“Prove your commitment to European values”: Ukraine – Sweden foreign policy audit

Sweden

Ukrainian President Petro Poroshenko meets Swedish Prime Minister Stefan Löfven during a visit to Sweden in November 2016. Photo: president.gov.ua 

Politics

Article by: Daria Gaidai, Leonid Litra

Ukraine’s success must include a proactive foreign policy. Today we explore the existing and potential contact points of Ukraine’s relations with Sweden with the help of analysts from the Kyiv-based Institute of World Policy.

In official statements, Sweden is consistently named not only an ally but also one of the closest friends of Ukraine in the EU. Kyiv appreciates the strong position of Sweden in support of the sovereignty and territorial integrity of Ukraine under Russian aggression. There are no differences in positions on Ukraine between the major parties of the country, and most Swedish people have no doubt of Russia’s responsibility for the military conflict in Donbas. Moreover, Sweden is also one of the major donors to Ukrainian reforms.

Swedish taxpayers fund the implementation of numerous projects in Ukraine in such fields as public administration, judicial, financial, and energy sectors, as well as programs aimed at supporting the civil society, decentralization, anti-corruption reforms, introduction of energy saving technologies, etc. Sweden belongs to the circle of foreign friends of Kyiv that have been actively supporting democratic reforms and European integration of Ukraine for over two decades.

Nevertheless, Swedes, like other European partners of Ukraine, were burned and disappointed after the 2004 Orange Revolution, when Sweden increased the volume of assistance to Ukraine by several times, becoming one of the leaders in terms of the amount of political and economic investments in post-revolutionary Ukraine.

Even numerous failures, rollbacks in reforms, and strengthening of authoritarian tendencies in Ukraine in 2010-2014 have not forced Sweden to abandon support for Ukraine and its European future. After the victory of Viktor Yanukovych in the presidential elections, Stockholm made every effort to establish contacts with the new government, simultaneously increasing support for the civil society. Perhaps, this is the only investment that paid off. As predicted by the Swedish donors, civil society has become a major agent of change in late 2013. After the Revolution of Dignity, Swedish-Ukrainian cooperation got a second wind.

Mutual interests

Apart from that, no discussion of Swedish-Ukrainian relations goes by without mentioning the historical ties between the two nations in medieval and early modern periods. We refer to both “Swedish diplomacy” of Ukrainian Hetmans (Bohdan Khmelnytsky, Ivan Mazepa), who sought an alliance with Sweden and more ancient past, strong dynastic and economic ties between Kyivan Rus and medieval Sweden. According to the Norman theory of the origin of Rus, all its princes had Varangian origins. Although the theory that the state on the territory of medieval Rus emerged due to the Vikings from Scandinavia is still debated (especially in Russia), historical sources testify undeniably close contacts between Rus and the Viking state. But what interests connect our countries today?

The policial level of contacts which exist between Sweden and Ukraine today is a bit lower compared to the period when the Swedish Foreign Ministry was led by Carl Bild, as Stockholm focused its main efforts on solving internal problems of the EU and global development.  At the same time, Kyiv also directs its main efforts in other areas, not forgetting, however, about its strategic friend in the North.

Sweden’s interests towards Ukraine:

  • restoration of peace and security in the region, which is impossible without strong and prosperous Ukraine;
  • successful democratic and economic transformation of Ukraine as a trigger for changes in other Eastern Partnership states;
  • the introduction of high standards for the protection of human and minority rights as the basis of Ukraine’s European integration and a positive example for other countries in the region;
  • development of trade and economic cooperation, including through the expansion of contacts between Ukrainian and Swedish companies; increase of the number of Swedish investments.

Ukraine’s interests towards Sweden:

  • support for the efforts of Ukraine to counter Russian aggression and principled position on maintaining the sanctions against Russia on the international level;
  • support for Ukraine’s European integration and the open-door policy within the EU;
  • long-term support for reforms and programs aimed at overcoming the impact of military aggression, particularly as an example for other partner countries of Ukraine;
  • to increase the number Swedish investments and Ukrainian exports to Sweden; expansion of major Swedish companies to Ukrainian market, which would improve Ukraine’s image among foreign investors;
  • hardline stance on Russian energy projects that undermine the position of Ukraine as a transit country for Russian natural gas to the EU.

