Atlanta 091499

Description: Sweden in a new business environment

Thank you for this opportunity to share with you some thoughts on Sweden today, provide some perspectives on recent developments in my country, and at the same time, introduce myself—given that I am a newcomer to the US.

As some of you may know, I am a newcomer also to the Foreign Service, and I will in advance pray for forgiveness for my shortcomings in this area. Although I have lived and worked in Sweden my entire life, I have also represented my country in a variety of international arenas: I was for example member of the G10 deputies to the IMF, and President of the Board of the Nordic Investment Bank.

When the Swedish government—to my great surprise—asked me together with my wife Inger, then Director General of the Office of Disability Ombudsman, to come to New York and to the US, it was because they were looking for someone with a broad experience of Swedish society and working life.

In this respect, I guess I measured up. For a job that requires a multi-faceted vision, I do have fortunately, a multi-faceted background.

My professional background includes experience in the following arenas:
Business: I have headed up a company that produced corporate newsletters, and been a PR consultant.
Marketing: I have served as president of The Swedish Council for Broad-based Share Ownership and as president of The Swedish Newspaper Marketing Company,
Politics and Government: I was a Member of Parliament, and served as State Secretary for Finance and Budget in the most recent non-socialist cabinet. I have also worked as journalist and editor-in-chief.

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In recent years, I have been a frequent speaker on the subject of the present and future of Sweden. I have usually painted a grim and gloomy picture of the future—and because of this gained a reputation for being a reliable forecaster.
But let me today state that te short terms predoictions for te Swedish economi are very bright.

Let me on this occasion also talk about the present state of Sweden, and about future trends.

In my opinion, Sweden is currently in the midst of a formative period—to use a well-worn cliché. Swedish society is undergoing a rapid transformation, the country now exists in a new business environment, old thinking no longer applies, and something new is on its way. What this will be, we cannot know as yet. As Churchill once said, “The future is imminent, but obscure.”

As was the case at the turn of the century, we are now in a transitional period: we approach the end of one era and the beginning of one new and unknown. “Our century begins and ends in Sarajevo,” the American author, Susan Sonntag wrote some years ago in describing the international political situation, and it is sad to see how right recent events have shown her to be. As was the case one hundred years ago, many today seem to recognize the existence of a crisis that has made us more attentive to the long-term trends affecting our society.

Such shifts have occurred before in Swedish history. Around the year 1520, members of the Swedish nobility were beheaded, Sweden broke away from the Danish empire, left the Catholic European community, and under Gustav Wasa, the country developed a central state with an efficient administration—then as is usually the case, in order to more efficiently collect taxes.

In 1718, the death of Charles XII ended both the Swedish era as a Great Power and the historic period of despotic rule. This ushered in an era that would produce one of the most democratic constitutions in decades.

Around 1840, liberalism broke through. There followed in short order, not only more extensive civil rights for women, but also free trade, a modern party system, a radical reform of local government—as well as the great emigration, to which we owe our excellent relations with important segments of American society.

Today’s rapid and far-reaching changes both in technology and in our way of thinking make it relevant to speak of and reflect upon this new formative period. Sweden is casting about for a new role.

And so…. What is happening right now?
I would specifically like to point to four trends or developments:
Greater geographic mobility
The erosion of the political dynamic
The new role of the media and Information Technologies, and
The globalization of the economy—that bears with it an enormous impact on our society.

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During the sixties and seventies, millions of Swedes moved from the rural areas to the newly constructed suburbs. Here, in the suburban marketplace, they encountered for the first time, the new immigrants from southern Europe. The mobile Swedes left the industrial areas in which their families had lived and worked for generations. They moved to suburbs where dreams of new work were crushed, or where they worked jobs of a kind that just ten years earlier, no one had ever heard of
When the moved away from their hometowns, they also left old habits behind. They did not continue to be active members of trade unions, they did not continue to vote for the same party, nor did they continue to read the daily paper. Old networks were severed, people became more and more isolated and more and more uncertain of how to act. The old channels of communication—newspapers, political parties, trade unions and popular movements began to erode.

