Debt? What debt? Summit leaders eye a "Nordic Way"

STOCKHOLM Thu Feb 9, 2012 4:50pm GMT

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STOCKHOLM (Reuters) - Greece may dominate the headlines and France and Germany may be where the power lies, but heads of Nordic and Baltic countries on Thursday touted themselves as possible role models for the rest of crisis-ridden Europe.

Nine prime ministers gathered at a contemporary photography museum in Stockholm to discuss how to promote women into top jobs and keep the elderly working longer - topics that contrast sharply with most other EU summits dominated by the debt crisis.

Many of their economies have avoided the worst of the debt crisis inflicting the 17-member euro zone, highlighting its divergence from the rest of Europe. The region prides itself of mixing sound public finances with an extensive welfare state.

"In a Europe with short term management of the debt crisis consistently on the agenda - we will today address long term growth issues," Swedish Prime Minister Fredrik Reinfeldt said in a speech opening the summit.

"You have to be prepared to reconsider what you once thought was true. And to change your mind," he added.

The summit may also be welcome respite for leaders of smaller countries who feel overshadowed by France's and Germany's dominance of EU affairs.

Economically, there appears a growing gap between this northern European corridor - where seven countries out of the nine are outside the euro zone - and the rest of Europe.

The summit's nine economies will grow at around 2 percent this year, compared with a contraction of 0.5 percent for the euro zone - and that is despite these countries having some of Europe's heaviest taxes and most extensive welfare states.

Sweden has a public debt of around 40 percent of GDP. But it can also afford a welfare state that entitles mothers and fathers 480 days of shared parental leave per child. Sweden was one of the few European nations last year with a budget surplus.

Many governments have pushed against more regulation in business in contrast to other parts of Europe.

While the conference was dominated by talk of "the Nordic Way", it also featured an appearance by Prime Minister David Cameron, who may be looking for fresh diplomatic space after being isolated in refusing to endorse new EU fiscal rules.

THE RIGHT WAY?

The glossy brochure at the summit was indeed labelled "The Nordic Way", and carried the haughty headline: "What's so Special about the Nordics?"

"Some Nordic countries are better off (than the euro zone) and we actually have space for manoeuvre," Reinfeldt told Reuters ahead of the meeting. "Then of course it is very important to ask what do in the mid-term perspective."

Reinfeldt said that by focusing on giving the elderly more opportunities to work rather than retire, and by encouraging more women into top jobs, the region could better fight off economic competition from emerging markets like China and India.

"Global competition is changing the world. This puts pressure on Europe," Reinfeldt said. "It is also the welfare state under threat."

Ahead of the summit, Reinfeldt said people should work until they are 75 rather than expect to retire at 65, sparking a furore in a country that prides itself on its cradle-to-grave welfare system.

But the declaration underscored how leaders believed they had much to offer the rest of Europe in policy initiatives.

"At least many Nordic counties have in both these areas reached longer and achieved more than many other EU countries, Prime Minister Jens Stoltenberg told Reuters during the summit.

"So partly I think other countries can learn something from us."

(Additional reporting by Patric Lannin and Adrian Croft, Editing by)

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