SWEDEN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90T00114R000404110002-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: March 19, 2012
• Sequence Number: 2
• Publication Date: January 6, 1987
• Content Type: MEMO

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SWEDEN
1
6 January 1987
General
Sweden is a Constitutional Monarchy with a unicameral parliament called the Riksdag. King
Carl XVI Gustaf has only titular authority as Head of State. The Head of Government is Prime
Minister Ingvar Carlsson, a Social Democrat. Parliamentary elections are held every three years,
and political party representation in parliament is proportional to the number of votes received
in the general election. The 1985 election yielded the following results:
Seats in Parliament Percent of Vote
Socialist Parties 178 50.1%
Social Democratic Party 159 44.7%
Left Party Communists 19 5.4%
Nonsocialist Parties 171 47.9%
Moderate Party 76 21.3%
Liberal Party 51 14.2%
Center Party 44 12.4%
Other Parties
TOTAL PARLIAMENT 359 SEATS
Key Cabinet members are:
Prime Minister ......................Ingvar Carlsson
Foreign Minister .................Sten Andersson
Defense Minister ..................Roine Carlsson
Finance Minister ...................Kjell-Olof Feldt
These briefing memoranda were prepared by
European Analysis
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SWEDEN - - FOREIGN POLICY
Neutrality - - Relations with East and West
"Nonalignment in peacetime with a view toward neutrality in war" has been the thrust of
Swedish foreign policy for over 170 years. In the postwar era, this has meant avoiding the
appearance of being too closely associated with the West and not allowing differences with the
Soviet Union to become inflamed.
Sweden often pairs criticism of Soviet and US policies in order to speak out yet
remain neutral. Although Palme was particularly critical of the United States,
Carlsson apparently wants to deal with Swedish-American relations principally
through private discussion--rather than public denunciation--of US foreign
policies.
Swedish relations with the Soviet Union have been strained since 1981, when a
Soviet submarine ran aground near a Swedish military installation. Carlsson,
however, appears determined to play down continuing territorial violations, the
Baltic Sea border dispute, and revelations of East-bloc espionage in order to
maintain a stable dialogue with Moscow. 25X1
Sweden keeps strong defenses in order to protect its neutral status in wartime.
Recognizing that these efforts can hardly match those of the Warsaw Pact,
however, Stockholm believes that East-West stability provides a better guarantee
of security and neutrality than confrontational posturing. In addition, Swedish
officials hope that a strong defense paired with support for regional stability will
bolster Finland's hold on independence and neutrality. These concerns underlie
Stockholm's support for confidence-building measures in Northern waters and for
at least continuing to discuss a Nordic nuclear-weapons-free zone. 25X1
Nicaragua
Sweden will provide approximately $23 million in humanitarian and development assistance to
Stockholm blames Washington for many of Managua's economic and political
problems. Although disappointed with the state of democracy in Nicaragua,
Sweden believes that foreign aid not only helps meet basic human needs, but
opens a channel for influencing Sandinista policies. F____1 25X1
South Africa
Sweden has already imposed limited sanctions and may impose a full boycott in 1987.
-- The government fears that boycotting South Africa without a UN recommendatio125X1
would open Sweden to criticism that it was not acting as a neutral.
-- Almost 45 percent of Swedish bilateral aid goes to the frontline states and
Tanzania. Stockholm also provides substantial amounts of humanitarian
assistance to the ANC. 25X1
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SWEDEN - - DOMESTIC POLITICS
The New Prime Minister
Ingvar Carlsson became Prime Minister after Olof Palme was assassinated in late February 1986.
His Social Democratic Party has formed a minority government, usually counting on the Left
Party Communists for the additional votes it needs to win parliamentary support for its policies.
On defense and national security issues, however, the Social Democrats work with the
nonsocialist parties to develop a "Swedish consensus." Since taking office, Carlsson has made
only minor cabinet changes and has generally reaffirmed the policies developed under Palme. 25X1
Carlsson, however, encourages cooperation and compromise with the nonsocialist
opposition along traditional Swedish lines, unlike Palme, who preferred a more
confrontational approach to politics. 25X1
Carlsson also tends to focus on Swedish and Nordic regional issues. Palrne
preferred international high politics and left domestic policy to his advisors.
