Sweden and Swedish Defence – Introduction to the Special Issue

ABSTRACT

This article provides the context for the articles in this Special Issue on Sweden and its defence. The article starts with Sweden before presenting Swedish defence, its economy, the military threats, the defence industry, the personnel and the guiding principles of defence. Swedish principles for governance of the public agencies in general and within the defence sector in particular are described. A presentation of the Swedish Defence Research Institute (FOI) and its defence economic activities is also provided.

KEYWORDS:

• Sweden
• Swedish defence
• Swedish context
• special issue
• defence industry
• personnel
• governance
• capability
• non-alignment

Introduction

Background

This special issue of Defence & Peace Economics on Sweden resulted from a visit to Stockholm and the Swedish Defence Research Agency (FOI) from Professor Emeritus Keith Hartley, University of York, UK, and Adjunct Professor Binyam Solomon, Carleton University, Canada. During the visit, presentations on different defence economic topics were given followed by interesting discussions. As a result, FOI was invited to contribute articles for a Special Issue, which the defence economists of FOI gladly accepted. In this introductory article I will give the reader a short presentation of FOI, which has funded most of the work for the Issue. I will also provide the context for Sweden and Swedish society in general. There follows a presentation of Swedish Defence. This introduction gives the reader a context for the five articles that follow.

FOI and Its Defence Economists

FOI is one of Europe’s leading research institutes in defence and security.¹ FOI is a government authority under the Ministry of Defence. Most of FOI’s activities are assignment-based. The largest clients are the Swedish Armed Forces, the Swedish Defence Materiel Administration, the Government Offices and the Swedish Civil Contingencies Agency.

FOI is organized into six divisions. Five conduct research within different areas of expertise. The sixth is a support division focusing on administration, IT and communication. The five research divisions are:

• C4ISR – Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance

• CBRN – Chemical, Biological, Radiological, Nuclear – Defence and Security

• Defence Technology

• Defence Analysis

• Weapons, Protection and Security

The agency has approximately 1,000 employees. About 800 are researchers at academic level. FOI employs physicists, chemists, engineers, social scientists, mathematicians and philosophers, working in research, method and technology development, analysis and studies.

FOI’s research involves activities that are undertaken both within a long-term perspective of knowledge-building and those that are conducted more as applied knowledge. The latter rely on research & development and analysis to answer our end-users’ more short-term questions.

FOI is financed by around 40% appropriations and 60% on commission basis through studies and analyses on behalf of different clients.

FOI’s Defence Economists belong to the Defence Analysis Division, which produces proposals and develops methods, tools and different approaches for decision-making. The division works in areas such as security policy, civil and military crisis management, command systems and defence economy. Our operational analysis groups participate directly in our client’s studies and planning work.

The unit Defence Economics undertakes research in support of investigations and decision-making. The research and studies are mostly applied but performed with good knowledge of theory and methodology. Current research² includes defence economic analysis, strategic personnel and materiel supply as well as defence logistics. Economic analysis includes the Defence Economic Outlook report series which offers a comparative analysis of international military spending, quantities and quality of military equipment as well as the economic strength underpinning military spending. In relation to international comparisons, the department has also begun to research the topic of defence specific purchasing power parities, outlining plausible methods in approaching the potential construct of such a measure. In the coming years, the department also aims to begin working on issues relating to geo-economics, in order to broaden our analyses of economic strength and how such strength is and can be used for political purposes. Strategic personnel supply continuously supports the Swedish Armed Forces and Ministry of Defence (MoD) with analyses regarding the reintroduction of limited conscription, the recruitment needs with regard to officers and specialists as well as the career prospects of women within the Armed Forces. Within materiel supply the department supports the MoD with analyses regarding materiel acquisition strategies, life-cycle cost development and international cooperation. The department has also begun work on analyses regarding the international arms industry, currently focusing on the potential consequences of European defence industrial integration. Logistics. FOI’s Defence Economics Department also supports the MoD with recurring analyses regarding the ongoing reconstruction and growth of the Armed Forces’ capabilities, including personnel, materiel and infrastructure.

