Mundus Brief May 2023

In 2017 the Monthly Policy Review made an in-depth profile of Jimmy ?kesson - the man from S?lvesborg, ahead of the 2018 election. We concluded, saying “Some argue he lacks charisma, but the question is whether it is not ?kesson's restrained personality that has laid the foundation for the party's successes. How far this will get him is, of course, difficult to say. Prime Minister? Extremely unlikely. Cabinet Minister? Still unlikely, but not impossible. The election is less than 500 days away. Soon we will know whether the boy from S?lvesborg will manage to gain real political power. Sweden holds its breath.” Interested readers can download the article here.

Although real influence was denied him at that poll, it created the launching pad for future success in the 2022 elections, where SD became Sweden’s second largest party, and the largest on the right of politics. Could anyone now write that its extremely unlikely that he becomes PM? Certainly not ?kesson, who stated in April that that was what he was aiming for. Meanwhile, even though he’s not even a minister today, and his party is not in government; but rather supports the Kristersson government, that is not stopping him and the SD from wielding real influence. Their actions are shaking the foundations of politics in Sweden, which functioned along a traditional left-right divide over socialist vs capitalist economics, but with a general consensus over social issues, be that LGBTQ, climate or Europe.?

The Tid? Coalition: An Unhappy Alliance

Eager to get their hands on power, the Moderates (M), along with the Liberals (L) and Christian Democrats (KD) made a Faustian Bargain, the implications of which are now becoming clearer as SD flexes its muscles across a range of policy issues. The Government needs the SD’s votes, and SD knows it, threatening to withdraw support if it doesn't win what it deems to be vital policy decisions. SDs New Found Assertiveness is our feature in the May Monthly Policy Review (click here for a link to our Chat GPT brief summary of the articles in the latest MPR) Arguably the Liberals are the party for whom this causes the biggest ethical challenges - especially given that they’re the most pro-EU party, and hence diametrically opposed to the SD’s Euroscepticism. But, there are a range of issues from drag queens reading children stories to biofuels on which keeping the coalition together is a hard challenge. Too much of a challenge for the respected former EU minister and European Commissioner, Cecilia Malmstr?m, who decided to leave the Liberals.

At first blush, the Spring Amending Budget was not necessarily a politically charged issue. The Government presented the relative absence of any big-ticket spending as welcome restraint, avoiding adding fuel to the fire of inflation. But, as covered in our MPR article The 2023 Spring Budget Bill: Defined by its Omissions? another interpretation could be that the 4 Tid? Agreement parties found it so difficult to agree that they decided to make few changes.?

Climate takes centre-stage in the ideological struggle

There’s no risk of missing SD’s fingerprints on Sweden’s climate policy. It was one of the issues made clear by the Tid? Agreement, that #Sweden would put a pause to its biofuels policy which essentially ratcheted up the volume of biofuels that would be blended into petrol and diesel each year. Known in Swedish as the reduktionsplikt, which translates to reduction obligation, the policy was designed to drive fossil fuels out of Swedish internal combustion engines. Introduced at a time when Sweden was trying to project a world-leading climate strategy, and also when other options such as battery vehicles and hydrogen seemed riskier, the policy was successful in forcing fossil fuels out, but a failure in terms of incentivising a rapid build out of Swedish #biofuels plants. Without extra supply, the diesel price climbed, compounded by the #ukrainewar and #energycrisis, and perhaps it was in some ways inevitable that the policy had to be dealt with. But that is not to underestimate the consequences of this decision. Not only does it mean that Sweden takes off its climate leader’s jersey, but it makes it perhaps inevitable that Sweden will miss its legally binding targets that it has just agreed with the EU under the Effort Sharing Directive (for more, see this Mundus Nordic Green News post).?

There is a get out clause - Sweden can buy reductions from other countries - but that will cost billions … of Euros. Why would it choose to do so? Perhaps its another front in the global culture wars. Or maybe just smart electoral politics.

Climate and Environment Minister Romina Pourmokhari is having none of it. She bravely maintains that Sweden’s climate goals are fixed. This is her job to do so, and she is responsible for preparing a plan to make it happen. However, the policy choices are very few, due to Sweden’s carbon starting point being blessed by the high levels of hydro and nuclear power, and due to Sweden agreeing to the most challenging of EU targets - at 50% by 2030. Mathematically, Sweden must cut its GHG fossil fuels #emissions - which are 30% of its total - if it is going to slash its emissions inside 7 years.?

