By Alistair Scrutton
STOCKHOLM (Reuters) - U.S. President Barack Obama's visit to Sweden next week points up the role of a pro-free trade European ally on the edge of a rapidly changing Arctic in a region where Russia is seeking more influence.
The first bilateral visit by a U.S. leader to Sweden may be overshadowed by the Syria crisis, but it is timely.
Obama will meet other Nordic leaders there who are keen to show the importance of Europe's northern rim as new Arctic sea routes open and China and Russia explore for resources.
The U.S. president, who will visit Stockholm on September 4-5 on his way to a G20 summit in St. Petersburg, has canceled a trip to Moscow in retaliation for Russia's decision to grant asylum to fugitive U.S. spy agency contractor Edward Snowden.
Along with fellow-Nordic EU members Finland and Denmark, Sweden is pushing for a landmark EU-U.S. free trade deal.
"This will be my main interest," Swedish Prime Minister Fredrik Reinfeldt said this month. "We are on the side of being pro-free trade in a Europe where you sometimes can find more calls for protectionism."
Sweden, a middle-weight EU nation once famed for its image of cosy welfare and liberal social policies has moved closer to Washington after seven years of Reinfeldt's center-right rule.
The EU's seventh largest economy now has a name for free trade, innovation and fiscal prudence. It has a big financial center and a finance minister with influence in Europe.
"UPLIFT IN AMERICAN INTEREST"
Sweden has moved closer to NATO, criticized Russian "soft power" in the region and tried to ensure its role as a regional powerbroker in the Arctic and former Soviet Baltic states. A row erupted this year when Russian bombers were reported to have flown near Sweden's borders, catching air defenses off guard.
Sweden's importance to Washington is growing, said Jan Joel Andersson, a senior research fellow at the Swedish Institute of International Affairs, citing shared interests like free trade.
Mike Winnerstig, a security policy analyst at the Swedish Defence Research Agency, said: "There is a clear uplift in American interest in the Baltic Sea region, and it has a lot to do with Russia - which is flexing its muscles more."
Obama meets Baltic leaders in the White House on Friday.
His visit to Sweden is an about-turn from when then-Prime Minister Olof Palme in the 1970s likened U.S. bombings of Hanoi to the killing of Jews in Treblinka during World War Two, prompting a freeze in U.S.-Swedish diplomatic relations.
For some in the United States, Sweden may appear socialist. But Reinfeldt has cut taxes and trimmed welfare. Many young Swedes speak English with American accents and are keener to get jobs in dynamic technology startups than in the civil service.
A poll in 2012 by the Meridian International Center and Gallup said 36 percent of Swedes approved of U.S. leadership in the world, up from only 13 percent in 2007.
Sweden has also begun finding itself more at odds with core euro zone members, with some ministers, like Finance Minister Anders Borg, arguing Sweden must look beyond Europe for growth.
Obama's visit is seen as a coup for Foreign Minister Carl Bildt, who was described in a 2009 U.S. embassy cable published by Wikileaks as "a medium-size dog with a big dog attitude".
The cable highlighted Sweden's intelligence cooperation with Washington over Russia, and its concern that the former Soviet Baltic states do not slip back under Russian influence.
It was little surprise that when Snowden sought refuge, Nordic nations like Norway and Iceland were named as possible asylum destinations, while Sweden was seen as a non-starter.
Supporters of Wikileaks founder Julian Assange say Stockholm would extradite Assange, holed up in the Ecuadorian embassy in London, to the United States if he went to Sweden for questioning over allegations of rape and sexual molestation.
(Additional reporting by Mia Shanley; Editing by Alistair Lyon)