Patriarch Diplomacy

It was probably a bigger step than many thought when the Patriarch of the Orthodox Church of Russia visted Latvia during the last few days.

It wasn't really like one church person visiting some other church persons.

He come on an official invitation by the President and the Prime Minister of Latvia. And on Riga airport was parked his very large official Russian government aircraft. His visit was treated as an official state visit.

According to the news media, it was the first visit of a Patriarch of Russia to Latvia in 900 years.

Who was there, and under which circumstances, in the 12th century was not made clear. If correct, then this was before the founding of either Riga or Moscow. An orthodox priest lost in the pagan woods on the Eastern shores of the Baltic Sea...

It's probably lost in the fog of history.

Anyhow, Alexey II has of course been to Riga before. He is in fact born in Tallinn in Estonia, and while bishop there his responsibility included the Orthodox in Latvia as well. But that was before he ascended to the heights of Moscow.

Nevertheless, he said that he hoped his visit could “set a good start for this relationship” between Latvia and Russia, and that the two countries would increase their cooperation in different fields.

It's not ping-pong diplomacy between Latvia and Russia.

It's patriarch diplomacy.

Challenges of Success

There is little doubt that Latvia at the moment is doing very well.

But with elections coming up in October, there are discussions on where the country is heading in the future.

Prime Minister Aigars Kalvitis is at the moment heading a minority government, but will remain in office until the elections.

What happens thereafter is anyone's guess. But fears that money-rich groups around the interests running the profitable oil transit in Ventspils were to launch themselves on the political scene seems to be receding. Their man is too bogged down in legal problems due to his past.

The probability is then high that we will see continued centre-right stability in terms of the policies of Latvia. And that should be good news to everyone concerned.

But Prime Minister Kalvitis is setting his sights on the future.

With costs rising as the country moves on, he speaks about the need to develop the scientific and educational base of the country, and sees this as key to safeguarding and improving the competitiveness of the country in the coming years.

There is of course a certain disappointment here over the attitude taken by certain of the old EU members against the new ones. While the markets of the new countries are completely open to the products of the older, the markets of the older are not completely open to the services of the new.

There is an imbalance that is seen as unfair in these arrangements. And the new EU service directive is of course the concrete expression of this.

But Latvia is also looking towards its Eastern opportunities. Riga has always been a city at the centre of the trading relationship between the East and the West.

Now Riga is coming back as an important service center for important parts of the CIS markets. There are developing links with the countries of Central Asia, and there is talk of developing a new Silk Road using the rail transport possibilities between China and the Baltic Sea, thus cutting transport times from East Asia to Western Europe substantially.

And when one listens to the politicians of Latvia, there is certainly no intention to abandon the successful flat tax model. Today, the income tax in Latvia is 23 %, which is even lower than the 25 % in Estonia and 24 % in Lithuania.

Some politicians are even taking about taking it down further. It is important to attract back all those Latvians who during the last two years have gone abroad to work in other countries, very many of them heading for Ireland. Latvia will benefit from their talent as they are coming back.

So, things are not that bad.

That the economy shows signs of overheating is obvious. The Riga property market looks crazy. The next government will have to firm up the macroeconomic policies by increasing the budget surplus.

But these are the problems of success.

Once upon a time Riga airport was a hub of the Soviet Air Force. Now it's a key destination for Ryanair.

Things have changed.

Across the Baltic Sea

An early flight this morning - but only to Riga in Latvia across the Baltic.

I will be there today and tomorrow, primarily but not only in connection with a conference there by East Capital.

But it's also a good way to keep up with what is happening in the country as it is heading to its elections to the Seima - parliament - just after the Swedish elections this autumn.

The economy is booming. Last year Latvia registred a growth of slightly over 10 %. This year will be slightly less, but all estimates speak about continued high growth in the years ahead.

I will be meeting Scandinavian businessmen to listen to their assessments. And I hope to be able to see at the least some Latvian ones as well.

Relations with Russia could obviously be better - although they are not necessarily bad. The border treaty has not been ratified, as is the case with Estonia, although in practice this doesn't really mean anything.

I notice that the Patriarch of Russia Alexey II has been in Riga the last few days and performed services at the main Orthodox church, among other things. Whether he has also been seeing the congregation of Old Believers - those refusing the lithurgial reforms at the time of Peter the Great - having their own Orthodox churches in Riga would be interesting to know.

Since the start of the process of naturalisation, 110 000 Russian nationals have applied for and been given Latvian citizinship. Much of the business of Latvia is dominated by Russian nationals - and they seem to be enjoying to be part of the European Union.

And for all the complaints occasionally coming out of some circles in Moscow, it is clear that a Russian living in Latvia has far better protection for his och her human rights than a Russian living in Russia. Accordingly, they want to stay in Latvia and see their future there.

Later this year, Riga will be hosting the NATO summit. I guess it will be the largest international gathering in northern Europe for at the least a decade. The only meetings of similar size I can remember where the Helsinki Summits.

The decision to have the summit in Riga can be seen as a tribute not only in general to the country but particularly to President Vaira Vike-Freiberga. She has established herself as an impressive and determined political profile, not seldom mentioned in connection with speculations about the next Secretaty-General of the UN, although I would consider that unlikely.

But the NATO Summit will be a great - and important - even for Riga.

Apart from having a promising future, Riga is a lovely city with a rich history.

The Defining Issue

I don't think it's generally understood here in Europe how big the immigration issue is in the US at the moment.

As I left the US after a week in New York, Washington and San Fransisco, the Senate had just taken its decision on what President Bush calls a comprehensive immigration reform.

The House has already decided on a more limited policy, focusing on border and enforcement, but offering no path to citizenship for those that have been in the country for a long time.

And now the task is to get the Senate and the House to agree to something that can then be voted on - preferably before the November elections.

Fred Barnes in the Weekly Standard is very clear on the importance of the issue:

"Failure to deliver on immigration reform, the single biggest domestic issue of the decade, would mark the end of the Bush presidency as an effective political force. Bush would become the lamest of lame ducks. His final two years in the White House would be painful."

But the other way around also applies.

If he can deliver on this, he will be seen as having achieved a major break-through on a very major issue, and also done it in a way that is likely to capture the centre ground of the electorate on the issue.

That could be very important.

But it will not be easy. He will have to face down some very hard-nosed and semi-xenophobic voices. And there will be elements on the Republican party that will have difficulties.

So far he seems committed to stay the course on the issue.

Whether it is the "defining issue of the decade" or not - the defining issue at the moment it certainly is.

Success in Colombia

Good news coming out of Latin America is rare these days.

The politics of the continent seems to be going through another one of its populist - and ultimately destructive - phases.

We have unfortunately seen it before.

One of the few exceptions might well be Colombia. I'm noting it because there is presidential elections there today.

Alvaro Uribe seems likely to win. And he deserves to win.

I remember years ago when Bogota was seen as so crime-infested and dangereous that one could hardly enter the terminal in the airport from flights transferring through there.

That's all gone. Today, charming Bogota is one of the safest and cleanest cities of Latin America.

There is little doubt that President Uribe has done more than any other leader to reduce Colombia's once-spiraling violence and the dangerous spread of its biggest rebel group, the leftists and drug-smuggling Revolutionary Armed Forces of Colombia, or FARC.

Murders have also dropped to just above 18 000 last year from nearly 29 000 in 2002, when Uribe was elected, and kidnappings fell to 800 from nearly 3 000 earlier.

This is all associated with the efforts done to combat the drug trade that previously risked totally destroying the country. A program of spraying cocoa plantations from the air that was once rather controversial has evidently started to be succesful.

Of note is also that Colombia's economy grew 4 percent or better the last three years. Foreign investments has tripled after President Uribe took office.

We'll see what happens, but to me it's obvious that he deserves to be re-elected.

Center of Excellence

It took some time to get back to Sweden from San Fransisco. The flight from there to London is ten hours.

Back there I had the opportunity of spending some hours at Stanford University.

It is one of the true centers of excellence in our present world.

