In few places on earth is the air fresher than in a Swedish housing project. Take Bergsjon, which sits five miles from the center of Sweden's second-largest city, the stately Dutch-built port of Gothenburg. Home to a Volvo plant and some of the world's biggest shipyards, Gothenburg was long an industrial powerhouse. Bergsjon was built between 1967 and 1972 to reward the workers who made it that. Bergsjon resembles the places Swedes love to retreat to in midsummer — quiet, pristine, speckled with lakes and smelling of evergreen trees — but it is only a short tram ride away from the city's giant SKF ball-bearing plant. The center has no cars. Its 14,500 people live in apartments set within a lasso-shaped ring road, on grassy hills that climb toward the country's rustic uplands. As Asa Svensson, a municipal coordinator for the development, notes, "It was planned for people who like to be in the country."

But now the shipyards are gone. The Swedish industrial workers Bergsjon was planned for no longer live there. Today it is inhabited mostly by immigrants, many of them refugees, of a hundred nationalities. Seventy percent of the residents were either born abroad or have parents who were. The same goes for 93 percent of the schoolchildren. You see Somali women walking the paths in hijabs and long wraps and graffiti reading "Bosna i Hercegovina 4-Ever." A few years ago, the mayor of Gothenburg declared, "The prospects of turning Bergsjon into a normal Swedish neighborhood are almost nil."

Forty percent of the families are on outright welfare, and many of the rest are on various equivalents of welfare that bear different names. Far below half the population is employed. There are reports of a rise in recruitment to criminal gangs — and to radical Islamic groups, too, although none of the authorities can give a clear idea of how Islam is practiced and where. In October, Mirsad Bektasevic, a 19-year-old Swede from near Gothenburg, was arrested in Sarajevo in an apartment that contained suicide-bomb vests, explosives and a newly made video presumably intended for broadcast. Bektasevic, who was born to Muslim parents in prewar Yugoslavia and found refuge in Sweden as a 6-year-old, reportedly ran a Web site supporting Abu Musab al-Zarqawi . In October 2004, Osama bin Laden disparaged George Bush's claim that Al Qaeda hated freedom by saying, "Let him tell us why we did not strike Sweden, for example." Sweden may have kept its distance from the Iraq war, but it has been unable to shelter itself from world events.

There are places like Bergsjon ringing the major cities across Sweden. They are all terra incognita to the vast majority of native Swedes. It would be wrong to overdraw the picture. Svensson, who has been working in Bergsjon for 25 years, says she has never been attacked or felt insecure there. The public spaces are clean, and the apartments are large. In the wake of last fall's riots in France, journalists from France and Germany visited Sweden's public housing, and some hailed it as a model to be imitated. But clearly, various experiments close to the heart of Swedish democracy and Swedish socialism have gone wrong. Swedes pride themselves on the success of the cradle-to-grave welfare state they developed over the last 70 years. For its foreign defenders throughout the cold war, it was an ingenious way of avoiding the pitfalls of both American-style capitalism and Soviet Communism, of achieving both equality and prosperity. But neighborhoods that were built to keep citizens close to nature now keep them far from the job market. Policies meant to protect people from persecution now expose them to neglect. Swedes have begun to use a word — "segregation" — that they used to employ only when lecturing other countries. A sobering realization is beginning to spread that the Swedish system cannot be easily adapted to a society in which a seventh of the working-age population is foreign-born.

s Hemingway might have put it, Sweden has become a multiethnic, multicultural and racially divided country in two ways: first gradually, then suddenly. The gradual part started with World War II. Sweden was neutral, but it fell under Germany's sway. Indeed, the historian Byron Nordstrom has described this neutrality as "a sham" and Sweden as a "virtual ally" of the Germans. Sweden provided million of tons of iron ore to the Nazis and permitted the free movement of troops across its territory. This neutrality would have two important consequences in the half-century that followed. The first was spiritual. The ambitious Swedish welfare state, defended in the first decades of the century on grounds of ethnic, and even volkisch, solidarity, was maintained and expanded, but on different rationales — expiatory ones, you could say, like egalitarianism and humanitarianism. The second consequence was logistical. At a time when all of Europe's infrastructure needed to be rebuilt or replaced, Sweden had one of the few undemolished industrial bases on the continent. In retrospect, its astonishing postwar growth rates — 4 percent a year until the oil crisis of the 1970's and 7 percent for most of the 1960's — were almost inevitable. All Sweden lacked was sufficient people to man its factories. A result was a series of temporary labor agreements with foreign countries along the lines of Germany's Gastarbeiter program, starting with Italy and Hungary in 1947 and spreading to Yugoslavia and Turkey two decades later. (Finns, many of them Swedish-speaking, streamed in throughout the period.) As they did in Germany, the laborers proved considerably less temporary than anticipated. But in contrast to the German case, the immigration has been a success by any economic or cultural criterion you would care to use.

