Monthly Policy Review

A Mundus International report

October 2014

The October issue, 2014 Monthly Policy Review

The Monthly Policy Review offers analysis on current policy issues - such as national politics; economic, security- and environmental issues, social developments and geo-political issues affecting Sweden. The Monthly Policy Review has been specifically developed as a tool for political reporting of foreign missions and contains exclusive research and analyses.

In the October issue

The Mundus International Calendar ...... 2

Greens set to shake up Swedish energy policy ...... 3 Green Policies ...... 3 A heavy impact on Swedish industry? ...... 4 EU ramifications? ...... 4 Comment ...... 5 The influential shadow ...... 5 Research project finds a group of well-educated and inspired individuals ...... 5 The revolving door ...... 6 Löfven’s shadows ...... 7 Comment ...... 8 The Bildt legacy ...... 8

Budgetary Blues ...... 10 Passing the Budget Bill ...... 11 The budget procedure ...... 12 Comment ...... 12 Everybody’s talking about…the future of the Alliance ...... 13

“Whether or not our world has become a better one during these years is unfortunately another matter. But we at least did what we could.“

Carl Bildt

1 The October issue, 2014

The Mundus International Calendar

October

29th Sep - 7th Oct Hearings of commissioner nominees, Brussels 1st Oct Jens Stoltenberg assumes his functions as NATO Secretary General 10th - 12th 2014 Annual meetings of the IMF and the World Bank Group, Washington D.C. 16th - 17th EU - ASEM summit, Milan 20th Foreign Affairs Council (FAC), Luxembourg 21st General Affairs Council (GAC), Luxembourg 27th - 30th Nordic Council session, Stockholm 23rd - 24th European Council, Brussels 28th The Riksbank publishes its October Monetary Policy Report November

1st (TBC) New college of commissioners takes office, Brussels 4th Congressional Elections, United States of America 9th - 11th World Economic Forum: Summit on the Global Agenda, Dubai 17th Last day to submit budget bill to the Riksdag 15th - 16th G20 meeting, Brisbane 17th - 18th Foreign Affairs Council (FAC), Brussels 21st - 24th NATO Parliamentary Assembly annual session, The Hague 24th - 27th World Islamic Economic Forum, Dubai 29th - 30th Green Party conference, Karlstad December

1st - 12th Dec COP 20, Lima 3rd - 5th Global Conference on Agriculture, Food Security, and Climate Change, Johannesburg 4th The Riksbank publishes The Financial Stability Report 2014:2 10th Nobel Peace Prize to be awarded, Oslo 18th Dec European Council, Brussels 18th NIER publishes its report on the Swedish economy

Further ahead

1st Jan 2015 Latvia takes over presidency of the Council of the EU 21st - 24th Jan World Economic Forum, Davos 7th Mar The Moderate Party to elect new party leader • Text in blue is an international event

2 The October issue, 2014

Greens set to shake up Swedish energy policy Today the Green Party, once described by the Economist as ‘nutty but well meaning’, forms a coalition government with the Social Democrats. After its successful EU election in May, the party is set to influence energy policies and both national- and EU levels.

By global standards Sweden has long been seen as a leader in climate-friendly growth, and governments of both persuasions have pursued pro-climate policies. Indeed, in his farewell speech Carl Bildt celebrated Sweden’s achievements in low-carbon growth, citing that GDP has risen by 60 per cent since 1990 while greenhouse gas emissions have fallen by 25 per cent, a period of time that spanned both Social Democrat and Alliance governments. But the introduction of the Green Party to Swedish government looks set to turn Swedish energy policy a much deeper shade of green.

Sweden has been able to achieve this growth by utilising its plentiful renewables resources. Currently half of Sweden’s electricity production comes from hydro-power. Sweden’s forests have an abundance of biomass that can also be used for electricity and heating, and there are many good locations for wind-energy too. However, the country has also placed a heavy reliance on nuclear energy. About 40 per cent of Swedish electricity generation is made by 10 nuclear reactors that were built in the 1970s and 1980s. The oldest reactors are scheduled to be closed down in the 2020s, and despite a 1980 referendum which voted to phase out nuclear, the policy of the outgoing Alliance government was to allow Vattenfall, a state-owner utility to build new reactors to replace the ones being retired.

Green Policies The emergence of the Swedish Green party , founded in 1981, was sparked by the anti-nuclear power movement following the 1980 nuclear power referendum. The Greens’ party platform describe their ideology as being based on "a solidarity that can be expressed in three ways: solidarity with animals, nature, and the ecological system", "solidarity with coming generations", and "solidarity with all of the world's people". The party is by its nature, anti-nuclear, and fighting climate change is high on its agenda. In contrast, the Social Democrats have been more equivocal on environment and energy policies, balancing their preference for a nuclear free, low-carbon Sweden with the need to create growth and jobs. Löfven has been quoted as saying that nuclear power would be needed for the foreseeable future.

