Money v. Principles: Sweden Turns Its Back on Saudi Arabia, Cancels Defense Deal

It’s not often one has the chance to write this sentence and have it actually be true: What a fascinating few months it’s been in Swedish foreign policy!

In the opening months of the country’s new leftist government, Sweden became the first in Europe to recognize the state of Palestine, leading Israel to withdraw its ambassador in protest, and Sweden’s military carried out a frantic hunt for what in all likelihood was a Russian submarine lurking outside Stockholm. The country is now embroiled in a diplomatic standoff with Saudi Arabia after cancelling an arms deal worth hundreds of millions of dollars. Riyadh has now also withdrawn its ambassador and joined the Israelis in venting a hollow kind of indignation over Sweden’s decisions.

Stockholm and Riyadh inked the current deal in 2005, leaving Saudi Arabia as one of the primary overseas markets for Swedish defense firms. Saudi Arabia, which has the world’s fourth-largest defense budget and worries about a future military confrontation with Iran, has purchased large quantities of Swedish airborne radar units and ground-based anti-tank systems. Between 2011 and 2014, the agreement netted the Swedish defense industry about $550 million in revenue.

The money hasn’t been enough to prevent the deal from roiling Swedish politics. Though it was negotiated and signed by the previous Social Democrat government, the idea of renewing the agreement — set to expire in May — generated intense opposition from several influential factions in Swedish politics. The Greens, minority partners in the current coalition, were fully against it. The Social Democrats’ influential youth organization also did not want to see the agreement extended, as did several centrist parties and the socialists.

On the other side of the debate was Prime Minister Stefan Löfven, who hoped to renegotiate the agreement and prevent Sweden’s defense industry from taking a major financial hit. Swedish business leaders also came out hard in favor of the agreement, penning an open letter that argued extending the deal presented nothing less than a test of Sweden’s credibility as a trading partner. Among the signatories were the heads of automobile maker Volvo, clothing giant H&M, and the telecom company Ericsson.

Caught between the business lobby and his coalition partner, Löfven appears to have calculated that he couldn’t afford to see his government fall over such a deal and agreed to cancel the agreement.

The fracas also speaks to a conundrum that faces many European nations. Publicly committed to human rights and representing publics quite earnestly concerned about such issues, governments from Germany to Sweden have struggled to reconcile their values with their lucrative arms sales to autocratic regimes. “It is always money versus principles. And this time we decided the principles of human rights were more important than a military deal,” one anonymous Swedish official told the Financial Times.

Saudi Arabia’s furious reaction to Sweden’s announcement is perhaps representative of their fear that other countries will reach the same conclusion. In addition to recalling its ambassador, Riyadh at the last minute blocked a planned Monday address by Swedish Foreign Minister Margot Wallström before the Arab League in which she planned to speak out against human rights abuses in Saudi Arabia.

Though it has a deplorable human rights record, Saudi Arabia has maintained its status as the coddled ally of Western nations by presenting itself as a reliable partner in the fight against terrorism and a key supplier of oil. Increasingly, this isn’t enough to keep an open door for Saudi sheikhs in Western capitals. Germany, for example, last year cancelled the planned sale of Leopard tanks to Saudi Arabia.

Throughout Europe, Saudi Arabia’s lashing of imprisoned bloggers, public beheadings, and continued restrictions on women’s rights — including their ability to drive — have led many political leaders to conclude the kingdom is a medieval theocracy protected only by its fabulous oil wealth.

Maybe, just maybe, Europe’s defense policies are beginning to catch up to its principles.

Correction: Due to an editing error, an earlier version of this story stated that Saudi Arabia has the world’s fourth largest economy. It has the world’s fourth largest defense budget.

JONATHAN NACKSTRAND/AFP/Getty Images