The New Reality of the New Wold

I left Los Angeles late yesterday evening to return to the Old Continent.

It remains a place that is equally strange and fascinating. It's truly a metropolis of the modern world.

The five-county LA metropolitan region is the home to more than 20 million people with very diverse backgrounds.

It is not only the second largest Mexican city on the planet, but also a ranking Korean, Iranian, Armenian and Ethiopian metropolis, not to speak about all the Europeans to be found there.

So the World Cup there has been somewhat problematic.

A few nights ago, thousands of Koreans gathered in their part of town to join the national mourning back home as their team was defeated by - of all people - the Swiss. The Koreans made the front page of the LA times.

But it's really been Maexico that's been popular.

Statistics from the cable TV companies highlight the nature of the city at a time of global conflicts like these.

And they demonstrate that there are far more fans of Mexian soccer teams in the LA market than there are passionate supporters of the USA squad. And neither team seems to have done spectacular.

It's not only that the matches involving the Mexican team have been far more watched, it's also that this has been done in Spanish rather than English. The combined Mexian rating on Spanish-language TV has been 21,7 - compared with 11,9 for the USA games.

It's the new reality of the New World that is emerging.

Great National Trauma

Well, it seems as if the Los Angeles Times got it basically right concerning the fate of Sweden in the confrontation with Germany.

In view of the emotions that have gone into the effort, consequences can't be anything but severe.

I don't know if the King is considering abdication. That the Prime Minister will have to resign in disgrace I take for granted - he did not miss any media opportunity to announce the glory to come.

Public executions are out of fashion since a couple of centuries, but psychiatric counselling in so called "crisis groups" is very much the fashion of the time.

I guess there will be the need for collective national psychiatric counselling after this.

But - on the balance - I expect Sweden to survive.

Morning in Santa Monica

Morning in Santa Monica with the waves of the Pacific Ocean coming in.

The morning mist hasn't really lifted yet, but soon the sun will burst through. It will be a warm day.

I'm here to give the commencement address at this year's graduation ceremony at the Pardee RAND Graduate School. It might well be the world's leading institution when it comes to education in policy analysis.

New PhD's from all over the world will graduate here today. And have to listen to my remarks - among others.

But it will be a short stay. More or less immediately after the ceremonies I'm heading the few miles to LAX to catch a flight back to Europe.

In the meantime, the fate of Sweden in the World Cup might well have been decided.

It does not seem to be such an enormous issue here in California, although the Sports Section of Los Angeles Times does mention it, and I notice that the game can be seen on both Channel 7 in English and Channel 34 in Spanish here.

And LA Times own prediction for the game is that Germany will win with a single goal, perhaps in overtime.

Whether the beaches, streeets and schools of Southern California will be deserted remains however to be seen.

Finland Explains

Well, in a week's time Finland takes over the Presidency of the European Union.

It has already unveiled the symbol it has decided on for its six-month period.

I'm not certain what it represents, but as always there is help to be found on profound matters like this.

And I can't abstain from sharing with you the rather elaborate explanation of the symbolism of the thing offered on the website of the Finnish Presidency:

"The design concept describes growth and development, a new direction forward, and the Finnish way of attending to matters in an open and direct manner. The logo draws inspiration from the lines and colours of the Nordic landscape. It depicts cooperation among the Member States of the European Union and their aspiration to debate and make decisions on matters of common interest."

"The logo suggests the green of a burgeoning forest, the sweep of the horizon and the blue of water shimmering the sun. The contemporary feel to the point on the right-hand side symbolises progressive Finnish thinking and seems to point the way forwards. The transparency of the design conveys openness."

Well, perhaps.

Or, perhaps not.

Midsummer!

There is probably nothing as Swedish or Nordic as the celebration of midsummer.

The classic painting by Anders Zorn of the midsummer dance in the bright midsummer night of Dalecarlia portrays an integral part of the myth of Sweden.

This midsummer is unlikely to be different. Parties, dancing, an element of schnaps and the occasional bouquet of wild flowers. Some herring, and hopefully some fresh potatoes.

I had my start on this before leaving Sweden a couple of days ago and travelling south through a football-centric Europe.

And now I'm spending midsummer eve in the stratosphere on a flight taking me to far-away Los Angeles.

Somewhat strange, I have to confess.

Things Brighten up in Vienna

With President Bush leaving Vienna after the summit with the European Union, the six months of the Austrian presidency is essentially over.

On July 1st the European baton is handed over to Finland and Helsinki.

The Austrian presidency has not been spectacular, but it has been solid. And that's roughly what these rotating presidencies are supposed to be.

They are not there to fundamentally change, but merely to chair, the politics of Europe. And in the process move to processes of reform and integration forward.

Measured like this, the Austrians did well.

There was a tendency towards caution in some of what they did. The reason for this was the approaching parliamentary elections, likely to be held in November. One wanted success out of the different summits - and too daring policies might have invited the risk of public failures.

If the opinion polls are to be believed, the tactica seems to have worked.

During the past nearly four years, the opposition SPOE has been consistently ahead of the Chancellors OEVP. But during the last few weeks opinion polls have registred a steady decline for the former and a steady rise for the later, with OEVP now stronger than its main rival.

The perceived success of the Austrian presidency might be one of the reasons for this, but part of the picture is also the close association of SPOE with the scandal-ridden central Austrian trade unions. In near bankcrupcy after different dubious deals, they have tarnished the reputation of their Social Democratic political party as well.

But November is a long time off, and a week can be a very long time in politics.

But the relative success of Vienna in chairing the politics of Europe, and the ascending support of its centre-right leadership as it starts to head towards elections, is still worth noting.

Who Will Win? Who Will Lose?

These days I'm leaving Sweden for the summer and relocating to more Southern parts of Europe.

