The Mundus Brief: June

The Mundus Brief: June

In May we reported that defence, immigration and integration were important themes, and they continued to remain so during June. Tension with Russia continued, with Putin claiming that NATO membership would threaten Russia, demanding a response. The tension was most evident in the skies over the Baltic, as Swedish and Russian planes tangled with each other. Why Putin chose to comment is however unclear. NATO membership is off the agenda with the Social Democrats in power, but the government has other ways to progress its security agenda.  Sweden is preparing to become part of the Joint Expeditionary Force (JEF), an elite UK-led military group capable of mobilising tens of thousands of soldiers to respond to different kinds of threats. The British defence minister, Michael Fallon, promised British assistance to Sweden in the event of a crisis. Prime Minister Stefan Löfven also participated in a EU-summit discussing future common defence cooperation and deepening of European capabilities for military and civil crises.

Monthly Policy Review

Immigration and integration issues were strongly reported. Deportations of Afghanis continued, despite a massive bomb in Kabul, which killed 80. The deportations are being resisted by the Afghani government, threatening the agreement that Sweden has with Afghanistan to encourage Afghanis to return home. The Löfven government continues to push domestic policies to improve the integration process – declaring its support for all immigrants to be covered by the ‘education duty’, which would require them to complete a primary education, improving their employability. Discussions also continued aiming to reduce the costs of employment for those hiring newly arrived. Security and policing were in focus too, with a debate about the growth in ‘underprivileged areas’, where the police lack resources to address issues, and which the police union says is leading to unsafe situations that its officers must face on a near daily basis.

Whether by design or not, human rights was a theme for Swedish foreign relations in June, with Löfven meeting the leaders of Burma, Bangladesh and China. Löfven raised the issue of the Rohingya minority with Aung San Suu Kyi, and poor labour conditions in his meeting with Bangladeshi PM Hasina. Later in the month, Löfven visited China, as part of a Swedish business delegation, where he met with President Xi, raising the case of Swedish citizen, Gui Minhai, a book publisher, who is imprisoned in China.

Business and the economy continues to thrive

The Swedish economy continues to do well despite issues with both a shortage of skilled labour and housing. The OECD was the latest in a long line of observers to comment on these.

As noted on many previous occasions Sweden is a global leader of innovation, and this is now leading to some standout examples with startups growing up, and growing big. Spotify was repeatedly in the news, as it juggled its finances and strategy ahead of a much anticipated listing. Spotify has now grown to employ 2000 people, and its listing is almost as big a news in Silicon Valley as it is in Sweden. Fellow unicorn, Klarna, follows in its footsteps. This month Klarna received its banking license and inked a partnership agreement with Visa. Klarna’s founder, not short of ambition, declared that the company wanted to become the ‘banks Ryanair’, Mundus News reported.

Sweden is also building its profile in cleantech, and was rated the #3 economy on the world for cleantech innovation (behind Finland and Denmark). Future upgrades might be expected, with the Riksdag passing legislation in June to ensure that Sweden becomes the ‘first fossil free welfare state’ by 2045, and reducing GHG emissions from transport by 70%. Volvo Cars responded by launching a new high-performance electric car brand, called Polestar. Geely, Volvo’s Chinese parent, announced that it was setting up a new innovation centre in Gothenburg with 3,500 employees. This month, Mundus analyses the policies designed to boost the growth in electric vehicle sales in Sweden. (Note: these announcements were put fully into context by the stunning announcement by Volvo on July 5 that from 2019, no Volvo would be sold without an electric engine, marking “the end of the solely combustion engine-powered car” according to Håkan Samuelsson, CEO of Volvo cars. A press conference will be held today) Experts observe Volvo’s move as a challenge to Tesla, although Volvo Cars presents it as part of its plan to sell 1 million electrified cars by 2025.

Obviously the Swedish economy is not all industries of the future. Defence industries are a very large employer, and defence exports are vital to both Sweden’s industrial and defence strategies. Saab’s order book for Gripen jets is strong, and deals with Brazil, Botswana and Bulgaria were in the news in June. Sweden faces a challenging balancing act between achieving sufficient scale to maintain its own defence industries and its strong advocacy for democracy and human rights. It now aims to be the first country in the world to legislate a so called ‘democracy clause’ limiting the sale of weapons to undemocratic regimes. We analyse the proposed law.

On June 28 the government published its latest prognosis on the economy, significantly upgrading its forecast for the budget surplus. Read our analysis here. Global demand driving exports has contributed to the good fortune, but equally, so have tax increases, which the Alliance has threatened to use as a trigger for a No Confidence motion, potentially bringing on an early election in the Fall.

Politics heating up

The only group that hasn’t gone on holidays are the politicians, who are heading to Almedalen Week on Gotland. The threat of a No Confidence vote is just the tip of the iceberg in what continues to be an incredibly dynamic political situation. In addition to the instability at the top of the Moderate Party, June saw a leadership challenge in the Liberals, with Birgitta Ohlsson taking on long-time party leader, Jan Björklund. Opinion polls continue to be bad for everyone apart from the Centre Party and Sweden Democrats. Annie Lööf is now openly discussed as a potential leader of the Alliance, and Jimmy Åkesson is rushing to sanitise the Sweden Democrats and his troops to pave the way for his dream of government.

Swedish values

Our closing thoughts are on Swedish values, with the Monthly Policy Review analysing a recent survey of Swedish trust in media institutions; what President Trump calls MSM (main stream media). Relatively speaking, Swedes remain trusting of their media institutions, although trust varies by source. What Swedes have no faith in, is the USA under President Trump. A recent Pew Values Survey identified Sweden as having the greatest swing away from confidence in the US following the transition from the Obama to Trump presidencies. A dismal 10% of Swedes have confidence in Trump “to do the right thing”.

 

 

 

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Sean is responsible for Mundus’ strategy and commercial activities. He began his career in the oil industry Australia. After working internationally in commercial roles with BP in South Africa, the UK and Singapore he moved to Sweden with his family in 2009. He worked in business development and then as the Strategy and Growth Director for NASDAQ Commodities from 2009 to 2015. Sean holds an engineering degree from Adelaide University and an MBA from the Darden Business School at the University of Virginia. He blogs about energy and innovation at www.renovamus.com