Given this, it should not have been a surprise that energy policy would be a core issue for the Greens to negotiate as they discuss forming the coalition government with their larger partner. An agreement has apparently been reached already, with the two parties announcing this week that they intend to set up an energy commission. After the announcement Löfven said that ‘The government's starting point is that nuclear power must be dismantled, we must have 100 per cent renewable energy’, while in their statement the Greens said that ‘An energy commission will be convened for cross-party discussions on energy policies with the aim of framing a long-term, sustainable energy agreement’. But, while there may seem to be an in- principle agreement about the direction of policy, there is less clarity about the pace and the depth of reforms. The Green Party’s election manifesto calls for two nuclear reactors to be closed down during this electoral period. The Greens’ spokesperson Åsa Romson said that this would easily be met, as increased safety and security requirements ended the functional life of older reactors. However, Mr Löfven seems to leave room for other interpretations on nuclear, saying ‘To have a long-term discussion that is going to lead somewhere, you shouldn't start by saying we should go this way or that way. Instead, you should keep the situation as it is now’1.

1 http://www.businessinsider.com/r-swedens-incoming-coalition-to-set-up-energy-commission-2014-10

3 The October issue, 2014

A heavy impact on Swedish industry? Whilst public support for the announcement may be positive, Swedish industry is far from enthused. And unlike some of its neighbours the Swedish economy still retains a significant proportion of heavy industry and manufacturing. Vattenfall, the company most immediately affected, claimed that closing nuclear plants would force Sweden to import ‘fossil energy’. An industry lobby group representing energy-intensive industries declared it ‘very worrying… Sweden's basic industry is put at risk if the door to new nuclear power is closed.’2

The Greens and the Social Democrats may find it easier to get aligned on renewables. Also included in Wednesday’s announcement was a commitment to increase the amount of renewable energy production by 2020 from 25TWh to 30TWh3. Sweden currently runs a marketplace for renewable ‘electricity-certificates’, and the parties have said that they will extend the schemes life from 2020 to 2030.

EU ramifications? Under the Alliance Sweden has had one of the more ‘pro-climate’ policies within Europe. Sweden was one of the founders of the ‘Green Growth Group’ of EU countries, that has since grown to 14 countries, and the former Minister for the Environment, Lena Ek initiated the New Climate Economy project that was recently showcased at the UN Climate Summit in New York. At first blush it should not be expected to tilt the balance significantly for a small country like Sweden to become even more climate-active. However, this new emphasis comes at a critical time, when the future of European energy policy dances in the wind, thrown about by strong gusts from all directions.

As previous editions of the Monthly Policy Review have reported on, European energy policy and infrastructure is a major plank of EU-reforms. Liberalisation of national energy utilities into a pan-European market is a process that is nearing 20 years duration. During the early 2000s the politics swung heavily in favour of climate-action, and the EU ETS was born in 2005. However, since the Financial Crisis governments have opted to avoid hitting their economies with additional costs and climate-action has been put on the backburner. Security of supply, which had been rather taken-for-granted, suddenly reappeared as a policy priority with Russian expansionism. Although security of Europe’s gas supply is separate from climate concerns, the policy actions that can be taken to avoid undesirable outcomes tend to overlap, and this, coupled with a sense that international negotiations are beginning to move, has appeared to help those arguing for action.

European leaders have already discussed the 2030 Framework for Climate and Energy Policy twice at the European Council, and they are due to conclude on the policy priorities when they next meet on 23 October. The Commission has proposed a ‘triple target’ of a 40 per cent reduction of GHGs by 2030, a 30 per cent energy efficiency target and a 27 per cent renewables target. Separately European political leaders are also considering a Market Stability Reserve, which is intended to increase the price of Carbon in the EU ETS.

If the Greens have their way and Sweden begins to close nuclear plants this will affect the balance of the northern-European electricity grid, as it is unlikely that sufficient renewables capacity can be built-out in time. Sweden would become a significant importer of power, particularly when intermittent renewables are not available, and the medium-term costs of energy will rise for regional industries. However, it is possible that Swedish renewables policy could make a significant difference to market structures within Europe. The Swedish electricity-certificates scheme is already run jointly with Norway. Strengthening and extending the scheme at a time when Europe may commit to renewables targets provides an option for other countries to opt-in to the market.

2 http://www.skgs.org/energibeskedet-aventyrar-basindustrin/ 3 Note, that this figure excludes hydro. Sweden’s total electricity generation is around 140TWh p.a., hence this represents a 4% increase in renewables share in 2020.

4 The October issue, 2014

Comment Energy Policy looks set to be a challenging exercise for the Löfven administration given the different objectives of the two parties, and their weak minority government, which will require them to seek support for their policies from other parties in the Riksdag. Energy and climate has many tough issues, with difficult trade-offs, and Stefan Löfven will need to be on a rapid learning-curve in preparation for the 23 October European Council, also the first opportunity that he has to meet many of his fellow leaders. The Green Party, meanwhile, will face the fact that smaller coalition partners usually loose it in the government position. They must defend the policies they don’t stand for - such as this week's defence deal - and the bigger the party often succeed in taking credit for everything that goes well. It was only last week that the Green Party’s former spokesperson, Per Garthon, warned that the Green may make concessions on defence but never on nuclear power “then the party would collapse”.