General Facts on Sweden

Population: 10.4 million (2020).³

Area: 450,295 km² (173,860 square miles).

System of Government: Unitary Parliamentary Constitutional Monarchy (the role of the King/Queen is only ceremonial and the King/Queen has no executive or legislative power). The Parliament has the legislative power and elects a Government led by a Prime Minister.

Leading Government Party: Social Democrats in coalition with the Green Party and supported by the Centre Party. Next election year 2022.

Currency: Swedish krona (SEK). Sweden has not adopted the Euro. Current exchange rate 1 SEK = 0,101 Euro, 1 SEK = 0,117 USD (2 November 2020).⁴

Gross Domestic Product (GDP): 5,119 billion SEK (2019). In USD: 541 billion USD (nominal, exchange rate average 2019), 569 billion USD (purchasing power adjusted).

GDP per capita: 488,872 SEK (2019). In USD: 51,687 USD (nominal, exchange rate average 2019), 55,069 USD (purchasing power adjusted).

Memberships in leading international organisations: United Nations, European Union, OECD, World Bank, International Monetary Fund, Bank for International Settlements.

General Facts on Swedish Military Defence

Military Expenditures⁵: 56.4 billion SEK (2019), 58.5 billion SEK (2020). The Budget for 2021 is 66.1 billion SEK. Transferred to USD 5.8 billion USD (2018), 6.2 billion USD (2019).

Share of GDP for Military expenditures: 1.2% (2020).

Share of Government Expenditures: 5% (2020).

Share of Total Taxes: 2.8% (2020).

Number of employees in The Military Defence⁶: 27,700 (approx. 2020). 6 100 officers, 3 200 non-commissioned officers, 5 900 regular soldiers, 12,500 civil employees. The Swedish Armed Forces with 24,100 employees being the main employer within the Swedish Defence. In addition there are around 12,000 part-time officers, non-commissioned officers and soldiers and during 2020 around 4,000 conscripts completed their military training.

Size of the Defence Organisation: Approx. 55,000 people incl. Home Guard and other reserves.

Number of employees Defence/Security Industry⁷: Approx. 30,000.

International Defence Cooperation: EU through The Lisbon Treaty, Partnership with NATO through Partnership for Peace, NORDEFCO (Nordic Countries), bilateral cooperation with Finland, unilateral declaration of solidarity with EU and Nordic countries.

The Aim and Purpose of a Special Issue on Sweden

Swedish Defense is unique in many respects with a country-specific profile in areas like security and defence policies, governance, defence industrial strategies and manpower solutions.

The aim and purpose of the Special Issue is to:

• describe and present the Swedish perspectives, cases and experiences to an international audience

• contribute with new findings based on theory and model approaches

• establish, widen and deepen Swedish contacts with researchers from the international community in the area of Defence Economics

Some of the articles thus describe the Swedish way of doing things and present the experiences from the rather unique choices that Sweden has made. These articles derive from applied research on the Swedish cases and can be seen as country-specific case studies. Other articles derive from regression analyses of Swedish and/or international data and could be of international interest theoretically and methodologically.

The defence economists of FOI have mainly established contacts with other researchers through international projects within EU research and innovation programmes and NATO Research and Technology Organization (RTO): in the latter case as a result of Sweden’s partnership with NATO. Publication in respected scientific journals is a way to widen the international contact area.

Sweden as a Country

Swedish Defence and its activities are, to a large extent, influenced economically, in attitudes and values by Swedish society. Thus, initially, a short description of Swedish society is presented.

Good Public Finances, High Taxes and the Social Contract

In international comparisons, Sweden has good public finances. Government Debt⁸ amounts only to 35.1 % of GDP (2019), much lower than the EU average of 79.3%. In a larger OECD context the relative position becomes even stronger.