The pace of blogging will certainly suffer somewhat as well.

We are heading towards the Midsummer celebration, and that's normally when normal activity on these latitudes cease. After that, Stockholm is a city left for the tourists to explore, while the natives migrate to all different directions.

But after the summer comes to elections on September 17. They will decide who will govern Sweden during the next four years. Most important.

The governing Social Democrats have been plagued by a series of scandals of different dimensions during the year. All have betrayed the increased arrogance that comes with having too much power for too long.

The Danielsson scandal - which I have commented upon repeatedly here - has caused him to take an extended - essentially eternal - vacation from his job, and there is now an official investigation into his lying.

But in spite of the different scandals of arrogance, opinion polls have shown the red-green bloc recovering some lost ground, and the situation as we head into the summer seems fairly balanced between the two blocs.

You might argue that with the perception being that the economy is booming, they should be well ahead in the polls. But they are burdened by the scandals and by an urge for something different and more forward-looking.

It's far from clear which ground the election will be fought on. The debate so far is rather uncertain.

The centre-right Alliance is focusing on the inability too create sufficient employment in the economy, which is undoubtedly a key long-term problem, although it might not be seen as that acute in a situation in which the figures are starting to improve somewhat.

The Social Democrats, for their part, are almost exclusively concentrating on negative campaigning against the opposition. It's the usual smear campaign, saying that any other government would be the fairly immediate end of most of the good things in life.

But they have a numgber of big problems.

One is that while PM Göran Persson certainly does not want to lose the election, I'm not certain that he really wants to win. He gives the distinct impression of wanting to do most other things in life except being Prime Minister - done that, seen that. And the quality of governance is clearly suffering as a result.

Then there is the problem of his semi-alliance with the Green Party and the ex-Communists. They are both pretty wild in their demands.

The ex-Communists have just published a platform advocating a massive increase in public empliyment as well as Sweden leaving the Schengen cooperation and the "dissolution" of the European Union.

For a party that never asked for the "dissolution" of the Soviet Union that's undoubtedly somewhat on the thick side.

How Persson intends to govern with this increasingly aggressive lot is beyond anyones imagination. It is most probably beyond his as well, and add to the impression that he doesn't reallt want to win. It looks much too messy on the other side.

At the end of the day I would guess that a rather lackluster election campaign after the summer will result in Persson having his secret wish of leaving the entire mess fulfilled.

The combination of the arrogance of power and the obvious absence of will to really do anything any longer might well be what tips the balance with the large number of undecided voters - polls speak about record numbers of undecided.

But September is a long way from now. This is my interim assessment.

New Soft Powers of Europe

Today I'm relocated temporarily to Sandhamn in the outer part of the beutiful Stockholm archipelagoe.

It's the premier sailing center of the Baltic Sea, although the season hasn't really started.

The water is still on the somewhat cold side.

But I'm here for a couple of discussions on trends in the European economy.

The news of the day is the big merger between the network equipment operations of Nokia and Siemens, creating the third biggest company in this sector in the world. The biggest remains Ericsson, with recently merger Lucent/Alcatel coming in second.

The merger is part of the wave of restructuring that we are seeing as the competitive forces are increasing in the European and global economy. The pace of mergers and acquisitions in Europe has picked up very considerably this year.

We see the gradual emergence of a more integrated European economy, utilizing not the least the new possibilities offered by the new member states. And this renewed European economy is likely to be substantially more competitive on the global markets - in spite of the remaining structural rigidities in parts of the European economy.

Increasingly, it is Europe that is setting the regulatory standards for the global economy.

And this is logical taking into account not only the fact that the European Union single market is the world's single largest economy but even more by the fact that as a trading entity on the global markets the EU is larger than the United States and Japan taken together.

The soft powers of Europe will increasingly be demonstrated by the European Union setting the standards for the increasingly integrated global economy.

Brussels increasingly becomes a regulatory hub for the global economy - in interaction with the World Trade Organisation in Geneva and Washington.

You will see this when President Bush comes to Vienna on Wednesday for the summit between the US and the EU. Much will be on the agenda, but among the most important issues is the accelerating regulatory dialogue across the Atlantic.

The new soft powers of Europe - from the perspective of Sandhamn.

Slovakia Better Than Expected

With results in from the Slovak elections, it looks somewhat better than what the polls had predicted.

For sure the left-leaning and populist Smer come out on top with 29,1% of the vote and 50 seats in the 150 seat parliament.

But Mikolas Dzurinda's SKDU did much better than expected with 18,4% of the vote and 31 seats.

And if you add the two other parties - the Hungarian SMK and the Christian Democratic party - that were part of the reform coalition of the last few years you end up with 38,4% of the vote and 65 of the seats in parliament.

Short of a majority - but not necessarily further away from a majority than the Smer party is.

So Slovakia will enter a period of maneuvering over who will form the coalition for the coming years. To me it looks rather open.

The far-right Slovak National Party should hopefully be out of the picture since it ran on an essentially anti-Hungarian platform. To bring them into government would undoubtedly have international repercussion. And the Communist are distinctly out since they didn't even make it into parliament.

Key might well be what happens with the populist HZDS of former President Meciar. He secured 8,7% and 15 seats - not too impressive - but seems to be one of the keys to who will govern in Bratislava in the years to come.

But Smer will need an agreement both with him and with parties that were part of the Dzurinda reform coalition. And the later ones are unlikely to agree to major corrections of the succesful policies pursued by Slovakia in recent years.

The Christian Democrats campaign with the pledge to take the 19% flat income tax down to 14%.

The country has really been one of the outstanding success stories of reform in the last few years.

But there is good hope that the essence of these reforms will stay - and practically everyone seems committed to taking the country into the Euro as soon as possible.

Will There Be A Constitution?

 With Brussels behind me for this time there might be reason to reflect somewhat on the eternal European constitutional issue.