Ukraine’s place in Sweden’s values-based foreign policy

Sweden belongs to the small group of countries that base their foreign policy on the value base of human rights, democracy, and international cooperation. Appeals to the values in the statements of Swedish leaders are not rhetorical figures or declarations of intent, but the direct determination of the nature and objectives of Swedish policies.

Sweden remains the global leader in development policies. According to the plans of the Swedish Government, the volume of development assistance should amount 1% of Swedish gross national income. The volume of Swedish annual humanitarian aid amounts SEK 6.5 billion (over USD 742 million), which places Sweden 7th among the world’s major donor in absolute terms. Swedish aid is focused on efforts to strengthen peace and state-building in weak countries.

Sweden opposes selfishness and isolationism in foreign policy. According to the Ministry of Foreign Affairs of Sweden, Sweden’s foreign policy must be active, fearless and constructive. The motto of this policy is “what is good for the world is good for Sweden.” Currently, the main foreign policy priority of the Government is to preserve a principled and cohesive European Union, “the most important foreign policy arena” for Sweden. One of the key principles for Sweden in the EU is solidarity, which is under threat due to the rise of populism and nationalism in some EU member states.

Stockholm regards the Russian aggression against Ukraine as the greatest challenge to European security since the World War II. Apart from that,  in the last few years, Sweden has faced the increase of Russian military presence in the Baltic region, invasions of Russian fighter aircraft in Swedish airspace, and simulated nuclear attack against Sweden.

Deterioration of the security situation forced the Swedish leadership to review their security and defense policies dramatically.

For the first time in more than two decades, the Government approved a significant increase in funding for the Swedish Armed Forces (11%).

In total, over five years, from 2016 to 2020, defense spending will reach about $25.5 bn. The Swedish Government has directly stated that their armed forces are prepared for military aggression and defined scenarios of potential military threats.

Aside from the show of force, Russia uses underhand methods, including cyber-attacks and disinformation, interpreted by Swedish politicians as “psychological warfare.” Russian information attacks on Sweden have forced the Swedish leadership to take action and initiate public debates on foreign interference in internal politics. The purpose of the attacks, according to them, is to influence Swedish public and politicians, in particular, to prevent country’s accession to the NATO.

Destabilization of Swedish public is sustained by various methods, from the “troll army” in Swedish Twitter, attacks on accounts of Swedish officials and public figures to spreading obviously false documents. The researchers have identified 26 cases of spreading of fake letters and other documents. One of them, supposedly signed by the Defense Minister, spoke about selling armaments to Ukraine, and the other told about efforts to prevent the punishment of a citizen of Sweden for war crimes committed in Ukraine. Sweden supported the establishment of the Center for Countering Hybrid Threats in Helsinki and NATO Strategic Communications Centre of Excellence in Riga.

Read also: Intimidation as a propaganda tool in the Nordic countries

Russia’s aggressive actions have led to a significant increase in the number of supporters of Sweden’s accession to the NATO, from 29% in late 2013 to 41% in 2015.

Some Swedish politicians believe that new security conditions force Sweden to consider joining the Alliance, a move which however lacks the consensus it needs. But apart from that, Sweden is also an active promoter of strengthening the Common Security and Defense Policy of the EU and expanding the role of the Union in resolving the crises around the world.

The key political forces of Sweden are unanimous regarding the assistance to Ukraine and its support on the international level. Moreover, Sweden makes efforts to convince its partners within the EU to maintain political and financial support for Ukraine. In 2015, Stockholm has allocated a $100 mn bilateral loan for Ukraine, and Prime Minister of Sweden Stefan Lofven expressed the hope that other countries would take the example of Sweden.

Sweden’s unambiguous position on Ukrainian issues has led to open diplomatic confrontation with Moscow.

The latter has not only accused Swedish leadership of a biased view on the conflict in Ukraine but also stated that Sweden is one of the countries that are primarily responsible for the development of this crisis. Sweden advocates for maintaining the EU sanctions against Russia “as long as the reasons for their introduction remain.”

At the same time, Stockholm believes that EU unity on Ukraine will largely depend on the progress in reforms.

