News Analysis: Challenges loom for Danish gov't as new Cabinet unveiled

Denmark's Liberal Party leader Lars Loekke Rasmussen assumed the role of prime minister on Sunday and formed a minority government consisting of only one party. The narrow minority government will have to find support for every piece of legislation in the Danish Parliament as it is in control of only 34 out of the 179 parliamentary seats.

The new government was announced after eleven days of negotiations between Rasmussen and the leaders of the winning coalition parties. But disagreements among the parties on key issues such as public spending made it impossible for Rasmussen to form a coalition government, leaving the one-party minority government as the only option left.

The government has the backing of Danish People's Party (DPP), the Liberal Alliance and the Conservatives. The team of ministers picked from The Liberal Party consists of 17 ministers, 10 of whom with previous experiences as ministers while seven others being ministerial debutants.

Rasmussen chose the veteran Claus Hjort Frederiksen as the minister of finance, Kristian Jensen as the foreign minister and Soeren Pind as minister of justice.

Rasmussen is known to be a skilled negotiator and a smooth political operator. These skills will be essential for the government's survival.

"I believe that this is a strong team with many skills. Skills will also be needed in the time to come, as we are very conscious of being a narrow minority government," Rasmussen told journalists as the Cabinet was presented outside Amalienborg, the residential castle of Queen Margrethe II.

"I'm confident that we can work with all parties in parliament, though we can not agree with everyone always," he said.

In his first press briefing, Rasmussen announced that he would fast track two initiatives through Parliament before the summer holiday. The first is a considerable reduction of the allowance paid to newly arrived refugees, a strong wish from DPP, which wants to make Denmark a less attractive destination for refugees from the Africa and the Middle East. The other initiative to be fast tracked by the new government is a tax deduction for domestic maintenance work, a key election promise from Rasmussen.

Rasmussen also announced that a referendum on Denmark's current opt-out on justice matters is to be expedited. Instead of a mid-2016 referendum, it will be held within 2015, hopefully before Christmas, according to Rasmussen.

If that is passed, Denmark can take full part in European police and intelligence cooperations, a long-time wish among most Danish political parties.

The election on June 18 changed the Danish political landscape dramatically. DPP, a euro-sceptic and anti-immigration party, is now the largest right-wing party in Folketinget, the Danish Parliament, with 37 seats.

Political analysts describe the election as the most remarkable change in voter behaviors since the so-called "landslide election" in 1973, when five new or previously unrepresented parties won seats, and more than half the members of the Parliament were replaced.

Like the election in 1973, this year's election is substantially setting back the four oldest, traditionally dominating political parties in Denmark - Social Democrats, Social Liberals, Liberals and Conservatives.

During the government formation, DPP repeatedly declared that it will always be in the place where the most influence is to be seen, whether inside or outside a government. As it turns out, the party leadership must have concluded that the most influence is to be won outside a government.

"We do not care about ministerial titles, all that matters to us is to get our policies through, to get as much influence as possible from our mandates", DPP leader Kristian Thulesen Dahl said while commenting on pressure from inside his party to join a coalition government.

DPP has a history of gaining more influence by supporting a government than being an actual member of a government. This was shown most notably during the nine years of the Conservative-Liberal government led by former prime minister Anders Fogh Rasmussen starting in 2001.

During that period, DPP managed to reshape the Danish policies on foreigners and immigrants on a much more restrictive course. It seems likely that DPP will take a similar position in a future minority government, now in a much stronger position with 37 seats in parliament, trailing only to The Social Democratic Party with 47 seats.

It will be a key challenge for Rasmusen to balance the EU-policy between the Eurosceptic DPP and The Liberals which traditionally is supporter of the European Union. During the election campaign Rasmussen announced that Denmark should partner up with UK in the forthcoming negotiations on scaling back the social dimensions of the European Union.

The new government with support from DPP is therefor expected to call for broader changes in Denmark's relation to the European Union. This is predicted to be seen as a welcome alliance partner for the British Prime Minister David Cameron, who is facing tough negotiations on the same subjects.

"The result of the Danish elections will cause a stir in many places in Europe, and the stirs can get more than just symbolic," says Thomas Lauritzen, European editor on the Danish newspaper, Politiken. "Denmark is taking part in major European changes."

Some analysts believe that the fragile minority-government will have a short life, and a re-election will come in less than four years which is the maximum allowed period between elections.

The life of the government relies mostly on Rasmussen's personal ability to maneuver in the stirred up political landscape in Denmark.

Former prime minister Helle Thorning-Schmidt announced on the election night that she stepped down as the leader of The Social Democratic Party. At a party congress on Sunday, her deputy Mette Frederiksen, was elected as the new party leader, making her the future red-bloc prime minister candidate. Endit