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The Success of the Nordics: It's the Mindset, Stupid!

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Europe and America are more and more likely to begin talks about a new Comprehensive (Free) Trade Agreement. Still the dominant narrative in the U.S. about Europe is clearly one of perpetual crisis and inevitable stagnation. The anemic way European leaders tackle the euro crisis to reverse the bleak economic situation on the continent has led many analysts to suggest that Europe is doomed to fail in face of growing competition from quickly rising powers in the East. Some might even wonder why the U.S. would want to tie itself even more to its sickly relative across the Atlantic.

Wait! Just not so fast! Recent data about the transatlantic economy (released yearly by the Center for Transatlantic Relations), which includes both trade and investments and jobs created by either in the other's economy, suggests that this is and will remain the single most important economic and strategic partnership. And while many structural problems certainly underline the dire state of Europe, it would be a mistake to paint with too broad brushes when it comes to the current state of European affairs.

An important argument is often missing from the debate -- the fact that far from all of Europe is in a perpetual state of crisis. In fact, the European economy is a diverse set of economies including some of the most viable ones in the world. In the World Economic Forum's latest Global Competitiveness Index, six out of world's 10 most competitive economies are European, with five European countries even ranking above the United States.

True enough, a large part of European economies struggle with chronic fiscal mismanagement, absence of economic growth and record unemployment figures. Some of the problems are cyclical, while most are self-inflicted. The latter are a result political gridlock, complacency, the lack of consensus between social partners, lack of transparency, ideologically driven economic policies, corruption and mismanagement of government budgets, the absence of entrepreneurship and innovation, a bloated and unsustainable welfare system. The list is long.

There is a segment of Europe, however, which seems on the whole to have gotten it right. They are the Nordics, a like-minded group of countries. Three are members of the EU (Denmark, Sweden and Finland) and two others tied in closely (Norway and Iceland). They are among the leading in the world in many respects, surveying different global indicators, the Nordic countries are at the forefront. They are among the healthiest democracies, the least corrupt, the most equal and most competitive nations in the world.

They are wealthy, except for Norway, by the virtue of their smart and creative businesses, well-managed state and not natural resources. They are proud of their balanced budgets and sustained exports. They are constantly and consistently overhauling their education system, and have found innovative ways to manage their welfare spending. And while they are not void of challenges of extremism, their responses are more tolerance, more free speech, more democracy, not less. To a great extent the source of their success lies in their pragmatic approach to the relationship between the state and its citizens.

The beauty of it really is that the solutions in each country, while at a distance seem alike, are nevertheless very diverse, not one size fits all. Their identities are not fading, but becoming stronger in a globalized world, as a source of strength.

But leaving the economics aside, the Nordics are also leading with example when it comes to defense. They are no free riders! Whether in Afghanistan or Libya, the Nordic states have frequently pulled above their weight. In the field of humanitarian assistance and development, they are second to none. Moreover, while the rest of Europe is struggling with finding ways to overcome the shrinking military budgets and shortcomings of non-integrated defense markets, the Nordic defense cooperation constitutes an example of 'pooling and sharing' of capabilities in action.

Nordic states, which now increasingly include the Baltic states of Estonia, Latvia and Lithuania, offer an example. They constitute an attractive vision for the future of Europe that contrasts the dominant 'declinist' paradigm. It is critical therefore that the Nordics see their relative well-being not just an economic asset but also as a strategic asset with real-world implications.

At the same time, it behooves other struggling European nations to learn from their example and follow suit, undertaking measures to increase their economic competitiveness and strategic posture, political moderation and social balance. The countries that created Skype, Angry Birds and Nokia, high-tech windmills and Noma (the restaurant), however, don't advocate their responses to the challenges to be the one and only. That is exactly why they must be watched carefully.

If Europe were to fail, it would bring catastrophic consequences for its foremost ally, the United States and the world at large. Fortunately, Europe is not deemed to failure. If more European states would think and act like the Nordics, the narrative would be quite a different one.

Don't copy their solutions; copy their mindset!