Sweden (09/03)

For the most current version of this Note, see Background Notes A-Z.


Kingdom of Sweden

Area: 449,964 sq. km. (173,731 sq. mi.)--about the size of California.
Cities: Capital--Stockholm (city population: 743,000; metropolitan population 1.8 million). Other cities--G�teborg (city population: 467,000; metropolitan population: 766,000), Malm� (city population: 257,000; metropolitan population: 550,000).
Terrain: Generally flat or rolling.
Climate: Temperate in south with cold, cloudy winters and cool, partly cloudy summers; subarctic in north.

Nationality: Noun--Swedes; adjective--Swedish.
Population (2003): 8.9 million.
Annual growth rate: 0.3%.
Ethnic groups: Indigenous Swedes, ethnic Finns, ethnic Lapps.
Immigrants: Finns, Bosnians, Iranians, Norwegians, Danes and Turks.
Religions: Lutheran (87%), Catholic, Orthodox, Baptist, Jewish, Buddhist, Muslim.
Education: Years compulsory--9. Literacy: 100%.
Health (2001): Infant mortality rate--3.47/1,000. Life expectancy--men 77 years, women 82 years.
Work force (4.1 million, 2002): Services--74%; industry--24%; agriculture--2%. Unemployment (2002): 3.8%.

Type: Constitutional monarchy.
Constitution: A new constitution was adopted in 1975, replacing the Acts of 1809, 1866, and 1949. Branches: Executive--Cabinet, responsible to parliament. Legislative--unicameral Parliament (Riksdag). Judicial--Supreme Court (6 superior courts; 108 lower courts).
Subdivisions: 21 counties, 289 municipalities (townships).
Political parties represented in Parliament: Moderate, Liberal, Center, Christian Democratic, Social Democratic, Left, and Green.
Suffrage: Universal over 18. After 3 years of legal residence, immigrants may vote in county and municipal elections, (but not in national elections).

Flag: flag of sweden

GDP (2002): $227.4 billion.
Annual growth rate (2002 expectation): 1.4%.
Per capita income (2002): $26,495.
Inflation rate (2002): 2.1%.
Natural resources: Forests, iron ore, hydroelectric power. Arable land: 6 million acres.
Agriculture (2.0% of GDP): Products--dairy products, grains, sugarbeets, potatoes, wood.
Industry (29% of GDP): Types--machinery/metal products, motor vehicles, electrical equipment, aircraft, paper products.
Services (69.9% of GDP): Types--telecommunications, computer equipment, biotech.
Trade: Exports ($79.5 billion, 2002)—machinery transport equipment, wood products, paper, pulp, chemicals, and manufactured goods. Imports (2002)--$63.3 billion. Major trading partners--U.S., EU, Norway.

Sweden has one of the world's highest life expectancies and one of the lowest birth rates. The country counts at least 17,000 Sami among its population. About one fifth of Sweden's population are immigrants or have at least one foreign-born parent. The largest immigrant groups are from Finland, the Federal Republic of Yugoslavia, Bosnia-Herzegovina, Iran, Norway, Denmark, and Poland. This reflects the Nordic immigration, earlier periods of labor immigration, and later decades of refugee and family immigration. The proportion of European immigrants has risen, the main reason being the conflicts in former Yugoslavia.

Swedish is a Germanic language related to Danish and Norwegian but different in pronunciation and orthography. English is by far the leading foreign language, particularly among students and those under age 50.

Sweden has an extensive child-care system that guarantees a place for all young children from 2-6 years old in a public day-care facility. From ages 7-16, children attend compulsory comprehensive school. After completing the ninth grade, 90% attend upper secondary school for either academic or technical education.

Swedes benefit from an extensive social welfare system, which provides for childcare and maternity and paternity leave, a ceiling on health care costs, old-age pensions, and sick leave among other benefits. Parents are entitled to a total of 12 months' paid leave between birth and the child's eighth birthday, with one of those months reserved specifically for the father. A ceiling on health care costs makes it easier for Swedish workers to take time off for medical reasons.