The public finances showed a budget surplus of 0.5% of GDP in 2019 where the EU on average displayed a minor budget deficit, −0.8%.⁹ Compared to the OECD states, where, for example, the USA shows a deficit of 6.6% (2018) of GDP, the relative position of the Swedish public finances becomes even stronger.

As in most countries, the public finances have deteriorated in 2020 due to the Covid-19 pandemic. Preliminary figures indicate that Sweden has fared quite well in comparison with most other nations.

High taxes explain to a large extent the strength of the public finances. The tax-to-GDP-ratio is 44% (2019) where the OECD average is 34%.¹⁰ Sweden holds the world record of 52% total tax pressure for the year 1990.

The citizen’s trust in the political representatives, authorities and institutions doing its best to provide for the citizens is a distinguishing characteristic of the Scandinavian countries. The idea of ‘Folkhemmet’, roughly translated ‘The people’s home’, has played an important role in Sweden since the 1930’s in creating a Welfare State. The strong ‘Social Contract’ between citizens and their representatives have been described by academic researchers (Trägårdh 2011). The contract could be described as ‘work and pay your taxes and the society and its institutions will care for your education, health care and pension’.

Looking deeper into the Swedish public spending, compared to other countries, we can see that Sweden today spends relatively less on the night-watchman state (defence, police, legal system) and more on education, which is financed by taxes and not private fees, and especially social protection where transfers from the working population to the non-working population stands out as a major explanation.

Sweden ranks high in international comparisons on quality of life. In the Human Development Index, HDI, used by the United Nations¹¹ Sweden is ranked number 7 with Norway topping the table (2020).

Sweden has a high degree of Economic Equality. In international comparisons Sweden displays a comparatively equal income distribution. According to the Gini coefficient, used by OECD¹² to measure income inequality, Sweden is among the countries with the lowest income inequality. The income differences in the gender dimension are also, in international comparison, small but there are still differences. The difference amounts unadjusted for age, education, profession and sector to 9.8%. The difference decreases to 4.4% after adjustment (2020).¹³

Sweden also has the largest female labor force participation (proportion of women in work) in the EU and only Iceland has a higher rate in Europe. A trigger and explanation for that is an economic incentive caused by Sweden leaving a model in year 1971 where taxation was based on family income for a system based on individual taxation. Marginal taxes were very high then, up to 80%, which made it favourable to have two wage earners in a family instead of only one. This can be seen as an example of the power of economic incentives.

Present Political Situation – Cracks in the Swedish Political Stability

Politically Sweden has gone from a very stable situation where Social Democrats had almost own majority for decades to, in recent years, a reshaped political landscape with alliances over traditional political borders. Sweden’s Democrats reached the limit for Parliamentary representation (4%) in 2010 and have gained growing support since then with 18 % of the votes in the elections of 2018. Sweden’s Democrats have focused on immigration and in the challenges of integration have gained increased support. Sweden has had a high level of immigration. Around 32% of the Swedish population has an immigrant background defined as born abroad or with at least one parent born abroad. Integration into the society and the labour market has been difficult for many immigrants. According to the World Values Survey¹⁴ Swedes are the most secularised and individualistic people in the world. A large share of the immigrants comes from countries in the opposite corner of the, so called, World Value Map, exposing the challenge of integration.

Nature Resources, Industry and Business

Sweden is rich in nature resources. Metal, particularly iron ore, and the large forests have traditionally been the base for industrial development. It has been asserted that the iron ore mines could have played a role in Sweden staying out of World War II because of their importance for the German weapons industry. Sweden has many large industrial companies for a relatively small country. Some examples are Ericsson, Volvo, Saab, Asea (today part of ABB), AGA, IKEA and SCA. The companies have often originated from Swedish inventions or Swedish improvements on earlier inventions. One of the inventors was Alfred Nobel, the founder of the Nobel Prize.

The Swedish Economy relies largely on foreign trade. We are dependent on exports and imports. Our exports correspond to 44% of GDP (2020). Sweden has traditionally supported free trade initiatives. Our most important trading partners for export are Germany, Norway and the USA.