It has an impressive track record in many respects. In recent years it has achieved a certain fame as the birthplace of what is much of todays Silicon Valley and the role it has played in the US and global economy.

Faculty and alumni of Stanford have helped to create companies like Cisco, eBay, Google, Hewlett-Packard, Silicon Graphics, Sun and Yahoo!. Most of them are headquartered in Silicon Valley.

And in all probability there are now small start-up companies on or nearby the campus which we will hear a lot about in a couple of years. The innovative spirit is very clearly there.

But I spent my few hours there primarily listening to Professor Irving Weissman telling about the state of stem cell research and the possibilities of regenerative medicine.

It's a controversial subject. Professor Weissman and his colleauges at the Stanford Center for Stem Cell Biology are at the very forefront of the international efforts in this area. But ethnic and religious concern have led to serious restrictions on what they can and what they can't do.

The potential, as professor Weismann described it, is obviously enormous, even if it will take time for the results to start to be applied widely around the world. But there are obviously the possibility of dealing with some of the most difficult diseases threathening us today.

Asked why he did not move to another country with his research in order to avoid the US restrictions, he answered that he was already in another country, namely California. State policy there is clearly in favour of stem cell research. But otherwise he mentioned other scientists moving to Britain, Singapore or China in order to continue their research.

Of the top 20 universities in the world 17 are in the United States, and Stanford is clearly one of them.

Even the shortest visit gives a strong impression of how we in Europe have often underfunded and underused our universities. We see them purely as edicational institutions, which they of course are, but not as the hubs of innovation, research and change in society.

Stanford University is a 2,9 billion dollar enterprise.That's a lot of money.

But there is little doubt that the benefits of what's being achieved there is many times that sum.

We ought to learn from that.

Friends in Need

By now, UK Prime Minister Tony Blair should have arrived in Washington for discussions with President Bush. It's a visit that has been arranged on rather short notice.

Bush will be interested in the personal impressions Blair got when he visited Baghdad and saw the new Iraqi government just a few days ago. But although the US media has been speculating that the two of them would announce some sort of troop withdrawal from Iraq this seems to me unlikely in the extreme.

On Iraq, their joint policy at the moment can be little more than hope that the government that is now at least partly in place in Baghdad will be able to exercise some sort of authority, and that this will make it possible to turn at the least a part of the insurgency around.

It's a faint hope - but it's what there is.

I suspect that the number one subject they will be discussing is Iran and what to do. And I strongly suspect that Blair will try to convince Bush that there has to be some sort of US direct involvement in some sort of talks with Teheran.

The letter written by President Ahmadinejad to President Bush is increasingly seen as an important signal. And that it is seen as important is obvious from the fact that it is the number one item on the webpage of the president of Iran.

The picture here - with Bush thinking on how to respond - is in fact taken from that webpage.

With the prospect of some sort of direct US involvement - which Teheran is very clearly seeking - it becomes more realistic to ask Iran for some sort of suspension of their enrichment activities. It might work - or it might not. But not trying does not seem to be too wise a policy.

Apart from Iran and Iraq, I would guess that Blair wants to get briefed on the discussions with Israeli Prime Minister Olmert the last few days, and that he wants to give support to the more concilatory parts of what the White House is trying to impress on the new Israel government.

He will undoubtedly stress the clear link between avoiding a deterioation in Palestine and everything else in the Middle East.

And then I would guess they will discuss how to handle the G8 Summit in St Petersburg in July. There was the EU-Russia summit in Sochi yesterday, and there will be the EU-US summit in Vienna in late June, which are also part of these preparations.

Blair stays in Washington also tomorrow. He will then deliver a speech to Georgetown University.

He will need some good publicity from the visit.

His approval ratings, according to the opinion polls, are below those of President Bush.

Intermediate Wisdom on Iran

Years back, Commentary was one of the US magazines that I found most interesting and stimulating.

But that was then. Now it is often so fanatical in its mistrust against anything that has to do with the Muslim world that it becomes nearly unbearable.

So it was not without interest that I started to read the main article in the latest issue arguing that it might not be too wise to bomb Iran. At least not immediately.

Normally, many of the contributors to Commentary would be in favour of the immediate bombing of many places - and most certainly of Iran.

But Edward Luttwak argues along different lines.

It's not that he rules out the use of military power if nothing else works. But he argues that we have got time, and that we need to look at the fundamental forces shaping Iranian society today.

I would recommend his piece to anyone seriously interested in the issue.

Edward Luttwak can certainly often be described as a hardliner in the US debate. He wouldn't object to the description. But he is also a learned and thoughtful person.

Well worth reading.

Same in California

Five hours flight time from Washington turned into six as we had to swing far to the South over Texas in order to avoid thunderstorms over the central mid-West.

But after hours of flying over the Western deserts the plane touched down by San Fransisco Bay.

The issue here - even more than in Washington - seems to be immigration.

Tomorrow President Vincente Fox arrives in California in order to, among other things, address the state legislature in Sacramento.

And Governor Arnold Schwarzenegger - a legal immigrant who is facing his own election later this year - must strike a balance between the very different views on this issue found in this state by the Pacific.

The issue is truly big. In Wall Street Journal today, New York mayor Bloomberg goes so far as to describe it as the issue that will define American politics of this decade:

"In every decade there is a critical domestic issue that shapes our political life for decades to come. In the 1960s, it was civil rights; in the 1970s, the Watergate crisis; in the 1980s, crime and drugs; and in the 1990s, welfare dependency. Today, it is immigration."

That might be to go too far - but it certainly shows the magnitude of the issue in the US political debate at the moment.

And in The San Fransisco Chronicle the issue is clearly the dominent one.

Meanwhile back in Washington, the Senate will try to get its act together on the issue before Congress takes a its Memorial day recess from Friday.

Although it is likely that the Senate will follow President Bush's rather sensible line, emotions are running high. A report by the conservative think-thank Heritage Foundation on Monday, saying that over 100 million immigrants would be let in over coming years under the proposed bill, lead to immediate changes.

But Heritage isn't satisfied, and continues with its warnings:

"As a result of this change, our estimate of the number of legal immigrants who would enter the country or would gain legal status under S. 2611 falls from 103 million to around 66 million over the next 20 years."

Business is firmly on the side of a more liberal policy, with the US Chamber of Commerce leading the charge on their side.

But on Thursday much attention will be on Arnold Schwarzenegger and Vincente Fox.

The Austrian and the Mexican battling for the soul of California.

Welcome Montenegro!

The results of the referendum on Montenegro has now been recognized by all.

Since more than 55 % voted for independence, the issue is settled.

The result has been fully accepted by the government of Serbia. That's of critical importance.

There are a large number of practical problems and related issues that have to be settled in the functional separation we are now heading for.

Will Montenegrians in Serbia become foreigners? Will Serb citizens in Montenegro? Who pays the pensions? Will the border be open for trade and travel like in the past? What happens with what's left of the navy and its installations in the Bay of Kotor and in Bar? How will the foreign debt - as well as the joint assets - be divided?

It requires goodwill and generosity in Belgrade as well as Podgorica to reach agreement on these and others issues. Possible also the mediation of the European Union.

But soon we will see Montenegro entering the United Nations as an independent state.

It's a country with potential - but also with potential problems.

It needs to handle its national diversity with care. Montenegrians are in a minority in Montenegro.

It needs to clearly break with its recent past of large-scale smuggling and criminality. Many still remember the minor navy of high-speed smuggling vessels operated under semi-official Podgorica protection.

There is no reason to think that all of this can't be done. But Europe will be watching.

Montenegro has always been Europe. If it handles things wisely in its immediate period of independence, the door to membership of the European Union will also open up.

But it will not come easily. And not fast either.

The key is in Podgorica.

Israel in the White House

 As I write I am watching on TV Prime Minister Olmert and President Bush meeting the press in the White House a block from here.

And as you can see from the picture - taken an hour ago - it is a truly nice day in Washington.

But whether the talks in the White House so far have brought more of stability in the Middle East is far from clear.