During the seventh and eighth centuries, the Swedes were merchant seamen well known for their far-reaching trade. In the ninth century, Nordic Vikings raided and ravaged the European Continent as far as the Black and Caspian Seas. During the 11th and 12th centuries, Sweden gradually became a unified Christian kingdom that later included Finland. Queen Margaret of Denmark united all the Nordic lands in the "Kalmar Union" in 1397. Continual tension within the countries and within the union gradually led to open conflict between the Swedes and the Danes in the 15th century. The union's final disintegration in the early 16th century brought on a long-lived rivalry between Norway and Denmark on one side and Sweden and Finland on the other

In the 16th century, Gustav Vasa fought for an independent Sweden crushing an attempt to restore the Kalmar Union and laying the foundation for modern Sweden. At the same time, he broke with the Catholic Church and established the Reformation. During the 17th century, after winning wars against Denmark, Russia, and Poland, Sweden-Finland (with scarcely more than 1 million inhabitants) emerged as a great power. Its contributions during the Thirty Years War under Gustav II Adolf (Gustavus Adolphus) determined the political as well as the religious balance of power in Europe. By 1658, Sweden ruled several provinces of Denmark as well as what is now Finland, Ingermanland (in which St. Petersburg is located), Estonia, Latvia, and important coastal towns and other areas of northern Germany.

Russia, Saxony-Poland, and Denmark-Norway pooled their power in 1700 and attacked the Swedish-Finnish empire. Although the young Swedish King Karl XII (also known as Charles XII) won spectacular victories in the early years of the Great Northern War, his plan to attack Moscow and force Russia into peace proved too ambitious; he fell in battle in 1718. In the subsequent peace treaties, the allied powers, joined by Prussia and England-Hanover, ended Sweden's reign as a great power.

Sweden suffered further territorial losses during the Napoleonic wars and was forced to cede Finland to Russia in 1809. The following year, the Swedish King's adopted heir, French Marshal Bernadotte, was elected Crown Prince as Karl Johan by the Riksdag. In 1813, his forces joined the allies against Napoleon. The Congress of Vienna compensated Sweden for its lost German territory through a merger of the Swedish and Norwegian crowns in a dual monarchy, which lasted until 1905, when it was peacefully dissolved at Norway's request.

Sweden's predominantly agricultural economy shifted gradually from village to private farm-based agriculture during the Industrial Revolution, but this change failed to bring economic and social improvements commensurate with the rate of population growth. About 1 million Swedes immigrated to the United States between 1850 and 1890.

The 19th century was marked by the emergence of a liberal opposition press, the abolition of guild monopolies in trade and manufacturing in favor of free enterprise, the introduction of taxation and voting reforms, the installation of a national military service, and the rise in the electorate of three major party groups--Social Democratic, Liberal, and Conservative.

During and after World War I, in which Sweden remained neutral, the country benefited from the worldwide demand for Swedish steel, ball bearings, wood pulp, and matches. Postwar prosperity provided the foundations for the social welfare policies characteristic of modern Sweden. Foreign policy concerns in the 1930s centered on Soviet and German expansionism, which stimulated abortive efforts at Nordic defense cooperation. Sweden followed a policy of armed neutrality during World War II and currently remains nonaligned. Sweden became a member of the European Union in 1995.

Popular government in Sweden rests upon ancient tradition. The Swedish parliament (Riksdag) stems from tribal courts (Ting) and the election of kings in the Viking age. It became a permanent institution in the 15th century. Sweden's government is a limited constitutional monarchy with a parliamentary system. Executive authority is vested in the cabinet, which consists of a prime minister and 20 ministers who run the government departments. The present Social Democratic government, led by Prime Minister G�ran Persson, came to power in 1994 after losing power briefly in 1991. King Carl XVI Gustaf (Bernadotte) ascended to the throne on September 15, 1973. His authority is formal, symbolic, and representational.

The unicameral Riksdag has 349 members, popularly elected every 4 years and is in session generally from September through mid-June.

Sweden is divided into 21 counties and 289 municipalities. Each county (l�n) is headed by a governor, who is appointed by the central government. Each county has a popularly elected council with the power of taxation, and each council has particular responsibility for education, public transportation, health, and medical care. Elected municipal councils are headed by executive committees roughly analogous to the boards of commissioners found in some U.S. cities.