Swedish Defence

The Economy of Swedish Defence

One of the sacrifices made by Governments to improve the public finances, to the good state they are today (pre-Covid-19), have been the military expenditures. Between 1994 and 2013, military expenditures were more or less the same in nominal, inflation-unadjusted terms of about just over 40 billion SEK. The share of GDP for military expenditures fell from 2.3% to 1%.¹⁵ FOI started to focus on the tendency of underfinancing Swedish Defence in 2009 and wrote several reports on the subject.¹⁶ The studies contributed to making politicians aware of the situation and with the higher perceived threat level after Russia’s annexation of Crimea, Swedish politicians became more generous. The Budget for the Military Defence has since grown to 66 billion SEK (2021) and is planned to continue to grow. Many political parties argue for a GDP share of 2 % (which in current price levels would be approximately 100 billion SEK).

Sweden has a system to automatically adjust for defence-specific inflation. FOI has made several studies on this subject as well and has argued that the present system makes the tendencies of underfinancing the Military Defence even stronger. A thorough presentation, by Nordlund, of the system and its effects can be found in Defence&Peace Economics (‘Defence Specific Inflation – The Swedish Perspective’, Defence&Peace Economics, Vol.27, No. 2, April 2016, p.258–279).¹⁷ Another article on the subject is ‘Defence Economics and Defence Allocations: Between Considerations of Need and Cost’, by Nordlund and Wiklund published in Strategic Outlook 7, FOI-R–4456 – SE, Nordlund and Wiklund 2017.¹⁸ These studies have led to the Defence Commission and the Swedish Agency for Public Management in a study on behalf of the Government proposing that the system of compensation for defence-specific inflation should be reviewed.

When it comes to the composition of the Military Defence Budget, the share of the budget for equipment is high in international comparisons.

Swedish Military History – from Warriors to Peace Lovers

Before the twelfth century Sweden was not a country. The country was instead ruled on a regional or local basis by different rulers or chiefs. The Swedish Viking Age lasted from the 8th century to the 11th century. The fierce Vikings were very skilled and often brutal warriors. Swedish Vikings often crossed the Baltic Sea and explored todays Russia on the rivers, the Black Sea and made journeys all the way to Constantinople (todays Istanbul) and even as far as Baghdad. The state Sweden started to form during the early 12th century. During the 12th and 13th centuries there were power struggles and competition among the Nordic kingdoms. Denmark especially became Sweden’s archenemy. But in 1397 Sweden, Norway, and Denmark met in the Swedish town Kalmar and formed a union. The union lasted until 1523 when Sweden left the union after war with Denmark. The new Swedish King Gustav I rejected Catholicism and led Sweden into Protestant Reformation. You can sense the origin of Swedish equality already from the earlier stages of the building of the nation. Feudalism was less frequent in Sweden than in the rest of Europe. The peasants have to a larger extent been free farmers throughout most of Swedish history.

During the 17th century, Sweden emerged as a European great power. The Swedish Empire reached its height in 1658 when the Kingdom of Sweden consisted of Sweden, Finland, todays Estonia and Latvia, parts of Norway and some areas by the Baltic Sea in today’s Germany and Poland. The Baltic Sea was to a large extent turned into a Swedish inner sea. The control of the Baltic Sea and its ports led to huge incomes making Sweden a comparatively rich country in the 17^th century. The capital was Stockholm but the largest city was Riga (in today’s Latvia).

There were still wars with our old archenemy, Denmark but Russia evolved as the new archenemy during the 18th century and in wars with Russia the Baltic States and later even Finland were lost.

After 1814, and a Sweden-enforced union with Norway that lasted until 1905, Sweden has seen a long, more than 200 years long, period of peace. Sweden has stayed out of wars since then even through World War II when Norway and Denmark were occupied by Germany and Finland was at war with Russia. We have a long history of neutrality and non-alignment. The long period of peace made Swedes averse to war actions and the tolerance of loss of lives in war actions is low. Most of the international operations that Sweden has participated in have consequently been for peacekeeping and not peace enforcement.