The influential shadow Today at noon, the government will officially change hands, and Stefan Löfven will officially become Prime Minister. When he steps over the threshold of Rosenbad today he will be closely followed by a number of people due to become some of Sweden’s most powerful civil servants. Those who are employed to drive policy have increased substantially over the past 20 years – they are found in the ministries, in think tanks and PR firms. They are influential, work in silence and heavily involved in policy making.

When Stefan Löfven and his newly appointed cabinet ministers walk across to their respective ministries after the Statement of Government Policy has been read in the Riksdag today, each of the Ministers will be followed by a handful of very influential individuals – the so-called “policy professionals.”4 These days, a cabinet minister is, on average, surrounded by eight to ten of these professionals. They are found in the ministries, but also on a local and regional political level and their influence is considerable. In the government offices alone, there are about 180 people who work with policy without having being elected to office.

It was in the 1990s that Sweden started to see new structures emerging around politicians and decision makers: political advisors, communicators and policy experts appeared without there being any real public knowledge about these new professionals. Prior to the 1994 referendum on EU membership, PR agencies began to influence government practices. The well-funded ‘yes campaign’ sought help to get their message across by PR agencies. Since then, the number of political employees (advisers) has grown, especially in the last ten years. However, there are earlier examples from Sweden’s political history: Tage Erlander, Prime Minister between 1946 and 1969, appointed political experts to his closest group to serve as a sounding board and discussion partners – among them Olof Palme. The emergence of this politically influential group is different in Sweden from the other Nordic countries. A Danish government minister usually brings one press secretary when he or she takes on a ministry. In Sweden you find a group of eight to ten people around a leading politician. Norway is somewhere in between.

Research project finds a group of well-educated and inspired individuals Swedish researchers led by Professor Stefan Svallfors are due to publish a study of so-called ‘policy professionals’. They are people employed by different organisations in order to affect policy and politics – rather than elected to office. It is a group that has grown in numbers and importance. The policy professionals are found in organisations such as government agencies, political parties, parliament, think- tanks, and lobbying organizations. They carry job titles such as communications or political advisors. The

4 This article is based on the following articles: http://www.tidningencurie.se/22/nyheter/nyheter/2014-09-23-de-har-politisk-makt-men-ar- inte-folkvalda.html, https://www.wallenberg.com/mmw/forskning/ny-yrkesgrupp-utformar-den-svenska-politiken, http://www.vr.se/amnesomraden/amnesomraden/humanioraochsamhalle/demokratiforskning/dedriverpolitikmenaranstallda.4.48d441ad 1363c4c099aac7.html and http://www.nordiclabourjournal.org/i-fokus/in-focus-sept-2014/article.2014-09-11.2917718659

5 The October issue, 2014 project, ‘Policy-professionals in the Welfare State’ is financed by the Swedish Research Council and builds on interviews with 70 policy professionals.5

According to the study the growth of policy professionals in Sweden is a symptom of political parties falling membership numbers. The political advisors and communicators see this job as an alternative channel, a way to express themselves politically without subscribing to the entire package. Professor Svallfors is himself surprised with the results so far: “What surprised me the most was that policy professionals are so sceptical of elected politicians. They are borderline brutal in their description of traditional politics as being slow and tedious. They could not imagine working in that way themselves. They consider themselves to be smarter than the elected politicians, and think their jobs are exciting, fun and an efficient way of influencing policymaking.” They know that they have power and they can say: “yes, I have more power than an MP”. At the same time communicators and advisors are experts who have become invaluable to nearly all organisations. If you ask whether it would be possible to manage without these communicators and political experts the answer is “impossible, they have become invaluable”.

Policy professionals represent a growing group. The study estimates that there are currently between 2,000 and 2,500 people working as policy professionals - and half women and men - in Sweden. They are well- educated, often political scientists and economists, mainly from the universities in Stockholm or Uppsala. They are usually around 40 years old, earn relatively well, and many have been headhunted into their jobs. Recruitment is quick and informal especially to a higher political level, eg. to the government offices. They are often inspired and are passionate for the issues they work with. Once inside a political block or organisation, they don’t move between blocks or organisations with conflicting interests. One exception is PR agencies, which tend to have more breadth, as they would like to offer their clients policy professionals with different backgrounds.

Policy professionals are found in the government offices, but also on a local and regional political level and they have considerable influence. They work to identify problems, understand the decision-making process, and to present the correct facts. Being on top of political processes is crucial. When should an issue be launched - often the earlier in the process the better. Where does the political landscape lie, and how can you turn a special interest issue into one of public interest? They have great influence in everything from getting a question onto the public agenda to determining which description of reality should become dominant: they can be brilliant at getting their message across. Another important task is to source the correct background material when this is needed. The information has to be both correct and timely in order to work. They rely heavily on their network: They need to know who to call to get the right information quickly. “One result of this is that a large portion of power (sic) becomes invisible. With invisibility comes a lack of responsibility too. It is not the policy professional that ends up in the glare of the media when something goes wrong, even if he or she has contributed to a bad decision. The government minister responsible does,” according to Professor Svallfors.

