Carl Bildt: A New Sweden For A New Europe

Sweden's reputation as the welfare state that works has been tarnished by a severe economic downturn. Europe's currency, as well as political, uncertainty compounds the problems. To find out how Sweden can transform itself, BW London Bureau Manager Richard A. Melcher interviewed Prime Minister Carl Bildt, 43, in Bildt's sleek, blond-wood office. Here are some excerpts:

Q How have Europe's jitters affected you?

A What was not foreseen was the amount of instability we had in the entire European system. That caught us, to a certain extent, by surprise.

Q Will it be hard to persuade Swedes to join the European Community?

A Yes. The dominant mood is of uncertainty. We will have a major debate that is going to run for a year.

Q Will Swedes go along with your tough market remedies?

A I think most people understand that we can't go on living as we have been doing....We have increased the pension age, and we have trimmed down the sickness insurance benefits and a lot of other things. We have proved that if there are sacred cows, this isn't India, this is Sweden, and we're capable of national decision-making in a critical period.

Q How will such stern steps affect Sweden's competitiveness?

A The good news is that we are improving the competitive position of the economy. Private industry is getting a radical improvement of its position by cuts in taxation and by the fact that inflation is now virtually out of the system. There is no way in which Sweden can survive as a rich and prosperous nation if we are not competitive in the new Europe. And we have lost a lot of our competitiveness during the '70s and '80s because of our political mistakes.

Q Is Sweden, then, no longer a caring society?

A You can only be a caring society if you've got a strong economy.