Cartoon row threatens Danish security and economy

COPENHAGEN, Apr 11 (Reuters) Danish police warned today Muslim anger over newspaper cartoons of the Prophet Mohammad had raised the threat of terrorist attacks on Denmark, after new figures revealed some of the economic damage.

Denmark was already on alert because of its participation in the US-led war in Iraq, where it has about 500 troops, though it has not yet suffered any attacks on Danish territory.

''We have ... estimated that there has been a generally raised threat level in the last few years, but with the Mohammad issue there has been additional negative exposure,'' said Lars Findsen, director of the Security Intelligence Service.

''It is clear that this has influenced the threat level,'' he told newspaper Jyllands-Posten, which printed the cartoons which many Muslims found blasphemous.

''We have registered a significant increase in the number of threats and threat-like situations.'' Anger over the cartoons sparked violent protests against Danish embassies in Asia, Africa and the Middle East earlier this year in which more than 50 people were killed. Consumers in Muslim countries have been boycotting Danish goods.

Danish-Swedish dairy giant Arla said on Tuesday it had fired about 50 of the 160 workers at a dairy in west Denmark producing cheese for the Middle East, saying this was a consequence of the blacklisting of Danish goods by millions of Muslims.

Arla's business in Saudi Arabia, one of its largest export markets, has dropped almost 80 percent since the beginning of February. Some larger Saudi retailers begun restocking its products after Arla launched a media blitz to win back shoppers.

''We are slowly moving back onto the shelves but we still have less than one tenth of the retailers we had before the boycott,'' Arla spokesman Louis Honore told Reuters.

Danish trade figures for February released on Monday showed an 85 per cent drop in Denmark's dairy exports -- the first tangible measure in national accounts of the consumer boycott.

''It's one thing to get back on the shelves. It's another to get consumers to accept the products again,'' said Honore.

Arla, Europe's second largest dairy products maker, estimates it will lose 60-65 million dollars this year due to the boycott assuming it can regain half of its sales in the Middle East by the end of the year. The dairy cooperative had sales of 3.2 billion crowns (519.8 million dollars) in the area last year.

REUTERS CH ND1746