OPINION: This clash of world views leaves Sweden vulnerable

An extremist with minuscule support in Sweden has managed to derail the main plank in the country’s security policy. How can Sweden learn to relate to places with very different values, asks The Local's publisher James Savage.

OPINION: This clash of world views leaves Sweden vulnerable
Left, protesters burning a Swedish flag in Turkey, and right, far-right extremist Rasmus Paludan. Photos: Emrah Gurel/AP and Fredrik Sandberg/TT

When Turkish protesters tried to burn a Swedish flag outside the country’s consulate in Istanbul it was supposed to be a riposte to the Danish extremist Rasmus Paludan burning a Koran outside Turkey’s embassy in Stockholm, but it provoked barely more than an eye-roll in Sweden.

It’s not that Swedes don’t like their flag. Indeed, for many outsiders they can seem a bit obsessed; they fly them from their summer houses, they’ll pop flags on the buses the moment a member of the royal family has a name day, more old-fashioned Swedes will hang little flags on their Christmas trees and plonk a mini flagpole on the breakfast table if someone in the family has a birthday. Even Sweden’s National Day, June 6th, was originally established to honour the blue and yellow banner.

But any consternation in Stockholm about the burning of the flag was down to what Turkish anger would mean for Sweden’s Nato application. The actual insult of the burning flag itself? Meh – it’s merely a symbol, a cheap bit of fabric. 

It’s not just the flag. There’s no national symbol that thugs in other countries could use to rile the Swedes. A dismembered dalahäst? If you paid for the dalahäst, go wild. Astrid Lindgren is probably one of the few people Swedes could be said to venerate, but even desecrating Pippi Longstocking books would raise little more than a tut. And even the most committed Lutherans tend to think there are more important things to worry about than avenging symbolic insults.

How do you insult a country where nothing is holy, the country that according to the World Values Survey stands out as the ultimate bastion of secular-rational values, where religious observance has declined to some of the lowest levels in the western world? Where anything goes as long as nobody gets physically hurt, nobody harms the environment and nobody loses any money?

Which brings us to Rasmus Paludan. A right-wing extremist and serial provocateur, his schtick is to travel around Europe burning the Islamic holy book. He is widely disliked and disapproved of in Sweden, where the government even tried to prevent him entering the country, until it turned out that he was a Swedish, as well as a Danish citizen.

Many Swedes see the burning of the Koran and they see an act of provocation and hatred against Muslims. But they also see an act of self-expression that is protected by law. And they see a lone man burning a mere sheaf of paper. While we know from experience that some people in Muslim countries will be offended, it’s hard for many people here to really, viscerally understand why. 

And this, perhaps, makes Sweden vulnerable. While Swedish politicians have come out and condemned Paludan in unusually frank terms, they have failed to prevent a foreign-based extremist with minuscule Swedish support from potentially sabotaging Sweden’s long-term military alliances – and now there are anti-Swedish demonstrations in a number of Muslim countries. While Paludan may be acting entirely independently, it’s sobering to think that if Putin wanted to harm Sweden (and he does), all he needs is some pliable extremists at one end and a prickly dictator at the other. 

Sweden wants – and needs – to protect its tradition of free speech. But it also needs to protect its national security at a time of acute danger. There are no easy answers, but squaring this circle will require the kind of realpolitik that doesn’t always come easy to a Swedish political class that is always most comfortable on the moral high ground. Internalising the fact that Swedish values are not universally shared would be a good place to start.

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INTERVIEW: ‘Like before the Swedish financial crisis only the numbers are bigger’

Andreas Cervenka, the author of the hit book Girig-Sverige, or Greedy Sweden, is, you can safely say, not the cheeriest of economic commentators.

INTERVIEW: 'Like before the Swedish financial crisis only the numbers are bigger'

The situation the country is in, Cervenka explains in this week’s Sweden in Focus podcast, out this Saturday, is in some ways worse even than what it was in the run-up to the 1990-1994 Swedish financial crisis. 

“In the beginning of the 90s, we had a huge real estate and housing bubble that burst and sent Sweden into the deepest financial crisis since the Second World War, and we’re still actually feeling the effects of that,” he says. “What’s happening now is roughly the same, only the numbers are bigger.” 