At the same time, local municipalities became increasingly centralized. Municipalities were transformed into service and care providers and administrators. Municipalities became responsible for care for the elderly, childcare, maintenance of public buildings and streets, and for the ownership of public housing. Local politics were professionalized, while local municipal governments became less and less efficient.

The result today is a distrust and discontent with politics and with politicians. A poll taken during the last election showed that about two thirds of the electorate did not trust their politicians. This mistrust of elected officials is an international trend, but has more dire consequences perhaps in a country in which the public sector controls about 65% of the GNP.
A couple of years ago, I wrote a book about Swedish politics that I titled, “The Empty Room.” The inner room—the one once inhabited by politicians, business leaders and trade unionists—has been abandoned. There is no one left to guide or to govern.

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This leads me to my second point, what I have called “The Erosion of the Political Process,” i.e. the declining importance of this process. Let me point out that since 1970, Sweden has not had a government with a single-party majority in the Riksdag. Every government has either been a coalition or a minority government. Remember this: The electorate has not in thirty years been able to elect a majority government.

Within the last few years, a new feature has been introduced in the electoral system making it possible to vote not only for a party, but also for a candidate. This improvement providing increased democratization is natural at a time when the electorate is less bound by party loyalty. Still, it tends to result in political fragmentation.

Not unlike many other European countries, Sweden has been difficult to govern. But this has also laid our political past open to scrutiny. We are now conducting an open and self-critical examination of, for example, Sweden’s role during the Second World War and the politics of neutrality.

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My third point is the role of the Media, and the new importance of Information Technology

Last summer I was at a conference in Stockholm’s Archipelago. At every break, all the Swedes reached for their cellular telephones. Seeing this, an American professor there asked me, “Why don’t you implant those things at birth?”
The way things are going, this may not be far off! My youngest son got his first cell phone when he was fourteen. He is now eighteen, and on his eighth. He communicates with his computer using his cellular—which he also uses as his main phone. More than every other Swede has his or her own cellular phone. They use it in the subway, in elevators—the coverage is very good everywhere. Sweden is a wireless society.

Most people also have their own personal computer. Surfing on the Internet is also common. A study of how Swedes use the Internet done in April of this year showed that 50% of those under the age of 80 used the Internet—mostly for email, but also to read the newspaper. A staggering 22% do their banking on-line and many track and trade stocks over the Internet—bypassing banks and brokers. Sweden has surpassed other countries in the extent to which its population uses the Internet.

This is of great significance for business, but also the beginning of a new trend by which information passes directly from the media to the individual, from newsdesks to citizens. As TV becomes digitized, audiences will be able to choose from a myriad of programs from all over the world. They will be able to direct their TV sets to provide an in-depth commentary on what is shown on screen. They will be able to replay or combine programs and services in new ways. We are not there yet—but it won’t be long.

This will transfer the power over information to individuals—but it will also segment the audience. Just a few years ago, TV had not yet become as commercialized in Sweden, and most received basic information through mass media. Now many use these media to watch soap operas and talk shows, and avoid more serious programming. This tends to deepen the divisions in society, creating again a group that is not as involved in—or informed about public life.

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Finally, I turn to the effects of globalization.
In many respects, the Swedish economic structure has always been international in scope—or, globalized, to use the popular term. A small country like ours, with a vital export sector of raw materials such as wood and iron has always been dependent on the world market. Our major industries have always found their primary markets abroad. In this respect, Swedes are globalization veterans.

But today everything is in a state of flux. Raw materials are less essential for the economy. Factories and workers are highly mobile. Even smaller and medium-sized companies move easily from one country to the next. A new low-cost production market has developed in the Baltic States, our neighbors to the East.

The result is fierce competition and increased demand for rapid adaptation. This has not been easy, and in the last twenty years, Sweden’s position on the world economic ladders has fallen, from second place to about seventeenth. Unemployment, a negligible problem only a few years ago, is now a major consideration.

