English version of the report ”What’s at stake? A geopolitical perspective on the Swedish economic exposure in Northeast Europe”

1 jul, 2019Tillväxtbarometern

This thematic report from the Growth Barometer deals with geopolitical risks and Swedish companies’ economic exposure in Northeastern Europe towards the year 2020. Countries covered by the report, apart from Sweden, are Russia and our common neighbors. The purpose is to stimulate reflection and discussion about the importance of the security environment for our economic development.

The report from the Growth Barometer consists of three parts: the first part describes Swedish companies’ trade and investment exposure in the area, which provides a picture of the economic values ​​that are at stake as a result of the geopolitical risks that have begun to take shape. The second part is an overview of these risks based on the military strategic conditions in the area. The concluding part presents three possible scenarios for the geopolitical development in the area and possible consequences.

The conclusion is above all that the exposure is significant, despite the fact that the direct economic exchange with Russia is limited. The report shows that:

1. The area is of great and increasing importance to Swedish companies

Trade with the countries in the area has increased faster than other trade and covers 475 billion in exports annually. The companies’ assets are over SEK 800 billion, corresponding to 31 percent of the business community’s international operations.

2. There is a ”fourth Nordic neighbor”

Economic exchanges with the Baltic States and Poland have grown rapidly, especially in terms of direct investment and imports. Together, they are in the same order of magnitude as our primary trading partners in the Nordic region. How does this affect the economic risk, given the tensions between them and Russia?

3. Geopolitical risk has escalated significantly since Ukraine

Russia’s willingness to use military force to achieve political goals has shaken the European security system. Despite financial difficulties, the major refurbishment program continues through the redistribution of resources.

4. A clearly deteriorating security situation should not be ruled out

We describe three risk scenarios: the disintegration with attempts to break out from, among other places, Kaliningrad and a weakened European decision-making power; Ultranationalism, where the situation in Ukraine is deteriorating and similar developments are beginning in Belarus; and a direct force measurement that poses a challenge to NATO as a security guarantor for Europe.

5. The uncertainty means the need for plans for companies

If tensions in the region continue to rise, individual companies will also be affected. How do you comply with tougher sanction regimes? How is the supply of strategic inputs affected? Is there a need for increased protection against information losses?

The Growth Barometer is a project run by the Blue Institute with funding from VINNOVA. To read the theme report in Swedish, click here.