Swedish law, drawing on Germanic, Roman, and Anglo-American law, is neither as codified as in France and other countries influenced by the Napoleonic Code, nor as dependent on judicial practice and precedents as in the United States. Legislative and judicial institutions include, in addition to the Riksdag, the Supreme Court, the Supreme Administrative Court, the Labor Court, Commissions of Inquiry, the Law Council, District Courts and Courts of Appeal, the Chief Public Prosecutor, the Bar Association, and ombudsmen who oversee the application of laws with particular attention to abuses of authority.

Principal Government Officials
Head of State--King Carl XVI Gustaf
Head of Government--Prime Minister G�ran Persson
Minister of Foreign Affairs--Laila Freivalds
Minister of Defense--Leni Bjorklund
Minister of Finance--Bosse Ringholm
Ambassador to the United States--Jan Eliasson
Ambassador to the United Nations--Pierre Schori

Sweden maintains an embassy in the United States at 1501 M St., NW Washington, DC 20005 Telephone: 202-467-2600, Internet: http://www.swedish-embassy.org/

Consulates General are in New York, Chicago, and Los Angeles. There also are consulates in 31 other U.S. cities. Contact the embassy for locations and telephone numbers.

Ordinary general elections to the Swedish Parliament are held every fourth year on the third Sunday in September. County council and municipal council elections take place at the same time. The next elections will be held in September 2006. There is a barrier rule intended to prevent very small parties from gaining representation in the Parliament. A party must thus receive at least 4% of the votes in the entire country or 12% in a single electoral district to qualify for any seats.

In the 2002 election, the Social Democrats received 39.8% of the vote, up from 36.47% in 1998. The Social Democrats cooperate informally with the Left Party and the Greens, relying on them for a parliamentary majority and cooperating on social and budgetary issues. Based on the 2002 election results, seven parties are currently represented in the Parliament: the Social Democratic Party (39.8%; 144 seats), the Moderate party (15.2%; 55 seats), the Liberal party (13.3%; 48 seats), the Christian Democratic Party (9.1%; 33 seats), the Left Party (8.3%; 30 seats), the Center Party (6.1%; 22 seats), and the Green Party (4.6%; 17 seats).

The Social Democratic Party has a base of blue-collar workers, intellectuals, and public sector employees. It derives much of its power from strong links with the National Swedish Confederation of Trade Unions (LO), which represents around 90% of Sweden's blue-collar workers. The party program combines a commitment to social welfare programs and government direction of the economy.

The Moderate Party emphasizes personal freedom, free enterprise, and reduction of the public-sector growth rate, while still supporting most of the social benefits introduced since the 1930s. The party also supports a strong defense and Sweden's membership in the European Union (EU). Its voter base is urban business people and professionals, but the party also attracts young voters, main-street shop owners, and, to a modest extent, blue-collar workers.

The Left Party, formerly the Communist Party, is today a party which expresses some of the traditional values of the social democrats but which also is focused on the environment and opposes Swedish membership in the EU. Their voter base consists mainly of public sector employees, journalists, and former social democrats.

The Christian Democrats have their voter base among those who belong to free churches--Methodists, Baptists, etc. They seek better ethical practices in government and the teaching of traditional values in the schools. They also want to improve care for the elderly and have an extensive family policy program. They strongly support Swedish membership in the EU and the EMU.

The Center Party maintains close ties to rural Sweden. The main concerns of the Center Party are the elimination of nuclear power and increased centralization of governmental authority.

The Liberal Party's platform is "social responsibility without socialism," which includes a commitment to a free-market economy combined with comprehensive Swedish social welfare programs. Foreign aid and women's equality also are popular issues. The Liberal Party base is mainly centered in educated middle-class voters.

The Green Party is an environmentalist party that attracts young people. The party takes a strong stand against EU membership and wants a new referendum on the issue. The Greens support a phasing-out of nuclear energy in Sweden and hope to replace it with alternative, environmentally friendly energy sources.

On January 1, l995, Sweden became a member of the EU. While some argued that it went against Sweden's historic policy of neutrality (Sweden had not joined the EU during the Cold War because it was incompatible with neutrality), others viewed the move as a natural extension of the economic cooperation that had been going on since 1972 with the EU. Sweden addressed this controversy by reserving the right not to participate in any future EU defense alliance. In membership negotiations in 1993-94, Sweden also had reserved the right to make the final decision on whether to join the third stage of the EMU (a common currency and central bank) "in light of continued developments." In a nationwide referendum in November 1994, 52.3% of participants voted for EU membership. Voter turnout was high--83.3% of eligible voters voted.

