Denmark is a small country with a population of about 5.7 million people, staying between state members of the eurozone or states that have their own currency directly associated with the euro. The economy of the northern state is largely dependent on the eurozone: Germany acquires 17% of Danish export goods; France, Italy and the Netherlands are the main importers. The persistence of a stable relationship between the Danish krone and euro is an essential thing to the economy and the export sector of this state. The National Bank of Denmark must implement decisions aimed at euro rather than internal factors, which can provoke imbalances.
For a stable balance between krone and euro, the Danish state bank should not just determine rates of 0% or lower but also invade the foreign exchange market to increase the amount of the Danish krone. These interventions could led to an impressive increase of foreign exchange reserves and prevent the growth of the krone against the euro, but also it could increase the liquidity and money supply of Denmark, which implies a significant risk to asset prices. But financial assets are not the only thing that can be of excessive value.
In the period of low interest rates after the crisis, the cost of housing increases and this begins to resemble an economic bubble in the mid-2000s. For this reason, serious measures are being taken, such as requiring greater financial stability for the buyer, who wants to take housing in a mortgage.
Even though families and Danish firms are making efforts to achieve a reduced level of debt in recent years, low interest rates have conflicting consequences. On the one hand, this simplifies the repayment of debt with an unstable rate, but also increases the demand for credit. Thus, private debt in Denmark remains above 200% of GDP, which is much higher than in many European countries.
In the beginning of 2018, the Danish Minister of Finance asked the European Central Bank to stop the incentive program, as there was a risk of financial overheating: there was a tightening of Danish financial and credit policy, while its economy was growing more than its capabilities, the labor market experienced the lack of human resources. Not only Denmark, but also several other states in the euro area, especially Germany, are in a situation of absolute employment and low interest rates, which form a threat of overheating and pressure on wages. The situation is that nominal wages in Denmark grow moderately, and real incomes rise above historical rates from the beginning of 2015.
At the beginning of this century, Denmark became the first country of the European Union, whose citizens opposed the transition to a single currency through the referendum. During the voting in 2000, 53.2% of Danes spoke against the euro. Thus, the Danish krone, introduced back in 1873, is still the countrys monetary unit. From the old EU countries at that time, the UK and Sweden also refused to switch to the euro. However, a survey of Danish residents in 2007 showed that 52% of the countrys inhabitants are no longer against the transition to the euro.
It is possible that Denmarks entry into the eurozone may be a way out of the potential problem, but it will also have its own negative consequences, which can be seen in the case of other countries that previously switched from their national currency to the euro. One of the first problems will be an increasing of prices for consumer goods, but the level of wages will remain at the same level, which will be the most unwelcome, because it could engender mass protests concerning the wrong policy by the current state bodies.
However, there are positive sides to entering the euro area, this can help solve the potential economic problems discussed in this article. The central bank of Denmark can be able to change the course of maintaining the stability of the Danish krone to the euro into a simpler regulation of national capital, which is certainly the best economic situation for country if assume that other economic sectors will remain at the same high level.
Bibliography
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2. Bredgaard, Thomas, and Per Kongshøj Madsen. Farewell flexicurity? Danish flexicurity and the crisis. Transfer: European Review of Labour and Research (2018): 1024258918768613.
3. Copeland, Paul, and Mary Daly. The European Semester and EU Social Policy. JCMS: Journal of Common Market Studies (2018).
4. Громова А. И. Опыт внедрения принципов зеленой экономики в мировой экономике (на примере Дании) //Креативная экономика. 2014. . 8 (92).
Sheep that have no shepherd: the case of Faroe Islands
Anastasia Ganina, 2nd year student of the faculty of Management and economics, Institute of World Civilizations, Moscow
Abstract: The article gives an analysis of the reasons for the formation of the autonomy of the Faroe Islands in Denmark, its legal status, the system of state bodies at the level of autonomy and their powers, the mechanisms of interaction between the autonomy and central authorities of Denmark, financing, the basis of autonomy and guarantees for its development.