When the boom stopped all over the West in the 1970's, labor unions sought — and got — restrictions on work-force migration. But one door was left open: political asylum. Polish Jews fleeing state anti-Semitism and Greeks fleeing the dictatorship of the "colonels" began arriving in the late 1960's, and Swedish immigration since then forms — to use a metaphor of the economist Torsten Persson — "a ringlike pattern of political crises," from pro-Allende Chileans in the 1970's through Kurdish nationalists in the 1980's to Somalis and Bosnians in the 1990's. So began the "sudden" phase of the emergence of multiethnic Sweden. Since 1980, according to the Organization for Economic Cooperation and Development, half of all residence permits granted — almost 400,000 — have gone to reunite families from various geopolitical disaster areas. A lot of these places were in the Islamic world. So Sweden now has a Muslim population of 200,000 to 400,000; the higher tally would place it among the most heavily Muslim countries in Western Europe.

Goran Johansson, Gothenburg's Social Democratic mayor, was a labor boss at SKF in the late 1960's, back when the tram line used by foreign workers was known as the Garlic Express. When the Yugoslavs started coming, Johansson recalled on a dark afternoon at City Hall earlier this winter: "I introduced these guys around. They directly found work and met Swedes every day. They had temporary housing, but they moved out quickly — often with Swedish women. Compare that to today!"

Sweden suffered from bad decisions and bad timing. In 1985, it shifted responsibility for integrating immigrants from its employment bureaucracy to its welfare system. Then, between 1990 and 1994, squeezed between an expanding state sector and increasing global competition for its industries, Sweden underwent the worst economic collapse of any Western European economy in decades. G.N.P. contracted by 6 percent, and employment levels declined by 12 percent. This was the moment (1992) when asylum applications were reaching a peak of 84,000 a year — to a country of only 9 million. The vast majority were accepted. That is, before family reunification is even reckoned in, Sweden was adding almost 1 percent a year to its population by welcoming some of the most desperate and traumatized people on earth.

Sweden had been trying to link immigrants with jobs and communities, along the lines Johansson still suggests. But such plans buckled under the size of the influx. The country now scrambled simply to house the newcomers. As it happened, empty housing was something Sweden had in abundance. Facing a housing shortage in the early 1960's, its government undertook an ambitious plan to build a million residences. It came to be known as the Million Program. The apartments that resulted compare well with other European subsidized housing, but Swedish culture is not built around apartment living, and native Swedes were unwilling to stay in them once they had enough money to afford their own houses. When the immigrants began arriving en masse, there was an obvious place to stick them. Assar Lindbeck, the dean of Sweden's welfare-state economists, points out that they were sent to areas where there were empty apartments — which are "by definition in an area of high unemployment."

Cool Million

By now, so fully has the immigrant population become associated with the Million Program that the immigrant magazine Gringo has coined the term miljonsvenskar, or "million Swedes," to describe the people who live in these apartments. The editor, Zanyar Adami, 24, a Kurd who arrived with his parents from Iran at age 6, brought out the first issue of Gringo in August 2004. He has since won the country's most prestigious journalism award.

Adami wants to defend and even glorify the culture of the newest Swedes, but admits that he is confused about what that culture is. Growing up as he did in newish housing in Hasselby, west of Stockholm, brought feelings of alienation, loneliness and inferiority. His own journalistic career began when he went out to a disco with seven Swedish-looking friends and was singled out to be turned away at the door. He went home and wrote a white-hot article that was published to considerable fanfare in Dagens Nyheter, the most influential national newspaper. "There was this feeling," he recalls. "'A Swede is better than a foreigner."'