The revolving door The study has also looked at the group’s relationship with the media and has noticed a worrying trend; there are fewer and fewer journalists compared to the number of policy professionals. Professor Svallfors is worried about what this means for the media and warns against what has happened in Göteborg, where the number of journalists has been halved in the past ten years while the number of communicators has doubled, leaving two communicators in the municipality and in companies for every journalist at the city’s largest newspaper. A serious development, considers Professor Svallfors: “There has been a fundamental change in the balance of power and the independent journalist is totally undermined. This is not good for democracy”.

5 http://www.iffs.se/en/project/policy-professionals-in-the-welfare-state/

6 The October issue, 2014

There is a considerable level of mobility towards the private sector for both state secretaries and ministers with an increased risk of various types of conflicts of interest as a consequence. This week, 24 ministers in the Alliance lost their jobs. Of those, 17 were elected to the Riksdag but the remaining seven are looking for a new job, including Anders Borg, Carl Bildt, Anders Norman and Anna-Karin Hatt. In addition, 137 policy professionals will be on the job market after having served at the ministries. Professor Svallfors points out that these are problems he wants to address: “I want to see ethical guidelines for this group. What is their position and responsibility? I also think we need transfer rules for how they can go from a public position of responsibility to other jobs, for instance in the private sector.” This is echoed by former Auditor General, Eva Lindström, who, in a report from the Expert Group on Public Finance (ESO), suggested a one-year quarantine including ministers and state secretaries before taking employment in lobby organisations or in PR.6 When politicians or public officials leave their posts and move to companies or stakeholder organisations within areas over which they had considerable influence in their previous positions. How the ‘revolving door’ is dealt with for these types of high-ranking positions can be considered to have a major impact on confidence in the public sector, according to the report. On a few occasions, the Riksdag has pointed out that there may be reason for the Government to review the possibility of taking suitable measures during transitional periods, e.g. in the form of a time quarantine. In Sweden, unlike the other Nordics, there are no rules on how soon the departing ministers may start a new job. The Council of Europe Group of States against Corruption (GRECO) has recommended that Sweden introduce rules to avoid conflicts of interests in situations in which public employees move to the private sector. Ms Lindström points out in her report that a large number of countries have drawn attention to the problem of conflict of interests in connection with what is known as the ‘revolving door’. Through legislation and the introduction of codes of conduct, restrictions have been introduced in several OECD countries. Until now, the Swedish position has been uncertain and a little naive, she writes.7

Löfven’s shadows The large number of important posts in the government offices that need to be filled, range from State Secretaries to political advisors. Social Democratic names that are mentioned for these political posts include Aida Hadzialic, Mayor of Halmstad, and Erica Sjölander, economist at IF Metall. Green Party names on the table include the Administrative Director, Per Ängquist, and Jon Karlfeldt, member of the Green Party executive board. A number of consultants and lobbyists are now ready to take positions in the red-green government that will take office. Stefan Löfven has had his team in place for years: people with much power but that rarely end up in the spotlight. Last week, current affairs magazine Fokus listed those who are closest to the Prime Minister – his policy professionals.8

• Emma Lennartsson – the Chief of Staff

Stefan Löfven’s closest advisor. Has an economics degree from the Stockholm School of Economics. Was previously a speechwriter for former Minister for Finance, Bosse Ringholm, planning manager for his successor Pär Nuder, and budgeting director under Thomas Östros. Most recently, she was chief economist at the Municipal Workers' Union. A problem solver who soon will become Sweden's most powerful official, unless she wants to be Minister.

• Janne Larsson – the Election General

Declared a genius spin doctor who once was Göran Persson's right hand: as a speechwriter, planning manager, head of press, and State Secretary. Returned to the Social Democratic party after a few years as a management consultant at McKinsey and Head of Communications at Nordea. Son of former Environment Minister Kjell Larsson. Rumour has it that he is aiming for a career as a politician.

6 http://eso.expertgrupp.se/wp-content/uploads/2013/07/2012_1-till-webben.pdf 7 http://eso.expertgrupp.se/rapporter/20121-svangdorr-i-staten-en-eso-rapport-om-nar-politiker-och-tjansteman-byter-sida/ 8 Fokus, no. 39, 2014

7 The October issue, 2014

• Odd Guteland – the Press Chief

Public opinion analyst who has worked at Gallup and now is responsible for handling the press. His sister Jytte Guteland just become a MEP. He was press officer for IF Metall during Stefan Löfven’s time at the union.

• Wille Birksten – the Advisor

Stefan Löfven’s best friend who followed him from IF Metall. Today national political advisor and one of those the party leader listens most closely to. Was previously political advisor to Minister of Industry and Trade, Leif Pagrotsky.

• Hans Dahlgren –the Head of Administration

The grey eminence of Social Democracy. Has prepared meticulously for the party's takeover of government. Long experience of governance: International Advisor to Olof Palme, State Secretary under Ingvar Carlsson and Göran Persson, State Secretary for Foreign Affairs under Anna Lindh, Leila Freivalds and Jan Eliasson. In addition, UN Ambassador and member of the UN Security Council. Rumoured to covert the post of Foreign Minister. But the queue is long.

• Anders Utbult – the Speech Writer

Rhetorical prodigy who was hired by Håkan Juholt but remained under Stefan Löfven. Political Scientist who studied both poetry and Russian literature. Has previously been campaign director for the Social Democrats and PR advisor at Gullers Group. Tweets constantly.