Main Swedish concerns included winning popular support for EU cooperation, EU enlargement, and strengthening the EU in areas such as economic growth, job promotion, and environmental issues.

In polls taken a few years after the referendum, many Swedes indicated that they were unhappy with Sweden's membership in the EU. However, after Sweden successfully hosted its first presidency of the EU in the first half of 2001, most Swedes today have a more positive attitude toward the EU. The government, with the support of the Center Party, decided in spring 1997 to remain outside of the EMU, at least until 2002. In late 2002, Prime Minister G�ran Persson has announced that there would be a referendum on EMU membership on September 14, 2003. In the six months prior to the EMU referendum, the "no" side held a steady lead, ultimately winning the referendum 55.9% to 42%. Reasons for the EMU defeat include voter resistance to changes in a strong domestic economic climate, a long tradition of Swedish independence (notwithstanding EU membership), and the government's inability to assure voters that EMU would not endanger the benefits of Sweden's generous welfare state. The attack on and assassination of Swedish Foreign Minister Anna Lindh - a rising star in the ruling Social Democratic party and the government's highest-profile campaigner for EMU - on September 10-11, only days before the referendum, may also have reinforced the voters' desire to maintain the status quo in the face of uncertain political developments. As of September 30, 2003, a permanent new foreign minister has not yet been named.

Sweden is a member of the UN and some of its specialized and related agencies including the World Bank, GATT, Food and Agriculture Organization (FAO), the International Labor Organization (ILO), International Atomic Energy Agency (IAEA), United Nations Educational, Scientific, and Cultural Organization (USESCO), World Health Organization (WHO) and others; EU, European Free Trade Association (EFTA), Council of Europe, and others. Sweden also is a member of NATO's Partnership for Peace and participates in numerous international peacekeeping operations.

Sweden is an industrial country. Agriculture, once accounting for nearly all of Sweden's economy, now employs less than 3% of the labor force. Extensive forests, rich iron ore deposits, and hydroelectric power are the natural resources which, through the application of technology and efficient organization, have enabled Sweden to become a leading producing and exporting nation.

The Swedish economic picture has brightened significantly since the severe recession in the early 1990s. Growth has been strong in recent years, and even though the economy slackened during the first half of 2001, the long-run prospects for growth remain favorable. The inflation rate is low and stable, with projections for continued low levels over the next 2-3 years. Since the mid-1990s the export sector has been booming, acting as the main engine for economic growth. Swedish exports also have proven to be surprisingly robust. A marked shift in the structure of the exports, where services, the IT industry, and telecommunications have taken over from traditional industries such as steel, paper, and pulp, has made the Swedish export sector less vulnerable to international fluctuations.

The government budget has improved dramatically--from a record deficit of more than 12% of GDP in 1993 to an expected surplus of .2% of GDP in 2003. The government's goal is to have a 2% surplus on average over a business cycle. The new, strict budget process with spending ceilings set by parliament, and a constitutional change to an independent Central Bank, have greatly improved policy credibility. This can be seen in the long-term interest rate margin versus the Euro, which is negligible. From the perspective of longer term fiscal sustainability, the long-awaited reform of old-age pensions entered into force in 1999. This entails a far more robust system vis-�-vis adverse demographic and economic trends, which should keep the ratio of total pension disbursements to the aggregate wage bill close to 20% in the decades ahead. Taken together, both fiscal consolidation and pension reform have brought public finances back on a sustainable footing. Gross public debt, which jumped from 43%t of GDP in 1990 to 78% in 1994, stabilized around the middle of the 1990s and started to come down again more significantly beginning in 1999. It is expected to be 51.7% by the end of 2003.

These figures show a quite remarkable improvement of the Swedish economy since the crisis in 1991-93, so that Sweden could easily qualify for membership in the third phase of the European Monetary Union. The government, however, decided for largely domestic political reasons that Sweden would not enter into the EMU from its start on January 1, 1999, but would keep its options open for entry at a later date. In its recent referendum on September 15th, Sweden decided against entry at this time.