But alienation is by no means the whole of it. Adami is just as keen to show he does not have any chip on his shoulder. Sitting in the Cinnamon coffee shop in the upmarket bohemian neighborhood of Sodermalm, Adami says: "My father is an economist and works as a taxi driver. He's always positive about Sweden, even if he's discriminated against. That's affected me a lot."

Gringo is a large-format, buzz-chasing magazine with a broad sense of humor and almost absurdly sophisticated graphics. Its articles depict life among the children of refugees as better than it is sometimes portrayed. The ghettoized svartkalle — or "black head," in the Swedish slang — comes off as positively cool. (Youth slang also has a term for ethnic Swedes: They are called Svennar, or "Svens," much as American ghetto slang used to refer to white people as "Chuck.") Adami sometimes says that Gringo's project is to create a new Swedish national identity. A recent article on "new Swedish words" included several Arabic ones, like habibi, haram and hayat. Every issue carries the motto "Sveriges svenskaste tidning" ("Sweden's Most Swedish Magazine"). "Mainstream Swedish media give an idea of the country that is 40 years out of date," he says. "Typically, their editorial staffs are middle-class, middle-aged, living here in Sodermalm." On the other hand, Adami recently moved to Sodermalm himself.

A generation ago, Nalin Pekgul looked at Sweden through Adami's eyes. When she arrived in the community of Tensta from Turkish Kurdistan with her parents in 1980, Tensta and the neighboring development in Rinkeby seemed to offer the best of both worlds — Swedish security and a cosmopolitan mix of cultures. Forty percent of Tensta was immigrant then, much of it Greek. Today immigrants and their children make up closer to 85 percent of the residents. As in Bergsjon, dependence is at astronomical levels. A fifth of the women in their late 40's, to take just one of many possible indices, are on disability benefits. Pekgul, who sat for eight years in the Riksdag, the national Parliament, now heads the National Federation of Social Democratic Women. Her decision to stay in Tensta, among people she grew up with, has been an important symbol.

So it was national news when Pekgul let drop in a radio interview that she was looking to move elsewhere, citing rising insecurity and Islamic radicalization. "People are using Islam to distance themselves from Swedish society," she says, sitting over chocolate-covered oatcakes and tea in the building she grew up in. "Ten years ago when I was a member of Parliament, people would see me on the tiniest cable stations. Now, when I'm on big national programs, only one or two people will ever say they've seen me. Everybody else is watching Al Jazeera."

Last January, Pekgul had a public discussion with the French feminist Fadela Amara about changes in France. "Whenever she talked about France," Pekgul recalls, "it sounded like we were undergoing the same changes France did, only 10 years behind. It was the first time I had thought: I'm going to have to leave. It's not going to get better."

Burning Cars

"In segregated areas," Mauricio Rojas says, "schools are the key." Rojas, 55, is a charismatic economic historian with a bewitching intellect who fled Chile in the early 1970's. "Many Swedes think the areas are interesting to live in," he says. "And they're right. But they won't stay if they don't think their kids are getting a Swedish education." Such blunt opinions have been Rojas's trademark since he began his career with the free-market Liberal Party. Immigrant politicians (although not voters) have gravitated to the Liberals, from Rojas to the Congo-born parliamentarian Nyamko Sabuni. This is perhaps not surprising in a country where the Social Democratic Party has been in power for all but a handful of years since 1932 and "progressive" is a synonym for "establishment."

Rojas estimates that the tipping point where white flight begins comes when immigrants reach 20 percent of the local population. The reason is that — given the tendency of immigrants to have more children — school systems then become half-immigrant. Kids come home speaking a "Rinkeby Swedish," with flat intonations and lots of slang derived from Turkish and Arabic, and the ethnic Swedes scatter. In Rinkeby and Tensta, that point was passed long ago.

"You have segregation," says Bjorn Hjalmarsson, the principal of the Bredby School in Rinkeby. "It's an enclave here." Of the 400 students at Bredby, fewer than 10 speak Swedish in the home. Sweden introduced a wide-open school-choice program in the early 1990's, and that affects a district like this. Some ambitious parents send their kids to schools in the city center, the only way to make connections with ethnic Swedes and thus (parents feel) to rise in life. The most conservative Muslim parents, who see Sweden as immoral and atheistic and don't want their daughters going to school dances, use the area's "intercultural" schools.