Introduction
Almost every European country in the early 20th century faced the problem of separatist movements in their territories. However, the types of separatism were different and manifested in different ways. Thus, modern EU member countries such as France, Britain, Belgium and Portugal have the experience of separating colonies from their territories. USSR member countries began the exit process from the Union of Republics, and Slovenia withdrew from Yugoslavia in the early nineties of the twentieth century.
As before, the tendency of the existence and functioning of separatist movements, organizations, political parties remain in Europe. Their activity can be observed in Ukraine, Spain, France, Poland and Denmark. So, this article will focus on the phenomenon of separatism on the example of the last country in the mentioned list Denmark.
The causes of the emergence of centrifugal tendencies in different states base on various factors: economic, ethnic, political etc. Scientific interest is reflected in the following questions: is there a direct link between the structure of Denmark and the emergence of separatist sentiments? Why are the separatist movements dominating the Faroe Islands? What are the causes of separatism?
Separatism in Denmark
The secessionist form of separatism aims at the creation of its own statehood (e.g. Northern Ireland in the UK); the ultimate goal of irredentism is joining another state (e.g. Hungarians in Romania). Enosis is a movement for reunification with a historical homeland (e.g. the Greek Cypriot movement for the unification of Cyprus with Greece in the seventies of the 20th century). Devolution is a movement in which regions inside the state require and receive political power and increasing autonomy from the central government (e.g. Kaliningrad Region of the Russian Federation).
The causes of the emergence of centrifugal tendencies in different states base on various factors: economic, ethnic, political etc. Scientific interest is reflected in the following questions: is there a direct link between the structure of Denmark and the emergence of separatist sentiments? Why are the separatist movements dominating the Faroe Islands? What are the causes of separatism?
Separatism in Denmark
The secessionist form of separatism aims at the creation of its own statehood (e.g. Northern Ireland in the UK); the ultimate goal of irredentism is joining another state (e.g. Hungarians in Romania). Enosis is a movement for reunification with a historical homeland (e.g. the Greek Cypriot movement for the unification of Cyprus with Greece in the seventies of the 20th century). Devolution is a movement in which regions inside the state require and receive political power and increasing autonomy from the central government (e.g. Kaliningrad Region of the Russian Federation).
D. Gordon in the book Secession, State, and Liberty [3] highlights the main factors that are decisive in the process of the emergence of a secessionist form of separatism in his opinion.
The author believes that secession is possible if:
there is an economically depressed class in a certain part of the state;
the union breaks up and the goal for which it was created is not achieved;
most represent a mortal threat to the minority and the government is not able to protect the corresponding territory;
people demand the right to self-determination: when the minority tries to preserve their own culture and the language from assimilation;
the group tries to eliminate the past injustice in the event of conquest;
there is a rescue from discriminatory redistribution (that is, from tax schemes, regulatory policies, economic programs, redirect resources to other territories, especially in a non-democratic way);
the state is too large for effective management of the territories;
The goal is to preserve liberal purity the state provides an opportunity for less or more liberal regions to secede.
The population of the Faroe Islands falls on VII VIII centuries during the campaigns of the Norwegian Vikings. The Faroe Islands had an independent parliament (Lögting), which enjoyed considerable independence in dealing with internal issues, despite the fact that the country became part of the Norwegian kingdom in 1035.
After the conclusion of the union between Denmark and Norway in 1380, the Faroe Islands became part of the United States [1]. According to the results of the Anglo-Danish war of 18071814, Danish-Norwegian union was dissolved. Despite this fact, the Faroe Islands, as a former part of Norway, remained part of Denmark in the form of an ordinary district [2].