Nuclear Power
Sweden's most important domestic political issue is the future role of nuclear energy. A 1980
general referendum requested that the government replace nuclear power with other forms of
energy by 2010.
-- Sweden depends on nuclear power for almost 50 percent of its energy
consumption. Abandoning nuclear power by 2010, therefore, would be expensive
and difficult. 25X1
-- Until early this year, momentum was building to revise the commitment to
replace nuclear power, but since the Chernobyl nuclear accident support has
shifted back toward dismantling nuclear power plants on schedule. The hard
realities of energy . consumption, however, may force the government to
reconsider once again. 25X1
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SWEDEN--ECONOMIC SITUATION
state they desire.
The Economy and Trade
The Swedish economy features a dynamic, technologically sophisticated industrial sector,
a growing service sector, and a government sector that spends over 60 percent of
GDP--the highest proportion among Western industrialized nations. Sweden also has the 25X1
heaviest tax burden, which most Swedes accept as necessary for the extensive welfare
-- Exports account for about 30 percent of Sweden's GDP and about 50-percent of
total manufactured output. Because of Sweden's reliance on trade, Stockholm
actively supports international efforts to expand free trade in goods and
services. Sweden's leading exports include automobiles, chemicals,
telecommunications equipment, and forest products.
The United States is one of Sweden's largest trading partners, accounting for
over 11 percent of Swedish exports in 1985. One-third of US imports from
Sweden are cars and trucks; this in turn accounts for one-third of Sweden's
total motor vehicle exports. US imports of Swedish steel grew rapidly in 1984
and 1985, but Stockholm is now troubled by the efforts of US producers to
convince Washington to counter government financial assistance to Swedish
steel manufacturers with new import duties.
-- In June, Stockholm enacted controls on reexporting foreign-produced high-tech
products and on exporting Swedish goods that use imported technology
controlled by the country of origin. The Swedish controls are intended to
ensure the continued flow of US high-tech components that are vital to both
civilian and defense industries, including the Grippen fighter jet program.
Economic Policy
Stockholm's main economic objective in recent years has been to spur Swedish
industry--which has experienced declining competitiveness since the early 1970s--by
restraining public-sector spending, controlling inflation, and reducing the current account
deficit. The Carlsson government has continued Palme's efforts at the risk of alienating
its labor union allies, who had increasingly criticized Palme's policies. One positive result
so far has been growing business confidence, which helped rally the Stockholm Stock
Exchange share index to all-time highs during second-half 1986, and surveys indicate
business investment may increase by over 10 percent in 1987.
-- The new government benefitted from an improved economy that resulted from
the fall in oil prices, a large trade surplus, and lower interest rates. Although
the 1986 growth rate was only about 1.8 percent, this was a marked
improvement over the zero GDP growth that forecasts in late 1985 had
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projected. Stockholm remains cautious about prospects for 1987, however, and
is concerned that OECD economies will remain sluggish and provide little export
growth for Swedish industry over the next two years.
-- Unions have criticized the shift in economic policy in the past few years as a
transfer of resources from potential wage increases to higher corporate profits.
At the same time, unions have criticized private business--which produces 25X1
about 90 percent of total industrial output--for not spending enough on
investment for continued employment growth. Swedes consider the official
2.5-percent unemployment rate for 1986 too high by their standards. 25X1
-- The Carlsson government, meanwhile, has advocated wage restraint to control
inflation--which was at a 4-percent annual rate through October 1986--and
maintain export competitiveness. Although this is below the 7.2-percent rate of
1985, it is still about twice the average rate among Sweden's eight main
competitor countries, including West Germany, the UK, the US, and Denmark.
Stockholm worries that private- and public-sector unions may decide to invoke
a contractual clause that permits them to renegotiate their contracts early in
1987 should the 1986 inflation rate exceed 3.2 percent--a likely result. The
government fears that new wage talks so soon after the October 1986
resolution of protracted and tense negotiations with public-sector unions would
further damage already-strained relations with its union power base.
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