The students in the English class for 15-year-olds come from Somalia, Syria, Turkey and Iraq. Many of the girls wear head scarves or hijabs. If Bredby is a representative school for the area (and it appears to be), then Sweden is getting educational outcomes far, far better than those of other European countries and the United States. The kids' English — a third language for all of them — is excellent, even if it takes them a while to get over their shyness in using it. They don't bring up politics, and they are unanimous in considering the United States "cool." They want to know how much American journalists earn and whether Tupac Shakur is really dead. "You can get famous there," say two of them. The only dissent on the question of America's coolness comes from the Swedish-born teacher, and this is not surprising. Particularly since the toppling of the Saddam Hussein regime, which numbered among its victims many relatives of the Kurds and Iraqis who sought asylum in Sweden, you find more unapologetic pro-Americanism among the children of Muslim immigrants than among those of Swedish stock.

Ethnic Swedes seldom come to Rinkeby, and many of these students get nervous and feel they are being "looked at" when they travel far from the neighborhood. What divides the students most sharply is the question of whether they are Swedish. When asked, half of them nod vigorously yes; the others nod vigorously no. "I'm Swedish," says one Somali girl. "And I'm proud to be Swedish. I'm born here." One of her friends snorts.

Could something like the French riots, with burning cars and rampaging gangs, happen in Sweden? "Absolutely," says one lanky boy near the window. "People burn cars here all the time. Not because they're angry — because they think it's fun." And, in fact, the charred patch of ground visible next to the school entrance that day marks the spot where a car was driven up to the wall of the school the previous weekend and set alight.

'Sweden Will Never Accept You'

Swedes aren't used to endemic crime, and they aren't used to associating certain neighborhoods with crime. Late last summer, there was a spectacular armed robbery by a gang from the town of Tumba. A month later, there was an attack on a police station in Ronna, a Million Program neighborhood in the city of Sodertalje, by Swedes of Assyrian Christian background. The incidence of violent crime is 37 percent higher in Sodertalje, at 13 incidents per thousand people, than in the rest of Sweden. While such figures would not cause an American's jaw to drop, they are part of a growing impression that society is losing its grip. Youths have discovered that if you hammer the panes at bus and tram shelters, the glass will rain into a pleasing arrangement of vitreous pebbles. Such piles are visible at several stops on the tram that connects Bergsjon to downtown Gothenburg. This hobby caused about 2.7 million Swedish kronor ($350,000) worth of damage last year, according to an official in the Gothenburg mayor's office. Among Somalis, the chewing of khat, an addictive low-intensity stimulant popular in East Africa, is widespread. Shipments of khat arrive daily (as they must, for the drug spoils quickly) from middlemen in England and Holland. On more than one occasion in the summer of 2004, transit authorities stopped bus traffic to Tensta because of attacks on passengers. Firemen and emergency medical technicians have been attacked in the suburbs of Malmo, Sweden's third-largest city.

Just as Pekgul's young immigrant neighbors complain that crimes against Swedes are taken more seriously than crimes against immigrants, you frequently hear allegations from white people that the more violent among the miljonsvenskar pick out ethnic Swedish youngsters to rob. According to Johnny Lindh, the police commissioner in Rinkeby, this may be statistically true but does not mean that crime is motivated by race. It is more likely that white Swedes in the center of Stockholm are easier marks — identifiably middle class and unlikely to have developed the habit of defending themselves aggressively.

According to the National Council for Crime Prevention, citizens of other countries make up 26 percent of Swedish prison inmates. Among those serving sentences longer than five years — which in Sweden are given out for only serious crimes like major drug dealing, murder and rape — about half are foreign citizens, and these figures exclude the foreign-born who have become Swedes. Again, to a non-Swede, the scale of this problem is small. In 2004, there were only 329 people serving sentences of more than five years in all of Sweden. Still, the association of crime and immigration is not a figment of the Swedish imagination. Last summer, the left-leaning tabloid Aftonbladet revealed that a number of Muslim extremist groups were recruiting in prisons. The largest is a group called Asir, perhaps named for the Saudi province from which four of the Sept. 11 hijackers came.