• Kristina Persdotter – the Policy Maker

The brain behind the Social Democrats’ policy development in the most important election issue – schools. Former student politician who has climbed rapidly in the party hierarchy.

• Mats Andersson – the Veteran

Has worked under Göran Persson, Mona Sahlin and Håkan Juholt. Knows everything about everything. Has trained the incoming State Secretaries and will probably become one himself.

Comment Stefan Löfven is a relative newcomer to national politics, and will have to muster all of his negotiating skills in what promises to be difficult road ahead due to the government’s weak electoral mandate. As such, assembling the right team in the ministries will be crucial for the government’s ability to push through its policies. With its long history of governance, the Social Democrats have a well of experience to tap from.

The Bildt legacy Controversial, arrogant, funny, and painfully outspoken. Many are the words that over the years have been used to describe Sweden’s outgoing Foreign Minister Carl Bildt. He hands over the Foreign Ministry to his successor today, after eight years as its well-travelled, ever-tweeting frontman and one of Sweden’s longest serving Foreign Ministers.

‘Everybody was there’. When Carl Bildt on 29 September gave an account of his eight years as Foreign Minister at the Swedish Institute of International Affairs (UI)9, the room was filled to the brim with Swedish and foreign diplomats, scholars and publicists. During his eight years he has had 111 Foreign Minister

9 His speech can be viewed here http://www.svtplay.se/klipp/2360590/carl-bildt-min-tid-som-utrikesminister

8 The October issue, 2014 colleagues in EU circles and attended more than 130 Foreign Ministers’ meetings: “That should be more than a lethal dose”, he said. Constantly on the go, he is so busy that European officials cannot keep track of his moves. Meanwhile his ministry has complained that he has not spent enough time back home. He is a far cry from his predecessor, Jan Eliasson, who frequently had coffee with the Ministry’s staff.

He has been at the epicentre of Swedish politics since the 1970s. But the end of the term of office of Fredrik Reinfeldt’s government means an end to Carl Bildt’s lengthy political service. The story about Carl Bildt is the story of Sweden's modern political history, and it is rich in colourful detail, events and situations. In his speech at UI, Mr Bildt recalled a speech he delivered at the same Institute in 2006 after being appointed Foreign Minister. For over an hour, he gave an account of how the world has changed over the last eight years. He described the hopes he had for the world, the economy and peace back then, “not only in Europe, but in the world as a whole during the years since the reunification of Europe had begun”. In two respects, his predictions unfortunately came to pass, he said: The international financial crisis of 2007 and an increasingly aggressive Russia, with the invasions of Georgia and later Ukraine. He admitted, among other things, that maybe he could have been more critical of Russia in the beginning of his mission. Mr Bildt, who has been called one of Vladimir Putin’s toughest foes in Europe, made true to his reputation and strongly opposed Russia in his last public speech as Foreign Minister: ”we are obviously facing an openly revisionist, distinctly authoritarian and expressly anti-western Russia today and tomorrow”, said Bildt and continued that after a peaceful period, it is now "the power of weapons that dictates the immediate European geographical area”. Asked by the WorldPost earlier this week why he is so much more outspoken than most other European statesmen on Russia’s annexation of Crimea and meddling in eastern Ukraine, Mr Bildt answered: ”It is for a very simple, but extremely clear reason: Europe’s borders have been drawn in blood, and to change them will draw blood again.” He said that Sweden is also seeing examples of Russia’s assertiveness: ”Even in Sweden, we’ve seen the most serious incursion of our airspace by Russian aircraft in the eight years I have been foreign minister”.10 In his speech, he talked about ‘troubling trends in Turkish politics’: “That there unfortunately are worrisome trendencies in their policies must no not lead us to undervalue the progress already made or the crucial importance of the steps that must be taken…A Europe that shuts the door on its own opportunities in Turkey is a Europe that shuts the door on its own strategic opportunities in the region whose future will have a marked influence on our own future.”

Mr Bildt spoke of his concerns about the developments that followed after the Arab Spring and the necessity of a new European global strategy. He stated that the Europe’s crisis management must turn into improved competitiveness, and mentioned the ‘extremely important’ free trade agreement with the United States, and the ‘necessary’ digital internal market: “With 6 per cent of the world's population, 20 per cent of the world's economy and 50 per cent of the world's social expenditure, we must understand that we may be attractive today - but we also face clear challenges in the future.” He pointed to Sweden leading the way on climate issues, with the report from the Global Commission on Economy and Climate, to which Minister for the Environment Lena Ek was one of the initiators, as a concrete example. He said that climate change would not be a problem if the whole world were like Sweden: ”we have reduced our emissions by almost 25 per cent while our GDP has increased by around 60 per cent since 1990”. Speaking about Sweden’s foreign-and security policy, Mr Bildt mentioned the ‘ground-breaking’ cooperation between Sweden, Finland, Norway and Denmark highlighted by, among other things, the joint air exercises that ”no one would have thought possible not that long ago”. On NATO he stated that Sweden’s cooperation with the alliance becomes ever more important in ‘unpredictable times’. He further believed that the Reinfeldt administration had ”succeeded in eliminating some of the squeamishness about NATO that still remains in circles in our country that are more nostalgically attached to neutrality - although a great deal remains to be done in this regard.” He said that, to him, cooperation in northern Europe has been of the greatest importance during his tenure, while acknowledging the criticism he has faced on not focusing on ‘classic’ areas such as southern Africa. He finished his speech at UI by proudly referring to the newly published Transatlantic Trends survey, which noted that support for the foreign policy pursued was, at 74 per cent, higher in Sweden than in any other EU country.