Current Military Threats

The perceived threat from Russia is very influential regarding the size and capability of Swedish Defence and thus Swedish Military expenditures.

Accordingly, Sweden monitors political developments in Russia and particularly Russian defence policies and Russian military capability. FOI regularly performs studies of Russian Military Capability through the RUFS project. The latest Report from the project is ‘Russian Military Capability in a Ten-Year Perspective – 2019’, (ed. Westerlund and Oxenstierna2019).¹⁹ The project studies and analyzes the number of personnel in Russian Defence, quantity and capacity of Russian weapons and Russian Defence expenditures.

Defence Industry in Sweden and the Swedish Profile

Sweden has a large defence industry for a small country. The Defence/Security Industry employs about 28,000 employees. Parts of the industry produce solely military equipment and other parts of the industry produce dual-use equipment for both military and civil markets. The most important defence industries are Saab, BAE Hägglunds and BAE Bofors. Sweden is one of very few countries outside the military dominating countries that is represented in the SIPRI²⁰ list of the 100 largest defence industries where Saab normally is placed around the 30th place. Many of the countries in the list are presented in ‘The Economics of the Global Defence Industry’ (Hartley and Belin 2020). One of the articles deals with the Swedish defence industry and its choice of future strategies (Lundmark 2020).

Sweden has, as a traditionally neutral (until lately) and non-aligned country, to a large extent chosen to be self-sufficient in defence equipment with a great share of domestic development and production. Swedish profile has been a mantra that has been repeated through the years meaning that our Defence Equipment needed to be customized to specific Swedish conditions. This has often resulted in own research and development and Swedish production or Swedish modifications. The marine ships and submarines are adapted to the Baltic Sea with archipelagos, different salt layers and the fact that it is easy to lay mines in the Baltic Sea. This means that ships often are relatively small to be able to operate in the narrow archipelagos, made of non-magnetic composite materials because mines often are triggered by magnetism. The submarines have a low radar signature, are able to stay underwater for a long time and rather silent to be able to come close to enemy ships and avoid detection.

Fighter jets are also relatively small and made for multitasking (interceptor, attack and reconnaissance). They are also easy to service because they have traditionally been serviced by conscripts in the base units. They have short take-off and landing stretches to be able to operate from war time bases around Sweden.

Fighter jets and submarines have been declared as essential to Swedish security interests allowing Sweden to support the Swedish defence industry and protect it from competition from foreign defence industries. Sweden, though, still supports the idea of free trade even when it comes to defence equipment. We have more to gain from other countries opening-up their markets to Swedish defence equipment than we have to lose by opening-up the Swedish market to foreign competition.

Sweden has a rather small defence sector but it is capital-intensive compared to most other countries. A dilemma is that production runs are getting shorter meaning that economics of scale are hard to achieve. I used to say that Sweden either has a too small a defence sector for its defence industry or a too large defence industry for our its own defence’s needs. A dilemma is that production runs are getting shorter meaning that economics of scale are hard to achieve.

Our small home market has resulted in the paradox that peace-loving Sweden has a large export of defence equipment. According to SIPRI²¹ one of the largest in the world per capita though the volumes have been reduced recently.

Later in this volume Martin Lundmark presents an article titled ‘The Evolution towards the Partial Strategic Autonomy of Sweden´s Essential Security Interests’ (Lundmark 2021) that will deepen your understanding and knowledge of a small country with a substantial defence industry describing the current challenges and possible ways forward for the Swedish defence industry through the concept of partial strategic autonomy.

Studies primarily based on two Swedish cases of concept generation dealing cost escalation and its related affordability issues have been published earlier (Amann, Kihlander, and Magnusson, 2020). A sequel to this study focused on experiences from the earlier stages of the development of the Swedish fighter aircraft JAS 39 Gripen (Amann, 2021). The conclusion was that sharp restrictions on costs promoted a new mind set where affordable innovative solutions were prioritized during the process. Consequently, JAS 39 Gripen managed to curb cost escalation.