Prime Minister Olmert is saying that he is ready and willing to meet with President Mahnmoud Abas of Palestine to see if an agreement can be reached on key issues. One gets the impression that President Bush has been pressing him into this - it did not come in his initial statement.

His stress is on the unilateral dismantling of some settlements on the West Bank that he wants to undertake. But he excludes "major centers of Jewish population" from this, leaving it unclear what he means. I would expect there to be more detailed discussions on this in the coming hours and days.

But unilateral moves can never replace a negotiated settlement. President Bush made that clear.

And an important fact is that unilateral moves are likely to play into the hands of Hamas.

The fact that Israel refused a negotiated deal during the past few years, but withdrew unilaterally from first Southern Lebanon and then Gaza, was of course undercutting the credibility of those Palestine leader ready and willing to negotiate, while it strengthened those saying that resistance and armed actions will force the Israelis on the defensive anyhow.

One would hope that one does not repeat that mistake.

And that pressure from the White House will moderate the unilateralist and dangereous tendencies in the policies of Israel.

This written before I haste away to give a speech to the Council on Foreign Relations here on trends in the politics and policies of the European Union.

Not as dramatic. 

Neighbours Bound Together

The truly important political meeting here in the US today is of course the one between President Bush and Prime Minister Olmert of Israel. They will come together in the White House within just a few hours.

But another visitor arriving in the United States today also requires attention.

President Vincente Fox of Mexico arrives in Salt Lake City in Utah. And he continues with visits to Seattle in Washington state as well as Sacramento and Los Angeles in Californa until Friday.

He comes in the middle both of the heated immigration debate here - the Senate is expected to take its decision within the next few days - and the campaign in the race to succeed him as president of Mexico in the elections July 2nd.

In Salt Lake City he was meet by demonstrators warning against Aztlan. That's an imaginary plan by Mexicans and others through undermine the Southwest of the United States through immigration, create the state of Aztlan and break loose from the United States.

But the true issues in the immigration debate are economic.

No less than 15 % of the workforce of Mexico works in the United States. That's a very high number. By now, app 10 % of the population of Utah is Hispanic. And in a state like Washington 6 out of 10 farm workers are Mexicans. Los Angeles - with a Hispanic mayor - simply would not work without its Mexican and Hispanic inhabitants.

The strength of the US economy is partly founded on immigration. And President Fox will meet with business leaders throughout his trip.

He is likely to be vocal in his opposition to President Bush's plan to deploy the National Guard along the borders - approved by the Senate yesterday. So are the tweo contenders in the presidential race in Mexico - centre-right candidate Felipe Calderon and leftist firebrand Lopez Obrador.

The outcome of that race is important for everyone. With its 100 million people Mexico is an economic powerhouse in the making. Within a decade President Fox believes it should have reached a level of development where few people would prefer to cross the border with the United States.

But it's all dependent on the future of free trade. Mr Calderon is very much in fav our, while Mr Obrador might well pursue more populist and leftist policies, thus limiting the future possibilities of Mexico.

Neighbours are always dependent on each other.

The economic interdependence between the United States and Mexico through immigration is enormous.

And these days we see how the politics of the two nations, face with important elections later this year, interacts.

Washington Talks

A sunny and nice morning in Washington as another week gets starting.

The President is in Chicago and the Vice President in Southern California, but Israeli Prime Minister Olmert has arrived in town prior to his important White House meetings tomorrow.

It will be the first major meeting between the US and Israel since the elections in both Palestine and Israel, and Olmert will seek US support for his different thoughts on further unilateral withdrawals.

It's also safe to expect discussions on the deterioating situation on the West Bank and Gaza. Finally, there is concern about the effects of the policy one has pursued, with the European Union trying to do as best as it can to set up some sort of support mechanism.

I will be here for a couple of days connected with a number of events, notablt the Sabanci Award tomorrow for essays on the future of Turkey. But I will also be attending discussions on Russia, on nuclear power, on energy security as well as giving a speech at the Council on Foreign Relations on where Europe is heading.

Over the weekend it seems as if Montenegro voted for independence, and that the process of formal separation from Serbia will now begin. One can only hope that it will be conducted in a good and generous spirit from both sides, since otherwise the risks of damage being done to both is rather considerable.

It's a new European mini-state - app 650 000 inhabitants - that is born.

Although the turmoil on the financial markets are likely to dominate much of the week, there will also be every reason to watch the summit between Russia and the European Union in Sochi on Thursday as well as the informal meeting of foreign ministers in Klosterneuburg in Austria over the weekend.

By that time I hope to be back in Sweden again. But in between a couple of days here in Washington and coming home I will also have to go for two days to San Fransisco.

More about all of this later.

Open or Closed Nation?

A sunny morning in New York. But before resuming discussions on the future of Russia, it is imperative to try to get through the Sunday papers.

The New York Times on Sundays is one of the more solid pieces of information to be found on this globe. There, as elsewhere, it is obvious how immigration is now the big issue dividing Americans and dominating its politics. Not even Iraq or Iran reaches the same intensity in terms of the debate.

And this coming week the Senate will try to get its act together and decide on its position. The House already has - to the horror of many.

For those interested, the Washington Post has excellent coverage of the issue. And the New York Times a good editorial today.

There are 11 to 12 million illegal immigrants in the United States. For all practical purposes we are talking about Mexicans - mostly referred to as Hispanics. And increasingly they are all over the US.

There are two extremes in the debate - an amnesty for them all, paving the way for citizenship, or more or less immediate imprisonment and deportation for everyone.

President Bush is trying to create a middle ground. But he's not having an easy time with the issue.

On the one hand he did important inroads into the Hispanic vote - increasingly important - in his latest elections. He is from Texas with its large Hispanic population and close ties to Mexico, and he speaks Spanish.

But on the other hand parts of the hard core of the Republican party is very militant in its deportation approach to the issue.

So he is on the one hand sending the National Guard to patrol the border with Mexico and on the other hand paving the way for a scheme under which some recent illegal immigrants would have to go back while those that have been here longer will be offered possibilities of staying.

Not an easy balancing act - but a decent attempt to secure a decent middle ground in a very divisive debate.

A debate very much like the one we now find in a number of European countries.

The pressure of the South is reshaping socities on both sides of the Atlantic.

Songs Showing A New Europe?

Not that it necessarily is a big thing here in New York - and whatever you think of it otherwise - the Eurovision song contest is a big event for many people throughout Europe!

In these days of discussions about "the borders of Europe" and the need to concentrate on the old "core Europe" it is interesting to note that the Eurovision contest is truly breaking out and demonstrating the existence of a much broader Europe.

Just look at the melodies and countries winning!

Finland with a very clear win. Why monsters is the mood of the day is beyond me, but that's a separate issue. Win they certainly did.

Then came Russia followed by Bosnia Herzegovina. After that we find Romania, Sweden and Lithuania. And following them was Ukraine and Armenia.

It seems as if European cultural and creative vitality is to be found in the North, in the East and in the Southeast.

This is in fact not unlike what we are seeing in the economic growth figures for different regions of Europe.

It could of course be pure coincidence.

But it could also be the sign of something deeper and more significant.

Time will tell.

Are We All Absorbed?

I have just left Brussels, stopping over at Heathrow airport before proceeding on the last flight of the day to New York.

But - all in all - it was a very good conference in Brussels yesterday and today.

A discussion before lunch today on the so called European social model was noteworthy for hardly mentioning unemployment, instead focusing almost exclusively on "employment protection", but other panels were broader in their approach.

The hard thruth is that if you fail in employment creation, then employment protection becomes just a defensive game that is bound to increase social tensions in society.

It's when you are succesful with employment creation that there can also be meaningful employment protection.

But the afternoon's discussion was about enlargement, asking the queastion whether the magic can work again.

Magic it certainly was. Javier Solana underlined it, and I tried to reinforce his words. The enlargement with 100 million people and 10 nations from Estonia to Bulgaria can well be described as Europe's finest hour in modern times.

And we are all benefiting from it. I argued that the European economy is become globally more competitive as a result of enlargement. No one among the large gathering in the Charlemagne building seemed to disagree.