10 http://www.huffingtonpost.com/2014/09/26/carl-bildt-putin-main-enemy-_n_5882082.html

9 The October issue, 2014

Carl Bildt has a reputation of being extremely knowledgeable, well-prepared and on top of just about any issue. Swedish journalists agree that he is one of the people scariest to interview. His biographer Björn Häger, due to publish his book in the spring of 2015, has said that the slightest mistake you make as a journalist when interviewing Carl Bildt, he tends to use to his advantage: “He is a famous man of great rhetorical self-esteem, who is unafraid of making mince-meat of critics who do not possess all the facts”.11 Carl Bildt is controversial and many Swedes claim that he ‘always gets off the hook’. Or as Carl Bildt said when some young reporters at newspaper Aftonbladet tried to make him accountable for secret contacts with the United States: “Reviewing Carl Bildt is nothing for beginners”.12 The criticism against him covers a broad spectrum. After having resigned as leader of the Moderate Party in 1999 - and hence becoming a private citizen - he took several assignments in the business world. In 2002 he joined the board of Vostok Nafta, an investment company with holdings in the Russian gas company Gazprom. His shareholdings in VostokNafta became an issue for the Riksdag Committee on the Constitution, and in December 2006, he sold his shares in the company. He has also been a Director of the oil company Lundin Petroleum (called Lundin Oil until 2001). Lundin Petroleum drilled for oil in southern Sudan and was singled out in a 2010 report by the European Coalition on Oil in Sudan (ECOS), as complicit in war crimes and crimes against humanity. The company denied the allegations. He has been an advisor to the fund manager East Capital and PR firm Kreab. He stepped down when he became Foreign Minister in October 2006. Recently, his stint with Kreab caused a Georgian ex-minister to accuse him of corruption. Asked to comment on the strong criticism he often faces, Mr Bildt told magazine Café: “I have strong opinions. I stand out. I am demonised. But I never read it.”13

Despite his somewhat dour manner, Bildt has charm, which has attracted devoted followers. But Carl Bildt has ruffled some feathers along the way. Some observers have called his undiplomatic comments a product of Swedish upbringing, which values honesty even if it hurts. Mr Bildt's bluntness was also noticed during this spring’s crisis in Ukraine, when he called President Viktor Yanukovych a "Quisling" on Twitter. A choice of words that met criticism not the least in Norway - Vidkun Quisling was a Norwegian politician who stood on Nazi Germany's side in his own country and "Quisling" is used today as a synonym for traitor. Bildt later admitted that his tweet was not very diplomatic: “No,” he said, “but a spade should be called a spade”. But even his fiercest critics concede Bildt has put Sweden firmly on the diplomatic map. Carl Bildt himself said at UI that he finds it difficult to say what he would miss the most or the least. But asked what he is most proud of he said: “many people say that Sweden really has been seen and heard in the world and in European politics, that we have had influence”.

He is the diplomat that world loves to hate, but what Carl Bildt will do now is still unclear. It has been rumoured that he will be the EU’s Ambassador to Washington. The author of three books, he once said he wanted to be “the Olof Palme of the right”. He could yet end up with a place in the history books. Until then one thing is certain: he will not retire.

Budgetary blues The Löfven government presented this morning is an administration led by a historically weak Social Democratic Party and an inexperienced Green Party. The government will find it difficult to enforce its policies due to its weak electoral mandate. With a hung Riksdag, the Alliance challenging the government’s budget proposal through a counter motion, and the Sweden Democrats as king makers, the stage is set for political turmoil. As a result, Sweden could see the first early election in more than half a century.

At 9 am this morning, Stefan Löfven will present his cabinet ministers and read the Statement of Government Policy for the 2014-2018 parliamentary term. The Social Democrats and the Greens will then face two challenging months to pass the 2015 Budget Bill, which must be brought to the Riksdag not later than 17

11 http://bjornhager.blogspot.se/2014/01/bildt-blir-bok.html 12 http://bjornhager.blogspot.se 13 http://cafe.se/pa-resa-med-carl-bildt-cafe-foljer-med-utrikesministern-nar-han-besoker-terrordrabbade-mali/

10 The October issue, 2014

November and is voted on in December. This is a complex challenge for the governing parties; not only during the coming weeks but, perhaps to an even greater extent, later in the parliamentary term. Mr Löfven must have the Left Party's support in the Riksdag vote. The Left Party has been clear that it will only vote in favour of a budget that includes their key policy area of only allow profits in the welfare sector if they are reinvested again.