In contrast with most other European countries, Sweden maintained an unemployment rate around 2% or 3% of the work force throughout the 1980s. However with high and accelerating inflation at this time, it became evident that such low rates were not sustainable, and in the severe crisis in the early 1990s the unemployment rate increased to more than 8%. In 1996 the government set out a goal of reducing unemployment to 4% in 2000. During 2000 employment rose by 90,000 persons, the greatest increase in 40 years, and the goal was reached in the autumn of 2000. The same autumn the government set out its new target--that 80% of the working age population will have a regular job by 2004. (The present employment ratio is 77.7%.) Achieving the employment target by 2004, however, will be difficult owing to a high proportion of disability pensioners, persons listed as chronically ill, and students. If the employment target is to be met, unemployment must decrease more substantially without stepping up the rate of wage increases.

Eighty percent of the Swedish labor force is unionized. For most unions there is a counterpart employer's organization for businesses. The unions and employer organizations are independent of both the government and political parties, although the largest federation of unions, the National Swedish Confederation of Trade Unions (LO), always has been linked to the largest political party, the Social Democrats.

There is no fixed minimum wage by legislation. Instead, wages are set by collective bargaining. Current labor contracts generally run through the year 2003, and call for wage increases of about three percent annually.

The traditionally low-wage differential has increased in recent years as a result of increased flexibility as the role of wage setting at the company level has strengthened somewhat. Still, Swedish unskilled employees are relatively well-paid while well-educated Swedish employees are low-paid compared to those in competitor countries. The average increases in real wages in recent years have been high by historical standards, in large part due to unforeseen price stability. Even so, nominal wages in recent years have been slightly above those in competitor countries. Annual wage increases have been roughly on European levels.

Swedish foreign policy is based on the premise that national security is best served by staying free of alliances in peacetime in order to remain neutral in the event of war. In 2002, Sweden revised its security doctrine. The security doctrine still states that "Sweden pursues a policy of non-participation in military alliances," but permits cooperation in response to threats against peace and security. The government also seeks to maintain Sweden's high standard of living. These two objectives require heavy expenditures for social welfare, defense spending at rates considered high by west European standards (currently around 2.2% of GNP), and close attention to foreign trade opportunities and world economic cooperation. Priorities in Swedish foreign policy include human rights, conflict management/resolution, nonproliferation, the environment, and building an influential role for Sweden within the European Union while maintaining a strong transatlantic link. Sweden places great importance on international law and multilateralism.

Sweden participates actively in the United Nations and other multilateral organizations. The strong interest of the Swedish Government and people in international cooperation and peacemaking has been supplemented in the early 1980s by renewed attention to Nordic and European security questions. In January 1995, Sweden became a full member of the European Union after a referendum in late 1994 indicated that 52.3% of participants wanted to join. Sweden became a member, in part due to its increasing isolation outside the economic framework of the Maastricht Treaty. It is an active member of NATO's Partnership for Peace and the Euro-Atlantic Partnership Council. As of September 2003, Sweden had about 1,000 troops deployed in peacekeeping operations overseas, including the Balkans, Congo and Afghanistan.

Swedish foreign policy has been the result of a wide consensus. Sweden cooperates closely with its Nordic neighbors, formally in economic and social matters through the Nordic Council of Ministers and informally in political matters through direct consultation.

Friendship and cooperation between the United States and Sweden is strong and close. The United States welcomes Sweden's continued independence, secured through self-reliance or in cooperation with other democracies. Swedish-American friendship is buttressed by the presence of nearly 14 million Americans of Swedish heritage. Both countries in 1988 celebrated the 350th anniversary of the first Swedish settlement in the United States.

U.S. direct investment in Sweden in 2000 totaled $2.6 billion. There were major investments in computer software and hardware, IT/telecommunications, industrial goods, and healthcare.

Principal U.S. Officials
Ambassador--Charles A. Heimbold, Jr.
Deputy Chief of Mission--Betsy L. Anderson
Political Counselor--Yvette Wong
Economic Counselor--Ingrid Kollist
Public Affairs Counselor--Gregory B. Elftmann
Management Counselor--Sandra R. Smith
Commercial Counselor--Keith Curtis
Defense Attach�--Col. David Anderson
Consul--Debra Towry

The U.S. Embassy in Stockholm is at Dag Hammarskj�lds V�g 31, S-115 89 Stockholm, Sweden, telephone: 46-8-783-5300, Fax: 46-8-661-1964, Internet: http://www.usemb.se/

For the most current version of this Note, see Background Notes A-Z.