Personnel in Swedish Defence

Conscription was introduced in Sweden 1901. It was for more than a hundred years a pillar in the Swedish Military Defence. Practically every male individual had to undergo military education and training. A small proportion was spared, mainly because of health issues. The idea conscription rhymed very well with the idea of ‘Folkhemmet’ (The People’s Home) making defence a ‘People’s Defence’. Due to conscription Sweden could mobilize up to 800,000 people during the Cold War. From 1980 women could volunteer for conscription.

After the Cold War conscription became more selective and at the start of the 2000’s only around 25% of males were selected for military education and training that normally lasted for 11 months. The figure continued to fall and in 2009 this figure was around 15%. The reason was that the Swedish Defence had changed focus from national defence to international operations. Conscripts were due to the laws a resource only for national defence and only a recruitment base for contracting soldiers on a voluntarily basis for international operations. In 2010 applied conscription during peace time was abandoned for an all-voluntary force. The new defence organization consisted after this of 50,000 people incl. Home Guard and part-time forces for national protection.

FOI warned that the assumptions that the decision to abandon conscription was based on could prove to be too optimistic in terms of possibilities to recruit, attrition rates and costs (Jonsson and Nordlund 2010; Nordlund and Jonsson 2011). FOI was soon proven right. It was difficult to recruit, especially to some categories, attrition rates were higher than assumed and costs higher. Simultaneously, the perceived national threat became worse especially after Russia’s military intervention in Ukraine. In 2018 conscription was reintroduced. This time the conscription is gender neutral, in line with Swedish gender equality values, but conscription will be very selective and only a small proportion (4–8 %) will undergo military training and education. The Armed Forces argue for that figure to be higher, about 10–12%. With conscription reintroduced the number of the total Defence Organization can be larger.

Sweden now has a mixed system based on both conscription and employment of voluntarily and continuously serving soldiers. The problems with recruitment of suitable, voluntary soldiers for employment are, therefore, still of interest to look into. In Peter Bäckström’s article ‘Self-Selection and Recruit Quality in Sweden’s All Volunteer Force: Do Civilian Opportunities Matter?’ (Bäckström 2021), later in this volume, results from the Swedish labor market are presented. The article is a continuation of work that has been presented earlier in Defence & Peace Economics (Bäckström2019) where the effects of unemployment on recruitment were studied.

The Government System for Management and Control of the Agencies

The management tradition concerning governance of the government agencies has since long time back been built on a comparatively high degree of decentralisation. The ministries are led by a minister but the agencies are independent. The agencies work according to laws and rules decided by Parliament, but are independent in applying the regulations. The agencies are formally associated with a ministry but the minister cannot interfere on individual matters or daily operations. Direct Ministerial rule is prohibited in Sweden.

The Government Sector consists of more than 300 agencies employing around 260,000 people. The largest agency is the Police Authority followed by the Armed Forces.

This tradition of decentralisation has meant that ministries are small and the agencies are rather big. The Government Offices employ in total around 4,700 people. The decentralised government model has historically served Sweden well allowing expertise to influence political decisions.

The Swedish governance model got a lot of attention during the Covid-19 pandemic based on the vast influence. The Public Health Agency of Sweden had on the Swedish strategy to cope with the pandemic. It has been debated in Sweden as well as internationally whether this was wise or not.

Management in the Public Sector of Sweden has, the last five decades, often been inspired by Management principles from the Anglo-Saxon countries. Since the 1990s by the ideas that has been labelled under the collective term New Public Management (NPM). Sweden is one of the countries in the world that has implemented NPM in the Public Sector the most.

The Public Sector in Sweden consists of the Government Sector, the Regional Sector and the Municipality Sector each of which has the right to collect taxes from the corresponding geographic areas (i.e. nationally, regionally or locally). The Municipality Sector is the largest of the Public Sectors when it comes to employment (about 900,000). The Municipalities are responsible for most of the welfare services (i.e. local schools, nursery schools, local health care, geriatric care and other social services). The Regions are responsible for regional health care, such as larger regional hospitals, and public transport services. Implementation of NPM has led to private contractors participating in producing different, wholly or partly publicly financed, social services.