The decision could be taken out of the hands of politicians, as we consider in Climate Policy Council Report: Emissions Going Up, Confidence Going Down, with the Aurora case brought on by Swedish children invoking human rights law to try to force the outcome.???

The #greentransition and energy crisis are a complete muddle for the Government. In the last few years, Swedish industry drank the kool aid, and many companies are now at the forefront of driving change. And as markets open up, Swedish firms are racing to get refinanced to drive their global growth, as we covered in the March Nordic Green Indices. Industry, traditionally more-aligned with right-wing, would love for the Government to provide supportive policies, but the policies presented are either minimalistic or erratic. Companies are now looking increasingly elsewhere, as domestic policies supporting green change fail to deliver, as we covered in our April report.

The Swedish EU Presidency

Putting domestic politics to one side, #Sweden is also President of the Council of the EU from January to June #eu2023se. The Government made a wise decision to “run it from Brussels”, which has meant technocratic efficiency and that it could keep many of the issues out of Swedish political debate. Mundus covers Sweden’s EU relationships, and we have looked at different aspects in the April and May Monthly Policy Reviews. Our April story, Sweden’s EU Presidency at Half-Time, looks at Sweden’s four priorities for its Presidency. The top priority, and where the Government is evidently most comfortable, is Security. The Swedish commitment to help Ukraine defend itself is self-evident, and Sweden has been unwavering in its consistency on this issue. Its second priority is the economy and a self-defined competitiveness agenda that Sweden hopes that it has now gotten Europe to agree to. If true, then this marks an important win for Sweden, and one where it will have done Europe a big favour in putting reforms at the centre of the EU agenda. But, there is hesitancy from officials, who are waiting to see how much traction this agenda gains. The third priority - the green and energy transitions are problematic for Sweden’s Government, which must deal with SD's climate scepticism. Nonetheless, Sweden receives credit for managing these files all the way to the end of the process, where it can claim to have delivered Fit-for-55 in its Presidency.

The fourth and final priority is the Rule of Law (#ruleoflaw). Europe-watchers understand that this is code for managing the extremes of the Polish and Hungarian governments, which are treated suspiciously in terms of their commitment to democratic principles. This is discussed in our special article, EU Rule of Law - A Swedish Presidency Challenge (click here for a brief summary). Here is another issue where the Government finds itself with firm feet, and also where Sweden shares a bipartisan political consensus, with even the SD standing up to fight for democracy, a point that it receives little credit for. Perhaps that is because SD is even more strident in fighting for Sweden to receive special exemptions for policies that better reflect the will of Swedish voters; that is to put Swedish interests first.?

Given that the EU is something of a Hotel California - “you can check out any time you like, but you can never leave” (OK, Brexit excepted), it makes it very challenging to deal with a country that chooses to take its own path. Having tried various tactics unsuccessfully, the Commission has eventually settled on withholding cash as a way to encourage Poland and Hungary to play by the rules. Lesser known is a practice of scheduling dialogue meetings on democratic values and rule of law, where a Commission report is used as a basis for a discussion with a country on its adherence to basic principles. Sweden has chosen to schedule dialogues with both Hungary and Poland.?

Where will it all end?

This brings us back to the boy from S?lvesborg. The SD line on Europe has waxed and waned. For most of its history the party wanted out of Europe. Then, as it sought to compromise to win power, it softened the rhetoric. But now it has decided to toughen up. In Mundus News Sweden this morning, we covered a debate article by ?kesson that says he wants to investigate how Sweden can prevent the EU from gaining more supranational power. He rails against EU law, aghast that more than 60% of the municipalities’ decisions originate in the EU. SD wants to ensure that the Government and Riksdag are prepared to leave the EU. “Everyone who has ever negotiated anything knows that you can get more if you leave the negotiating table.”

PM Kristersson “explicitly notes that there are conflicting goals in almost all policies, not infrequently between climate and environment.” His political skills are sure to be put to the test in the months ahead. Meanwhile ?kesson can daydream and wait for the day when he has Kristersson’s job.