One of the vital issues for Ukraine is the construction of the Nord Stream 2 pipeline in the Baltic Sea, which would allow Gazprom to increase gas supply to the EU bypassing Ukraine.

But the Swedish Government, while expressing their dissatisfaction with the project, stresses it doesn’t have many opportunities to impact the construction.The pipeline does not go through the territorial waters of Sweden but passes through the exclusive economic zone, where state jurisdiction is limited.

However, Gazprom needs Swedish infrastructure: the islands Gotland and city of Karlshamn received proposals to rent out their ports. As both harbors are strategically located, the Swedish military, special services, and center-right opposition in the Parliament were opposed to the move. After several months of negotiations, Gotland turned Gazprom down. But Karlshamn agreed.

In the meantime, Sweden’s leadership joined the voices of Nord Stream’s sharp opponents in the EU.

Sweden is an important donor of Ukrainian reforms

Sweden’s aid to Ukraine exceeds not only that given to countries of the Eastern Partnership, but also the Western Balkans and Turkey. Since 2005, Swedish aid to Ukraine has increased, reaching its peak in 2009 ($36.3 mn) and in 2011 ($41.7 mn). However, the lack of political will to implement reforms against the backdrop of changes in foreign policy vector after 2010 has buried numerous ambitious Ukrainian-Swedish projects and initiatives.

 

 

Right now, Sweden’s priorities in Ukrainian reforms include strengthening of democracy, improvements in respect for human rights and further development of the state based on rule of law (in particular, increase in efficiency and transparency of public and judiciary authorities). Sweden devotes significant resources to support projects to support the potential and sustainability of Ukrainian NGOs.

Decentralization is another vector of Swedish support for Ukraine, as is the improvement in the environmental situation and rational use of natural resources, closer economic integration of Ukraine in the EU and development of market economy.

Through the support of programs by the World Bank and European Bank of Reconstruction and Development, Sweden makes its contribution to the realization of economic and institutional reforms.

In culture and education, a number of initiatives are being implemented with the support of the Swedish Institute. In Ukraine, the Institute finances separate projects and supports student and research exchanges between Ukrainian and Swedish Universities.

Separating friendship from business: the fate of Swedish investors in Ukraine

Ukrainian officials often mention that Sweden is Ukraine’s largest economic and trade partner among the Nordic countries and that Swedish companies were some of the first to invest into Ukraine. But this is only because the volumes of economic cooperation with other countries of the region are even more meager.

Ukraine’s share of Swedish exports is only 0.3%, (compared to 0.1% of imports). Sweden, in turn, ranks 20th with 1.1% of the total volume of bilateral trade between Ukraine and the EU member states.

Moreover, there is a significant trade imbalance between the two countries. Swedish export to Ukraine exceeds Ukrainian exports to Sweden by five times. However, it should be noted that after a long period of decrease, which reached its peak in 2012-2014, a certain increase is observed in the volume of trade between the two countries.

Considering the good political relations between the countries, this is hardly a positive assessment.

In 2016, imports from Sweden amounted to about $385 mn (+60% compared to 2015), which is the highest figure since 2011. Ukraine mostly imported cars and mechanisms, paper, transport equipment, and chemicals. Ukrainian exports to Sweden have increased by 21% IN 2016 – to $74 mn. Although this isn’t much it’s the highest figure since 2008. Ukraine exports engines and motors to Sweden, wooden goods, printed production, furniture, and transport equipment. Over January-September 2016, the volume of Swedish investments into Ukrainian economy amounted to $329.4 mn. The bulk of Swedish investments accounts for the processing industry ($217.7 mn).

Swedish investors are leaving Ukraine: volumes of investments have been steadily decreasing since 2010.

The sharpest drop occurred in 2013-2014, when the volume of investments decreased from $1.08 bn to $439 mn. For the first 9 months of 2016, the volume of Swedish investments in Ukrainian economy amounted to $329.4 mn. The bulk of Swedish investments accounts for processing industry ($217.7 mn).

Swedish companies that appreciate their reputation are suspicious toward investing in the country, which is regularly mentioned in connection with corruption and political scandals. As of today, the Ukrainian Government has failed to reverse this trend and make Ukraine more attractive for Swedish investors, who are already disappointed in the possibility of transparent and fair business in Ukraine. Investors are waiting for stable rules in the tax and judicial systems, as well as in business regulation.