There are those trying to slow down things. European Voice reports in its issue out today about some proposals prior to the informal gathering of EU foreign ministers next week.

It all centers on the concept of "absorption capacity".

I'm not certain what this means. Is Sweden "absorbed" by the European Union? Is France "absorbed" in the same way? The concept is a rather strange one - I don't think we really want to be "absorbed".

Key must be what the addition of new countries adds to the Unions capabilities or powers - or, possible, subtracts from them. That's the truly relevant criteria.

France or Sweden might not be "absorbed", by the Union - not to mention Britain - but they have all certainly added to the Union in a number of different ways. Europe is stronger - more or less - with them as members.

There is, in my opinion, very little reason to doubt that future enlargement would change the fundamental pattern of adding to the capabilities and powers of the Union of previous enlargement. There is every reason to believe the contrary.

This is the real debate we need - not one that centers around the somewhat strange concept of "absorption capacity".

Economic Discussions in Brussels

Very early morning in order to get to Brussels for a number of things, but notably for the big Brussels Economic Forum.

My prime task is to chair its discussions on enlargement tomorrow afternoon, but I did attend also some of the sessions today. It was worth the time.

Mario Monti, who escaped being recruited to the new Italian government, was as usual highly critical of some of the core European countries in his remarks.

He dealt in particular with the relationship between the single market and the single currency, and argued that while those in the single currency need more of single market than the others, it now looked as if it is developing in the opposite direction.

It's in reality the non-Euro countries that are better at implementing the single market legislation than are those of the Euro area. While there was previously talk of a single market in search of a currency, there is now the risk that we will see a single currency in search of a single market.

And this will of course feed rather well into the discussions at my session tomorrow. i will argue that the dynamism of the European economy today is coming from the new rather than from the old members, and that we have every reason to proceed with enlargement.

Much of the emphasis of the discussions were indeed on the importance of the single market and the openness to competition.

The head of McKinsey made clear that there is nothing as effective as the white heat of competition in driving innovation and growth in productivity.

Indeed, this is exactly what their recent study on Sweden illustrate.

There is a lesson for all of Europa in that.

Montenegro Maneuverings

Yesterday evening was the big TV duel in Montenegro prior to the referendum on independence on Sunday.

It was Milo Djukanovic versus Predrag Bulatovic. They have both been around for many years.

Opinion polls indicate a lead for the pro-independence supporters versus the pro-union ones, but whether it will be enough to secure the necessary 55% is unclear.

Although the election campaign is monitored by both the OSCE and the Council of Europe, it is obvious that all the tricks of the trade - and in Montenegro there are many - are employed.

A large number of Montenegrians live in Serbia and in particular in Belgrade, but they have to go physically to Montenegro in order to vote.

Well, suddenly Montenegro Airlines announced that it has to substantially cut down on flights from Belgrade, claiming that their aircrafts were needed elsewhere. It wasn't too far fetched to see this as a move to limit the number of people coming from Belgrade to Montenegro to vote.

But soon after the Montenegro Airlines announcement, there was one from the JAT Airline in Belgrade announcing a sudden increase in flights to Podgorica during the coming days.

In rough terms, you will see the North of the country going for continued union with Serbia, and the South and the coast going for independence. But there will be exceptions to this rule.

On the coast, the city of Hercog Novi on the border with Croatia is likely to vote for continued union with Serbia. After the wars, its population has a very high percentage of refugees, not the least from Bosnia.

And in the north, it's likely that Bijelo Polje and Rozaje will go for independence. Here, a substantial part of the population are Muslims calling themselves Bosnians. The region of Sandjak - Muslim rather than Orthodox - straddles the border between Serbia and Montenegro.

What happens in this region needs watching. There is a sudden conflict in its capital Novi Pazar, which is on the Serb side. Suddenly, the man I also associated with a more radical nationalist position, always closely linked with the more Muslim parts of the politics of Bosnia, has come out strongly in favour of a continued union between Serbia and Montenegro.

In the Balkans things are seldom as simple as they look.

The pro-independence voices in Montenegro are dressing many of their arguments in European terms. For many of them there is no doubt that this is sincerely felt.

But facts are partly different. It's not unlikely that there are shady Russian interests also supporting the pro-independence camp. The by far largest enterprise of the country - the aluminum works by Podgorica - has just been taken over by a Russian group of somewhat debatable reputation, and other Russian business interests are noving in, not the least on the property market.

Whatever the outcome of the referendum, it has to be respected.

But days after Sunday will not be easy - come whatever.

Balkan Reform Signals

There is still uncertainty on whether Bulgaria and Romania will be able to join the European Union by the start of next year or whether they will be given another year to get their respective houses more in order.

That's the message from the European Commission yesterday.

Bulgaria got six different issues that require "urgent attention", and Romania got four of the same level of seriousness.

And by October they must demonstrate dignificant success - otherwise the Commission will recommend that their membership is delayed until 2008.

I think it is good that the Commission is taking a fairly strict approach to this. One should not be able to get into the Union by cutting too many corners. The rules of the game have to be observed.

Add to that the fact that harsh conditions of this sort is actually a way of helping these countries in their reform process.

I talked recently with a very senior politician from Bulgaria who clearly said that this approach was helpful in driving the necessary changes and reforms. If Brussels where to turn a blind eye to the obvious problems in the judiciary and elsewhere, it is dead certain that local opponents of reform will do the same. The result would be bad for everyone concerned.

Although there are those that oppose further enlargement, and see escalating demands on the applicant countries as a way of keeping them out,I do believe that strict observance of the criteria is more likely to pave the way also for future new members.

The "red cards" to Sofia and Bucharest are also important in sending signals to Zagreb and Ankara, as well as - further down the line - Skopje, Belgrade and Sarajevo.

But this signal is only effective as an encouragment to reform if it is the same time made very clear that the door to membership will be open.

New Openings with Iran?

There is little doubt that the Iranian nuclear challenge represents the perhaps most difficult issue on the global agenda today.

So far, we are on a glidepath to confrontation, as I have been writing about before. Only the somewhat wider awareness of the danger this represents has slowed down the speed of that glide somewhat.

The EU foreign ministers discussed a renewed possible package to be offered to Iran, and in Friday a meeting in London - subsequently postponed to early next week - will discuss the possibilities of proceeding with different measures after the negative IAEA report to the UN Security Council.

There are increasing pressures for the United States to engage directly with Iran on the issue, but this is unlikely to happen, aat the least in direct form.

It is far more likely that things are moving in the direction now advocated by Henry Kissinger when he is trying to analyze the situation. In effect, he proposes extending the present EU3 formula for discussion with a formula similar to the one used in the six-party talks with North Korea.

That would de facto see the United States sitting down on the negotiating table with Iran - although in a broader framework.

Whether that will move the issue forward or not is another matter. It has so far not brought success with North Korea. And there are no signs - at the least as far as I'm aware - of either Teheran being prepared to give up on what it considers its right to enrich uranium or the US being prepared to accept some version of enrichment in Iran.

And that's the core of the dispute at the moment.

But the fact that the focus at the present is on the possibility of different diplomatic moves - and even the possibility of talks with Iran involving the US - is important in itself.

The letter from President Ahmadinejad to President Bush should, in spite of its demagoguery, be interpreted in the same way. You don't write letter to the Great Satan is you are not prepated to engage with him in some sort of way.

We'll see what happens on Friday and thereafter.

In the meantime one can do far worse than reading Henry Kissingers view on the issue.

To Oslo - and then Brussels and New York

The sun is shining over Stockholm, but I'm soon heading for the airport for a quick trip to Norway.

Dinner in Oslo down by the water at this time of the year is seldom a wrong move. Chilly - but beutiful.

And I guess many there are busy preparing for their annual May 17th national day, parading down the Karl Johan main street and waving flags. It's impressive.

But tomorrow it's back to Stockholm again.

Towards the end of the week I have some conflicting engagements with both a two-day meeting of the commission set up to review the constitution of Sweden - we are to submit our recommendations in 2008, so the hurry is limited - and the big Brussels Economic Forum orgaized by the Commission.