What to do with the failed Constitutional Treaty?

Discussions at the summit in the last few days did not seem to throw too much light on the subject. The famous "period for reflection" will continue.

But perhaps there is still some contours of what will happen further on starting to emerge in the general mist.

That the old Constitutional Treaty is dead is obvious to everyone although officially acknowledged by few. That it was recently ratified by Finland and Estonia was nice, but little more than that. It was like paying homage to the heroes of the past.

It's next year that we will start to see some movement on the issue.

First there will be some sort of political declaration at a special summit in Berlin on March 25 in connection with the 50th anniversary of the Treaty of Rome. That will indeed be a proper occasion to review the accomplishments of the past half century, but can hardly avoid looking somewhat into the future as well.

Then it will be for the meeting of the European Council in June to start to take decisions on how to proceed. This will be under the German presidency, and after the French elections.

And what did emerge out of the discussions in Brussels in the last few days is that what will be initiated then is supposed to be brought to some sort of conclusion in the second half of 2008. That happens to be under a French presidency of the European Union.

So one can forsee a mini-convention starting in the later part of 2007 and winding up by the summer of 2008. And I'm rather convinced that this will then produce a rather slimmed down document that might be called something like Treaty of Institutional Reform.

The C-word will be gone. And it will be given a more proper designation. Institutional reform is what it is really all about. In substance, I would expect it to differ little from these parts of the much larger Constitutional Treaty.

This treaty will then go for ratification during 2009. A smart idea would be to treat the elections to the European Parliament in June of that year as a de facto referendum on it. Voters could vote for candidates supporting the treaty or for candidates opposing it. It might even breath more life into the debate leading to these elections.

An uncertain factor would be the extent a deal in mid-2008 on these issues would be linked to the review of the European Union budget foreseen to be launched in 2008/2009.

There could be arguments for bringing the issues together in a "big deal", but there are equally compelling arguments for keeping them separate, with the budget issues then in focus during the Czech and Swedish presidencies in 2009.

We'll have to wait and see. But the fog might soon start to lift. At least somewhat. 

Could Have Been Worse

The grey clouds over Brussels yesterday has today given way to a pleasant sun.

And the conclusions coming out of the meeting of the European Council that finished a couple of hours ago are not as bad on the issue of enlargement as there for a while was reason to fear.

As Austrian Chancellor Schuessel said at the press conference, it was decided not to make the bogus concept of "absorption capacity" into a new criteria for further enlargement.

But it is somewhat vaguely noted in the conclusion that "the pace of enlargement must take the Union's absorption capacity into account." Well, yes, although different people can interpret that in different ways.

It is also said, that the more detailed debate on these subjects that is now scheduled for the December meeting under the Finnish presidency will also look at "further ways to improve the quality of the enlargement process on the basis of the positive experience so far."

That doesn't necessarily hurt.

It was important that one described enlargement in principle as something very good for the Union. It was especially noted that "enlargement is helping the EU become a more competitive and dynamic economy and be better prepared to meet the challenges of a globalised and changing world."

So one must note that the enlargement process got through the Austrian presidency largely intact, although there were those trying to twist the entire thing in a far more negative direction.

Now it will be up to the Commission to present a more strategic report on the issue in October as preparation for the renewed discussion at the European summit in December.

So everything turns to Finland.

Brussels Dinners

By now, the heads of state and government of the European Union should be heading for their dinner to discuss the future of the constitutional treaty, while their foreign ministers are heading to theirs to discuss the issue of Serbia.

I'm also in Brussels, although obviousoly heading for another dinner.

And so is the final summit of the Austrian presidency. Soon the Finns will take over.

In Luxembourg in the beginning of the week one managed to avoid an immediate crisis over the accession negotiations with Turkey - but in fact only postponed it until later this year.

The talks are not going particularly fast. With present speed I'm told that it will require somewhat more than 26 years to conclude the accession negotiations with Turkey. It's bizarre.

Among the big battles now are what will be said on further enlargement in the conclusions coming out of the European Council tomorrow. Omens are not good - the draft that Vienna has placed on the table is as restrictive as it gets, and while there is a substantial number of countries that want to delete most of this, there is at the least one big country that want to be even harder.

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

So far, every enlargement has added to the powers, possibilities and policies of the European Union. You will be hard pressed to find anyone who even in private would like to see any of these enlargements undone.

Dark predictions that the new members would produce new political divisions and institutional stagnation have not come true. In fact, almost all the difficult political divisions are between the old members. It was - let's not forget that - France and Holland that shot down the constitutional treaty.

There is a tendency to blame other problems on enlargement. But the mailaise in France can not be blamed on the Hungarians or Estonians, and it would be most unfair to have the Serbs or the Turks punished for it.

Still, that's the tendency in some quarters.

Let's hope that the more optimistic and confident European forces assert themselves somewhat better in the coming hours.

In Memory of Anatoly Sobchak

Earlier today, Russian President Putin did something very decent and honorable.

In St Petersburg, he inaugurated a statue in the memorory of Anatoly Sobchak.

The widow of Sobchak as well as the daughter were among those present at the ceremony.

Anatoly Sobchak was among the earliest and the firmest of democrats of Russia as the Soviet Union started to disintegrate.

As a matter of fact, in those days it was the democrat Anatoly Sobchak in Leningrad and the democrat Borus Yeltsin in Moscow and the more uncertain Michail Gorbachov in the Kremlin.And between Yeltsin and Sobchak, it's fair to say that Sobchak was the most Western in both style and orientation.

He might not have been a perfect human being in every respect - at closer scrutiny, very few are - but he was definitely a committed democrat.

