Sweden Takes More Active Role

SWEDISH Prime Minister Carl Bildt relishes the broad challenges facing his country, now in rapid transition from neutrality to activism in Europe's evolving foreign, economic, and security policies.

The Nordic leader was in Washington recently to lay out his priorities and solicit strong United States leadership to help diffuse security and safety problems in a newly defined Europe.

Mr. Bildt casts himself as one of a "generation of European leaders born after the Second World War, brought up during the cold war ... in a Europe divided by walls and barbed wire."

His agenda, which he outlined in a Monitor interview, reflects the demise of the neighboring Soviet empire and Sweden's future membership in the European Community.

In meetings with President Bush, Secretary of State James Baker III, and several Pentagon officials and congressional leaders, Bildt cautioned America against "looking inward" and called for broader US engagement in European issues, especially those affecting northern Europe.

Predictably, ensuring stability in the former Soviet empire tops the list. "The US could do more with aid and financial flows," Bildt says.

He calls for stronger US support for International Monetary Fund assistance to the former republics, especially Russia and the Baltics.

By Swedish standards, says Bildt, "we're providing massive amounts" of food aid, energy supplies, and technical assistance.

Given their historical trading relationships and proximity to the volatile remains of the old Soviet superpower, the Swedes bring an important perspective to Washington policymakers. Economist Anders Aslund directs the Stockholm Institute of Eastern European Economics, a funnel for data and analysis of the ongoing reform process in all of the region's former Communist countries.

Mr. Aslund is one of five senior international economic advisers to Russian President Boris Yeltsin, and a private economic adviser to Bildt.

He accompanied the Swedish prime minister on his US trip and met with Mr. Bush, Mr. Baker, US Treasury Secretary Nicholas Brady and International Monetary Fund Managing Director Michel Camdessus.

Aslund spent a week briefing the Bush administration and a host of Washington foreign-policy groups and think tanks on Russia's economy, now undergoing "shock therapy."

He asserts that after many false starts, progress is real in key areas including price reforms. A solid foundation is forming for massive privatization, Aslund says, but some $4 billion in international assistance is needed to help stabilize the ruble.

Aslund laments that while Central Intelligence Agency and Pentagon officials readily agree that the US must now contribute substantially to the fund, Bush and Baker remain unconvinced. Aslund reports that Treasury Secretary Brady, ever the prudent banker, is risk-averse and does not want to bail out what he sees as a government engaged in questionable reforms.

"It's very worthwhile for the West to give proper support," argues Aslund, who expects a major financial initiative from the Group of Seven leading industrial nations well before the G-7 summit this July.

Sweden expects to reap great benefits from an enlarged northern European market if the reformers triumph. But he also notes a potential for danger: "A lot of uncertainties are still there. While politics change, geography doesn't."

Swedish history is replete with wars that left Russia holding former Swedish territory.

Peter the Great founded the Russian city of St. Petersburg in 1703 - his window to the West - on then-Swedish soil. The Soviets have since built up a strong military-industrial complex in that part of Russia, Bildt notes.

"The Swedes are in an area full of surprises and setbacks; it's always conceivable something could go wrong in the Baltic region," observes security analyst Helmut Sonnenfeldt, a Brookings Institution scholar. Sweden and Japan are the only countries to increase defense spending this year, he says.

"We've been underfunding our defense forces for 10 years," Bildt says. "Russia remains the strongest single power on the continent. Even after all the cutbacks - there is no rival to it. The uncertainty is there and a small nation must be aware of that."

Roughly 130,000 Soviet troops remain in the Baltic countries "without any agreement between Moscow and the former republics," he notes.

Sen. William Roth (R) of Delaware, an avid participant in the trans-Atlantic dialogue, says, "You can't rule out the Soviet hard-liners marching into the Baltics. By virtue of Sweden joining the EC, a major defense question arises."

"The old Swedish neutrality has lost its relevance," Mr. Sonnefeldt says, adding that as long as Bildt leads the government, Sweden will adopt a more assertive foreign policy.

He adds, "If NATO remains intact, Sweden won't join, but it will cooperate."

Bildt agrees, but says plans are fluid because the European security structure is in "a formative stage."