Mundus Brief: November 2021

It has been two months since our last Mundus Brief. We hope you excuse the absence. We have been very busy with preparing for the Bright Green Summit. More on that later.

Recent months have been relatively quiet, at least in comparison with the frequently tumultuous events of much of Stefan Löfven’s reign. Last week he took his departure from his position of Party Leader of the Social Democrats, and Magdalena Andersson was elected. If things go according to plan, he will step down as Prime Minister within days too. But they might not. And it is possible that Andersson may fail in her quest to be elected as Prime Minister. But, we think that it’s in no-one’s interest to rock the boat so much that it would throw Sweden into snap elections with a scheduled poll just 10 months away.

Still, the lack of a crisis doesn’t mean that nothing important is happening. Rather it is a comment on the stasis in Swedish politics. The issues are well-identified, parties and political blocks have their views on what the right solution is. The Social Democrats hold power and are administering their medicine. If it doesn’t work, it will take a general election to usher in the new doctor.

Take immigration and integration as an example. The Reinfeldt (M) administration created a fairly liberal system and encouraged a wave of Syrian and Afghani refugees to come. Gradually Löfven addressed this, and the flood of immigrants dwindled to a trickle. Immigration policy was almost killed off as a policy issue, in that all the leading parties were now against mass immigration. But there has been little sparkle from the Government in terms of initiatives that would lead to successful integration. This was recognised by Andersson herself, who asked in her acceptance speech as leader, “how is it even possible for children to be born and raised in Sweden, one of the world’s richest and most equal countries, and commit murder before they have even turned 18?” This is a critical question that demands an answer.

As a result, tensions are increasing. The most apparent example of this is with crime. A report published earlier this year identified a clear relationship between ethnicity and criminality. This was the subject of Part 1 in our mini-series looking at integration in Sweden. In Part 2, featured in the November edition of the Monthly Policy Review, we took a deeper dive into the causes of segregation in Sweden, a political thorn in the side of the Social Democrats. 

In claiming an absence of crises, perhaps we neglected to mention the incipient Cementa crisis. For those unaware, it might come as a surprise that around 75% of Sweden’s cement comes from the one factory on Gotland, owned by Cementa. And that factory has had its application for an extension of the right to mine limestone – the key ingredient in cement – rejected by a court. The mine is now closed, and Sweden’s supplies of cement dwindle by the day. Unable to overturn the legal decision, due to the independence of the judiciary, the Government has rushed through an emergency law, but has not yet confirmed that it will use it to allow a temporary extension for 8 months. The effects of the stoppage may be dramatic. According to Byggföretagen (the Swedish Construction Industries), within weeks, construction of most new homes and several major infrastructure projects will be stopped or delayed, threatening 175,000 jobs in the construction industry alone, and resulting in a loss of investment of more than SEK 20 billion per month.

Amazing as this situation may seem, it is but one example of the challenges of developing and operating major process industries in Sweden. Despite spending SEK 85 million on its 8,000-page long environmental impact statement, Kaunis Iron’s developments are threatened by the EPA in the courts. And state-owned mining company LKAB has had its application for developments of its green steel project rejected on the most spurious of grounds. The sad reality is that despite the best of intentions, Sweden’s green dreams are gummed up by bureaucracy. The legal basis for this is explored in the latest edition of the Monthly Policy Review. Underlining the impacts, on 8 November, Dagens Industri, Sweden’s leading business paper ran an analysis which showed that the average cost of applying for an environmental permit is now 10% of companies’ sales. And as a result, 35% have put investment plans on the shelf and 12% of the companies have chosen to locate investments abroad. 

In a similar vein, in October we explored the semi-paralytic nature of Sweden’s administrative model. Although, on paper, it seems a good idea for government agencies to be independent from their political masters, in practice this can lead to a situation where no-one really has their hands on the steering wheel. A very obvious example of this was the beginning of the pandemic, where the Löfven Government claimed that FHM (the Public Health Agency) was in charge and the Government was unable to take any significant action. But this is far from the only recent example. Sweden’s evacuation of Afghani interpreters after the fall of Kabul was botched because the Government said that the Migration Agency needed to rule on this. And, as many an expatriate has come to find out, their very grounds for existence in Sweden are determined not by rational economic judgements of the need for labour and talent, but rather by how the Migration Agency interprets Byzantine rules. 

And so while there is much to celebrate and admire about contemporary Sweden the country is challenged at its very foundations. It is as unable to deal with the integration of large numbers of refugees as it is to be in control of the green future that the majority apparently clamour for.

Talk of the green future, brings us back to the Bright Green Summit. With seemingly the entire world captivated by the negotiations currently underway in Glasgow, Mundus also challenged ourselves to play a role. We are more than a little excited to let you know about what is planned. The backstory to this begins with a conversation that we had with our friends at the American Chamber of Commerce (AmCham) just prior to the summer. We argued to them that irrespective of how successful COP26 was in agreeing a global scheme to deliver 1.5°C, there was so much activity underway in both the Nordics and the US that it needed to be communicated to a wide business audience. We are happy to say that AmCham agreed with us, and the Bright Green Summit was born. 

The Summit on 18 November, is bringing together a wide variety of stakeholders from the Nordics and the US. It will be opened by Per Bolund, Deputy PM and Minister for Environment and Climate, and feature input from leading American diplomats, academics and businesses, as well as Nordic business and agencies. The Corporate Partners, which include Nasdaq, Amazon Web Services, Bain & Co., ChargePoint, Skanska and Scania are contributing with their expert insights and business insights. If you’re at all interested to find out what was agreed in Glasgow, who are the winners and losers, and what opportunities are available to your business, we think this is the event for you. To register for your digital ticket, click here.

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