According to the Danish Constitution of 1850, the Faroese Lögting owned the status of a provincial council without legislative competence, although with the right to submit legislative proposals to the Danish parliament. Despite this status, it became a form of expressing political positions by the Faroese. In connection with the spread of national movements of mainland Denmark, the Faroes launched a campaign to raise their status, which can be safely call the manifestation of the secessionist form of separatism. The Party of self-government formed in 1906. It originally intended to protect the Faroese language. Then it moved to the requirement of granting autonomy to the islands. Other political parties formed on the Faeroes also advocated an autonomous regime.
The strategic position of the Faroe Islands in the Mid-Atlantic had a significant impact on their fate during the Second World War. Britain in April 1940 occupied the archipelago in order to prevent the Faroe Islands from becoming the base of the German. Despite the formal occupation, the authorities of the Faroe Islands received considerable independence. The existing flotation as the administrative organ of the Faroe Islands in May 1941 entrusted legislative powers to the constitution itself. The Faroe Islands received their flag, which was placed on merchant ships registered on the Faroe Islands. It should be noted that the British presence was quite high on the territory of the Faroes as an alternative to the German occupation, and during this period the organizational foundations of separatism were actually laid [4].
The British occupation of the Faroe Islands ended in September 1945. The islands returned to the status of the county of Denmark. This caused considerable discontent among the population. As a result of numerous discussions with the consent of the Government of Denmark in 1946, there was a consultative survey (the Faroese parliament was not obliged to be guided by its results) among the inhabitants of the archipelago declaring full state independence of the Faroe Islands. With a slight margin of 161 votes (48.7% against 47.2%), the advantage was gained by supporters of the independence. According to the results of the poll, by 12 votes to 11, Lögting announced the withdrawal of the islands from Denmark. At the same time, the third largest island of the archipelago, Suduroy, announced that it remains part of Denmark.
Over the time, due to the incomplete legitimacy of this decision, which was not taken by the absolute majority, the King of Denmark dissolved the Faroese Parliament, and the majority of the new Lögting staff opposed the separation from Denmark. The parliamentary delegation of the Faroe Islands was invited to Copenhagen, and after lengthy negotiations on March 23, 1948, the Faroe Islands received the status of a self-governing national community within the Kingdom of Denmark, which was the result of a pragmatic compromise between the two sides [5].
In 1973, Denmark joined the EU, but the Faroe Islands refused to do the same. Since 1984, the Faroe Islands have been declared a non-nuclear country, although a number of military bases of Denmark and NATO are located on the archipelago.
The Danish Constitution of 1953 does not contain a reference to the autonomous status of the Faroe Islands. The act of autonomy of the Faroe Islands adopted in 1948 in the form of the Danish law, that is, the system of public authority on the islands based on ordinary rather than constitutional legislation, and autonomy authority is a consequence of donation from the central government. The Danish parliament has in fact the right at any time to change the act of self-government without the consent of autonomies. However, it is widely believed that the Faroe Islands Autonomy Act of 1948 is not an ordinary law, but it acts as a treaty between the Faroese Lögting and the Danish parliament, and then it can be canceled unilaterally.
Currently, the legal framework for the functioning of autonomy and its bodies includes the following laws of the Kingdom of Denmark:
Act of Autonomy of the Faroe Islands of March 31, 1948;
The Act on the Organization of Public Power in the Faroe Islands of July 26, 1995;
Act on the spheres of responsibility of the authorities of the Faroe Islands of 12 May 2005;
The Act on the Powers of the Government of the Faroe Islands in the Field of International Activities of 14 May 2005.
These documents identify the subjects of the Faroese autonomy, implemented directly by residents, by the representative and executive authorities of the Faroe Islands and their officials. The subjects of autonomy of the Faroe Islands were determined through a conciliation procedure between the central government of Denmark and autonomous bodies, which lasted almost 50 years. As far back as in 1948, the act of self-government of the Faroe Islands laid down by the norm, the subjects of autonomy of the Faroe Islands are divided into two types, included in accordance with the list of A and B.