Firestorm at the Folketing!

The 179 member Folketing (Danish Parliament) has become the center of yet another intense political situation playing out in Europe. The Danish Socialist People’s Party said it was leaving the governing coalition, which sparked fears that the coalition government of Prime Minister Helle Thorning-Schmidt might collapse. 

The Socialist People’s Party is the second biggest in the three-party government which holds 45 seats in the 179 member body quit the coalition over the governments recent plan to sell stock in Dong Energy, the state owned energy company to investors from Goldman-Sachs the deal would invest $1.5 bn into the system, which some argue is badly needed. 

The government has also received heated debate from it’s third coalition member the Red-Green Alliance which on on Jan. 28 grilled Finance Minister Bjarne Corydon for almost four hours in a hearing, criticizing him for his plans for Dong, the world’s biggest operator of offshore wind farms. An online petition seeking to block the deal has gathered more than 195,000 signatures, and thousands of protesters gathered outside the parliament in Copenhagen late yesterday to voice their anger.

Dong is selling the shares as part of a financial restructuring announced in February last year to cut costs, reduce debt and bolster investments in oil and gas exploration, as well as in wind farms. The plan included cutting expenses by 20 percent and selling assets to raise 10 billion kroner.

The deal worth 8 billion-krone ($1.5 billion) investment in Dong Energy gives Goldman-Sachs an 18% stake in the company. Parliament’s finance committee is due to vote today on the Wall Street bank’s offer to buy an 18 percent stake in the Danish utility. A Megafon poll conducted by TV2 showed 68 percent of Danes are against Goldman holding the stake

“The government already has low support in polls and this case won’t help in any way,” Jens Hoff, a professor of political science at the University of Copenhagen, said by phone. “Core voters are running away because Social Democrats and Socialists consider the whole thing a very bad idea.”

Goldman’s investment in Dong “is privatization which fits with the image of what a center-right government would have done,” Hoff said. “This fits the tale of a Social Democrat government pushing right-wing policies and Corydon hasn’t been able to change that agenda; the question remains who will be able to do that.”

In a Jan. 26 poll published by newspaper Berlingske, 55.1 percent of Danes said they’d vote for the opposition bloc led by Lars Loekke Rasmussen’s Liberal Party. That compares with 49.7 percent in the Sept. 15, 2011 general elections. A Danish electoral term lasts a maximum of four years.

Corydon has rejected calls urging him to inject state funds into Dong or to delay the Goldman deal until new alternative offers are examined. Postponing the vote could harm Dong’s credit ratings and its ability to negotiate with its banks and investment partners, Corydon has said. Dong is selling the shares as part of a financial restructuring announced in February last year to cut costs, reduce debt and bolster investments in oil and gas exploration, as well as in wind farms. The plan included cutting expenses by 20 percent and selling assets to raise 10 billion kroner.

Although Socialist People’s Party quit the coalition a spokesperson for the party said it would continue to support the government removing fear that the government would fall. Although as the Prime Minister, becomes more disliked we have to wonder how much longer can she keep control of the government, especially if this sale is approved?

 

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