THERE have been great changes in Scandinavia recently, and now that the Prime Ministers of Denmark, Sweden and Norway have completed their visits to Moscow, it seems to be an appropriate time to pause and appraise them. First, exactly what is the nature of the changes? Second, how do they affect NATO and Western security?

Certain historical facts will help us to answer these questions. The first and most important fact is that Sweden stayed out of two world wars. The Swedes attribute their success to a policy of neutrality. Others explain it in terms of expediency, mixed with good fortune. In any case, the result of Sweden's policy has been that, politically speaking, few concepts are more popular in that country than the one summed up in the word "neutrality."

The second fact of importance is that in 1949, Sweden, Denmark and Norway almost succeeded in establishing a Scandinavian defensive alliance. The basic reason for its last-minute failure was that the United States would not promise to supply the projected alliance with arms. This decision by the National Security Council had consequences of great significance. The Norwegians, led by their very capable Foreign Minister, Dr. Halvard Lange, immediately applied for admission to NATO, and were accepted. With considerably less enthusiasm, Denmark also became a NATO member; Gustav Rasmussen, the Danish Foreign Minister, publicly expressed doubt that the American decision was in the best interests of peace. Sweden did not follow suit.

Fact number three is that there was established in 1952 a Nordic Council consisting of representatives from Denmark, Norway, Sweden and Iceland. This organization, founded largely as a result of the efforts of the Danish Prime Minister, has had as its aim the promotion of Scandinavian economic, political and cultural coöperation. Although Finnish representatives had participated in the discussions leading to the Council's formation, Soviet pressure dissuaded Finland from becoming a member in 1952.

The fourth fact is that the great change in Soviet tactics in 1955 and 1956 brought about the Soviet evacuation of the naval base at Porkkala, situated only about ten miles from the center of Finland's capital, Helsinki. This act, of course, was hailed with jubilation throughout Scandinavia. Today there is even some speculation that the Russians may soon return some land taken from Finland in the winter war of 1939-1940.

The fifth fact, closely associated with the fourth, is that recently the Soviet Government withdrew its objection to Finland's joining the Nordic Council. A Scandinavian organization which until the summer of 1955 was being denounced by Moscow as an agency of NATO had now become, in Soviet eyes, a great peaceful organization designed to disrupt American imperialism in Scandinavia.

A sixth fact is that recently Iceland made clear that it would be happy to get along without American airmen stationed on its soil. This suggestion must have struck a responsive chord in both Norway and Denmark. In 1949, Norway made public a note to the Soviet Union in which the promise was made that there would be no foreign bases on Norwegian soil except during war or in case of the immediate threat of war. In 1953-1954, when the NATO authorities said it was necessary to station American airmen in Denmark, the Danes refused the necessary permission.

The last fact to bear in mind in this discussion is that any attempt to bring genuine economic coöperation among the Scandinavian countries runs squarely up against the unfortunate truth that large sectors of their economies are competitive rather than complementary.

With these facts in mind, we may find it easier to answer the original questions.

II

The proposed Scandinavian defense alliance of 1949 (which was to include only Norway, Sweden and Denmark) would have brought with it a certain measure of integration of the defense, foreign and economic policies of the three nations. The failure of that plan perpetuated a deep division in these fields. Since Iceland, Norway and Denmark are NATO members, while Sweden and Finland are not, the Nordic Council has never been able to concern itself officially with foreign or military policy. A Scandinavian military alliance would have been binding upon its member states; the Nordic Council can only make recommendations and must rely essentially on the force of public opinion to back them up.

It may well be that the progress of the Nordic Council in the social-cultural field has been a reaction to the failure to achieve a Scandinavian defensive alliance in 1949. Thanks to the Council, passports are no longer required of citizens of one Scandinavian country entering another. For all practical purposes, a common Scandinavian labor market has been created, and the Scandinavian workman who has been a member of a sickness benefit society in his own country may transfer that membership, without new health tests, to any other northern country where he may find employment. A Scandinavian convention covering social security was signed in September 1955 by the five Ministers of Social Affairs. This convention, a direct result of the earlier agreement on a common labor market, facilitates to an even greater extent the transfer of workers from one country to another. At its latest meeting in Copenhagen in February of this year, the Council resolved unanimously that an extension of the existing Scandinavian coöperation in atomic research and the peaceful utilization of atomic energy were "of the greatest importance." At the same meeting the Council recommended appointment of an expert committee to study possible further coöperation in nutritional research. In addition, it was proposed to establish an advanced course of journalism at the University of Aarhus, in Denmark, to be supported by all five Scandinavian countries.