Looking back, his most significant contribution might be when he courageously and effectively organising opposition to the coup by Commununist hardliners in August 1991. While Boris Yelstin as Russian President climbed up on the tank and rallied opposition to the coup in Moscow, Sobchak fulfilled the same crucial role in Saint Petersburg without which it might have succeeded in Russia's second city.

He courageously confronted troops and persuaded them not to enter the city, and served as a rallying point for anti-coup demonstrators in St Petersburg.

In the critical period between August and December 1991 following the coup's failure, the Soviet Union was in a state of flux as there was uncertainty as to whether it would continue in some devolved form or collapse completely. During this period Sobchak moved to decisively break with the Soviet era.

Acting on the results of a referendum held earlier in the year, in which Saint Petersburg's residents had voted to officially re-adopt their city's name, Sobchak presided over a renaming ceremony on the 74th anniversary of the Bolshevik coup, 7th of November 1991.

The guest of honour at the dedication ceremony was none other than the then imperial claimant to Russia's throne, Vladimir Cyril Romanov, Grand Duke of Russia. Sobchak let it be known that he supported the establishment of a Russian constitutional monarchy.

At that time, Sobchak emerged as Russia's second most important political leader due to his crucial role in opposing the coup and because of Saint Petersburg's importance.

Unfortunately Sobchak failed to consolidate his penultimate position and to reinforce Russia's democratic prospects. Although an avowed constitutional monarchist, Sobchak in effect wrote Russia's 1993 republican constitution, which provides for a strong executive president.

Instead of utilising his immediate post-coup prestige to invigorate Russia's fledging democratic movement by moving into the national political sphere, Sobchak unfortunately became ensnared in the travails of Saint Petersburg politics. Failing to stem his city's crime rate and accused of financial impropriety, Sobchak failed to win re-election in 1996.

For reasons I'm not familiar with the young Vladimir Putin was recruited to run his international office when Anatoly Sobchak was mayor of St Petersburg. And Putin in his turn recruited a young man called Alex Miller to carry his papers around.

That was a decade and a half ago.

Since years back Anatoly Sobchak is dead. After some difficult years, he died in 2000. But Putin is President of Russia and Miller is CEO of Gazprom and the two of them continue to operate in tandem in the same way as they did in those early days in Leningrad.

This spirit is a different one today than it was then.

I vividly remember the enthusiasm of Anatoly Sobchak for the democratic and European future he saw for his country and his city. For him, the death of the Soviet Union was a cause for jubilation.

In spite of all what can be said, and the differences that there probably would have been between the two men today, it was very decent and good of President Putín to honour the memorary of the man that brought him from his shady past to the circle of aspiring democrats of Russia.

When I'm in St Petersburg next time, a visit to the statue will be the most important part of my days.

He most certainly deserves to be remembered.

In my opinion, Russia today would have needed also Anatoly Sobchak.

Berlin As Another World

A brief detour to Berlin yesterday evening was a detour to another world - the world of fotball.

Enjoying the neart-tropical heat that has descended over Northern Europe, the streets of Berlin were a bubbling, hot inferno of nationalist passions.

Friendly, for certain, but very strong and very firm.

And that was just the beginning.

Today it starts in Berlin. Brazil is meeting Croatia in the enormous Olympia Stadium of 1936 fame butwith a modern make-up.

With the team from Brazil lodged in the Kempinski, the hotel where I'm normally staying had been more or less taken over by intensely flag-waving Croats. They were all preparing for tonight.

While there are only slightly more than 2 000 people from Brazil living in Berlin, expectations are that app 30 000 will descend on the city tonight. The Croats have a better base in the nearly 12 000 living in the city, but also closer geographic proximity, so they might well start to match the numbers of Brazil.

Well, I hope Croatia wins.

I'm always in favour of outsiders. They challenge what is established - and thereby they often change things for the better. I assume this applies to football as well.

If Berlin survives this encounter tonight, it will then have to endure Sweden meeting Paraguay on Thursday.

Perhaps not the same thing, but I see in the local papers that 50 000 self-proclaimed Vikings are expected to descend on the old Prussian capital, with numbers from Paraguay most probably being significantly less.

Is all this a big exercise in nations and nationalities coming toghether in our increasingly globalized world? Or is it one of the last refugees of the sentiments that in the past brought far worse disasters than street violence, over-consumption of beer and hysterical passions?

I don't know.

In the meantime one might note that recent surveys show a more optimistic mood in the German economy than at any time since reunification.

Good for all of us.

Choices of Importance for Europe

Back on the European continent - and in a Stockholm where the weather is bordering on the tropical these days.

In Luxembourg the Foreign Ministers of the European Union are meeting to sort out issues in advance of the meeting of the European Council in Brussels at the end of the week.

Some are trying to do whatever they can to put brakes on the further process of enlargement of the Union.

The Greek Cypriots are trying to bloc the opening of negotiations on the first chapter with Turkey, and they have the tacit support of some others. And several countries are - under the heading of "absorption capacity" - trying to redefine the criteria for admitting new members in a more restrictive direction.

It's a highly dangereous exercise - it is Europe playing away its soft powers of transformation. It's playing with the future stability of important parts of our continent.

I can only hope that there will be other governments taking a firm stand.

I'm heading for a hectic week as well. Soon off to speak at the annual meeting of the Stockholm Chamber of Commerce on the global challenges, but then off to Berlin for a dinner.

Then back to Stockholm for the Nordic Venture Network discussing the high-tech scene on the Top of Europe. But then the off to Brussels for most of the rest of the week. It's the board of the European Policy Center, among other things.

But it will be right in the middle of the turmoil of the European Council.

But the week will of course also see the important election in Slovakia on the 17th.

An important week for Europe.

Afghanistan in Canada

Before leaving Canada and heading home to Europe I must just note the intense debate here over the nations engagement in the NATO mission in Afghanistan.

