Inside Report (6)

Submarine saga, Part II - or is it Part III?

Remember the submarine in Swedish waters - the one that had to come up for air in two days, but apparently didn't? The Swedish military remains convinced it was there and that it was Soviet. It insists this was a significant Soviet naval venture linked to future East-West military planning. The outspokenness of Swedish military chiefs on this point has embarrassed the Socialist government. Premier Olof Palme made an unusually forceful statement defending Swedish neutrality.

The incident is also expected to produce bigger defense budgets - especially for the Navy - which the Socialist Party had always opposed.