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. Last Updated: 07/27/2016

Crayfish Steer Euro Away From Sweden

STOCKHOLM, Sweden -- A crayfish party and the double income of a government minister may undermine Sweden's drive to join the euro.

It's been called the "Karlsson effect," but despite the humorous undertones, analysts are finding it anything but mirthful as they assess its impact on the crown and Sweden's support for adopting the euro.

Analysts say public outcry surrounding the country's new Migration Minister Jan Karlsson -- which has inflamed voters' perceptions about what tabloids branded as "European Union excesses" -- is playing a key role in helping turn the tide of opinion against joining the single currency.

Karlsson, former president and member of the European Court of Auditors, created a furor when he was appointed a minister in the Social Democratic government three months ago.

The media have focused on Karlsson's double income from his pension as a former EU official and salary as a Swedish minister. They have also spotlighted alleged excesses, which included the costs of hosting a traditional Swedish crayfish party for friends that Karlsson was accused of claiming against his government expense allowance. Karlsson said the party was part of his work.

"The mere fact that he had some friends over to dinner and then had the government pay for it is enough to cause controversy," SEB Merchant Banking chief analyst Hendrik Mitelman said. "That's not how to get elected in Sweden."

Another analyst, who did not wish to be named, said the affair underlined what ordinary Swedes saw as the arrogance of those in power in Brussels.

"Europe is a closed and opaque society and this reminded Swedes they prefer open government," the analyst said.

The incident also violated a deeply held convention in Swedish society called Jente Law, which says that no citizen is better or worth more than another.

In emphatically egalitarian-minded Sweden, such revelations led to widespread demands for the minister's resignation. Karlsson was forced to hold a news conference, where he donated his Swedish salary to a memorial fund honoring Olof Palme, the prime minister who was killed in 1986.

Ministerial salaries average 82,000 crowns ($9,440) before tax a month, but Karlsson works free for the government.

But market watchers say Swedes say the fact Karlsson remains minister and retains what to ordinary people is an almost unimaginable European pension of 80,000 crowns after tax has ensured the issue remains a smoking gun.

Karlsson's remaining income still exceeds the 50,000 crown take home pay of Prime Minister Goran Persson.

Analysts say the indirect impact of all this has been on Swedish public opinion, which has turned dramatically against the euro just weeks after party leaders set the date of Sept. 14 for a referendum on whether to ditch the crown.

The latest run of polls has shown a decided swing away from the previous bias toward joining the euro, to one where the majority now do not want the single currency.

One by the Sifo organization showed 41 percent of Swedes would vote "no" to the euro while 37 percent would be for it.