The list is long. In the social-cultural field it is impressive; there is no evidence here of any substantial opposition to the work of the Nordic Council. However, in the area of economic coöperation the story is different. Some progress seems to have been achieved by the slow day-to-day methods of diplomacy, but the so-called common market, involving a significant reduction of internal trade barriers by Norway, Sweden and Denmark, would appear to lie far in the future.

Norway, less industrialized than Sweden, produces an enormous amount of electricity. Sweden needs electricity. Were modern civilization less complicated, one might reasonably expect the Swedes to buy Norwegian power without excessive difficulty. For some time, however, large-scale export of electric power from Norway to Sweden was frowned upon by Russia, which saw in it only a scheme by which Swedish defense industry would be built up and Sweden would be made a satellite of its neighboring NATO Powers. Furthermore, some opposition came from Norway itself. If it is a question of supplying Swedish industry, asked many Norwegians, why should their country export to one of its chief competitors the very power which is Norway's tremendous competitive weapon in the international manufacturing field?

After lengthy negotiation, the municipal authorities of the city of Trondheim, in central Norway, agreed to the export of electricity to the city of Stockholm. The plan was approved by the Norwegian Parliament by a vote of 81-63 on December 6, 1955. However, this agreement was reached only after the Norwegian Ministry of Industry, in conjunction with the Board of Waterfalls and Electricity, had published a long and considered memorandum on the subject, recommending that in view of Norway's needs the electricity exported must come from Norway's annual increment of newly developed power. This policy would make the export of electricity very modest.

Even Norway's present annual rate of power development is a great drain on her foreign reserves, since she can produce only half her requirements for turbines and other hydroelectric plant and equipment. The report of the Ministry of Industry pointed to the need for foreign loans, and suggested that these should be paid off during the life of the contract for power export. Thereafter, plants built with these loans would revert to meeting Norway's own requirements. The Board of Electricity proposed that the price to be charged for exportable power be sufficient to cover a margin for the cost of developing economically less favorable water power resources. Today it is estimated that Norway's electrical works generate only one-fifth to one-sixth of the total which is economically feasible.

In Norway it is easy to find suspicion of Sweden. The political union of the two countries was dissolved only a half a century ago, and the Norwegians remember that one of the great arguments for that break originated in the different economic facts of life in the two countries. Norway was becoming commercial and was living from its merchant marine and its exports of fish. Sweden meanwhile was becoming industrialized. Norway's continuing fear of Swedish economic power was well expressed by the Oslo newspaper Verdens Gang not long ago when it wrote, in opposition to Swedish plans to invest capital in a north Norwegian mining enterprise, that it was simply a matter of preserving that mining region "as a Norwegian area." For a mining company in Norway to have a Swedish director, Swedish engineers and Swedish workers appeared to Verdens Gang to be nothing short of Swedish infiltration.

In view of all these factors Scandinavian economic cooperation has proceeded at a snail's pace. Much more important, however, is the discussion of the proposed common market.

A 1947 Scandinavian report to the newly-created Council of Europe mentioned the fact that Denmark, Norway, Sweden and Iceland had created a Joint Scandinavian Committee for Economic Coöperation. In 1950, that Committee reported that the conditions required for a Scandinavian customs union did not then exist; but the idea did not perish, and has been before the Nordic Council since the formation of that body in 1952. Present proposals differ considerably from those of a few years ago. Among other things, Iceland today is not included in the proposed common market. Even with Finland in the Nordic Council today, there has been no serious suggestion of including that country in any Scandinavian economic alliance.

