| Population | 5,602,628 |
| Surface area | 43,094 km² |
| Capital | Copenhagen |
| GDP | USD208.5 billion (2012 est.) |
| Currency | Danish kroner |
| Corruption level (Transparency International Corruption Perceptions Index 2012; 100-90 = very clean, 0-9 = highly corrupt) | 90 (rank: 1) |
| Current government | Minority government by Social Democrats, Social Liberals and Socialist People’s Party |
| Three largest cities | Copenhagen, Aarhus, Odense |
| Baltic Sea coastal regions | Most southern and eastern parts of Denmark, e.g. Zealand, Fyn and Bornholm |
By Anders Wivel
Despite a change of government in September 2011, Danish politics have been largely characterised by continuity since the beginning of the economic crisis in 2008, although with an increased emphasis on reforming the welfare state in order to increase growth and create new jobs. A pragmatist turn in domestic and foreign policy priorities across the political spectrum has left economic austerity at centre stage, whereas the promotion of values at home and abroad plays a more marginal role than previously. The Baltic Sea Region (BSR) continues to play a role in Danish foreign policy, with the Danish policy framework for the BSR aiming to enhance co-operation among Baltic Sea states.
Government
Denmark has a long tradition of coalition governments. Its last single party government was in 1981-1982. In the Danish Parliamentary election on 15 September 2011, the incumbent centre-right coalition, led by Prime Minister Lars Løkke Rasmussen from the Liberal Party, lost to a centre-left coalition led by Helle Thorning-Schmidt from the Social Democrats. Lars Løkke Rasmussen had replaced Anders Fogh Rasmussen, the previous leader of the Liberal Party, as Prime Minister in 2009 when Fogh Rasmussen was appointed Secretary General of NATO. The centre-right government was a coalition of the Liberal Party and the Conservative Party, supported by the nationalist Danish People’s Party and the small libertarian Liberal Alliance. The new centre-left government is a coalition of the Social Democratic Party, the Socialist People’s Party and the Social Liberal Party. This coalition is supported by the left-wing Red-Green Alliance. The election result was close, with the parties supporting Helle Thorning-Schmidt winning 50.2% of the vote as opposed to the 49.8% given to the parties supporting Lars Løkke Rasmussen. Thorning-Schmidt’s victory was expected, and there was no major reaction from the financial markets.
The government coalition led by Helle Thorning-Schmidt, the first female Prime Minister of Denmark, has been troubled by internal divisions since the beginning, with the Social Liberal Party demanding a more liberal economic agenda than the two other parties, and a more liberal migration policy than the Social Democratic Party. The Social Liberal Party was the only party entering the coalition with an election victory, having won eight seats. The Socialist People’s Party lost seven seats and the Social Democrats lost one seat. In addition, the Social Liberal Party was the only coalition party with a credible coalition alternative. As the traditional centre party in the Danish Parliament, it has a long tradition of close co-operation with both left and right. The party succeeded in setting the agenda for government policies, and Social Liberal leader Margrethe Vestager, rather than Helle Thorning-Schmidt, was soon seen as the most influential member of the government. In contrast, the Socialist People’s Party came into the government coalition with a substantial defeat. This was due mainly to the modification of the party’s traditional left-wing policies, which had been reformulated in order to make the party ready for government participation in combination with the challenge from the Red-Green Alliance, which picked up many former Socialist People’s party voters, winning eight seats at the election and continuing to gather support, according to opinion polls. As a result, the Chairman of the Socialist People’s Party Minister of Foreign Affairs, Villy Søvndal, decided to step down as party chairman. This prompted a leadership election, which Member of Parliament Annette Vilhelmsen won in October 2012, signalling a return to a more traditionalist position and a victory for party grassroots. A number of well-known younger party members left active politics or the party altogether, but the result in the short run has been little change in substantial party positions or electoral support.
Policies
Danish politics are characterised by strong support for the welfare state across political parties, with only the small libertarian Liberal Alliance, occasionally supported by the Conservative Party and the Liberal Party, challenging the consensus. However, since the beginning of the economic crisis in 2008 and in particular since the change of government in 2011, a new regime of austerity has had a decisive influence on Danish political discourse. In particular, two cases receiving heavy media coverage in 2011 and 2012, ‘poor Carina’ and ‘lazy Robert’, have influenced the political debate. In the first case, the debate focused on what it means to be poor in Denmark and to what extent citizens receiving unemployment benefits sometimes have economic opportunities exceeding those of citizens holding jobs. The second case focused on incentives for taking a job and the right of those unemployed to turn down job offers. In both cases government and opposition politicians, in particular from the Liberal Party and the Social Democrats, were united in their calls for citizens to contribute to society by taking up a job whenever possible. This focus on the individual responsibility of the citizen was combined with a focus on collective responsibility for the future of the Danish economy and society. Public spending was reduced in 2011 and 2012. In 2011 alone, public spending fell by 0.7%, the largest reduction in public spending since 1990. Except for the leftwing Red-Green Alliance, there was widespread political consensus in the Danish Parliament on maintaining austerity policies. However, some of the traditional trade union allies of the Social Democrats were critical, in particular as the government decided to uphold the previous government’s reform of unemployment insurance, which left an increasing number of unemployed with no right to receive insurance or government benefits after two years of unemployment. The unemployment level in Denmark was relatively constant from February 2010 to December 2012, only varying between 6.1 and 6.4% of the workforce.
