Copyright the Catch

The government of Sweden has a problem that is not unique but perhaps is in a more advanced stage of development than many other technologically developed countries with a high standard of infrastructure. It's peer to peer file sharing of course. In Sweden to say it is a widespread practice is to understate it. Millions of Swedes are sharing material over digital networks.
Two days ago the government announced the publication of a report, Musik och film på Internet - hot eller möjlighet? (Music and Fim on Internet - Threat or Opportunity?). At 379 pages and having taken two years to compose it is not lightweight consideration of the problems arising from having large percentage of the population online via broadband super fast Internet.
Some in the Swedish debate propose a restructuring or even abandoning of copyright law, but this is not possible. No state can withdraw from international copyright agreements and not expect a sever reaction from such powerful states as the USA and the EU (sanctions, legal challenges, embargoes).
I have not read the document Musik och film på Internet - hot eller möjlighet?, but here is a (improvised) translation of one of the paragraphs from the introduction:

De omfattande intrång som olovlig fildelning gör i upphovsrättigheter är enligt utredarens bedömning ett betydande hinder för investeringsviljan i, och utvecklingen av, de lagliga alternativen. Därför föreslås att Internetleverantören ska kunna vitesföreläggas att vidta åtgärder, t.ex. säga upp avtalet med abonnenten, för att hindra fortsatta intrång med hjälp av den tjänst Internetleverantören tillhandahåller. Abonnentens intresse av att behålla uppkopplingen ska beaktas vid bedömningen av om avtalet får sägas upp och om ett föreläggande ska meddelas.

The extensive infringement which uncontrolled file sharing creates for copyright protection is, in the judgement of the investigators, a considerable hindrance to the willingness for investment in, and further develop of, the legal alternatives. Therefore proposes that the Internet service provider shall be able take punative measures, for example cancelling service contracts, to impede the infringement with the help of the appointed ISP services. The subscriber's interest for continuing the connection shall be considered with the judgement of whether the contract shall be made void and a court order issued.

A bad translation but maybe you get the idea. Of course, it took all of 24 hours for the proposal to meet resistance from within the government itself. Welcome to Catch 22.