It's a rather substantial one. There are 2 200 Canadian soldiers in southern Afghanistan, and they are increasingly taking on a fighting role there, with the occasional casualty very difficult to avoid.

It's a new experience for a country that otherwise has a vast amount of experience from more conventional peacekeeping missions around the world.

The mission was of course started under the previous Liberal government, but when Prime Minister Harper and his conservative government took over in January the mission was extended for a further two years.

That proved to be very difficult for a Liberal party that by that time was in profound disarray after its defeat. A majority of Liberal MP's opposed the extension of the mandate.

And in the context for the leadership of the Liberal party now underway, Afghanistan looks like becoming the most controversial issue. With most of the party members against, there could be a problem for frontrunner Michael Ignatieff with his rather hawkish stand on most of these issues.

So Afghanistan has suddenly come to the politics of Canada.

The Harper government is a minority one, and it is likely that it will seek a new mandate through a new election early next year.

Then Afghanistan might be even more of an issue.

The Multiculturalism of Canada

I'm still in Canada, and here the debate caused by the arrest a week ago of 17 persons accused of preparing for terrorist attacks in Toronto seems to be accelerating by the day.

The newspapers have several pages a day on different aspects of the story, and there isn't a TV channel that is not having a talkshow on the issue.

It's not that terrorism is entirely new to Canada. Way back there was a Quebec Liberation Front blowing up people, and in 1985 Sikh extremists blew up an Air India aircraft killing 329 people.

But it's still the trauma - much like Britain after the London bombs last July - of finding that you have home-grown young boys and men preparing to undertake terrorist acts.

Canada is truly a immigrant nation. During the past 40 years more than 7 million people have been coming here. And with 30 million inhabitants, it receives in the order of 120 000 new immigrants every year. That's nearly 1% of the population every year.

There is no doubt that this has contributed to the success of modern Canada. The economy is white-hot, old deficits have disappeared, and unemployment hasn't been so low for more than three decades.

The boom in energy has undoubtedly made its contribution to this.

It might seem surprising, but the US is importing more energy from Canada than it is from the Middle East. In the booming Alberta province in the West - the centre of the enery industry - unemployment is now down to 3,5% in spite of a large influx of people from other parts of the country.

Canadians are proud of their commitment to what they call multiculturalism - while South of the border in the US the concept preferred is that of the melting-pot.

In a sense, you could argue that Canada never had any choice. With French-speaking Quebec and its urge to be as independent as possible within Canada, the melting point was never an option. Multiculturalism was dictated by the reality of Canada.

And the communities have multiplied as streams of talented people from all across the world have sought to create their future her.

There are now 750 000 Muslims in the country - and close to 60% of those live in the greater Toronto area. That's where the arrests a week ago happened.

Can multiculturalism survive? Most Canadaians seems to believe that the arrests of the 17 just revealed the tip of an iceberg, but in spite of that the same polls show that a majority are keen to preserve multiculturalism as one of the basis of modern Canada.

That being said, the debate as I have been able to follow it during my days here seems to point towards a somewhat more determined framework for the multicultural society. In these respects, there are echoes here of the debate in the Netherlands in the last few years.

While US commentators are displaying an element of Schadenfreude over the arrests in Toronto, the Canadaian debate so far seems keen to defend the core values of the Canadian multicultural model of a major immigration society.

It's a debate with relevance for us all.

The Discontent of Canada

Today found myself in Ottowa in Canada.

Ottawa is not only the capital of this large and very diverse country, but has also developed as an impressive high-tech centre.

There are 1800 high tech firms employing 76 000 people in the Ottawa area. In view of the concentration of telecommunications research and development here, it is claimed that this is among the world's five top R & D locations.

For some time, the pages of the newspapers here have been filled with the challenges faced by the Canadian troops in southern Afghanistan. And yesterday's Ottowan Citizen has a first page huge photo of the funeral of the first female Canadian soldier killed over there.

It's hardly surprising that the deployment there has lead to an intense debate. The opposition Liberal party - which in government initiated the deployment - is now deeply split over the issue.

And the debate is most unlikely to go away.

But the big issue over there is of course the arrests of no less than 17 persons - 12 young men and five juveniles - for terrorism on Friday.

There is page after page in the newspapers on the issue. Wheren't these ordinary Canadian boys? How could that be possible in our tolerant and multicultural society? Or was it because of that is happened?

There are far more answers than questions.

How serious the two groups of plotters were remains to be seen when the trials start. On the surface, they all look rather amateurish. But so might the Madrid or London bombers have looked some months they really mounted their attacks.

They did try to buy significant amount of nitrogen fertilizer that can easily be made into a bomb. They did not suspect that the sellers were agents of the CSIS - the security service - and that their arrest was imminent.

The methods of terrorism adjusts constantly.

So must accordingly the methods of counter-terrism.

Hope in Iraq

As a rule, one should not rejoice over the death of a human being.

But the death of Abu Musab al-Zarqawi in Iraq yesterday is a true reason for jubilation.

His aim was to spread death and destruction, and to inspire sectarian and religious conflicts, with a terrorism of the utmost bestiality.

His death in an airstrike, in ombination with the security ministries now filled in the new Iraqi government, is profoundly good news and brings some hope to a situation that otherwise started to look rather hopeless.

With the fundamentalist terrorism obviously weakened, the the new government must now start an offensive to encourage at the least the nationalist part of the armed insurgncy to lay down their arms and shift into the political process.

In combination with some accomodation of Sunni concerns related to the constitution that should be able to bring the fragile process forward.

Danish Model of Success

Yesterday was a busy day back and forth to Copenhagen for discussions with different political leaders there.

Denmark is doing extremely well these days - and that's part of its political problem.

