Denmark is set to force refugees to hand over their valuables in order to pay for their accommodation while applying for asylum, in a move the UN has warned may fuel fear and xenophobia. The Danish government has secured a parliamentary majority in favour of legislation that will severely curb the rights of refugees, and is expected to begin debate on the legislation in parliament on Wednesday.

The bill states that asylum seekers who arrive with more than 10,000 kroner in cash “will have to [use] the surplus above 10,000 kroner to pay for their stay”, Danish government spokesman Marcus Knuth told the Guardian.

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After criticism of an earlier draft of the law, refugees will no longer have to give up items of sentimental value, such as wedding rings, or items deemed as essential, such as watches. Gold bullion could still be seized, but Knuth said that in the case of any dispute of sentimental value, the asylum seeker would have the final say.

Responding to comparisons between the new law and the treatment of Jews during the Holocaust, Knuth said the claim was “ludicrous” because similar laws apply to Danish citizens on welfare benefits. “We’re simply applying the same rules we apply to Danish citizens who wish to take money from the Danish government,” he said.

The move is the latest attempt by Denmark’s centre-right government to roll back its obligations to refugees. Last month, the prime minister, Lars Lokke Rasmussen, called for an end to the UN 1951 refugee convention, a law created in the aftermath of the Holocaust – a suggestion the UN said would “renounce millennia” of human progress.

Local refugee advocates also warn that there are worse aspects to the new law than the articles concerning refugees’ belongings. If passed on Wednesday, the law will prevent most Syrian refugees from being granted more than one year’s sanctuary, unless they can prove that they are individually under threat in Syria. Parents who arrive without their children will have to wait at least three years before they can apply to be reunited with their family, a clause campaigners have described as particularly cruel.

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Michala Clante Bendixen, chair of Refugees Welcome in Denmark, said: “It means that most of these families will be separated for up to five years. First they’ll have to wait for the asylum application to go through, then there will be 3 years of waiting, then they’ll have to apply for reunification. Separating families for five years is completely crazy.”

While Denmark only accepted about 20,000 asylum seekers in 2015 – 2% of the total to arrive in Europe last year – its government is keen to deter more from coming, Bendixen said. “They have two goals: one is to scare people away, and the other is to make life as hard as possible for those who are already here, to make them leave.”

Denmark also recently introduced more stringent border controls, forcing more potential asylum seekers back to Germany, which took in about 1.1 million last year. Germany has also begun to turn back more migrants from its own southern borders, with deportees to Austria rising to 200 a day in January, up from 60 in December, the Austrian government said this week.

A vote on the bill is expected later in January.