The 2024 edition of Åre Business Forum began on Wednesday with Prime Minister Ulf Kristersson as the opening speaker. The forum, held for the 16th year, usually gathers around 600 visitors from Sweden, Europe, and the USA. This year's program focuses on how business can strengthen Sweden, the Nordics, and Europe for increased resilience, sustainable growth, and competitiveness, covering topics like geopolitics, macroeconomics, entrepreneurship, innovation, defense, security, growth opportunities, leadership, space, and AI. Kristersson gave an overview of the geopolitical situation and its consequences for business and trade as the opening speaker.
Sweden's economic context is one of transformation and current challenges. The country transformed from one of the poorest in Europe to one of the richest over a 100-year journey starting in the 19th century. Key factors in this transformation included open trade, access to natural resources, industrialization, technological development, social reforms, and education. Sweden today has a mix of big companies founded over 100 years ago and younger companies at the forefront of technology. However, the rules-based order since World War II is on shaky ground, transatlantic bonds are being questioned, economic growth is mostly in China and the US, and free trade seems slightly out of fashion.
This is very important. Probably some of the companies that we in ten-fifteen years will think are some of Sweden's most successful are started here.
A geopolitical crisis is driving these challenges, as a conflict between the US and Iran has escalated energy prices. The price of oil and gas is soaring due to the US and Israel's war against Iran, with Iranian attacks on ships in the Strait of Hormuz driving up oil prices. On Thursday, Iran attacked a large gas facility in Qatar in response to Israeli attacks on the country's gas fields. The US president Donald Trump gave Iran an ultimatum to open the Strait of Hormuz within 48 hours or face new threats to Iran's energy infrastructure, to which Iran responded with threats to instead close the strait completely and further expand the war. In Europe, gas prices have doubled since the war started three weeks ago and are now at the highest level since 2022, when the Russian gas tap was shut off, affecting Swedish households. Many countries have redirected their gas and oil imports from Russia to Gulf states in recent years, increasing vulnerability.
This energy crisis overshadowed all other issues at Friday's EU summit in Brussels, which was originally supposed to be about growth and competitiveness. There has been growing discontent with the cost of the EU's climate transition, which is now being chipped away at, as soaring energy prices are fueling countries that want to slow down the transition. The EU Commission recently proposed scrapping a long-agreed ban on new fossil fuel cars from 2035 and instead introducing an emissions target for car manufacturers. Ahead of the summit, Poland, Italy, Austria, and seven other countries demanded a review of the EU's emissions trading system (ETS), which is the backbone of the union's climate policy. Heavy industry and electricity and heat production buy and sell the right to emit carbon dioxide, and the price of emissions increases as the number of emission allowances on the market decreases. The ten countries want to slow down the reduction rate, with Italy advocating for the entire system to be abolished, but at least as many EU countries, including Sweden, defend emissions trading as crucial for the union's relatively rapid transition.
I think that most people want to decide for themselves how they put together their grocery bag.
Prime Minister Ulf Kristersson came to the Brussels summit with his own wish list: to protect Swedish bottleneck revenues. Bottleneck fees arise when there are large differences in electricity prices within the country, and the money should be used to expand the electricity grid or compensate consumers. A new EU law proposes that 25 percent should finance projects that are particularly important for the common European electricity grid. The government has interpreted this as meaning Swedish money could be used outside Sweden, which is seen as unfair since not all EU countries have established the electricity price zones that generate the revenues. Energy Minister Ebba Busch has protested several times at meetings with EU energy ministers. At the summit, Ulf Kristersson received guarantees that the money stays in Sweden, with the message expressed in writing via a sentence in the joint statement by the leaders, stating there should be a 'flexible approach to domestic bottlenecks.'
NATO concerns and European defense buildup are also prominent amid the tensions. Donald Trump has repeatedly threatened to leave the NATO alliance, prompting talks about a plan B for the defense alliance, including a 'European NATO' with Sweden's participation. Ulf Kristersson does not want to call what is happening a backup plan for NATO, but rather a step in strengthening the European part of the alliance. Europe is undergoing the largest buildup of defense capability since the Cold War, with Sweden primarily contributing to strengthening security around the Baltic Sea. NATO Secretary General Mark Rutte has been criticized for fawning over Donald Trump, including calling the US president 'Daddy' during a NATO summit, but Ulf Kristersson does not want to comment on how he views Rutte's actions, stating that a secretary general must balance different interests. Kristersson urges calm after reports that US President Donald Trump wants to reconsider NATO membership.
All of Europe is currently panicked by the gas price.
The government is responding to the energy crisis with upcoming measures and economic scenarios. There is great concern over rising energy prices in the EU, but there will be no shutdown of the emissions trading system (ETS), according to Prime Minister Ulf Kristersson. Soaring prices have led to demands for both imports from Russia and the abolition of the ETS system, but Kristersson states this will not happen. Prime Minister Ulf Kristersson will hold a press conference on Monday morning to present measures against high energy prices, with participation from Jimmie Åkesson, Ebba Busch, and Simona Mohamsson. The government is working on three scenarios to assess how Sweden will be economically affected, including a regime change in Iran that leads to a cessation of the country's aggressive tone towards the outside world. Prime Minister Ulf Kristersson says the government has preparedness to act if the war in the Middle East has economic consequences for Sweden.
