency, succeeding Poland.
• End of Jan. 2012: Council President Herman Van Rompuy will seek to have a draft of the intergovernmental accord for the 'fiscal compact' treaty.
• 30 Jan. 2012: Extraordinary European Council meeting.
• 1-2 March 2012: Next regular EU summit. The '17+6' group and others expected to sign to new intergovernmental treaty.
• 25 May 2012: Regular European Council meeting.
• 28-29 June 2012: Regular European Council meeting.
• 1 July: Beginning of Cyprus EU presidency.

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