With more foreasight than most other nations - certainly than Sweden - it has started to tackle some of the long-term demographic and welfare issues. A big reform commission has produced an agenda for necessary reforms, and the centre-right government under Prime Minister Fogh Rasmussen is now negotiating with parts of the opposition to see where a broad consensus can be established.

But to undertake painful reforms when the economy is positively booming isn't the easiest thing.

We'll see what comes out of it.

For a Swede it is striking to note the difference between how the Swedish and the Danish labour markets work. In this country, the market is fairly heavily regulated, and the Social Democrats under trade union pressure are doing their utmost to preserve that situation.

In Denmark it's very different. They have a very flexible labour market in combination with good levels of unemployment support. And it works just beutiful!

Youth unemploymment in Denmark is now - and these are the official figures - less than half of what it is in Sweden - 22 versus 9 %.

And while Sweden has one of the highest rates of unemployment in the European Union, Denmark is starting to suffer the problems of the lack of manpower. Business is starting to see the tight labour market as a major restrictions on its expansion.

For Sweden, there is now a Danish model to follow. And for others.

Mess in Mogadishu

Events seems to have taken a dangereous turn during the last few days in the Somali capital of Mogadishu.

It has been a desperate place for decades. I don't think there is any other capital in the world as torn apart by chaos and conflicts as this one.

There hasn't been a functioning government in the country since 1991. And prior to that different Cold War proxy wars on the Horn of Africa destabilized the entire region. On top of that came the horrible draught that led to the ill-fated US and UN intervention.

Since then it's been chaos.

After the invasion of Afghanistan there was a fear that elements of al-Qaeda would try to relocate to Somali. And there were signs that part of the infrastructure for terrorist activities in the rest of East Africa was in the country.

That made it even more imperative to get some sort of government in place. Talks under the auspicies of African nations did have some success in this direction last year, although the resulting government could not establish itself in Mogadishu.

But since then fighting has accelerated.

On the one hand the so called Alliance for the Restoration of Hope and Counterterrorism, which seems to be a loose coalition of secular warlords. Rumour has it that they have clandestine US support. There is also Ethopian support.

On the other hand the so called Islamic Courts, supported also by Eritrea. As usual, it's war by proxy.

The last week seems to have seen the islamist forces taking control of Mogadishu and driving the secular warlords away. There are reports of significant fighting.

If this is the case, then it is a worrying development.

It might be that this war by proxy has undermined the fragile efforts to set up a functing government. And it looks as if it is the islamist forces that have gained the upper hand.

This comes at the same time as there are signs of a deterioation of the situation in southern Afghanistan. And Iraq certainly does not seem to be approving.

Dramas Forming Sweden

Today is the National Day of Sweden.

It’s been sort of celebrated as such for years, but since 1982 it is official that it is the National Day, and since last year it’s also a public holiday.

Why the 6th of June?

Well, there were competing offers when the choice was made in the late 19th century – the age of awakening nationalism – but June 6th seemed to be the least complicated option.

It was the day in 1523 when Gustav Vasa was crowned as King of Sweden, and it was the day in 1809 when the constitution that was in force until 1809 was promulgated.

But these were also years of drama and traumatic events in our part of Europe.

From 1397 the three nations of Norway, Denmark and Sweden had been united in what was called the Union of Kalmar after the castle in present south-eastern Sweden where it had been agreed.

But from the late 15th century nationalist feelings in Sweden started to question this arrangement. And when the Danish king Christian II – who was King of the Union – answered with repressive measures, the situation become rife for open rebellion.

This came under the leadership of the young nobleman Gustav Eriksson Vasa. He allied himself with the Hanseatic German traders in Lubeck in order to finance his rebellion against the Danes and their local allies. The more romantic mythology however attaches greater importance to him rallying the peasants of the Dalarna province for a march against the foreign occupiers in Stockholm.

Gradually he won the battles, and it was in Strängnäs on June 6th that Sweden left the old union and pronounced him king as Gustav Vasa. Thus emerged Sweden as a true nation state for the first time.

At that time Stockholm was still in Danish hands, although Gustav Vasa could enter the city on June 23rd. But large parts of Finland were not under his control, there was fighting in the South and Gotland was well beyond anything.

It took until a meeting in September in Malmö – then Denmark – for there to be some sort of provisional border settlement. It was one that Gustav Vasa was deeply dissatisfied with.

It was not a harmonious divorce after the "war of liberation", and Sweden and Denmark continued to see each other as archenemies for a couple of centuries. It’s really only since the 19th century that things have normalized.

June 6th 1809 is also associated with a traumatic realignment of the politics of Northern Europe.

These were the years of the Napoleonic upheavals across Europe. At a meeting in Tilsit, Napoleon had given tsar Alexander a free hand in northern Europe.

The resulting war - one in a series between Sweden and Russia during primarily the 18th century - had seen the armies of the Tsar defeating the Swedish armies on the battlefields of Finland. The mighty fortress of Sveaborg outside Helsinki had fallen into their hands.

And the disastrous conduct of the war had lead to a coup d’etat in Stockholm in March supported by an advancing rebellious army. The somewhat tragicomic king had been arrested.

At that time Cossack units had briefly been within just a day or two of the capital after having crossed on the ice from the Åland islands. And in June a Russian army was standing in and controlling northern Sweden.

A brief battle in the vicinity of Umeå in northern Sweden in August ended in another Swedish retreat, and in September the peace that separated Sweden and Finland, and later made Finland an autonomous nation within Russia until 1917, could be concluded essentially on Russian terms.

In the meantime the then Parliament had dismissed the king and his entire family and hastily written the new constitution. This, I understand, is what we are celebrating.

So the two June 6th are dates associated with very major geopolitical shifts and changes in Northern Europe.

The first broke down the Union of Kalmar, and there emerged the continued union between Denmark and Norway and a Sweden that at the time included also Finland. But the wars between the two large states would continue on and off for two more centuries.