Some of the elements in NPM fitted the decentralised Swedish government model very well. So in a strive to further raise customer focus, efficiency and cut costs Sweden started to implement NPM in the 1990’s.

A concept initially called Management by Objectives and Results was introduced. The concept was based on politicians defining the objectives and the expected results (the What?-question) for the different agencies. It was then up to the agencies to independently, within the legislation, decide on the way the objectives and results should be achieved (the How?-question). The model was later renamed and shortened to Management by Results.

The Sweden Defence Sector was already in the 1970’s inspired by the ideas of Program Planning and Program Budgeting that mainly came from USA. The Swedish FPE-system (System for Planning, Finance and Economic Management) that was introduced was largely influenced by Secretary of Defense McNamara and his administration and research from the RAND Corporation. The FPE-system made budgeting and planning more ambitious and were mainly conducted by the Swedish Armed Forces and directed by the Ministry of Defence. Parliament felt that they were not involved in the planning and wanted to have more transparency. In order to give Parliament the desired involvement and transparency the Government in 1995 decided that the Defence Commission should have a regular involvement in the planning of Defence. The Defence Commission is formally a Government forum for consultation between the Government and representatives of the political parties in the Parliament. The objective is to achieve the broadest possible unity with respect to how Sweden’s defence and security policy is to be designed. Apart from representatives from the Government and the political parties the Commission also can draw on experts, mainly from different defence agencies.

The Defence Sector is also one of the sectors that has gone farthest in adapting NPM. Several reforms with inspiration from NPM have been implemented since the early 1990s. One of the most prominent reforms was a client/contractor model. It meant that most of the appropriations for Military Defence are given to the Swedish Armed Forces that uses the appropriations in their own business but also purchases services from other Government agencies. The Swedish Defence Materiel Administration (FMV) buys defence equipment on behalf of the Swedish Armed Forces. Research and studies are purchased from the Swedish Defence Research Agency (FOI), education of officers from the Swedish Defence College (FHS), testing, selection and recruitment of soldiers from the Recruitment Agency and premises are rented from the Fortifications Agency. In the article “Management reforms in the Defence Sector“, (Lundberg and Rova 2021) later in this volume, Lundberg and Rova present the reforms in the defence sector, their connection to NPM and the possible implications for the management of the challenges of today.

Measuring and Comparing Capability

Measuring military capability is generally of interest for Sweden and FOI. The studies of Russian military capability are already mentioned. We also try to estimate our own absolute and relative capability with different methods.

A common way of estimating military capability is to compare military expenditures for different countries. The underlying assumption of doing this is that money builds capability. Capability does not equal military expenditures but there is probably a rather strong correlation. FOI does for this reason regularly monitor military expenditures with a wide international approach. The latest report is ‘Defence Economic Outlook 2018’ (Olsson, Alozious and Ädel 2018).²² The data are primarily from SIPRI and its database on Military Expenditures.²³ A special issue of Defence and Peace Economics on SIPRI’s new data-set has been published (Defence and Peace Economics, Vol.28 – Issue4, Defence and Peace Economics 2017). FOI also conducts deeper studies by comparing Swedish Military Expenditures with selected countries of interest. In these studies, we try to standardize and adjust data to achieve a higher degree of comparability; and FOI are planning to do some work on Defence Specific Purchasing Power Parities.

Another way of measuring and comparing is to study the quality, performance and capability of military equipment. Later in this volume Per Olsson presents methods to measure capability for equipment in the article “Measuring Quality of Military Equipment“ (Olsson 2020) with tanks as an illustrative example.