On Friday afternoon I have to be at the Forum, however, since that's when I'm chairing its session on enlargement and its effects on the European economy. Speaking in that session will also be Javier Solana, Giuliano Amato and Olli Rehn.

But later that day I'm off to New York for a weekend of dialogue with Russian business leaders. It's part of the regular series of such meetings that RAND has been running during a number of years.

On the economic and financial front this looks like being a week of some turmoil, and on th political front of at the least some importance.

In Brussels, the foreign ministers of the European Union are meeting today and tomorrow with a fairly heavy agenda. They will discuss the report from the Quad meeting in New York last week on the Middle East and the mechanism that the Union is now setting up to facilitate economic aid to the occupied territories, bypassing the Hamas government.

But there will also be Balkans on the agenda.

On Sunday there is the referendum on independence in little Montnegro, and the European Union is likely to say that they will strictly respect the result in accordance with the agreed criteria, and that they expect both Podgorica and Belgrade to do the same.

That sounds more straightforward than it is. It might well be that the independence vote falls short of the 55 % support required according to the agreement, and that will open up the entire question again.

But some sort of qualified majority for important constitutional changes - and this is certainly such - is far from uncommon.

We'll have to wait and see.

Nuclear Power Turns Green

An editorial in the New York Times yesterday - reprinted in the International Herald Tribune today - makes the case for a new look at nuclear power.

It's not a new position, but it is receiving new support in view of the combination of the energy security and environmental challenges we so obviously are facing.

In the words of the NYT:

"How much impact nuclear power could really have in slowing carbon emissions has yet to be spelled out, but there is no doubt that nuclear power could serve as a useful bridge to even greener sources of energy."

True. And gradually we are likely to see policies also in Europe starting to move in that direction.

The energy review in Britain will be the first major move. But others are bound to follow.

Which Way Britain?

British politics these days is all about when Tony Blair will step down and hand over 10 Downing Street to his long-time rival Gordon Brown.

At some time he is likely to do that. And the evolving conventional wisdom in London - for whatever that is worth - is that it will happen within a year from now.

But no one really knows. It is highly likely that he hasn't decided himself but is thinking of different options. And it is highly unlikely that he has given a firm time for the hand-over to anyone.

So it's really all speculation at this stage.

But that speculation is itself is creating a new situation. The Labour party is seen as increasingly divided at a time when the Conservatives are coming back. And Tony Blair is starting to look like something of a dead duck.

His political energy looks undiminshed to an outside observer - but his political powers are very clearly in decline.

Many are making comparisons to the situation when Margaret Thatcher was forced from her leadership position in 1990. It was, as Gordon Brown pointed out last week in a comment that was widely interpreted as a push for an early transition, an "unstable, disorderly and undignified" exit, which come to haunt the Conservative party for many years.

The two great questions hanging in the air is first what the Blair era has really achieved and second what a Brown policy would really mean.

Margaret Thatcher left after eleven years of solid achievements. She wasn't my cup of tea in every respect, but that she took Britain from decline to a new start is today obvious to all. She made Britain into a robustly competitive nation.

Tony Blairs greatness as leader was that he accepted the Thatcher revolution and carried it into the Labour party, thus creating New Labour. If there was a Blair revolution, it was primarily a follow-up. Britain - well, overall - stayed on track.

Where Gordon Brown stands on the different issues is less clear to me.

He has presided over a rather solid expansion of the public sector and a stealth increase in taxation. That's solidly Old Labour. But he often preaches the virtues of deregulation and open markets. That's obviously New Labour.

And on Europe it's all very unclear. He's a man who loves to go to Washington and buy the latest books. I'm all in favour of that. But he's also a man that only occasionally turns up at European Union meetings, and then far more to lecture than to listen. That doesn't give influence.

The centre of gravity in the Union in terms of foreign affairs has already moved from London to Berlin. The German presidency during the first half of 2007 will obviously be of key importance - it's towards the end of that we will also see a new President of France.

But without an active approach by London not very much can be done anyhow.

There are certainly big European issues that need to be addressed. The important debate on future enlargement. The necessity of getting some sort of treaty on institutional reform. The commitment to review the budget. The need to deepen the single market.

Is there a Brown policy that differs from the Blair one on issues like these?

It will be important to watch the British transition in order to get some sort of view of where its politics might be heading.

There is still time - perhaps until his 10th anniversary of entering Downing Street a year from now - left of Blair.

There are some important issues he needs to tackle. A solid energy policy - most probably a new British push for nuclear power. The continued wrangling with Iran. And reform of the pension system.

But then then there will probably be a few Brown years. Policies? Well, that's the question.

After that, it looks increasingly likely that there will be the Cameron years.

How To Win War To Lose Peace

There have been numerous book published on the Iraq war, but Cobra II by Michael Gordon and Bernhard Trainor will be hard to beat.

It has already established itself as the most authoritative description of the preparation of the war and its actual conduct.

And it is certainly worth reading - both for the down-in-the-dust description of the usual fog and confusion that war always is, and for the insight in gives you on the miserable way in which one planned for the after-war situation.

According to the book, Donald Rumsfeld was as committed to fighting a new type of fast war with more limited quick-strike forces as he was determined that there should be no follow-up stability operations à la Balkans and definitely no so-called nation building.

Well, winning the war was undoubtedly a success, but peace has proved to be far more elusive.

And Cobra II gives at the least part of the answers why. There was litterally no planning for what to do after victory - apart from an astonishingly naive determination to withdraw US forces as fast as possible.

Only days after the fall of Baghdad in April 2003, preparations for leaving Iraq were ordered. General Franks flew into the city, meet the commanders that had fought their way to victory and said that they should be prepared to leave.

According to his guidance, the invasion force of 140 000 troops should be scaled back to about 30 000 troops by September. The belief was that there would be a functioning new Iraqi government up and running in thirty to sixty days.

Well, it didn't work out like that. The coalition forces in Iraq today are more numerous than the forces that won the war. In many respects they are still too few. And there still isn't a truly functioning Iraqi government.

Proper planning and far more numerous forces would certainly have avoided some of the worst of the mistakes, although it's an illusion that everything would have been smooth running without these obvious mistakes. But a difficult situation was undoubtedly made much worse and much more complicated.

But there are numerous other insights of value in the book.

There is the usual one on the difficulty of intelligence. It turns out not only that the US intelligence assessments were wrong on the issue on weapons of mass destruction, they were also substantially wrong on what the US forces would encounter once they entered the country.

There is seldom such a thing as certainty when it comes to intelligence. The Iraq war certainly illustrated that old thruth again.

A book well worth reading.

The Israel Lobby Controversy

The controversy generated by the essay by John Mersheimer and Stephen Wall on "The Israel Lobby" that I have written about earlier just continous and continous.

The flight back from London today gave me the time to catch up with some of the latest contributions to the debate.

It's an important debate because it now seems to engage a very significant portion of all those seriously discussing foreign affairs in particular in the United States.

The one way or the other, it is a debate that will have a lasting influence.

Among the most readable contributions to the debate that I have come across is the piece by Tony Judt in Haarets.

He is a professor and the director of the Remarque Institute at New York University, and his book "Postwar: The History of Europe Since 1945" has been reviewed very favourable and is most readable.

He vividly describes the change in the public perception of Israel that, in his opinion, has occured:

"We can see, in retrospect, that the victory of Israel in June 1967 and its continuing occupation of the territories it conquered then have been the Jewish state's very own nakba: a moral and political catastrophe. Israel's actions in the West Bank and Gaza have magnified and publicized the country's shortcomings and displayed them to a watching world. Curfews, checkpoints, bulldozers, public humiliations, home destructions, land seizures, shootings, "targeted assassinations," the separation fence: All of these routines of occupation and repression were once familiar only to an informed minority of specialists and activists. Today they can be watched, in real time, by anyone with a computer or a satellite dish - which means that Israel's behavior is under daily scrutiny by hundreds of millions of people worldwide. The result has been a complete transformation in the international view of Israel."

But I would recommend those interested to read the the entire piece. It's an important one.