The second broke down all of this.

Sweden and Finland were separated after having been one entity since the early Middle Ages. A reduced Sweden had to seek a new identity, and Finland with its wide autonomy inside Russia could start to emerge as a nation in its own right, acquiring its independence in 1917.

Denmark had sided with Napoleon in the wars of those years, and had to accept the loss of Norway, which was given to Sweden as some form of compensation for the loss of Finland. But it never worked that way, and in 1905 the two dissolved the union and Norway gots its independence.

In a wider sense, this is what June 6th is all about.

The birth of nations is often bloody, messy and not always that glorious affairs.

I leave to others to judge whether Sweden is an exception.

Welcome Serbia!

On Saturday evening, Montenegro declared its independence as a result of its May 21 referendum on the issue.

And today it was the time for Serbia to do the same.

Montenegro becomes independent of Serbia - and Serbia becomes independent of Montenegro.

We see two new state entities on the map of Europe. But I hope that Foreign Minister Vuk Draskovic was right when he said that it is "a state separation - not a separation of Serbia from Montenegro". The human and other bonds remain strong.

And on June 12th it is expected that the European Union will officially recognize the existence of the two sovereign states of Serbia and Montenegro in place of the former state union.

It was at an extraordinary meeting of the Serbian Parliament that it was proclaimed that, according to the constitutional charter, the international-legal subjectivity and jurisdiction of the former federal union will now be taken over by Serbia. This has been agreed before.

Serbian Parliamentary Speaker Predrag Marković said that the parliament will make the government aware of the fact that all state bodies must, within a deadline of 45 days, take all measures to make sure that all jurisdictions of the federal union are transferred to the state level, in order to avoid any problems or conflict in the separation from Montenegro.

This is easier said than done. There are numerous small issues that could become very big if not handled in a constructive and generous way. Control over the armed forces - up until now a joint responsibility - is just one among them.

For Serbia as well as for Montenegro there will be the need for new constitutions. In the case of Serbia that's been on the agenda for years, and was a key issue when the present Kostunica governmernt was formed. But progress so far has been exceedingly slow.

For all of the problems of separation, Serbia has all reasons to look with optimism to the future.

Its constitutional structure will be far more straightforward after the separation. The Serbian economy is already doing rather well with growth rates of 5 - 6% - substantially better than Montenegro in the last fe years. And Belgrade is gradually on its way back as one of key hubs of most things in the region.

There are substantial issues that needs to be handled - Mladic and Kosovo. Neither is simple. And there needs to be statesmanship and generosity in handling all the state divorce issues.

But once out of the way, there is every reason to believe that Serbia could become one of the pillars of growth and one of the foundations of stability in the region.

Flat Tax Elections

Although not necessarily the deciding issue, the question of a flat tax was an issue in the just held parliamentary election in the Czech Republic and is also debated leading up to the Slovak elections on June 17.

It's really the success of the Slovak flat-tax reform with a 19 % income tax, profit tax and VAT that has changed the terms of the debate on the issue throughout large parts of Europe.

It was all of course started by Estonia in the early 1990's, and then followed by Lithuania and Latvia, but it was Slovakia that took the concept to Central Europe.

Mikulas Dzurinda and his centre-right government has been ruling Slovakia since 1998, being re-elected in 2002, and taking the country from an unreformed virtual outcast in Europe to one of its true star performers.

Its economy is booming with growth rates above 6% and with very rapid increases in industrial production and exports. Once sleepy Bratislava has suddenly become a very popular place. Its airport is emerging as one of the hubs for low-cost airlines.

This year Slovakia will produce more cars per capita than any other country in the world - it was only years ago that its main export effort was in old-style Soviet tanks.

But also the Czech Republic is doing very well with growth rates above 5% and also impressive developments in industry.

In the Czech election debate, centre-right ODS said it wanted to introduce a flat income tax of 15 % if it won, thus trying to give new momentum to the economic development of the country.

That election ended with ODS gaining 81 seats versus the 74 seats of the CSSD of the Prime Minister. But the centre-right bloc ended up together with 100 seats in the 200 seat Chamber of Deputies, thus producing a perfect tie.

It reminds me of the 1973 Swedish election. In 1970 we had introduced a new unichamberal system with 350 members, but no one had contemplated the possibility of the two "blocs" each getting 175 seats, which is exactly what happened.

Well, Sweden survived, although the quality of economic policy deterioated substantially in the years of parliamentary maneuvering that followed. We subsequently changed the constitution so that the parliament now has 349 members. Nations do learn.

Tomorrow President Klaus is likely to start some sort of talks with ODS leader Mirek Topolanek to see whether he can form a government. But how far such a government can carry its program - including the flat tax proposal - is of course a very open question.

In Slovakia the opposition party Smer - Third Way - is complaining heavily against the policies of the Dzurinda government, but as far as I understand their proposal for changes are rather modest.

On income tax, they will retain the 19% tax, although they will introduce an even lower bracket of 15% for low-income earners. And on VAT they will introduce differentiated VAT rates, with some higher and some lower.

The outcome is still open.

Smer is well ahead as an individual party in the opinion polls. But it is far from excluded that Dzurinda will manage to forge a new coalition of the different parties of the centre-right.

The flat tax model seems there to stay in Slovakia - and it might have been gaining ground in the Czech Republic.

Stalin and Hitler

There are events that change history - and there are books that do a wonderful job of describing them.

John Lukacs is among the very best of historians of modern Europe. His "Five Days in London - May 1940" is only one of the classics from his pen.

Now he's back with a masterful small book on the relationship between Hitler and Stalin and the former's decision to go to war with the later on June 22nd 1941.

This was, in his opinion, the most important turning point of the Second World War, since "the Anglo-American alliance, for all its tremendeous material and financial and industrial and manpower superiority could not have really conquered Hitler's Germany without Russia."