It is argued by many in Norway that a common market cannot be created without surrendering a substantial measure of national sovereignty, and that this would leave Norwegian industry at a competitive disadvantage to more efficient Swedish industry and more efficient Danish agriculture. These fears led several members of the Liberal and Conservative Parties in the Norwegian Parliament to vote against joining the Nordic Council when it was created. Although outvoted at that time, many members of these parties still take a negative attitude toward the common market. In Denmark and Sweden, there has been scattered and unorganized opposition to the common market idea; but in 1952 the only votes in those two countries against the Nordic Council came from the Communist representatives. At that time, there were no Communists in the Norwegian Parliament.

Without coördination of taxation, social and investment policies, many think a common market would be impossible; and it is this abridgment of national sovereignty that some Norwegians fear. It is interesting to note that at the recent Copenhagen meeting, Mr. Bertil Ohlin, speaking for the Swedish Social-Liberal Party, and Mr. Bertel Dahlgaard, expressing the concerted view of the Danish delegation, referred to the experience of the Benelux countries and found that in those countries coördinated policies were at a minimum.

Study after study has been made of the proposed Scandinavian customs union. The latest phase of this question started at the Oslo meeting of the Nordic Council in 1954, when the three governments were asked to pave the way for a common market for as large a sector of economic life as possible. The recommendation specifically pointed out that a common market could be introduced by different methods and at different rates for various sectors of the economy. These recommendations were adopted with the support of all the Danish and Swedish votes, nearly all the Icelandic votes and half of the Norwegian votes (those of the representatives of the Labor Party); the remainder of the Norwegians abstained from voting.

The meeting of the Council at Copenhagen early in 1956 lasted ten days, and two full days were given to debate on the common market idea. In order to obtain approval of the General Agreement on Trade and Tariffs--GATT --the Council was informed that if the three nations have any customs union at all, at least 75 percent of their trade within the union would have to be exempt from customs and other barriers. The negotiators have agreed already on 45 percent, and it is hoped that soon there will be agreement on another 15 percent. That would leave a final 15 percent to be worked out.

Although the principal purpose of the debate in Copenhagen was really to decide whether the experts should continue their work, actually the pros and cons of a Scandinavian market were thoroughly aired. All the members of the Danish and Swedish delegations accepted the general idea of a common market. Indeed, a certain economic compulsion, despite the Norwegian opposition, drives Scandinavia toward greater economic coöperation. Norway, Sweden and Denmark together require a large and stable home market as a basis of competitive production in new sectors of industry. "In Denmark," said Mr. Erik Eriksen, former Prime Minister, "we feel that in a world of atomic bombs and automation our countries simply have to stick together. If we don't, we fear that our culture, our economic life, and, indeed, our political self-determination may be in jeopardy." These three Scandinavian countries have lived for some time with the constant problem of foreign exchange difficulties. The three Prime Ministers have all recently made trips to Moscow in search of greater export opportunities for their countries. The concept of a common market, under which productivity would increase and investment capital would flow more easily, is one which certainly has great appeal.

On the other hand, the Norwegian opposition asserts that a common market might divert some of Norway's imports to Sweden and Denmark because of the advantages they would have over Norway's less-developed industries. The result would be that outside countries, particularly the United Kingdom, would take retaliatory measures against Norwegian exports and Norwegian shipping.

The Norwegians have learned that the mountains divide and the sea unites; they know that their standard of living is in large part the result of ocean commerce. For a country with a population less than half that of metropolitan New York, Norway has an enormous merchant marine. Only about 15 percent of it is engaged in trade touching Norway, whereas 85 percent trades almost exclusively among foreign ports. Obviously, therefore, the threat of retaliation of any kind against Norwegian shipping is a source of concern. Leaders of the shipping industry have expressed strong opposition to a common Scandinavian market. Present intra-Scandinavian trade is not great in proportion to the total amount of Norwegian trade with non-Scandinavian countries. In the opinion of many Norwegian shipping men, to hope that the proposed common market could increase inter-Scandinavian trade sufficiently to overcome prospective losses elsewhere is a vain hope indeed.

III

The Nordic Council's work in fostering development of the common market is closely related to problems facing NATO. It is perhaps in Finland and Iceland that this inter-relationship can best be seen.

