Mundus Brief – November 2019 in review

November’s weather may have been gloomy – by some reports it might have had the least sun in 30 years – but the politics was far from dull. The Löfven government is beset by multiple crises that are not proving easy to shake off. 

Domestic politics is being torn asunder by the emergence of SD as a serious political force. In addition to the gangland wars, the Social Democrats have another crisis on their hands – the challenge of restructuring the Public Employment Service is proving to be a huge political headache, which may even bring the government down. Meanwhile, Sweden faces very challenging negotiations in Brussels over the post-Brexit EU budget, and now Sweden is embroiled in a diplomatic dispute with China. 

The Sweden Democrats are reshaping Swedish politics

In the November Monthly Policy Review we wrote that the last time that Sweden witnessed a major political power emerging was when the Social Democrats formed 100 years ago. The results of that political transformation are now modern history. Can the Sweden Democrats be as successful? They are giving it their best shot. In November, SD revamped their policies, ditching issues that could halt their progress, such as a ban on abortion. At the party’s national meeting a new generation of leadership was put in place, with the effort positioned as building the team for “the 2022 election of fate” And there is now an open dialogue between SD, KD and M, which is heading towards the creation of a new right-wing block, positioned much further to the right of the spectrum than Reinfeldt’s Alliance with liberals.

PM Löfven is caught flat-footed. In an interview on SVT Agenda, Löfven argued that segregation was to blame for gangland executions, and said that it was difficult to anticipate this happening. Aftonbladet, typically a paper that backs S to the hilt called the interview “a disaster”. M leader Ulf Kristersson went on the attack, accepting that the origins of the gang crisis were already in place in the 1990s, and apologising for the reality that his party had ignored the problem. But he said that they were now ready to tackle the issue, given the chance. This sounded like an invitation to Jimmy Åkesson to work together in government.

It appears that these challenges are too much for the current generation of social democrats. LO’s President, (the union movement) Karl-Petter Thorwaldsson, announced that he would be retiring, and Löfven also signalled that he was going to step down as S Chairman in 2021. Within S, the party appears to be in turmoil, with Party Secretary, Lena Rådström Baastad being blamed, and with the party looking to reboot its public image. What is being argued is that S needs to be clear what it would be doing if it could govern by itself, without being entangled by the January Agreement (JA). Apparently the Prime Minister and other ministers should be articulating how their S ideas would be better than the actual policies that they are implementing as a government. That would be an unusual way to lead a country!

The extent to which S’ hands are tied is highlighted by the reform of the Public Employment Service (Arbetsförmedlingen), which is proving politically costly for the government. Reform of the Employment Service was a key platform of JA, to which Löfven signed up to a year ago. But, the politics has gone badly wrong for the government, who is implementing a C policy proposal that they probably don’t believe in, but which impacts a large proportion of the community at a time of rising unemployment.

The political cost is especially high in rural areas. Earlier this year, the Service announced that it was closing 132 of its offices throughout Sweden, which would enable it to deliver services via digitalisation. This left communities without any offices or advisors to talk to, and the government has now backed down giving the Service an additional SEK 900 million next year to keep rural offices open. It was too good an opportunity for the government’s enemies to resist. The Left Party (V), which was locked out of power under JA has said it wants to push a vote of no confidence in the Minister of Employment, Eva Nordmark, and with M, KD and SD all suggesting that they will back such a motion, it would be likely to pass. But as Nordmark has only been Minister for 3 months, the vote can not be interpreted as a personal criticism of her – but rather a vote against the government. PM Löfven is indignant, and S says that if opposition parties go that way then the government may call new elections.

Foreign affairs is not much easier

Political wins are no easier to come by in international affairs either. The biggest headache for the government is that it has a significant issue with how to manage value conflicts with China. Tensions with China are rising in a number of western countries, but Sweden seems for some reason to have a particular challenge in a fight that it would rather not pick. Issues are coming up on an almost weekly basis – most recently when Gui Minhai was awarded the Swedish PEN award, which was presented by Amanda Lind, the Minister of Culture, at a ceremony also attended by Ulf Kristersson. The Chinese Ambassador expressed his country’s displeasure, and two Swedish films were immediately banned from being shown in China. With the community clearly expecting Löfven to stand up for freedom of opinion, the diplomatic dispute risks spilling over into trade, something which the government and Swedish companies are very keen to avoid. Policy gurus might wish to review our November Monthly Policy Reviestory on Sweden’s new China policy.

This month also sees Sweden celebrate 25 years of happy marriage to the European Union. Our December Monthly Policy Review reviews the history of the relationship and looks at what happens next as its closest ally, the UK leaves, and with security an ever increasing concern. But right now there are no parties and presents – as European capitals shape up for a protracted fight over the total size and country shares for the EU budget. 

COP25 Climate Convention begins

Sweden makes much of its transition to a green economy, and long-time Mundus readers will be aware that this is a subject that we like to track. In the December Monthly Policy Review we interview Sweden’s chief negotiator at COP25, Mattias Frumerie to understand Sweden’s negotiating objectives ad learn his expectations of progress at the summit.  

Economic outlook still quiet

Although the economy is doing OK, growth is not spectacular. The stock market has performed well, and the Krona has rebounded somewhat from its lows. But forecast after forecast comes in saying that low growth is here to stay. Part of the reason for that is that Sweden’s export engine has run out of steam. With trade wars all around, it is not an easy economic outlook in any region. But, Swedish goods exports are particularly concentrated to Germany, whose car industry is in a slump. Is this a time when the trend to services – such as fintech and music streaming will come to the rescue? That is the topic we investigate in our final story of the December Monthly Policy Review.

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.