Not since the glory days of Gustav Adolf the Great has Sweden wielded such power in Central Europe.  It’s been a busy day.  First, PM and European Council President Fredrik Reinfeldt held a meeting with under pressure Czech PM Jan Fischer to discuss the status of Czech ratification efforts on the Lisbon Treaty (in an omen, Fischer’s plane was delayed).  The other two European “Presidents” (commission and parliament) were also there.   Reinfeldt’s careful formulation: “it is important that we are flexible and ready to act”, meaning that no more pressure on the Czechs on top of what is already there, but background preparations for treaty implementation will proceed nonetheless.  Meaning specific job descriptions and candidates for the positions of permanent Council president and foreign policy representative.   So formally nothing gets done prior to ratification, but things move at lightning speed once Mr Klaus gets out his quill.   In the meantime, the Swedish minister for EU Affairs, Cecilia Malmström, will go to Prague to gauge the state of affairs on the ground.

But wait, there’s more.  Sweden’s finance minister Anders Borg has put the cat among the pigeons on the fiscal restructuring package for Latvia, which is a complicated mix of support from IMF, EU, and Nordic countries.  Essentially he argued that unless the promised cuts are delivered in the forthcoming budget, the Nordic component won’t be delivered as planned.  And this as the Latvian government works on legislation to convert loans into the non-recourse variety.  While the specifics of these moves may be somewhat surprising, the big picture is that the inevitable dynamics of choosing internal devaluation over external devaluation are playing out as Edward has been warning here for months.

That’s a lot of action over 4 days.  We may not say it often, but keep a close eye on Stockholm for the next while.

UDPATE 8 OCTOBER: PM Reinfeldt had what sounds like a truly bizarre conversation with Czech President Klaus in which Klaus asked for a 2 sentence footnote to the Lisbon treaty.  This looks rather mischievous since the footnote could easily have been agreed at the European Council summit which gave Ireland the treaty clarifications that it wanted.

Today is a key inflection point in determining whether the EU will be looking forwards or backwards over the next few months.  Irish voters will have had their second run at approving the Lisbon Treaty by referendum.  The count begins at 0800 GMT and it’ll be worth checking the Irish Election blog for early word of the “tallies” (informal survey of ballots as they are sorted) as well as general reaction to the result.  There’s some possibility of anti-climactic process if the tallies or a reliable exit poll signal a clear Yes margin early on but there have probably been a few sleepless nights in government circles nonetheless.   Assuming a Yes vote, there will be 3 issues worth watching:

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Only a guess of course but it’s a metaphor of the situation that will face the Czech Republic on the night of 2 October when the Irish voters approve the Treaty of Lisbon at the second time of asking in a referendum.  And they will approve it.  The opinion polls leave some latitude as to the final margin, but even a generous assumption about the voting behaviour of the “don’t knows” doesn’t alter the prediction that it will pass.

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So we’re in the new era of the Swedish presidency of the European council.  Insh’allah this will be the last country presidency under the rotating system once all that Lisbon messiness is sorted out.  The Swedes have the advantage of taking over from the politically hobbled Czech presidency and they begin with a slick website and very much with the times there’s a Twitter feed.  So what do we learn is getting the Swedish presidency twitterers excited? –

02/07 14:39 Mårten Wierup: 1st meeting went well-the most exciting thing that happened was that Latvia’s excessive budget deficit was added to the Ecofin agenda (7/7)

One’s first reaction might be to be glad that there’s someone in the world who finds Ecofin agenda items exciting.  One’s second reaction might be to wonder: what’s the need for yet another rap on the knuckles for Latvia?  Our twitterer is indeed correct that Latvia did not appear on the original draft agenda, so what’s the urgency?  Well, Edward had the relevant background a few days ago.  The IMF and the European Commission appear to be not on the same wavelength regarding the Latvian rescue program, not least on the role of the exchange rate peg therein.  If there is a split (especially within the European institutions), it might well be the kind of thing that would get sent to the ministers to sort out.   One thing this suggests: since Ecofin doesn’t meet till next Tuesday, don’t hold your breath waiting for the next installment of the IMF loan to Latvia.