And those more interested in the debate as such might find interest in Mersheimer's and Wall's reply to some of their more virulent critics in the latest issue of the London Review of Books.

Century of Excellence

 After some hectic days in Stockholm it was a very early flight from a sunny home to a sunny London.

Under the theme "A Century of Excellence" we are here celebrating the 100 Year Anniversary of the Swedish Chamber of Commerce here.

During the first part of the seminar Margot Wallström from the European Commission, Chris Patten, nowadays Chancellor of Oxford University, and I have just spoken about different aspects of our rapidly changing world.

Margot had her focus on the environmental challenges and the need to make economic growth sustainable in view of them.

Chris spoke about the changing nature of the China that he knows so well not the least after his years as the last Governot of Hong Kong. Can China continue to be a successful growth economy without opening up also its political system? He did not think so, although the trends that he sees at the moment are rather moving in the opposite direction.

I concentrated on how the politics and the economy of Europe is changing as a result of the Eastern enlargement of the European Union.

Without in any way wanting to put all the other achievements of European integration in the shadows, I think it can be safely said that this enlargement was the European integrations finest hour.

So far. 

The Dramatic Swedish Shift

A somewhat bigger picture to show something that illustrated what's been happening with Sweden during particularly the past decade.

The graphs show exports and imports as a share of our total economy. You can say that they together measure the degree to which our economy is integrated with the rest of the world.

You can see that this increased fairly steadily through the 1960's, the 1970's and the 1980's.

But then you see the big shift that occured in the first years of the 1990's. It was a time of profound structural reforms in Sweden - as well as us entering fully the European Union.

And then everything takes off. You can see that the curves bend upward in a fairly dramatic way. A different economy emerged - and a different Sweden is the result.

A major study published these days by McKinsey tries to analyze the performance of the Swedish economy during the years since 1995.

Their conclusion is that the good performance has mainly been because of the rapid increase in productivity in the private sector, which they explain by a combination of our entry into the European Union, our more stricter competition policy and by the rather radical structural reforms in terms of liberalisation, privatisation and deregulation undertaken in the early 1990's.

Thus the success of the Swedish companies on the world markets and the dramatic shift you see in these curves.

That's the story of the economy of Sweden during the past few decades.

I produced the graph in connection with a speech I delivered in Stockholm earlier today on The Art of Governance. A rather ambitious title, to put it mildly.

But in it I tried to look both back on the past decades in Sweden, as well as forward on the new tasks and challenges a new government later this year will be confronted with.

The speech is unfortunately in Swedish - but there might be those interested in it anyhow.

Putin Without Surprises

Today was the day of Russian President Putin annual "state of the union" address.

It was in the corresponding speech last year that he ventured into a number of very pecular theories and thoughts. Those interested in the details can read my rather detailed blog entry on the subject from a year ago.

But this year they seem to have learnt that lesson - as well as the one from the rather remarkable series of pronoucement on energy issues that we have seen coming out of Moscow lately.

They probably concluded that they did not have more feets to shoot themselves in.

So it was a rather eventless but not necessarily uninteresting speech that was delivered in the great hall in the Kremlin.

The most important focus was on overcoming the demographic decline of Russia. At present the country is declining with 700 000 people every year. There will not be enough men to fill the ranks of the army President Putin wants to build to assure the greatness of the country.

But he also acknowledged that the performance of the economy is falling short of his declared aim of doubling GDP within a decade. Less clear was however what he wanted to do about it.

No major surprises, that is.

Balkan Concerns One Year Later

It's Europe Day, and one year after we presented our report, the members of the International Commission on the Balkans meet again in a slightly rainy Rome to discuss where we stand with the international policies towards the region.

As presented at a press conference under the chairmanship of Giuliano Amato, it was a rather downbeat assessment.

What is happening is that Europe is slowly backing away from its commitment to the Balkans - and the Balkans is slowly backing away from its commitment to Europe.

It's not dramatically visible on a daily basis. But for those of us following the more long-term trend, the change is visible and worrying. And there is a growing sense of alarm among Balkan observers over what might be the long-term consequences of this gradual slide of policies.

You see the big change in the smaller things.

Failure by the Bosnian parliament to agree to rather limited constitutional changes. Failure by the Serb authorities to apprehend or otherwise deal with the Mladic issue. Difficulties in getting real status negotiations on Kosovo going.

Without a clear European accession perspective, the politics of the Balkan starts drifting again, reforms begin to stall and new risks start to appear on the horizon.

We'll see if our message of concern - even alarm - from Rome is heard.

In June the European Council will discuss also the future enlargement strategy for the European Union.

Will they sink the Balkans - or will they give the peoples of the region new hope?

Policy Meltdown in Middle East

As the economic and social situation on the occupied West Bank and in Gaza deterioates, there is an accelerating need to discuss what Western policy is really trying to achieve.

I utter fail to see how a social meltdown in the occupied territories will foster the forces of moderation and promote the possibilities of peace.

On the contrary, it is likely to play into the hands of the fundamentalists and the militants, and thus be contrary to the goals that we normally claim that our policy has.

In Europe, I have yet to meet anyone who genuinely believes in the policy that is pursued. Indeed, the European Union is busy seeking ways around it, although there are reports that it is encountering resistance from the United States.

The interest of Israel in this is somewhat strange. As the occupying authority on the West Bank, they are the ones that will have to handle the consequences. The aid that has been given to the Palestinian Administration has, de facto, been making the task of the occupation somewhat easier.

Gaza is of course much worse. Here Israel is also closing the border crossings, thus making any trade impossible. It risks rapidly becoming even more of a hotbed for terrorists than has already been the case. And our policy is to a large extent responsible.

Anmong the voices protesting the policy is the one of Jimmy Carter. He knows what he is talking about concerning the region.

Others are equally critical, but less outspoken. Outgoing Quartet representative in the region, former World Bank president Jim Wolfensohn, has views that are very similar to those of Jimmy Carter.

It's no coincidence that he asked to be relieved of his post - and that the US did not want to see him replaced by anyone else.

It's an emerging economic and social meltdown in the occupied areas and in Gaza.

But it's already a policy meltdown of dangereous propotions in Tel Aviv, Washington and Brussels.

Battle for the Quirinale

Tomorrow morning I'm taking the train from Fidenza via Bologna to Rome.

So far I'm enjoying the sun and life of northern Italy. Couldn't be much better.

I'm heading for Rome for a final follow-up meeting Monday evening and Tuesday of the International Commission on the Balkans.

But I will be arriving in a Rome filled with political drama of the highest order. It's tomorrow that 1 010 representratives - both chambers of the Italian parliament as well as representatives of the country's 20 regions - meet to elect a new President of the Republic.

When elected, that new president is likely to ask Romano Prodi to form the next government.

But it's completely up in the air who will be elected. It will be a secret ballot.

Prodi has put forward ex-Communist Massimo D'Alema as candidate. This has, rather predictably, caused a storm of indignation from the centre-right. Also the Vatican - still a force - has voiced its grave reservations.

Berlusconi - not a happy man these days - have gone so far as to suggest that the election of D'Alema would lead to a "fiscal strike" by his voters, i e a refusal to pay taxes. It sounds pretty extreme to me when an outgoing Prime Ministers is seen as advocating illegal, and at the end of the day, non-democratic measures.

It's thus highly uncertain that D'Alema will be elected. To be elected in the first votings of the rather complicated system you need 674 votes - but estimates are that the centre-left coalition can only muster 541, and are thus significantly short of what is needed.

Just as well, in my opinion. A more widely respected and broadly supported candidate would not hurt the politics of Italy at this important point in time.

And there are numerous such.

I'm having dinner tomorrow with Giuliano Amato. He would certainly make a good and well-respected president. He's from the centre-left - but respected by the centre-right.

Another possible name is Mario Monti. He's more from the centre-right, but is respected by the centre-left.

Both are names that will bring Italy credibility and voice with the rest of Europe.

But we'll see. Maybe the entire thing is sorted out when I'm sitting om my train heading for Rome.