It is where crime interacts with the world of Sweden's hundreds of thousands of Muslims that people get most passionate. There can be few countries in Europe where natives know less about the ways of the Muslims who live among them than Sweden. The isolation of the apartments where immigrants mostly live has a lot to do with this. But even those who live and work in those areas find it hard to be precise about Muslim ways, and particularly about Islamist radicalism — although all are fairly sure that it is increasing.

"We have some people here who can't leave Sweden," says Commissioner Lindh in Rinkeby. "If they went to the U.S., they would be imprisoned."

So the police have a pretty good idea of what's going on in the mosques? "No," Lindh replies.

The Great Mosque of Stockholm dominates a busy square at Medborgartorg, three subway stops south of the city center. Reportedly financed by a sheik from the United Arab Emirates, it has a highly varied body of worshipers and leaders. Last summer, a window opened onto the mosque's internal politics. Swedish public radio broadcast the content of anti-Semitic cassette recordings being sold there. And various rival mosque leaders began to use the pages of the right-leaning tabloid Expressen to hash out their differences and expose each other's agendas.

An Algerian-born, Saudi-educated conservative imam, Hassan Moussa, announced in the pages of Expressen that he was receiving death threats from within his own mosque. Moussa, who said he had been "shocked" by the London bombings that summer, called on Sweden's integration minister, Jens Orback, to establish a council to combat extremism. In expressing his opposition to violence, Moussa recalls over coffee at the Culture House complex in central Stockholm, "I decided that I would leave the word 'but' out of my sermons."

Moussa didn't gain much from going public. He lost influence within the mosque, according to someone knowledgeable about its inner workings. But his article brought many new Swedish Muslim voices out of the woodwork, the most forceful of whom was the Iraqi-born writer Salam Karam. Karam had long criticized Moussa himself for his "double messages" and his intimacy with the hard-line Muslim Brotherhood, so he opposed Moussa's council on the grounds that Moussa would probably wind up serving on it. But Karam applauded Moussa's change of heart and added some horror stories of his own. One involved a prominent imam who had been ostracized and condemned as "a Jew who converted to Islam" because he had opposed suicide bombing and suggested that Muslims vote for the Christian Democratic Party. (In general, the Social Democrats command a loyalty among Swedish Muslim voters approaching that of African-Americans to the Democratic Party.)

Swedes increasingly get the sense that these are not just exotic or foreign stories. "Radicals are abusing the situation in Sweden to recreate the old culture," says Lebanese-born Kassem Hamadé, who reports on Islam and Islamic radicalism for Expressen. "One of the most important appeals to potential members is: 'Sweden will never accept you."'

Irresistibly Seductive

weden's immigrants are far from the poorest in Europe, but they are among the most excluded. Is outright prejudice to blame? A recent study by the economist Dan-Olof Rooth found that Swedish-raised children adopted from other lands, who often look different, did worse when looking for jobs than similarly situated ethnic Swedes. Channel 4's Kalla Fakta ("Cold Facts") and other national news shows routinely practice "sting" journalism, showing, for example, that an apartment "open" for a Swede is somehow "taken" when a non-European shows up or calls. Real-estate companies have campaigned for the removal of satellite dishes — which tend to mark an apartment as home to unassimilated immigrants from developing countries — from apartment windows on the disingenuous reasoning that they could hurt someone if they fell.

But when Swedes discuss immigrant issues, the background attitude is less often prejudice than political correctness. Problems are constantly fudged — and resolved in such a way as to establish no principles and offend no one. In one recent case, two girls were forbidden to wear full burkas to school in Gothenburg — but only because teachers supposedly could not tell them apart. There are shibboleths: education is hailed as a panacea for the ills of exclusion, even though the "problem" immigrants who came from the developing world after 1980 have, on average, more academic qualifications than the successful ones who preceded them.

And there are taboos: the practice of second-generation Swedes returning to their ancestral countries to find husbands and wives, for instance, is common, particularly among families from Turkey. Neighboring Denmark has passed laws limiting the practice. In Sweden, public discussion of this kind of endogamy is muted, although Swedes complain in private that it slows integration and unacceptably widens the number of potential new immigrants. "It's nothing you can talk about," says one educator at a Million Program school. "In general, we despise the Danes for raising this." The rise of a right-wing anti-immigrant party, along the lines of the Danish People's Party, appears unlikely in Sweden — in part because memory is still fresh of the New Democracy Party, which stormed into the Riksdag with more than 6 percent of the vote at the height of the economic downturn in 1991 but then performed erratically, embarrassing even its most ardent followers.