Neutrality/Non-Alignment and International Defence Cooperation

Sweden has a long tradition of neutrality and non-alignment and has stayed out of military alliances. The tradition has served Sweden well. Neutrality is nowadays left out of the political rhetoric but Sweden still points out that it is non-aligned.

After the World War II there was a debate where influential debaters argued for NATO membership. Today we are in a grey zone with close cooperation but not formal membership. We have signed the Lisbon Treaty that outlines defence cooperation within the EU. There is increased cooperation with NATO and we are partners with NATO through Partnership for Peace and Sweden and NATO bilaterally take part in military exercises. There is a cooperation forum among Nordic countries (NORDEFCO) and a deepened bilateral cooperation with Finland which like Sweden has not joined NATO.

The NATO debate has woken up and many of the parties in Parliament advocate NATO membership: The Moderates (conservative), The Liberals, The Centre Party, the Christian Democrats with a support from approx. 35–40 % are all for membership. The Social Democrats, The Left Party, The Green Party and The Sweden Democrats (conservative, national) have until recently rejected the idea of membership. Sweden’s Democrats have now shifted position and opened up for readiness to join NATO as a possible security policy option. Consequently, there is parliamentary majority in favour of a ‘NATO option’ meaning that membership could be considered in the future dependent on the security situation. In the article ‘NATO’s 2 Percent Guideline: A Demand for Military Expenditure Perspective’ (Alozious 2021), Juuko Alozious presents a study of the compatibility of economic requirements or recommendations of NATO and EU. The approach is a dynamic model that can explain development in military expenditure among NATO allies that also belong to the EU, using public debt as a proxy for economic variables. The estimations performed suggest that public debt could have acted as a constraint in the development of military expenditure of NATO allies that also belong to the EU, during the period 2014–2019.

Burden sharing aspects within EU from the perspective of a potential European Defence Union have been studied (Kollias 2008). The results indicate that some members are likely to under-contribute while others are likely to over-contribute compared with the benefits they would get from a defence union.

Sweden is not a member of NATO but a member of the EU. Sweden has good public finances and lives up to EU’s fiscal regulations but its defence expenditures are much lower than 2% of GDP. In 2020, the share of GDP was 1.2% but according to the Defence Agreement in December 2020 the Defence Budget will gradually be increased by about SEK 5 billion per year from 2020 to 2025 in real terms. This will result in a share of GDP of approx. 1.6–1.7% of GDP in 2025.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1. Swedish Defence Research Agency, website: www.foi.se

2. As presented by Anders Strömgren, Head of the Defence Economists.

3. Statistics Sweden, www.scb.se

4. Swedish Central Bank, riksbank.se .

5. Swedish Government, regeringen.se .

6. Swedish Armed Forces, forsvarsmakten.se .

7. Swedish Security & Defence Industry Association, soff.se .

8. Defined according to the Maastricht Treaty as used by OECD, data.oecd.org.

9. Eurostat, https://ec.europa.eu/eurostat/home .

10. Organisation for Economic Co-operation and Development, OECD, data.oecd.org .

11. United Nations Development Programme, hdr.undp.org .

12. Organisation for Economic Co-operation and Development, OECD, data.oecd.org/inequality/income-inequality.htm .

13. Swedish National Mediation Office, mi.se .

14. A global network of social scientists studying changing values and their impact on social and political life, .www.worldvaluessurvey.org . Results are presented in the World’s Value Map.

15. Stockholm International Peace Research Institute, SIPRI, sipri.org .

16. The documentation is in Swedish apart from very short summaries in English. For downloads go to http://www.foi.se and search under Reports.

17. Also published in Defence Inflation – Perspectives and Prospects, Edit. Hartley, K. and Solomon, B, Routledge, Nordlund 2016.

18. Free download at http://www.foi.se search under Reports for ‘Strategic Outlook 7’.

19. Free download at http://www.foi.se search under Reports.

20. https://www.sipri.org/databases/armsindustry .

21. https://www.sipri.org/databases/armstransfers .

22. Free download at www.foi.se, search under Reports.

23. https://www.sipri.org/databases/milex .