Alliance faces defeat in sale of state-owned firms
Published: 21 Jan 2011 12:12 GMT+01:00
Updated: 21 Jan 2011 19:03 GMT+01:00
- Vattenfall invests in North Sea wind farm (21 Oct 10)
- Sweden has 'no time frame' for state sell offs (19 Oct 10)
- Profits soar for Sweden's state-owned companies (03 Sep 10)
The Sweden Democrats announced their support for the opposition's proposal when it was first presented on Tuesday, and the Left Party has also said it will back the motion, Sveriges Radio reported on Friday.
"We will almost certainly support the line of the Social Democrats and the Greens," Sweden Democrat spokesman William Hahne told AFP.
The government, which does not have a majority in Sweden's parliament, the Riksdag, plans to sell state assets worth 25 billion kronor ($3.8 billlion) per year during its current term in power.
When Prime Minister Fredrik Reinfeldt's coalition government first came to power in 2006, it received parliamentary backing for its plans and has already sold Absolut Vodka maker Vin & Sprit, a chunk of telecoms giant TeliaSonera, its share in the Nordic and Baltic stock exchange operator OMX and part of the postal service, among others.
Before winning re-election last September, the government reiterated its intention to let go of part or all of TeliaSonera, Nordea bank and mortgage lender SBAB. It has said energy company Vattenfall and its share of Scandinavian airline SAS could also soon go on the block.
The government however lost its parliamentary majority in last year's vote, which ushered the far-right Sweden Democrats into the house for the first time and if the opposition parties join forces they can block the planned sales.
The motion will likely go to a vote sometime in March and Hahne of the Sweden Democrats said the party's mind was almost made up.
"We are among other things against having Swedish energy production interests fall under the influence of foreign power games," he explained.
"The state should control the very important infrastructure, like for instance water (hydro) power," he added.
Financial Markets Minister Peter Norman pointed out he had just received the opposition's motion and had not yet had time to analyse the effects in full.
"However, it is risky to own shares in the financial sector. During a financial storm, those who possess a large amount of state debt can get in the most trouble. As such, it is important to force down the national debt," he said at a press briefing.
"I also noticed that Nordea is not on the list, so we will proceed with the sale of Nordea shares. The Nordea plan is still on track," he added.
Norman also emphasised that the government has no plans to try to form a majority with the Sweden Democrats.
"We have no contact with the Sweden Democrats and it still applies," he said.
Speaking later on Friday with the AFP, Norman blasted the planned opposition motion.
"It is unfortunate ... The plan was to try to raise 100 billion kronor ($15 billion) for state coffers by selling shares of (Nordea, TeliaSonera and SBAB)," he said.
"That would entail reducing our public deficit by the same amount," he said.
"We clearly saw amid the financial problems last year that countries with high public deficits can be in a lot of trouble, so this is unfortunate for both Sweden and the tax payers," he said.
The decline is also in line with the global strengthening of the euro, however.
The currency received a boost last week after European Central Bank President Jean-Claude Trichet said that inflationary pressures in the eurozone could imply that the ECB was prepared to begin raising its key interest rate from a record low this past autumn.
"The euro has strengthened against both the krona and other currencies, even against the dollar. After that, there may be a halt in state selloffs on the margin. It probably plays a small role. However, it is not the main cause of the krona weakening," said Jenny Mannent, currency strategist at Handelsbanken, to the TT news agency.
The reaction to the Sweden Democrats' announcement mainly relates to the market envisioning a smaller flow of foreign currency in Sweden than expected should state-owned companies not end up on the auction bloc. This in turn negatively affects the exchange rate.
"It is of course expected that there would be some foreign buyers here. From a flow point of view, it is negative for the krona," explained Mannent.