Dilsa Demirbag-Sten, a Kurdish immigrant author and television personality, says the focus is too much on discrimination. "Are immigrants discriminated against?" she asks over coffee in the Hotel Lydmar on a sunny Saturday morning. "Definitely. But it is not the only reason they have problems. They are also discriminated against by the racist, anti-Semitic honor culture that many of them live under." Demirbag-Sten, whose new book describes honor culture in Kurdish Sweden, says that the larger problem, in her community, at least, is a new kind of political Islam, one that knows how to probe liberal institutions and use them to advantage. She is particularly frustrated that recent government reports, thick with postcolonial theory and quotations from Edward Said, address neither immigrant anti-Semitism nor immigrant antifeminism. "The focus on discrimination is a way of avoiding the real problem," she says. "Because if the problem is not discrimination, then the problem is the Swedish system itself."

This would indeed be troubling news for Sweden. Although its vaunted welfare state was called into question in the 1990's, it has since shown much more resilience than anticipated and retains its place as the foundation stone of the national self-image. No one expects the Social Democrats to be chased from power any time soon. And yet this system poses particular problems for welcoming newcomers that other systems do not. When the state winds up allocating goods and services, more things are "decided" and fewer things "happen." Most Swedes are proud that 40 percent of apartments are public housing, distributed according to need. But that means that immigrants clustered together in apartment buildings far from the labor market can more plausibly blame the government for "segregating" them, even if this segregation arose purely from Sweden's desire to help the world's most unfortunate, regardless of their race or country of origin. The welfare state's good deeds never go wholly unpunished.

An argument now in vogue, particularly on the left and in academia, holds that Sweden suffers from "structural discrimination." Abdirisak Aden, a Somali-born Muslim who is also an active member of the Social Democratic Party, advances this view when he says, "Whether you're Ahmed or Svensson, you should be equal in the labor market." This takes the stress off of intentional discrimination, which is hard to document, and focuses on the ways ethnic Swedes and minorities would still be unequal in the labor market even if employers were not themselves biased. The "structural racism" school emphasizes the inequalities that immigrants face because of their relative lack of access to capital and social networks.

The problem is that the solutions it offers may involve dismantling more of Swedish society than anyone would be comfortable with. Consider a 2004 Organization for Economic Cooperation and Development report, which saw a possible source of inequality in the fact that two-thirds of the jobs in Sweden are filled through "informal methods." Those "informal methods" have never been a problem before. "Informal methods" — whereby a man can, say, introduce his neighbor's nephew into the union local — may even be necessary in an egalitarian culture, where people have little chance to exercise what the social theorist Francis Fukuyama calls the "thymotic" urge, the will to stand out. They may be the lubricant that keeps a free, socialist society from hardening into a system of bureaucratic authoritarianism. Zanyar Adami may be right when he says, "I see no contradiction in having a bigger, more open Swedish society that keeps the old Swedish virtues." But he may also be wrong.

Mauricio Rojas, the free-market politician, once wrote that, in the 20th century, Sweden has "improved living conditions for its citizens at the expense of limiting their vital alternative choices." It unlocked the secret of one-size-fits-all well-being. Maybe Sweden is now simply too diverse to benefit from the mass-produced prosperity and security that suited it so well for almost a century. Critics of capitalism used to cite Joseph Schumpeter and Daniel Bell to show that the free market is ultimately undermined by its own successes: the wealth the work ethic creates makes people want to work less. The welfare state has its cultural contradictions, too. It rests on consensus, which is another way of saying a lack of cultural variety. The stronger the consensus, the more room a welfare state has to grow. But as consensus strengthens, so does a certain naïveté, a belief that your own idiosyncratic habits are something that no one else could fail to find irresistibly seductive. Sweden's biggest immigration problem may be a matter not of crime, unemployment and Islamic radicalism but of something else altogether: that its newcomers understand perfectly well what this system erected in the name of equality is and have decided it doesn't particularly suit them.

Christopher Caldwell, a contributing writer, is at work on a book about immigration, Islam and Europe.