Girig-Sverige, which won Cervenka Sweden’s most prestigious journalism prize last year, tells the story of how the decision to scrap a string of taxes on wealth and assets combined with years of zero or negative interest rates to make Sweden dramatically more unequal as a society, while turning its people and companies into the most indebted in the world after Hong Kong and Luxembourg.

For Cervenka, the Riksbank bears a lot of the blame for this depressing development.

“All parts of the state should be evaluated on their results. And the result is: have they fulfilled the target of inflation? No, in practically no period over the last 15 years have they been able to stabilise at around 2 percent. Has something else happened in society? Well, we have become the most indebted country in the world.” 

The bank, he believes, has been wrong to turn a blind eye to the extreme inflation in assets like property and equities, while focusing exclusively on consumer prices. 

“There’s obviously a lot of talk about inflation these days. But in fact, we have had inflation in Sweden for quite a long time, not in consumer prices, but in assets,” he explains.

“That’s rising prices of property, stocks, land or all kinds of financial assets, and that’s been quite explosive for a long time, which benefits people who own assets, and specifically people who own assets that they financed with debt.”

Normally, central banks only use negative interest rates as a last resort when the economy is in a deep recession, but the Riksbank has had them in place while the economy has been booming and unemployment low, changing the balance between rich and poor in Sweden.

“The central bank is supposed to be an apolitical institution. But low interest rates do create inequality in the way that they actually transfer money from people who don’t own things, who don’t have mortgages, to people who do. And that’s been a huge transfer of wealth.” 

The central bank has not acted alone, however. Parties of both left and right have acted to reduce the taxation on assets. 

“Sweden is still a very high-tax country when it comes to taxation of labour. We’re not number one in the world, but we’re still in the top five. But when it comes to taxes on assets and property, we’ve been abolishing a lot of taxes,” he explains.

Someone making a million kronor from dividends and rising stock prices would only have to pay about 7 percent tax on that income, he estimates, whereas someone making a million kronor in salary would pay about 35 percent. 

For Cervenka, it is not only the indebtedness in society which is a problem, but the way gross inequality slows economic growth and leads to rising crime and health disparities, while the near-impossibility of getting rich through earning a salary skews people’s choices. 

“The difference between a very high taxation of labour and relatively low taxation on assets definitely alters your incentives as a citizen,” he says. “It’s been much more profitable to own a house over the last 10 years than to work.” 

Soaring house price inflation has also led to segregation, with the young, immigrant populations, and other groups priced out of upmarket parts of Sweden’s cities. 

“If you look at the centre of Stockholm, you can almost have a sign saying, ‘If you’re young, don’t bother coming here, because you can’t afford it’,” he says. 

“It also affects, you know, ‘can you afford to have kids?’, ‘What kind of job should you be looking for?’ If you’re living in Stockholm, if you are a teacher, a nurse or a policeman, it’s almost like an economic sacrifice because the cost of living is so extremely high.”

“In the US, they talk a lot about gated communities, and in Sweden, we have that, but we have something much more effective than walls or barbed wire, we have high square metre prices.” 

Those who haven’t managed to get a mortgage or benefit from the low rates have ended up crammed together in the same segregated areas, he adds, fuelling some of the problems Sweden has had with gang crime. 

“The people who don’t own anything, they all stay in the same area and that creates some social problems and just this crazy tension in the fabric of society.” 

So will the economy have a hard landing? Cervenka believes the high level of indebtedness, both in the population and in the corporate sector, makes Sweden vulnerable. 

“I would say we are one of the most rate-sensitive economies in the whole world,” he says. “The Swedish state has very low debt, but the private sector is very highly indebted, so the rate increases have much more impact on Sweden than on a lot of other countries in Europe.” 

A huge proportion of many people’s income already goes to paying off their mortgages, he adds. 

“A lot of people in Sweden are practically working for their banks now, because that’s where the the lion’s share of their income goes. We talk a lot about how the price of eggs or butter has increased 20, 30, 40 percent. But interest payments have maybe gone up by 300 to 400 percent – four or five times what you used to pay – and a that’s a huge increase.” 

In the near future, Cervenka predicts, we will discover whether Sweden’s economy is in for a soft landing or a devastating crash.

“Right now, the markets are betting that we can avoid the worst-case scenario. But the jury’s still out, and I think the next six months will be quite crucial.”