Sweden to support EU fiscal pact but sets terms

(STOCKHOLM) - Sweden will support the eurozone pact on fiscal discipline at an EU summit next week but will demand several conditions be met, the opposition said Thursday after it struck a deal with the minority government.

The opposition Social Democrats had threatened to block Sweden's support of the euro pact, which it feared was a "back door" into the eurozone, while Prime Minister Fredrik Reinfeldt has pushed strongly in favour of it.

The Scandinavian country rejected the euro in a 2003 referendum.

"The government has accepted the Social Democrats' demands in order to participate in the EU's financial pact," Social Democratic party secretary Carin Jaemtin said in a statement.

While Sweden is not a eurozone member, it has among the strongest public finances in Europe and is therefore seen as an influential player in European efforts to improve financial discipline.

Reinfeldt's minority, centre-right government and the Social Democrats agreed on four conditions that Sweden will push for at the negotiating table in Brussels next week, the opposition said.

They include demands that Sweden not be required to transfer any decision-making power on its budget from the national parliament and that Sweden be granted a seat at eurozone summits where the pact is up for discussion.

Eurozone versus full EU summits are a sensitive topic for some governments, notably France, which refuses to grant access to the 10 other EU states more than once a year.

Sweden will also seek guarantees that it will be exempt if the pact is written into the EU constitution.

Reinfeldt is expected to comment on the Swedish position on Friday after he meets parliament's EU affairs committee, where the formal decision will be taken.

The so-called fiscal "compact" to tighten budgetary discipline and economic governance between the 17 eurozone nations is one of the main issues on the agenda when leaders of the 27-nation EU meet in Brussels on Monday.

All EU states save Britain have agreed to consider signing the fiscal compact, the aim of which is to avoid a repeat of the debt crisis in the eurozone.

The pact is expected to be agreed in principle Monday before formal acceptance at an EU summit on March 1 and 2.