COPENHAGEN and STOCKHOLM -- Sweden's central bank has been worrying about what cashless consumers would do if an emergency such as a Russian cyberattack took down the electrical or communications grid.
And so as of July, Swedish consumers can buy essential goods using their Mastercard and Visa cards without a network connection. The central bank (the Riksbank) wants to go further by enabling offline purchases with Swish, a local mobile payments system that bypasses the Visa and Mastercard networks altogether.
"What this whole geopolitical situation has brought about is that you need to be redundant in your operations," the governor of Riksbank, Erik Thedéen, explained in an interview.
"If we look on our payment system, it happens to be that we have two credit cards that are from the same country, the U.S.," he said. "I think we should keep that in mind."
The initiative, in its own small way, shows how much this corner of the world has changed. Few countries thrived as much from globalization and the end of the Cold War as the Nordics -- Sweden, Denmark, Norway, Finland and Iceland.
That world is gone. Russia threatens their territory, China threatens their markets, and they can no longer count on the U.S. to defend either. A recent visit to Denmark and Sweden showed me how they are pivoting to this new reality: sinking more money and manpower into defense; tackling vulnerabilities in payment systems, supply chains and trade relations; and integrating their economies, defense industries and militaries more tightly with each other and Europe.
Far from paying a price, they seem to be thriving, an encouraging sign for the rest of the world.
All in on rearmament
Few members of the North Atlantic Treaty Organization have responded as energetically to President Trump's demand to shoulder more of their own defense as the Nordics. Last year, Denmark and Norway each spent more than the U.S. on defense as a share of GDP, according to the Stockholm International Peace Research Institute. A decade ago they spent a third as much. Sweden and Finland aren't far behind.
As notable has been the political consensus behind the buildup. In elections in Denmark in March and Sweden last month, parties on the left and right, including the far-right anti-immigration parties, supported the military boost.
The reason: Russia looms just across the Baltic Sea. The Danish Defense Intelligence Service has concluded that after a ceasefire in Ukraine, Russia would be ready for war in the Baltic region within two years, and able to wage large-scale war in Europe within five, assuming NATO is slow to rearm and the U.S. doesn't become involved.
"People know that, so they know why [rearmament] is so crucial," said Flemming M?ller Mortensen, a member of parliament with the Social Democratic Party, which leads the governing coalition.
The change in mindset shows in more mundane ways. Just as Sweden has made sure payment cards work if the grid goes down, Denmark has asked every household to keep three days' worth of essentials on hand, including food, water, medicine and a solar or battery-powered radio.
"When you have private parties and gatherings, we talk about prepping: 'Do you prep, do you not prep?' " said Mortensen.
Young adults once again face the prospect of being drafted. Sweden reinstated conscription in 2018 and will call up 9,000 recruits this year, compared with 3,500 in 2018. It is debating lifting the prohibition on conscripts serving outside Sweden. "How do you assess what is the defense of Sweden? It could be in Latvia," said Vice Admiral Ewa Skoog Haslum, the military's chief of joint operations.
Denmark has made women eligible for conscription and extended conscripts' service to 11 months from four.
In need of a military-industrial complex
Trump's lukewarm commitment to NATO and his efforts to annex Danish-ruled Greenland (shelved under an agreement with Denmark last month) woke Danes and Swedes up to their dependence on U.S. technology for security: Patriots for missile defense, Palantir for police and military AI, even Microsoft in desktop software. Like most of Europe, Denmark struggles to compete with Silicon Valley on innovation. Promising startups such as Zendesk and Unity often move their headquarters to the U.S.
"The ownership of technologies has become a factor in all conflicts," said Martin Lidegaard, Danish minister of business and competitiveness. While the U.S. is still Denmark's most important business partner, "we need to ensure...that we will not be depending on American technologies...We also need to ensure that the U.S. will be able to depend on us."
Beyond supplying components to weapons platforms such as the F-35 jet fighter, Denmark has little defense industry. For decades, "[w]e didn't think that it was necessary. That was a big mistake," said Lars Sandahl S?rensen, head of Dansk Industri, Denmark's main business association.
Denmark has taken small steps -- such as manufacturing drones for Ukraine with Ukrainian expertise -- to build a defense base. Lidegaard plans to unveil a more ambitious strategy for stimulating defense production in coming months.
While Sweden has a substantial defense industry, it is pushing joint procurement with European allies and Canada to lessen dependence on the U.S. It is buying frigates from France, and France is buying the GlobalEye radar surveillance plane from Sweden's Saab. Canada, which makes GlobalEye's airframe, is weighing a purchase.
Doubling down on trade
Denmark and Sweden punch above their weight globally thanks to multinationals such as Denmark's Novo Nordisk in weight-loss drugs, Ørsted in wind farms, and Lego in toys; Sweden's Ericsson in telecommunications equipment and Spotify in music streaming. They are thus acutely vulnerable to rising protectionism in the U.S. and competition from China.
The U.S. remains their main market, but incremental growth will increasingly come from elsewhere, helped by free trade pacts the European Union has signed. "We can trade with Canada today more easily than with the United States," said S?rensen. "We have heavy investment into Australia now in the green transition." To pursue opportunities in India, his association now has 140 employees in Chennai.
And they are deepening cooperation with each other. Lidegaard and his Nordic counterparts just announced a Nordic Growth Alliance to promote cooperation in sectors such as quantum technology, data centers and space, while reducing red tape.
Elsewhere, the transition to a less open, more dangerous world has been costly and controversial. Military spending is contributing to the fiscal crisis now engulfing France. A trade war with the U.S. has laid Canada's economy low. German politics have been convulsed by the rise of a right-wing, Russia-friendly party.
Denmark and Sweden are coping better in part thanks to lessons learned from economic crises decades ago. In the early 1990s Sweden endured bank failures, soaring deficits and unemployment, and interest rates that briefly hit 500%.
"Everything that you see that you think is good in Swedish economic policy, is very much a child of the 1990s crisis," said the Riksbank's Thedéen. That includes tough rules on deficits, an independent central bank, and a pension system that indexes retirement to lengthening lifespans. It has made it difficult for politicians to be fiscally profligate, he said.
Denmark recently has run surpluses, enabling the government to offer voters a hefty cut in electricity taxes. The central bank worries the culture of fiscal rectitude is fading. "The military buildup is a given, and Denmark's public finances are robust enough that we can actually afford it," said assistant governor Thomas Harr. "But then we have less money for other things. And that's what we are trying to communicate."
By today's standards, such problems look manageable. Any country afraid of turning into France could do worse than to study Denmark and Sweden.