In addition to austerity policies, government policies focused on education. Debates over primary school education in particular took centre stage in late 2012 and early 2013 over a government proposal to create longer school days with more variation between activities and subjects than in the existing school system with the goal to increase learning. The government saw this as a cornerstone for preparing Denmark for a globalised marketplace and as a response to international surveys on primary school learning, most notably PISA, placing Denmark far below the expectations of Danish politicians and decision makers. However, the proposal caused controversy among teachers, who were expected to teach more hours per week. Migration policies played a much less prominent role than in the previous government.
The most important Danish foreign policy priority in 2012 was the Danish EU Presidency. In accordance with the general priorities of the Danish government, stimulating growth and creating jobs were at the top of the Danish Presidency’s agenda. From the beginning, the Prime Minister framed the Danish tenure as a ‘bread and butter’ presidency focusing on effectively facilitating continued co-operation on meeting current political and economic challenges, rather than a visionary presidency aiming to set a new agenda. Judged by these standards, the presidency was viewed as a success by most Danish and international observers. In general, the government has continued the so-called ‘activist’ agenda characteristic of Danish foreign policy since the end of the Cold War. This entails a strong engagement with European and global challenges and an active pursuit of Danish priorities through diplomatic, institutional and military means. However, there is a change of tone and emphasis in foreign policy priorities compared to the past decade. Arguments about foreign policy activism as a means to defend and promote liberal-democratic values internationally are now less prominent and arguments emphasising activism as a means to pursuing more traditional foreign policy interests are more prominent in interviews and speeches by ministers.
Economic situation and anti-crisis strategies
Danish economic competitiveness declined by 20% from 2001 to 2011. This was mainly the result of Danish wages growing more quickly than wages in competing countries. From 2003 to 2008, a housing bubble developed in the Danish property market. The creation of the bubble is often attributed to the combination of lending practices by mortgage banks financing property loans and the decision by the Danish parliament to allow for a new type of housing loans, which allowed property buyers to pay interest only for a ten year period rather than start paying back their loan immediately, as was the traditional Danish practice. Also, central and local authorities repeatedly exceeded their budgets throughout the 1990s and calls for economic reforms by independent economists were largely ignored across the political spectrum during the reign of the Fogh Rasmussen governments of 2001-2009.
Current Danish economic policy is based on the government’s so-called ‘2020 plan’ published in May 2012. The plan identifies the major economic challenges until 2020 and how to meet them. The plan aims to improve conditions for economic growth and to enhance public finances between 2012 and 2020. The plan takes its point of departure from the economic policy of the previous centre-right government, and somewhat controversially, the reforms of early retirement and unemployment insurance that the Social Democrats and the Socialist People’s party criticised heavily when in opposition. The 2020 plan entails labour market reforms, increased efficiency of the public sector and spending cuts across a number of policy areas. Defence cuts and planned reforms of the allocation of economic stipends for students are among the policy areas expected to contribute most heavily to balancing the budget. One billion euros is expected as a rebate on EU membership. Also, government benefits for the unemployed without economic means (‘kontanthjælp’) will be reformed in order to enhance incentives for taking up a job. The centre-left government has maintained the overall tax policy of the previous centre-right government, which was intended to increase the economic gap between citizens inside and outside the labour market while keeping in sight the goal that Denmark should remain a country characterised by a high degree of economic equality.
Denmark and the Baltic Sea Region
Baltic Sea Region (BSR) policies played a prominent role in early formulations of Danish foreign policy activism. By the end of the Cold War, Danish support for Baltic independence and ensuing Danish-Baltic co-operation is viewed by Danish policy-makers as an early success story of Danish foreign policy activism and an important ‘foreign policy lesson’, wherein ambitious value promotion paid off in terms of international recognition and tangible results. Although co-operation continues in a wide range of policy areas, including traditional ‘high politics’ issues such as security and defence, Danish BSR policies no longer hold the prominence they held in the past. Still, Denmark hosted the annual forum on the EU Strategy for the Baltic Sea Region (EUSBSR) in Copenhagen in June 2012. It also continues to work on the implementation of the recommendations in the report with respect to promoting co-operation between the Nordic and Baltic countries, commissioned by Denmark and Latvia in their capacities as presidents of the Baltic Council of Ministers and the Nordic Foreign Policy Cooperation in 2010. Most importantly, the Danish framework for the BSR aims to strengthen co-operation among Baltic Sea states, including Russia, with a particular focus on creating economic growth and protecting the environment. Thus, Danish Baltic Sea policies reflect the focus on economic growth found in Danish domestic policies as well as Denmark’s ambition to brand itself as a pace setter in international environmental and climate policy. The goals are pursued primarily within the Council of Baltic Sea States, the EUSBSR and the Northern Dimension. This reflects the long-held Danish preference for working simultaneously within multiple multilateral settings in order to pursue its foreign policy interests and promote Danish values internationally.
Outlook
The strong support for economic austerity policies and welfare state reform from a large majority in the Danish Parliament and a more pragmatic debate on most policy issues means that Danish policy priorities are likely to remain stable over the years to come. Like other policy areas, Danish Baltic Sea policies are likely to reflect a pragmatic policy discourse and economic restraints.