The symbol of IKEA

The Swedish company IKEA, which owns one of the largest networks of furniture shopping centers in the world, holds a special place in the history of Ukrainian-Swedish relations. For several years, the Swedish furniture giant was negotiating to enter Ukrainian market. It was not just about opening stores in major cities of Ukraine, but also about developing a cooperation with Ukrainian furniture manufacturers.

Despite the promises made by top Ukrainian officials to promote the ambitious plans of IKEA, the company faced an impassable obstacle: the need to pay bribes to local officials.

In the interview of 2010, the head of the Russian branch of IKEA Lennart Dahlgren stated that “IKEA has no money to pay bribes. Why is the land in Ukraine three times more expensive Ukraine than in Moscow or London?”

He also claimed that corruption in Russia compared to Ukraine is “whiter than snow.” Finally, the frustrated Swedish investors postponed their Ukrainian plans.

The experience of IKEA, a company with a global reputation, sounded an alarm not only for Swedish businesses but also for all foreign investors willing to operate in Ukraine.

After the Euromaidan revolution, representatives of the new reformist Government made several attempts to convince IKEA’s management that the situation has changed. Although it is not a problem to purchase IKEA products in Ukraine via the Internet, opening Ukrainian office of the furniture giant would be an important step in improving the image of Ukraine.

Other promising vectors of economic cooperation lie in the energy sector, given Ukraine’s urgent need for implementation of energy-saving technologies, of which Sweden, with 26% of its domestic energy being fulfilled by renewable energy sources, is the undisputed world leader. .

Another important vector is waste management. As a world leader in eco-friendly waste processing, Sweden has much to offer Ukraine, from simple sorting line to the technologies of producing energy from waste.

Other potential areas of cooperation include telecommunications, infrastructure modernization, and agriculture, including the supply of modern equipment and logistics development.

The recent years have been marked by increased attention to the IT sector. In April 2016, the first Swedish-Ukrainian forum IT-Connection has been organized with a purpose to connect Swedish and Ukrainian IT companies.

Swedish public attitudes towards Ukraine

Swedes demonstrate the most powerful support for Ukraine among all European nations.

In 2014, over 70% of Swedes expressed the need for economic and political support for Ukraine, even at the risk of provoking a conflict with Russia, which is the highest rate among all 12 polled countries. Moreover, over a half of Swedes (56%) believe that the EU should respond to Russian aggression by providing Ukraine a membership perspective, increase economic support (72%) and increase sanctions against Russia (68%).

At the same time, 54% were against giving Ukraine military equipment and materials.

Similar trends have been shown by the opinion poll conducted in Sweden in 2015 on request of the Institute of World Policy.

But there is a difference.

Answering to the question why Ukraine should be in the EU, Swedes most often choose two arguments: “Ukraine is a part of Europe” and “this is a way to protect Ukraine from Russian aggression” (33% supporters in both cases).

The third most popular reason is that Ukrainians are committed to European values (18%). However, it should be noted that much more Swedes disagree with this statement; almost a third (31%) of respondents believed that Ukrainians have yet to prove their commitment to European values.

Among other arguments against Ukraine’s accession to the EU, Swedes often mentioned corruption (42%), the influence of oligarchs, and poverty (18%).

Overall, Ukraine still remains largely unknown to Swedes. Swedish media primarily mention Ukraine in the context of war and corruption, while not many Swedes so far have visited the country. Although the recent European Song Contest and European Football Championship of 2012 in Kyiv helped to increase awareness in Sweden about Ukraine a little bit; it’s not enough to radically change the perception of Ukraine.

In Sweden, Ukraine has already a successful civil initiative to promote Ukraine in Scandinavia — the Ukrainian Institute in Stockholm, established by pianist Natalia Pasichnyk. Given that the Ukrainian Institute of Sweden is not a state institution, it could be seen as a pilot project of cultural diplomacy.

This report was conducted within the project of the Institute of World Policy “Ukraine’s Foreign Policy Audit”. This project is implemented with the support of the “Think Tank Support Initiative” implemented by the International Renaissance Foundation (IRF) in partnership with Think Tank Fund (TTF) with the financial support of the Embassy of Sweden in Ukraine. The full report can be found here.

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