In many ways, time has caught up with Sweden. Our former advantage of having an intact industry while a bombed-out Europe was being rebuilt with the aid of the Marshall Plan—this advantage has long since passed. Sweden’s advantages of a functioning infrastructure and a stable labor market are no longer unique.

Sweden is no longer the middle way, and the faithful protectors of the Swedish social model are now fighting an uphill battle.

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Well this could be summed up as quite a gloom picture, somewhat inappropriate for someone whose job it is to tell the world what is right about Sweden. But with the problems come possibilities. Let me give you some brief examples:

  • While it is true that the political process has been eroded, at the same time, many more individuals sense that they are on their own and forced to take their own initiatives. Small companies are proliferating rapidly. What formerly was part of the public sector is changing to an open service market where small companies and private initiatives compete with local government in providing daycare, primary school education, health care, etc.
  • Immigration has caused problems—but it is also opening up Sweden. We are becoming a new generation of Swedes—not always blond and blue-eyed—with international networks and new visions. I went to a party thrown by young Swedes the other night in New York. Those present were much younger than I and played music that was much too loud for me. There were about 30 Swedes, most of them under the age of thirty. Most worked within PR, advertising, art, and fashion. They all spoke Swedish. Half of them were black. This is also Sweden. Every fifth Swede today has a mother or father who was born in a different country. Sweden is a melting pot. That means that a lot of young Swedes have relatives in other countries. The world is their oyster. Swedes have international networks and have international literacy.
  • The new media will create new social rifts, but will also make Sweden into something of an experimental laboratory for the future. In Sweden, communication between cell-phones and computers has developed the furthest. One of the things that I want to sell in America is the notion of Sweden as a Hi-Tech society. Forbes Magazine recently characterized Sweden as the second best IT-market in the world.
  • More money is being spent on higher education in Sweden than ever before. It is symbolic of a new era that the new Malmo University is built on the site of an old shipyard. We no longer build ships, but we are building our knowledge base and level of competence.
  • Sweden went through a major economic crisis in the beginning of the nineties. The government was forced to make cuts in public spending that were both difficult and highly unpopular. But now we are able to reap the benefits of these actions. The Swedish economy is booming, with a growth rate of 4% this year and next. Consumer expectations are very optimistic, and unemployment is on its way down. The government will propose to the Parliament a decrease in taxation, especially on the taxation of corporations. Sweden already has corporate taxation that is lower than in the US.
  • Globalization increases competition, but it also makes it possible for Sweden and Stockholm to again become the economic center in the Baltic area—as it once used to be. Historically, the Nobel family made its money in Baku and Russia. My own grandfather was an industrialist who produced separators for Russia and the East. All this came to a halt with the communist take-over in Russia. Now new possibilities are opening up.
  • We have more than our share of booming IT-companies. Som of them with red digits, years of losses, an skyrocketing on te stockmarket and soon to be introduced at NASDAQ.

In the new economy real assets are worth less and brand names more. Happy for a country with SAAB and Volvo, with Ericson and Tetra Laval, with IKEA and H&M – Europes biggest fashing retailer which now is heading for the American market.

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So the Old Kingdom is changing at long last, almost from one day to the next. We should remember though that for all this recent change, there exists a tradition of change and avant-gardism that reaches back in history. For such a small country, Sweden has been astonishingly forward thinking, and made important contributions in both art and industry. In my new position, my most important task will be to keep Sweden on the map. Art, theater, design, new technology, Swedish food—everything that helps to make Sweden better known is good. Ultimately, our aim is to create greater profits and better business opportunities for Sweden and for Swedish companies.

America is essential for Sweden. About a tenth of Swedish export goes to the US. Over the last four and a half years, Swedish direct net investments in this country totaled more than 8 billion dollars, which makes the US the second largest market for Swedish investments in the world. At the same time, since 1995 US direct investments in Sweden amounted to 16 billion dollars, far ahead of the investments made by any other country.

My contribution to all of this can only be marginal, but if all the Swedes in America, all the various Swedish-American associations and all the companies doing bus iness with Sweden help each other and work together wherever possible, I think that together we can achieve a great deal.

Thank you.