But even if the Left Party supports Government's policies, there is no guarantee that they will pass through the Riksdag. Political stability can only be obtained through informal cross-bloc cooperation and by inter- party agreements (mainly with the Centre Party and the Liberal Party). There is potential for this via agreements in the Riksdag and its committees, because long-term challenges – including energy, migration, and defence - provide a strong incentive for the incoming government and minor parties to work together. But, there are major differences between the Social Democrats and the Greens in many areas. Their election tactics were based on going to the polls as separate alternatives and saving the negotiations and compromises until after the votes were counted. The policy areas in which the parties differ include tax, immigration, energy, the environment, infrastructure and transportation, and defence. This week, the Social Democrats and the Greens have managed to reach important deals on important issues such as energy, the defence and pensions. The negotiations have been conducted in small groups at the parties’ highest levels and they will form part of the Statement of Government Policy delivered by Stefan Löfven this morning. In addition, the parties are working to produce a fairly detailed programme designed to guide government decision-making through 2018.

The Sweden Democrats are in an unusually strong position as kingmaker, which changes the dynamics of work in the Riksdag. Under the Swedish system, each party can present its own budget proposition and the Alliance has said it will present a joint budget this autumn. Its budget is likely to contain provisions for increased spending on asylum, which would make it hard for the Sweden Democrats to vote for it. However, an Alliance budget that had the support of the Sweden Democrat would defeat Mr Löfven’s budget, leading to the collapse of the government. Tradition in the Swedish Riksdag is that a party or a coalition will only vote for its own budget proposal, and if that proposal falls, they will abstain from voting. But the leader of the Sweden Democrats, Jimmie Åkesson, has stated that his party will make a ‘political valuation’ of the two budget bills: "It could be that Stefan Löfven's budget proposal includes a cut of the pensioners' tax, improvement of the unemployment benefit, things that we were in favour of in the election. But it could also be that the centre-right budget includes other things that we were in favour of in the election," he told reporters. If the government is unable to pass the Budget Bill through the Riksdag, this would probably trigger a new election. However, most analysts believe the Sweden Democrats will not risk this outcome.

Passing the Budget Bill Constitutionally, the Budget Bill must be submitted no later than three weeks from the date on which a new government takes office, but no later than 15 November.14 A so-called elimination method is applied to the budget voting procedure. First the budget proposals with the least support in the Riksdag are pitted against each other. When a party has lost a vote on its budget bill, the customary practice is for that party to abstain from subsequent budget voting. According to the election results, the Social Democrats together with the Green Party will have fewer seats (138 of 349 seats) in the Riksdag than the Alliance. This means that the government is also dependent on the Left Party to abstain from submitting its own budget bill and to vote instead for the government’s budget. But regardless of how the Left Party acts, Sweden faces an acute government crisis if the Sweden Democrats make reality of the threat to topple Löfven’s budget. The Alliance and the Sweden Democrats together have more seats than the government and the Left Party together, creating a dilemma for the Alliance parties, which would need to either abstain from voting on the government Budget Bill, or receive the support from the Sweden Democrats and thus be prepared to take power in case of a probable extra election.

14 This year, 15 November falls on a Saturday, which is why the date referred to is 17 November

11 The October issue, 2014

Should the Löfven government survive this autumn, the rest of the electoral term looks easier as the Alliance The budget process will probably not put forward a joint budget bill until ahead of the 2018 election. • • • Work on the central government budget is a year- round process. It begins with preparatory work and The budget procedure budget proposals from the government and then The Riksdag has a more significant role in the budget proceeds via Riksdag decisions on the central process than in many other countries with a government budget to practical application by government agencies Parliamentary system of government. Swedish law was designed to make it easy for minority governments to • 15 April: Government presents Spring pass budgets by allowing the bill that gets the most Fiscal Policy Bill to the Riksdag votes pass. This system has provided political stability • Early June: The Riksdag approves where governments have governed without majority Fiscal Policy Bill backing for most of the post-war era. However, that system was sidestepped last year when the opposition • 20 September: Government presents a broke with tradition and blocked parts of the Budget Bill to the Riksdag (15 November in election years). Expenditures are government’s budget. Now the Alliance parties have divided into 27 Expenditure Areas, which said they will not hesitate to do the same. are in turn divided into about 500 individual appropriations. The Budget Bill presents detailed proposals for the distribution of government expenditure between the • End of November: The Riksdag approves in one vote the total various expenditure areas. The Riksdag considers the expenditures for each of the 27 Budget Bill in two stages. First the Committee on Expenditure Areas. Finance considers the expenditure ceilings for the coming years. Next, an examination is made of how • End of December: The Riksdag approves individual appropriations within much money should be used for each of the 27 each of the 27 Areas with one vote for expenditure areas covered by the Bill. The Committee each Expenditure Area. then examines the government’s proposed estimate of Source: www.regeringen.se central government tax revenues and other income. While it is the Riksdag Committee on Finance that prepares these issues, the other Riksdag committees have an opportunity to comment. The Committee on Finance formulates a comprehensive proposal that is discussed by the Riksdag in a debate in the Chamber. The debate in the Chamber concludes with the Riksdag deciding on the expenditure ceiling, the allocation of expenditure-to-expenditure areas, and changes in taxes and charges, and approving the estimate of central government revenues. After this, each committee makes a proposal on the allocation of the money between appropriations in the expenditure areas for which it is responsible. The Riksdag takes the final decisions on the central government budget in mid-December. After this, it is the task of the Government to ensure that the decisions are put into effect. This occurs by means of appropriation directions issued by the Government to the agencies.15

