Wednesday, February 09, 2005

Denmark Moves On!

The election to the Folketing of Denmark resulted in a resounding re-conformation of the centre-right coalition under Prime Minister Anders Fogh Rasmussen.

For the opposition Social Democrats, it was the second very serious setback. After the 2001 election catastrophe, it changed its leader. Now, it will change leader again. But the core problem is the deep divisions on policy issues inside the party.

The Venstre party of the Prime Minister had a small setback, although confirming its position as the largest party of the country. The junior coalition partner Conservatives, however, registred their first increase in the Folketing for 2 years, and were accordingly jubilant.

After the 2001 election victory, the government faced a most challenging EU presidency, which it handled very well.

These times there are also significant challenges on the horizon. A major structural reform of local administration has to be taken through the Folketing. A referendum has to be held on the Constitutional Treaty of the European Union, although a very broad agreement between the parties on a Yes recommendation has been secured.

Anders Fogh Rasmussen made the issue of strengthening Denmark in face of the new competition coming from the East of Europe and Asia one of his key points in the campaign. At some point in time, this will require not just an increase in R & D spending, but also more structural reforms in the welfare state system. An expert panel will report on the issue later this year.

That's when he might run into problems with his present parliamentary base. The two-party coalition is supported in the Folketing by the anti-immigration but pro-welfare state and heavily populist Danish People's Party. Serious reforms is unlikely to be possible on that basis, but might require an open hand to the more leftist liberal Radikale Venstre that emerged as one of the true winners of the election.

But that's some year into the future. For the next year or two, there is likely to be smooth sailing for the most reform-oriented government in Northern Europe at the moment.