Sweden's defense policy has undergone a transformation in response to these geopolitical shifts. The country has experienced radical U-turns in its defense policy in short time, with the Ulf Kristersson government spearheading military rearmament and building a more resilient civil society through Total Defence. Total Defence is a two-pronged strategy mobilizing armed forces and militarized civil society to resist invasion, defined Sweden during the Cold War, and at its height in 1964 could mobilize 800,000 soldiers with a large air force and reserve society including bunkers and supplies. Wartime posting included both people and companies such as doctors, teachers, mechanics, marketing experts, Saab, and Ericsson. Prime Minister Ulf Kristersson served as a platoon commander for the Signal Regiment in Enköping between 1983 and 1984. After the Soviet Union collapse, Total Defence was regarded as inefficient against asymmetrical threats, leading to a pivot to Operative Defence focused on a small professional force for international operations, with defense spending cut from 3.8% of GDP in 1960 to 1% in 2017 and conscription made dormant in 2010. Operative Defence presupposed that Russia was no longer a geopolitical rival, but Russian actions in Ukraine and Georgia revived invasion defense planning, with Supreme Commander Sverker Göranson stating in 2012 that Sweden could hold out for a week against an attack on a limited area. Defense spending was raised in 2015 for the first time in decades, and conscription was reactivated in 2017.
They are still much more dependent on fossil energy than Sweden. We made historically wise decisions when we made ourselves independent of oil and gas for Swedish electricity production.
Domestically, the economic outlook involves inflation, growth, and the euro debate. Ulf Kristersson's government has pledged a cautious fiscal policy and has been encouraged by downward inflation trends, leading to amendments to the 2024 budget including a 6 billion kronor addition to local governments for healthcare and additional spending on defense and infrastructure. Inflation is approaching the central bank's 2% target, which could enable interest rate cuts in May or June. The Swedish economy contracted for three consecutive quarters in 2023, with government expectations of 0.7% growth this year and unemployment rising to 8.3% from 7.7% in 2023. The debate on the euro has taken off due to the inflation shock, with pressure on the krona's value and record lows against the euro in the fall. The Moderate Party's stance on the euro has been known for some time.
A funding controversy surrounds SVT, Sweden's public broadcaster. SVT asked the Prime Minister about the government's plans for infrastructure investments in the county, but part of the explanation for SVT's cost-cutting package is increased costs when TV4 and other commercial channels left the so-called terrestrial network at the turn of the year. SVT must remain in the terrestrial network because it is part of the emergency preparedness mission. SVT's board has requested extra funding for the increased expense but has not yet received a decision from the government. The government's proposition states that if other media companies leave the terrestrial network during the license period and this leads to significantly increased costs for the public service companies, this should be seen as an extraordinary cost that therefore should not be included in the funding decision for the license period. Culture Minister Parisa Liljestrand has previously said to SVT Kulturnyheterna that the question of extra money for the terrestrial network fee should be handled in the parliament. Kulturnyheterna has sought Ulf Kristersson, and he referred back to the culture minister. The opposition believes the issue is not being handled quickly enough and that the government can take money from the so-called public service account to cover the fee. Social Democratic Party leader Magdalena Andersson demands that Prime Minister Ulf Kristersson intervenes to get a decision on extra funds for SVT.
Fundamentally, we see the ETS system as a success and an important tool also in the future.
Trade tensions are also on the agenda, with Sweden and the European Union prepared to retaliate against US trade policies, as the EU stands ready with countermeasures. Sweden's goal is not retaliation but to lower tariffs and increase trade with the US and other countries.
Domestic price discussions include a temporary food tax reduction. The tax reduction is a temporary measure until December 31, 2027, affecting grocery stores, gas stations, street kitchens, cafés, and restaurants. During Prime Minister Ulf Kristersson's visit to Gävle, the focus was on discussing prices and food tax in the store.
In the long run, we cannot count on the US to bear the lion's share of the defense of Europe.
EU decision-making reform is another point of contention, with Prime Minister Ulf Kristersson angry about Viktor Orbán's veto threats and believing it is time to change the EU's decision-making methods and deprive Hungary of its veto right. Unlike the parties in the government, the Sweden Democrats want to keep the current order regarding EU decision-making.
The implications of these developments center on energy price measures and economic preparedness, with the government's upcoming press conference and scenarios aiming to address the crisis. Reactions and unknowns persist, including the specific measures Kristersson will present, when a decision on SVT's funding will be made, the other two economic scenarios besides regime change in Iran, how the flexible approach to bottlenecks will be implemented, and what specific EU countermeasures against US trade policies might entail.
A stronger European NATO is exactly what we are building now, and Sweden is a driving force.
The Baltic Sea has never been more threatened and contested than it is now with constant cable breaks and constant strange, bad sailors dragging anchors and destroying things. The Baltic Sea has also never been as protected and monitored as it is now. We contribute significantly there.
It was important not to tear up the rules of the game for all the companies that have now used European climate policy as a competitive advantage. Extremely important for us.
Nothing in our daily experiences of cooperation in NATO, and it is very extensive, has changed at all. So I think right now we should look more at what happens and a little less at what is said.
Our right to decide over bottleneck fees in Sweden is secured. Other countries will not be able to seize them. It is explicitly described.
I think it would be 'good' to introduce the euro in Sweden and welcomes the ongoing debate about the issue.