How the two courted each other up to their infamous pact on August 23rd 1939 is a story documented elsewhere but worth repeating. And they both derived immense immediate benefit from it.

Hitler got the possibility to attack Poland, thus starting the Second World War. And Stalin got the possibility to get back territories that had been lost in the collapse of the Russian Empire at the end of World War II. He took back parts of Poland, the three independent Baltic states and tried to do the same with Finland.

Up until June 1941 Hitler's armies had done whatever they wanted across the continent of Europe. The German military machine was without parallel. And the expectation was obviously that it would succeed to crush the Red Army as well.

History turned out differently. And whether Lukacs gives a completely convincing answer to the question why Hitler attacked Stalin can be debated. He was obviously less certain of success than most of his generals. But perhaps breaking the back of Russia was the only way he saw of breaking the resistance of Britain and of Winston Churchill.

For Lukacs, June 1941 is also proof that individuals do matter in history.

In June 1941 Hitler wanted war with Russia, but Stalin certainly did not want war with Germany. Others around both of them were more apprehensive towards the policies pursued.

Hitler decided for war. And that decision eventually sealed his fate and set the course of European history for the following half century.

It's a book worth reading

Welcome Fridtjof Nansen

Yesterday the new frigate Fridtjof Nansen arrived for the first time in Norway and entered the harbour of Oslo to much fanfare.

A lot of money and effort has gone into the five high-tech frigates that Norway ordered with a shipyard in Spain and with the US firm Lockheed Martin.

In a wider sense they can be seen as a symbol of the new importance of what in Oslo is often referred as the High North.

Once an area of military confrontation during the Cold War, it is now developing into an area of increasing also economic importance.

Estimates that probably are wildly optimistic are saying that up towards a quarter of oil and gas reserves not yet found might be located up in the Arctic area.

But even if that is the case there is little doubt that there are vast resources up there. Apart from - of course - those related to fisheries.

Statoil of Norway is close to getting the Snöhvit gas field in production up there, and these weeks there is intense speculation on when and how the Russian authorities will announce their decision on foreign partners in the development of the gigantic Shtokman gas field on the Russian side of the sea border.

It's natural that Norway is then investing into the assets needed to survey and police that vast areas of the North Atlantic.

It's obviously in the interest of Norway - but it's also in the wider European interest.

So we all have reasons to say our welcome to the frigare Fridtjof Nansen.

The Conflicts of Europe

In the mail yesterday was this year's edition of IISS's respected Military Balance.

For decades, it has been the standared international reference work on these issues.

Since some years back, it also includes a Chart of Conflicts giving details on the ongoing as well as recent violent conflicts around the world.

I looked with particular interest on the estimates made of the number of fatalities in the different conflicts.

It is interesting to note the estimates for the Balkan conflicts of the 1990's.

For the Bosnian war between 1992 and 1995 the number of faralities is estimated at 95 000. That's considerable lower than the figure of 200 000 often referred to public discussions and even somewhat lower than other equally serious attempts to get to the true scale of that conflict.

It will not be until there is a new census in Bosnia that we will start to get a more exact view of this. The last one was in 1991. But I'm fairly certain that the figure then will turn out to be in the vicinity of the IISS estimate.

As for the Kosovo war between 1998 and 1999, the figure IISS uses is 4 000, which is less than half of the figure of 10 000 one often hears.

The Bosnian war is still the by a wide margin worst conflict in Europe since World War II.

For the Chechen war since 1999, IISS has the estimate of 16 000 fatalities, for Nagorno Karabach between 1992 and 1994 22 000 fatalities and for the conflict over Abchazia during the same years 6 000 dead. Further back in history, it notes 4 000 fatalities on Cyprus in 1974.

The Balkans and the Caucasus region are obviously the places to watch.

It's here that there is a risk that the ethnic mosaic left by a rich past will ignite tensions that escalates into conflicts.

An Answer to the Letter

In a very major policy shift, Washington has now said that it is prepared to sit down on the negotiating table with Teheran and discuss also the nuclear issue.

This was - as I have written - somewhat predictable, but is nevertheless a major move. There was a risk of Teheran capturing the high ground in the debate with its letters and initiatives.

There are important caveats in the initiative.

Washington will sit down together with London, Paris and Berlin. And that's a wise move. It presents a broader but still obviously united front.

And the demand is that Teheran suspends enrichment and reprocessing activities. This is the "foundation stone" of the initiative.

Fair enough. The EU3 are saying the same thing, although they talk about enrichment. I have not seen reprocessing being an issue - I'm not aware of any signs of them doing that.

The initial reaction from Teheran has been critical rather than negative, and has tried to avoid taking a clear stand on the conditions for talks. The Iranian Foreign Minister Mottaki said that Iran "will not give up our nation's natural right" to enrichment, but what is demanded isn't really that they give up what they consider their right, only that they don't exercise it. That's a huge difference.

After some maneuvering I would not be surprised that a formulae of technical suspension or something of that sort is found.

In effect, we are now entering a period of discreet negotiations over the conditions for negotiations.

And that's progress - of sorts.

Not everyone in the US is happy with what the Washington Post describes as "perhaps the biggest foreign policy shift" of the Bush presidency.

In its editorial, Wall Street Journal was lukewarm - at best - in its support for the move:

"Iran's relentless drive for a nuclear weapon is a difficult problem, and perhaps Ms. Rice is right that direct diplomacy is essential to expose Iran's real purposes. But given Iran's track record, we'd say the Secretary has walked her President out on a limb where the pressure will soon build on him to make even more concessions. If this gambit fails, she'll have succeeded mainly in giving the mullahs more time to become a terrorist nuclear power."

Time will tell who's right.

But not to explore all options in a situation as serious as this can be sound policy.