STOCKHOLM, Sweden -- In the years after World War II, Sweden and its Nordic neighbors seemed to regard Europe as if it were someplace else, an unpredictable, even perilous foreign realm consumed by the intrigues of the Cold War.
Sweden, Finland and, to a lesser degree, Norway stayed aloof on their side of the Baltic Sea, turning their energies inward while they shaped their small, conformist and homogeneous northern societies into what many people admiringly regarded as well-ordered models of socialist engineering.
Now, with the collapse of the Soviet military threat and the growing pace of European economic and political integration, Scandinavia's three northernmost nations appear to be coming in from the cold, bringing their foreign policies into harmony with each other as they realign both their economies and their external politics to more closely resemble those of the rest of Europe.
The demise of the Soviet military threat was a major factor: It removed the reasons for keeping Finland, Sweden and Norway divided on matters of foreign policy. At the same time, the vitality shown by the integrating free markets to their south has proved a powerful incentive to abandon socialism and join the unified free market.
Indeed, the Nordic countries have been hit hard by the global recession and the soaring cost of maintaining welfare states dependent on high taxes, high levels of public spending and vast centralized bureaucracies.
Having abandoned their countries' allegiance to a policy of political neutrality, the new non-socialist governments elected last fall in both Sweden and Finland are moving to apply this spring for membership in the European Community, and their shift is expected to increase the pressure on Norway to join them in Europe's economic integration.
In both Stockholm and Helsinki, the course is being charted by a new generation of younger, more conservative political leaders, who want to restructure their overburdened welfare societies in the direction of more market-oriented economies that will encourage private competition.
"The time for the Nordic model has passed," said Carl Bildt, a 42-year-old conservative who became prime minister of Sweden last fall. "It created societies that were too monopolized, too expensive and didn't give people the freedom of choice they wanted; societies that lacked flexibility and dynamism."
Critics try to dismiss Bildt as a kind of pale Nordic imitation of Margaret Thatcher and predict that his reforms will only aggravate the nation's ailing economy.
But Mr. Bildt has a broad mandate for change, at least until the next election in 1994, and former Prime Minister Ingvar Carlsson's Social Democrats, who dominated the political scene here for decades, have lost a lot of ground.
In place of the more inward, Nordic model, government leaders and businessmen now talk with enthusiasm about the emerging potential of a resurgent Baltic economic region, a kind of 21st-century reincarnation of the Hanseatic League, the medieval mercantile association centered in the cities of northern Germany that dominated trading and economic relations throughout the Baltic.
In an interview, Mr. Bildt took out a map to describe an area anchored on the east by St. Petersburg and Russia, and including not only his Scandinavian neighbors and the northern coasts of Poland and a reunited Germany, but also the three newly reconstituted Baltic nations of Latvia, Lithuania and Estonia.
"Where does Russia reach Western Europe?" he asked. "It is only here. In the short term, there may be decay and despair. But over the long term, you will have a northern European revival."