Comment Passing the Budget Bill is crucial for the government and Stefan Löfven faces tough negotiations ahead to win the support of the Left Party. It is impossible to know how the Sweden Democrats' will act in the crucial vote in the Riksdag in a few weeks. The party may look to maximise chaos and vote for the Alliance shadow budget in the hope of forcing Mr Löfven or the Alliance to negotiate with SD. However, at this stage it messages from the party’s leadership suggest that they will not risk a new election being called with the risk for them of being punished by the voters for triggering political crisis.

15 http://www.government.se

12 The October issue, 2014

Everybody’s talking about…the future of the Alliance The Alliance appears to be taking a hiatus this term. Jan Björklund, leader of the Liberal Party, made his views of the future of the Alliance quite clear in an interview with SVT on Tuesday, 30 September: “My assessment is that the Alliance will emerge as a united option sometime before the elections in 2018, in order to regain power. In the meantime, I predict that the parties will have a looser cooperation in the Riksdag, developing their own programmes and policies, only to negotiate a common platform before the next election. “ Indeed, the Alliance is entering a new phase of cooperation.16

While the Alliance offered the Liberal Party, the Centre Party and the Christian Democrats a channel to policy making, the three smaller parties also suffered from the domination of the Moderates and the sacrifices that had to be made on the altar of cooperation. Analysts predict that the smaller parties will want to adhere to their own political agendas in the Riksdag during the coming four years, and suggest that they take this opportunity to polish their own political profiles in order to regain public support.17

While the passive invitation to enter into government with the Social Democrats was profoundly and swiftly refused by the Liberal Party as well as the Centre Party, cooperation on certain issues is to be expected. Such collaboration is plausible, even possible as the smaller parties may enjoy greater freedom to negotiate on their own terms. There are several issues on which the Social Democrats stand closer to the Liberal Party and the Centre Party than the Greens. Several analysts suggest that the government should deal with the Liberals and the Centre Party on education, energy, social insurance, defence and some aspects of fiscal policy18. Indeed, this gives leverage to the Liberal and the Centre Party to promote their own agendas.

Yet, sworn allegiances are not so easily abandoned. The Moderates, the Liberal Party, the Centre Party and the Christian Democrats will put forward a joint budget in order to keep the promises made to the voters during the election campaign. The leader of the Christian Democrats, Göran Hägglund, has also suggested that the four parties will continue to cooperate in the Riksdag on issues where their political agendas concur.19 But as to the role of the Alliance in subsequent budget negotiations, one can only speculate at this point. Should the four parties choose to present four different budget bills in the years to come, the government of Stefan Löfven will be in a more agreeable and conducive situation, provided that it weathers the budget negotiations this December.

Set on presenting a joint budget in December, the Moderates still speak of the Alliance as a unit, even in opposition. According to Anna Kinberg Batra, group leader for the Moderates in the Riksdag, “The Alliance has a good collaboration and will actively oppose what appears to be a weak government. We will present a joint budget bill. In 2018, we aim to challenge the sitting government”.20 In the eyes of the Moderates, they are still the cohesive force of the Alliance.21

In that, they may have been right. The Alliance was left in limbo when Fredrik Reinfeldt stepped down as Prime Minister and announced his resignation as leader for the Moderates. In the meantime, the harsh political reality has called upon Mr Björklund and the leader of the Centre Party, Annie Lööf, to act independently. While the Alliance has suffered severe criticism at the grass root- and municipal level, there is nothing to indicate that prominent political figures and prospective party leader candidates (such as Birgitta Ohlsson and Erik Ullenhag of the Liberal Party) would favour severing ties altogether.

The perceptions of the current status of the Alliance may differ between the parties but the objectives for the 2018 elections concur. The question is what the political scenery will look like in a couple of years’ time. It may not be as easy to rein the smaller parties into cooperation, having bridged the political divide on a

16 Elin Boberg, Press Secretary to Jan Björklund (Fp). 17 http://www.svt.se/nyheter/val2014/mats-knutson-utveckling-mot-att-allianspartierna-glider-isar 18 http://www.dn.se/ledare/huvudledare/samarbeta-men-om-vad/ 19 http://www.aftonbladet.se/nyheter/valaret2014/article19622007.ab 20 http://www.aftonbladet.se/nyheter/valaret2014/article19622007.ab 21 http://www.dn.se/ledare/signerat/eftervalsanalys-nya-moderaternahar-blivit-gamla/

13 The October issue, 2014 number of issues. The concept of the Alliance, albeit beneficial for the smaller parties in some respects, needs a metamorphosis before the next election. There is an inherent risk in the smaller parties flying solo for a while. But if it offers them an opportunity to reconnect to the ideological roots, they may well bring new energy to a new Alliance based on the pretext of more autonomy.

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