Baltic World In New Focus

There seems to be a sudden Baltic focus in important parts of the trans-Atlantic relationship.

US Vice President Cheney was just a couple of days - as I have been writing about - in Vilnius in Lithuania.

Baltic? Well, the city of Vilnius itself is significantly more Central Europe than Baltic Europe, but Lithuania is still considered as one of the Baltic countries.

One of the results of Chancellor Merkel's visit to Washington in the past week is that President Bush will visit her in Stralsund in mid-July. That's definitely a Baltic city.

That coming meeting is surely a sign of the new weight of the relationship between Washington and Berlin. It will be the third meeting between Georg Bush and Angela Merkel within six months.

It's the most intense of the relationships between Europe and the US at the moment. And the most significant.

But back to the Baltics.

From Stralsund President Bush will head for St Petersburg and the G8 Summit there. Another distinctly Baltic city.

But he will be back in Europe within just a couple of months. Then he's heading for Riga in Latvia for the NATO Summit there in November. Another distinctly Baltic locations.

So the US President will be visiting three important Baltic cities within just five months. It will be a distinct record in high-level US presence in that part of the world.

From a Swedish perspective we might note that our airspace will be filled with an American leadership heading for Baltic cities. But they will just pass by - on present plans, they will not be landing.

Stralsund has its own place in Swedish history.

It was of course an old Hanseatic trading city with all the links to the Baltic world of those days.

But it was in 1628 that Swedish troops helped it to withstand the siege by the Catholic forces of Wallenstein in the Thirty Year's War. And when that war ended with the Peace of Westphalia in 1648, Stralsund and parts of Pomerania ended up under the crown of Sweden, where it was to remain the one way or the other until the end of the Napoleonic wars in 1815, when it become part of Prussia.

In more modern times, Stralsund was part of the East German dictatorship after 1945.

I remember how the house in the main square once built for the Swedish garrison commander was then used as the House of the National People's Army. The town itself housed a school of the East German navy.

Bu now Stralsund is part of modern Germany. And it is part of the parliamentary constituency of Angela Merkel.

That's why it is part of this coming into new focus of the Baltic world.

Fragile But Crucial Peace

After a couple of deadlines had passed, and two minor rebel groups deserted the process, there was a peace deal signed between the Sudanese government and the main rebel force in Darfur.

It's undoubtedly a huge step forward - but represents just another step in the long and difficult road towards stability for Africa'a largest country.

Darfur was a strange war in that it, at least to some extent, was a war triggered by peace.

It was when the long efforts to get a peace deal between Khartoum and the Southern parts of the country finally were crowned with success, and the South suddenly got a major share of both the power and the resources of the country, that there was a feeling in far-away Darfur that they ought to have the same.

That lead to the first attacks against government forces in the area. And with the government army so worn down by the long conflict in the South, they really didn't have the capability to respond and restore order. That was when the militias and thugs were let loose and the carnage and tragedy really started.

But now a combination of factors have lead to a peace deal.

I haven't seen its details, but it's bound to be fragile. All peace deals initially are. There are hard compromises to be swallowed, and there are always then men with the guns that want to carry on.

Sudan will require an enormous amount of internatonal attention and resources in the coming years. Its fate will be the fate of much of Africa.

Key to its future is to get the deal between the North and the South to work. Five years from now there will be a referendum on whether Sudan should stay united or whether they will go their separate ways. It's critical to make Sudan feel like a country with hope for the future prior to that.

If the North and the South where to split, there is no hope for peace in Darfur, and there is the significant risk of carnage also in other parts of the huge country. If the country should be split apart, there are many that would lay their claims to the spoils, and they know how to do it.

Such a process of disintegration will not remain within the borders of Sudan.

We have already seen how the conflict in Sudan has been spilling over into Chad - or the other way around. There are numerous other such examples along the long borders of the country. Sudan borders on no less than ten other countries - many of them with unresolved issues not too dissimilar from those of Sudan.

So we have every reason to hope that peace will get hold in Darfur.

A massive humanitarian effort is needed immediately. But there will also be a need for a truly massive UN operation to make the country as a whole succeed.

The biggest UN operation today is the one in the Democratic Republic of Congo. I would expect the one in Sudan to be even bigger a year from now.

Africa is at stake.

Old Links With New Meanings

The conference in Vilnius is over, most participants have returned or are on their way home, and I have ended up for the evening nearby Parma in northern Italy.

It was undoubtedly a succesful conference.

This group of countries meet for the first time in Kiev in December of last year, but there is no doubt that there will be further meetings after Kiev and Vilnius.

There is a need to discuss common values for our common neighborhood.

It is striking how a new time brings forward also old links and ties of different sort.

The conference was jointly hosted by the President Valdas Adamkus of Lithuania and President Lech Kaczynski of Poland, and discussions to a large extent dealt with the situation in the areas of Europe that where once covered by the union that existed between the two.

The union of Lublin that created the common state was set up in 1569, but could fall back on nearly two centuries of common existence. It lasted until the Napoleonic wars, and come to cover a very larg part of Europe between the Baltic and the Black Seas.

Relations between Poland and Lithuania have certainly not been harmonious all the time since then, although they were both parts of Imperial Russia for a long time. When they regained their independence in 1917, however, disputes over Vilnius poisoned their relationship for more than a generation.

But those days are gone.

They are both members of both the European Union and NATO, and they are both now looking towards the East in an important part of their engagment. The border to Belarus is only 50 km from Vilnius, and Kiev is close to both Vilnius and Warzaw.

Together, there is no doubt that Poland and Lithuania can serve an important function as a bridge between the trans-Atlantic institutions and those countries in the East of Europe that are not yet members of these.

The union of Lublin is unlikely to be resurrected. But there are new links growing from old connections.

All to the benefit of a new Europe.

Cheney and All Other Democrats in Vilnius

It's a pleasantly warm and sunny morning in Vilnius. The leaders of the democratic East of Europe have now begun their discussions. But a lot of the early attention is centered on the visitor fram far away.

It is not that usual for the Vice President of the United States to venture on foreign policy missions. But today he is here at the Vilnius Conference. It is cedrtainly a sign of the importance that thev US attaches to the region, its values and its stability.

Dick Cheney called the Baltic region "the frontline of freedom in the modern world." He reminded of the decades of Soviet occupation, but also pointed at the extraordinary democratic and economic success of Estonia, Latvia and Lithuania during the past 15 years.

Good words.

And now the meetings goes on. Javier Solana has taken over the chair, and President Saakashvili of Georgia is speaking as I write these comments. And after that we'll listen to the UK Minister for European Affairs Doiuglas Alexander and European Parliament representative Elmar Brok.

Then I will be chairing the next session with, among others, President Yushenko from Ukraine as well as - then speaking his mind - Javier Solana.

Serbia in Serious Crisis

Contrary to my own expectations, the government of Serbia has not succeeded in handing over Radko Mladic to the ICTY tribunal in the Hague.

Accordingly, the European Commission is now "calling off" its talks with Serbia and Montenegro over a so called Stabilisation and Association Agreement. Undoubtedly a serious step.

And Serb Prime Minister Kostunica is saying that this risks doing "great damage" to the country. Serious consequences of a serious step.

How did it come to this?

There is no doubt that the government during the last few weeks and months have taken major steps to destroy the support network for Mladic. They were very clearly on his tail, and they made his life substantially more difficult.

Whether they should have been able to arrest him or not is difficult for an outsider to judge.

It can not be excluded that Prime Minister Kostunica relied too much on efforts to pressure him to surrender, and hesitated in ordering an assualt that might well have resulted in him being killed. That might simply have been one bridge too far for Kostunica.

But it might also be that he simply slipped out of the net. It would not have been the first time in human history that a manhunt suffered a setback.

Although it has little to do with the challenges of today, there is little doubt that the European Union is applying harder standards to Serbia than it did to Croatia.

In the Croatia case, the EU did not open membership negotiations as long as Ante Gotovina was not apprehended and brought to the Hague, but there were no problem in negotiating and concluding an SAA treaty with Croatia with Gotovina still at large.

