THE DISTINGUISHING FEATURE OF THE COMMUNITY IS ITS institutional system. The establishment of that system and the changes and distortions it has undergone have very much moulded its development. But the Community is also a complex ongoing process: the institutional side alone does not give the full picture. The economic, the financial and the institutional aspects are closely interwoven, and together determine the course of its affairs. I propose to consider the state of the Community today, its current crisis and the outlook for the years ahead from both these angles.

EL SALVADOR AND NICARAGUA, TWO SOCIETIES WHICH HAVE recently experienced revolutionary conflict, have also embarked upon electoral processes. The US government cdls El Salvador's regime ‘democratic’ and aids its fight against leftist revolutionaries, while calling Nicaragua's regime ‘totalitarian’ and its elections a sham. What would democracy in these countries require and what are democracy's prospects?

One criterion of democracy, opposition or competitiveness, is insufficient because it says nothing about the social bases of competing elites. In order to provide some guarantee that a regime will be responsive to politicized social needs, we must stress the criterion of participation or inclusiveness as a necessary condition for democracy. In a context of intense conflict a democratic regime must allow all sectors – or rather their representatives chosen in competitive elections – to participate in decisions which will affect them. Such a regime's prospects for success are further enhanced by pacts of mutual guarantees of security among the contending actors, as in the consociational democracies.

COMPARATIVE EXERCISES BETWEEN THE POLITICAL SYSTEMS of countries with little obvious common ground may not lead to convergences being discovered, but may be useful in bringing out, by the decorator's well known principle of contrast, the strongest and most salient features of each. It is in this spirit that the present essay has been undertaken, for the author would not seek to claim any evident link or close comparative yield from examination of these two countries.

They do, however, have more basic characteristics in common than might be imagined, at first sight. First, they both fall into the category of ‘small democracies’. Certainly Belgium with a population of 9.9 million is considerably larger than Denmark with its 5.1 million, but Belgium remains nevertheless in both world and even European Community terms a ‘small state’.

THE 1960s APPEAR IN RETROSPECT AS THE BELLE ÉPOQUE of the postwar era. The IMF— a Cinderella while convertibility remained limited to the EPU-area—came into its own, as did the GATT with the Dillon and Kennedy Rounds. There were plenty of storm clouds, however. The monetary system, for one, was built on the shakiest of foundations. The gold/dollar parity had been fixed by an Act of Congress at $35 in 1933, a quarter century before convertibility became a reality. Four years after convertibility, in 1962, the gold pool had to be set up: a massive commodity agreement between the six richest countries, with the Bank of England as the buffer stock manager. That agreement limped on to the mid-1960s by the grace of the Russians, whose bad harvests forced them into substantial gold sales. After that, the combined effects of American arm twisting and the hubris of highly dirigiste central bankers shored up the system, until its final collapse in 1971.

THE SHOCK INDUCED IN SWEDEN BY OLOF PALME'S assassination was not translated into any dramatic political consequences. In the absence of any identifiable culprit or motive Swedes could do little more than speculate inconclusively whether responsibility might lie in a vendetta against Palme pursued by some foreign agency or, less likely but more insidious, in some unsuspected pathology within their own society. The assassination served no obvious political purpose. It could only be registered, therefore, as signifying that Sweden, no less than countries with a tradition of political violence, was subject to the ‘sleep of reason’. In a mood of sad resignation the country sought to resume normal politics.

AS HE SALUTED THE GRIM FORMATIONS OF 10,000 ‘FIGHTING groups of the working class’ and thousands of other soldiers and paramilitary police in Berlin's Karl-Marx-Allee on 13 August, Erich Honecker looked quite relaxed. He knew that his colleagues Egon Krenz (crown prince and security overlord) and Erich Mielke (Minister for State Security) had taken every precaution to ensure that there would be no counter-demonstrations to mar this celebration of 25 years of the ‘anti-fascist defensive (Berlin) wall’. In this, his fifteenth year as leader of the Socialist Unity Party (SED), the 74-year-old Honecker could compliment himself on a successful party congress followed by successfully staged elections. He could also look back to a number of successful initiatives in the GDR's external relations.