COPENHAGEN -- This peaceable kingdom may be very much a part of a new Europe, but the world's problems seem awfully far away. The Persian Gulf crisis, for example, seems not quite real in this city of copper spires and long winter nights. "It's the joke of the year," one Dane put it, referring not to the threat of war but to Denmark's contribution -- dispatching one warship, the frigate Olfert Fischer, to the gulf.

Developments in the Soviet Union seem real enough, especially to those Danes who regard the Baltic states as if they were lost tribes of Scandinavia. But as one Danish professional put it, "We're worried that the Russians are coming" -- this time as immigrants.

Still, foreign news is not a chief concern. It is not untypical for a radio newscast to begin with a report on, say, a nutrition study in the schools of north Jutland.

Meanwhile, even the Danes have trouble figuring out exactly who's running the country. Prime Minister Poul Schluter, the Conservative People's Party leader, is still trying to cobble together some sort of coalition government as a follow-up to the Dec. 12 election, but it is not so easy. "One certainly can say we don't have Europe's strongest government!" he conceded to Danes on New Year's Day.

Yet Schluter, working with a shrinking number of seats in the Folketing (parliament), continues to run the show -- perhaps because no alternative has presented itself, perhaps because he seems equipped, if only by experience, to do so. His foreign minister, Uffe Ellemann-Jensen, is from the Liberal Party, commonly called the Left party here but now further to the right than the Conservatives. The once-dominant Social Democrats still have more seats in parliament than any of the other dozen or so parties, but they seem to have lost their lust to rule. Schluter, in his televised New Year's address, rather pleaded for political cooperation. He even quoted the Danish writer Johannes V. Jensen:

Now the decline is over,

And hope is lighted,

Now the light comes --

And the long day behind it.

Yet, in spite of some whining, it is hard to discover urgent problems here. Even the balance of trade is positive -- for the first time in 27 years -- and when one asks Danes what worries them most, they speak of their debt to Japan, a troublesome amount of unemployment and a welfare burden that is enormous. Queen Margrethe II, in her annual New Year's Eve talk, observed that "we are a privileged people" in comparison to just about everyone else on the planet.

There are, to be sure, tax laws that have sent the real estate market crashing and a growing concern about Denmark's role in a more united Europe. The tax law that has homeowners agonizing is one that effectively taxes the potential benefit of a house in addition to its actual worth. For example, if the government estimates that you could rent the house you live in for $25,000, you would be taxed as if that amount were income. That can be tough, because personal income taxes here average about 52 percent.

Denmark, as Danes repeatedly will tell you, is a little country -- not much over 5 million people -- and its smallness is of concern to anyone who contemplates a Danish role in a larger Europe. Of particular concern is the place of little Denmark vis-a-vis big Germany. Privately, older Danes concede they do not like the Germans very much. Those too young to remember the Nazi occupation are reminded of it every May, the anniverary of the liberation.

Writing recently in the newspaper Politiken, Ritt Bjerregaard, a leader of the Social Democrats, argued (under the headline "The Fourth Reich") that the most important event of the 1990s was the unification of Germany.

She went on to tell her readers that "Germans cannot, of course, go around sheepishly, plagued by a bad conscience over Nazism and Auschwitz. But I'm sure that I'm not the only European who, each time I visit Germany or meet someone of my age or older, can't help wondering what they were doing during the Nazi period. Where were they? What did they experience? How could they act as if nothing was going on, or were they active in the Hitler Youth or the party?"

She did not say -- because she did not need to in a country proud of its history -- that Denmark saved its Jews from the Germans.

Yet if ties to Germany and Europe are inescapable, the Danes are not about to surrender their cultural identity. It is, after all, this tiny country that gave the world Soren Kierkegaard and Hans Christian Andersen. And it is in this city where works by Henrik Ibsen and Knut Hamsun were first published a century ago.

Remarkably, the culture still flourishes. New Danish books, because of small print runs, may cost $30 to $40, even in paperback, and yet numerous publishing houses and 400 to 500 new and antiquarian bookstores stay happily afloat. The Royal Theater continues to produce operas, ballet and classic and modern plays -- currently "De Forkerte" (The Wrong People), an impressionistic look at the German occupation.

Yet just when you think everything is going swimmingly, there's trouble afoot. On New Year's Eve, what news media described as "street war" broke out in downtown Copenhagen. About 500 "troublemakers" blocked traffic and threw rocks and bottles at passing cars. On Istedgade, a somewhat seedy street close to the railroad terminal, there was a confrontation with police. Reporters and onlookers expressed great shock that such a thing could happen in Denmark.

The days are short, the winter light is sharp, the country is still run with shocking orderliness, and Danes still say, "Vi har det godt" -- sort of the equivalent of "I'm all right, Jack." A new Gallup survey of how many Danes own color television, cars, etc., confirms it, at least materially.

Herbert Pundik, editor of Politiken and one of the Danish Jews rescued in 1943, puts it this way: "The Danes are a chosen people. They just don't know it. And that's their salvation."