But these things apart it is a fact that Prime Minister Kostunica had undertaken to meet the deadline - and that he did not.

He did not, at the end, give the European Commission any other option. The "call off" was the only possibility for the Commission when the Serb government failed to honour whnat it had promised.

What will happen now remains to be seen. To "call off" is easy - to "call on" will require Mladic in the Hague. Nothing more and nothing less.

Deputy Prime Minister Labus has resigned in protest against the inability of his own government. He has been driving both economic reforms and the European approach of Serbia. It remains to be seen whether the rest of his G17Plus party will follow him into opposition.

We might be facing a government crisis in Belgrade - at the worst possible time.

A government in crisis might be even less capable of taking the steps that might be necessary in order to bring Mladic to the Hague. It might simply be too busy trying just to survive under pressure from the different forces in parliament.

Add to this that there is a critical meeting in the Kosovo status negotiations tomorrow in Vienna. And that we are rapidly approaching the referendum on independence in Montenegro May 21.

It couldn't have come at a worse time.

Serbia is in crisis - and that means that the Balkans is in a potential crisis.

The Success of Enlargement

Today the European Commission published its assessment of the effects after two years of the biggest enlargement ever in its history.

It's a timely and important document in view of the tendencies in the debate in some member states to blame enlargement for all sorts of evil.

And - while it does not explicitly say so - it also implies that a further enlargement of the European Union might bring further benefits to us all:

"Two years later, the biggest enlargement ever of the European Union is an economic success: the 10 new Member States’ economies are growing at a rapid pace enabling them to progressively bridge the gap with their richer neighbours. But the latter also win as the increase of the EU’s single market by 75 million to 450 million inhabitants brings a wealth of trade and investment opportunities. More importantly, enlargement has acted as a force of modernisation in the EU as a whole – a timely force given the sudden emergence on the world scene of China and India."

It's a message worth repeating over and over again.

Soft or Hard Partition?

Although there is official optimism on Iraq after a new Prime Minister has now been designated, the real debate in Washington over Iraq seems to be a very different one.

Broadly speaking, it can be described as a debate between the soft and the hard partition options.

A recent heavy-weight voice was added to the soft partition school in a recent OpEd article in the New York Times by Senator John Biden and Les Gelb.

It's somewhat ironic that at virtually the same time as there is failure in Sarajevo in the efforts to continue to revise the Dayton constitution, Biden and Gelb hails Bosnia as a model for the future of Iraq.

Essentially, they argue for a constitutional deal that divides Iraq up in three semi-autonomous entities with a common Baghdad at its centre. It's a soft partition of the country.

But there are difficulties. One is that they foresee that all oil revenues should be shared so that 20 % of then could be given to the Sunni's to finance their entity.

This sounds good in theory, but the problem is that the hasty semi-deal on the constitution has already given part of these rights away, and it's very difficult to see how them now can be taken back. And without that component the entire thing looks like a non-starter.

A remark that is difficult to avoid is that the alleged soft constitutional division of Bosnia was only achieved after a very hard division during the very brutal Yugoslav civil war. The human cost was truly horribled. Whether it could have been achieved without that civil war is a separate but by no means irrelevant question.

Another part of the debate was referred to in a recent news article in The Washington Post, which gave voice to some of those saying that a hard partition in the form of a civil war in Iraq is now more or less unavoidable. Some are even saying that it might be desirable.

The soft partition advocates speak about the post-war Bosnia as a model.

The hard partition advocates suspect that it is rather the pre-war Yugoslavia that is the best guide to the situation that Iraq is now in.

Neither a particularly attractive option. Mildly speaking.

Between Baltic and Black Seas

A few hours ago President Adamkus of Lithuania opened the first part of the meetings here in Vilnius on "common vision for common neighbourhood".

He called for an open and fresh discussion on how to establish an agreed strategic perspective on how to support and consolidate democracy and freedom in Europe's East.

For him, "the fate of democratic consolidation in Europe's East is the greatest issue in trans-Atlantic politics." Sitting here in Vilnius, with the most near-by other European capital being Minsk in authoritatian Belarus, that is a most understandable position.

But how should we proceed in consolidating democratic structures between the Baltic and the Black Sea? And President Adamkus widened the perspective by talking also about a vision for the area between the Adriatic and Caspian Seas.

These are the questions that will be the focus of the discussions here.

The meeting here in Vilnius can be seen as a third-generation effort to assist in the democratic transformation of the East of Europe.

The first generation was really the so-called Visegrad Group of Central European countries that was formed already in 1991 trying to advocate them being included in the European Union.

The second generation was the so called Vilnius Ten, based on the ten countries that meet here in Vilnius in May 2000 in order to advance the issues of their inclusion in both NATO and the European Union.

With the enlargement of both the European Union and NATO to these areas now two years old, attention shifts towards the wider East and the issues of democracy and security there.

It's to a large extent a question of the political and economic future of Russia. But it's equally a question of the political and economic future of the areas in between Russia and the European Union.

And those are the issues on which President Adamkus is calling for a clear strategic vision.

Easy in theory - somewhat more complicated in practice.

Just one example uppermost in the minds of many dealing with this part of Europe.

There seems to be little progress in establishing a new government after the elections in Ukraine. In principle, agreement has been reached on the reforming of some sort of Orange coalition, but in practive contradictions on core issues are blocking progress.

There is a significant risk of a deepening constitutional crisis on the Dnepr.

And without a solid government in Kiev driving reforms there is a big strategic hole in any strategy for democracy and security between the Baltic and the Black Seas.

But we will probably hear more from President Yushenko when he arrives here in Vilnius later today. Tomorrow he will be in the panel on the summit that I'm moderating.

Vilnius for Democracy

Last week it was very much the internal state of the European Union as well as the challenges facing the trans-Atlantic relationship that was the focus of different discussions I attended in Berlin and Brussels.

Tonight I'm heading for beutiful Vilnius in Lithuania where the perspective will be different - but certainly no less important.

The Vilnius Conference will focus on the prospects for democracy and freedom in the more Eastern parts of our continent.

If the enlargement of the European Union has consolidated peace and created new prospects for prosperity in the belt of 10 nations and 100 million people from Estonia to Bulgaria, the situation further towards the East is less clearcut.

Vilnius will be an impressive gathering.

Among apart from the presidents of Lithuania, Latvia and Estonia, there will also be those of Poland, Ukraine, Georgia, Romania and Bulgaria as well as the Vice-President of the United States.

That the US is sending Vice President Cheney to this gathering can be seen as a sign to Moscow that the democracy issues are still high on the agenda prior to the G8 Sumnit in St Petersburg in mid-July.

My task will primarily be to moderate different sessions both on the pre-summit tomorrow and the large summit on Thursday. The voice of the European Union will be the voice of High Representative Javier Solana. And Sweden is sending Deputy Prime Minister Bo Ringholm.

Our discussions in Vilnius will certainly have consequences well beyond the summit itself. And they will take place during days of other important events as well.

Today will see diplomats from the EU3 as well as from the US, Russia and China meeting in Paris to discuss which steps to take after the IAEA report on Iran to the Security Council at the end of next week. Expect them to agree on the aims - but differ on the means.

Tomorrow I hope the European Commission will publish its assessment of the effects of the enlargement two years ago. There is no way around making any such assessment very positive.

Tomorrow will also see German Chancellor Merkel heading for Washington for talks with President Bush only days after returning from her talks in Tomsk with President Putin. It's clear where the European centre of gravity these days is.

Italy might be getting a government. Silvio Berlusconi is resigning later today, and we might well see the process of forming the Prodi government speed up in relation to expectation. That will further contribute to the change of the balance on important political issues in Europe.

But in the Balkans there is now an extremely acute risk that the European Union will have to suspend talks with Serbia and Montenegro over the coming SAA agreement due to the failure to deliver Mladic to the Hague. It will be a significant setback primarily for Serbia, but for the efforts at stability in the wider region as well.

And in Great Britain there will be the not altogether unimportant local elections that I have written about before on Thursday.

Another week in the politics of a rather dynamic Europe.