The Soviet evacuation of Porkkala and the granting of permission for Finland to enter the Nordic Council were clearly designed to create neutralist sentiment in Scandinavia and to weaken the existing strength of NATO. Finland in the Council can do more to pull Denmark, Norway and Iceland away from their NATO ties than Finland out of the Council. Considering the recent political and economic instability in Finland and the dependence of the country's new president on Communist support, it appears that in dealing with Scandinavia the Russians have played their cards well.

Following the Soviet withdrawal from the Porkkala naval base came the resolution of Iceland's Althing calling for the withdrawal of all NATO armed forces from their country. This resolution was not unexpected among NATO leaders, because for some time many influential Icelanders had expressed the hope that foreign troops might soon leave. Nobody could demonstrate the actual connection between the Porkkala evacuation and the Althing resolution, but that there was a relationship seems very clear. After all, a month of "Soviet-Icelandic friendship" had been inaugurated by Moscow in October 1955. In seeking to weaken Iceland's ties to NATO, the Russians had a powerful propaganda weapon in the Porkkala evacuation. And, in turn, they may also have a basis for hoping that anti-NATO feeling in Iceland will spill over into the meetings of the Nordic Council.

There is not much doubt that a revolt against NATO's predominantly military character has been brewing for some time. Largely for internal political reasons, Denmark in 1953-1954 resisted the stationing of foreign troops on her soil. The Icelandic Althing is, however, the first legislature which has gone beyond philosophic expression of the revolt. The elections of June 24, though inconclusive, certainly demonstrate the difficulty of trying to harmonize international military policies and local politics.

In 1952, the first full year after arrangements were made to build radar stations in Iceland and to station American soldiers there, the United States purchased one quarter of Iceland's exports, largely fish. By 1955, this figure had fallen to 15 percent. In 1952 the Soviet bloc countries took 7 percent of Iceland's fish exports; in 1955, they took 28 percent. Icelanders may well wonder at a military alliance which cuts across the pattern of its trade.

Finland, Sweden, Norway, Denmark and Iceland all have recently sought to increase their trade with the Soviet Union. The Finns have been rather successful--so successful, in fact, that they are tragically dependent on the Soviet world for such necessities of modern life as petroleum products. Premier Einar Gerhardsen, of Norway, accompanied by Minister of Commerce Arne Skaug, went to Moscow in search of urgently needed markets for Norwegian exports. Premier Tage Erlander of Sweden reported after his recent Soviet visit that the Russians did not try to hide their hope that Sweden's "non-alliance" policy would be extended to other Scandinavian and north European governments. Premier H. C. Hansen of Denmark arrived in Moscow just as Pravda proclaimed its praise for the Danish refusal to permit foreign combat formations in Denmark. Negotiations are now in progress for resumption of normal trade relations which were broken off in the summer of 1954 when, in response to American protests, Denmark can-celled a delivery of tankers to the Soviet Union.

NATO, never too strong in Scandinavia, is seriously threatened today in that part of the world. The facts of economic life and the emotions of nationalism are combining to weaken NATO, and in seeking to overcome this, the Atlantic Alliance faces a serious dilemma. NATO divides Scandinavia. The Nordic Council is slowly but surely bringing the Scandinavian countries--all of them--into closer coöperation. In 1949, when the National Security Council decided not to supply arms to the proposed Scandinavian defensive alliance, the decision was made largely on the basis of military thinking. Air bases, within striking power of the Soviet Union, seemed to be the great need of the moment. At the time, there were those who argued that Norway, Sweden and Denmark, united in a defensive alliance and supplied with American arms, would contribute more to the Western cause than a divided Scandinavia. Such a defensive alliance would have brought a large measure of coördination of economic and military policy, and would certainly have avoided the division which now exists in Scandinavia.

Today, without permission to station NATO forces in Denmark or Norway, and threatened with the loss of an effective base in Iceland, the North Atlantic Alliance is greatly weakened. Furthermore, the economic unity emerging in Scandinavia will sooner or later impinge directly upon the defensive planning policies of Norway, Sweden and Denmark. When, in 1949, Denmark's Foreign Minister remarked that the decision of the National Security Council was not in the best interest of peace, he was voicing an opinion widely held in his country. One wonders now whether he was not essentially correct.

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