pic: shufordprinting.com
When China became one of the biggest shareholders in Norwegian Air this spring, a bunch of red flags suddenly went up for the government. Quite correctly, the market crash that was a result of the initial Covid shock opened the way for some big and little investments in different industries – just ask any one of the thousands of small investors that took the opportunity to buy some expensive stock at rock bottom prices. But for many people, it’s one thing for some guy to buy some Ericsson stock (and, sadly, it generally is some guy) and it’s quite another when a foreign government becomes a controlling shareholder.
Up until this point, people who thought that foreign ownership of more or less strategically crucial national assets was worrisome were basically ignored. It was a very near miss when Russia was about to buy the chance to “cooperate on maintaining” the Slite harbor in Gotland for their oil pipeline Nord Stream 2, for example. At first a lot of breath was wasted trumpeting that Swedish municipalities could verily make their own decisions about these things (kommun självbestämmande) – but then both Slite and Karlshamn voted in favour of the “cooperation project”.
Only in the 11th hour did the Social Democratic government step in and manage to convince Slite, at least, to say no to the deal. Karlshamn didn’t say no, and the government couldn’t convince its own municipality that a slew of Russian engineers crawling around laying cables and whatever else was perhaps a poor idea. Karlshamn got jobs and a slew of cash from a Dutch company named Wasco, who provides for and supplies the Russian pipeline, and Slite got some vague promises of similar levels of investment from the government.
The same government also gave the go-head (read: silence) to other sales. Imego, Norstel och Silex, all advanced hi-tech companies with products that can be used for both civilian and military purposes, are now owned by China (see this article for more information). These are just three examples of many. At the time, Minister for the Interior Michael Damberg expressed “dismay” that not more Swedish hi-tech companies could remain Swedish, but that was all that was done or said. It took the Norwegian Air example to finally get Sweden’s attention.
As anyone who has lived here knows, for any issue there is a commission to investigate it. The issue of direct foreign ownership by not-so-friendly and not-so-democratic regimes also has an ongoing investigating commission, whose conclusions are set to be made public sometime late next year. The Moderate party, and now a majority in parliament, has said that the issue is too important to wait on some commission’s report. “Threats of these kind have actually existed for a long time. Other countries have had laws about this for a long time. What no one could have known was that Covid would make the issue [of direct foreign ownership] so acute” said Ulf Kristersson to SvD.
That was in April. At a press conference late yesterday, the Social Democratic government announced that it was now taking the bull by the horns, and presented list of measures it was getting ready to take in order to protect Swedish assets. Foremost among them? Another commission is going to look at the issue.
“Sweden, and the EU, are vulnerable in a pandemic” stated Michael Damberg. So one of the most immediate actions he’s taking is giving the Swedish Defence Research Institute the authority to do a study on foreign investment in “protection worthy” operations (skyddsvärda verksamheter) in order to have better background knowledge. The Institute is to map out which branches in particular could jeopardize Sweden’s security (if, say, they were to be bought up by non-friendly states). Another measure is to authorize Sweden’s Inspection for Strategic Products (ISP) to collect information on foreign companies that want to buy Swedish companies.
If those measures do not a good night’s sleep make, the EU is taking its own steps. Due to be done in December of this year, the EU is putting together a framework for laws that can help prevent foreign ownership of assets that have security implications. Germany, and other EU countries, already have laws that allow the government to put a stop to sensitive sales.
This is not to say that SAS couldn’t be majority owned by China in the future though. When the Norwegian government was tasked with saving Norwegian Air with taxpayer’s money, one of the requirements to be bailed out was that Norwegian convert its leasing obligations into stock. Norwegian had a leasing arrangement to the tune of lots of billions to a company that in the end is owned by the Chinese state. When it had to convert the leasing agreement into stock, suddenly that company owned a lot of Norwegian Air stock. In other words, it wasn’t like the Chinese government went discount shopping and bought a bunch of Norwegian Air on purpose and because it was such a great deal (it could actually be a really bad deal – how long will it be before people fly like they used to?). SAS also has plane leasing obligations with Chinese companies, so much will depend on how much they might need to be bailed out and what the requirements for a bailout will be.
One would hope that the requirements made to SAS, if an even huger bailout becomes necessary, could not result in the same ownership that Norwegian now has, but you never really know. And besides, foreign direct investment is something Sweden always tries to encourage – it brings jobs and development. The trouble is foreseeing what human rights and environmental track record a direct investment brings along.