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living standards of lower income groups, and programs for increasing the income of the rural population to attract its support. It has also backed changes in the school system in an effort to bring educational facilities above the elementary level within the reach of larger numbers of the lower income groups. The party program continues to place greatest emphasis on traditional goals, such as maintaining full employment, raising the standard of living of lower income groups, and increasing productivity in order to enable Sweden to compete in world markets. These relatively noncontroversial goals have the support of most Swedes, whereas some of the party's more recently enunciated proposals - such as increased government planning and control over banking and industries - have been sharply attacked and are likely to face considerable opposition.

One of the most crucial problems facing the party, and a potential threat to its dominant position in Swedish political list, is the continuing high rate of inflation. The "temporary" price freeze instituted by the government in October 1970 remained in effect until January 1972. Plant closures and unemployment reached serious proportions in the winter of 1971-1972. A tax reform bill adopted in May 1972, which gives relief to lower and middle income groups by increasing pay roll taxes for the employer, threatened to prolong unemployment difficulties.

In foreign affairs the SAP supports Sweden's traditional policy of non-alliance and neutrality. The party reflects the views of the overwhelming majority of Swedes, who remain opposed to membership in NATO, despite the fact that Sweden identifies itself with the other Western democracies. The Social Democrats are also opposed to full membership for Sweden in the EC because of the political and military ties to the Western alliance entailed by membership. Nevertheless, the government realizes the reality of economic dependence on the EC countries as markets for Swedish products and is prepared to negotiate a treaty providing for an industrial free-trade arrangement that would protect many economic interests of Sweden without requiring it to assume political obligations that would compromise its neutrality. The attitudes of party leaders and the rank and file toward the USSR do not differ markedly from other segments of Swedish society. Despite certain ideological affinities between social democracy and communism, most party supporters remain suspicious of Soviet intentions toward the non-Communist world and are repelled by the atmosphere of coercion and fear that characterize life in the Soviet Union.

Since the early 1960s domestic political considerations have impelled the SAP to assume a more neutral stance in its foreign policy. Young activist members of the left wing, restless over what they regarded as a trend to the right by the SAP, criticized the leaders for their stand on a number of foreign policy issues. In mid-1965 the more radical element began to press for an independent, "Social Democratic" foreign policy that would alter the party's traditional commitment to non-alignment and reluctance to criticize either the East or the West and lead to a more vigorous approach to foreign policy issues. As international opinion began increasingly to focus on Vietnam, there was growing pressure on the party leaders to adopt an anti-US position on this issue. In order to forestall possible defections from its left wing to the Communists, the SAP leaders decided to placate the left on foreign policy issues, while advocating a middle-of-the-road approach to domestic problems. This was an effort to minimize opposition from its moderate labor following. At first, the move to the left was limited to public remarks by prominent government leaders. In January 1969, however, the Swedish Government became the first Nordic country to recognize North Vietnam, placing a considerable strain on relations with the United States. After Palme became Prime Minister, the government sought to dissociate itself from the strident anti-Americanism of the party's left wing that had clouded bilateral relations. The ebb and flow of anti-Americanism have since been subject to the degree of fighting in the combat zone. With the intensification of the Vietnam war in the spring of 1972, leaders in the Riksdag, led by the Prime Minister, stepped up their harsh criticism of the United States.

There is considerable division within the party regarding the size and mission of national defense forces. Most members hold that Sweden should maintain sufficient forces to deter a potential aggressor, but there is also widespread sentiment that military expenditures should be reduced in order to permit further expansion of social welfare benefits. Indeed, Swedish military commanders predicted a significant reduction in the effectiveness of the military as a result of inadequate defense appropriations passed by the Riksdag in June 1972.

d. Press and finances

Since the demise of the morning daily Stockholms-Tidningen in 1966, the Malmo morning daily Arbetet (Labor) has been the principal organ of the Social Democratic Party. The Stockholm daily Aftonbladet represents the views of the left wing and has the larger

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200090019-6