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Sweden 'caved to banker' in Saudi arms deal

Published: 18 Aug 2014 17:12 GMT+02:00

The Swedish government's role in the arms factor was revealed in a media scandal in 2012, eventually prompting then-Defence Minister Sten Tolgfors to resign
 
"The Saudi Affair was a key reason that Tolgfors resigned," Ann-Marie Ekengren, professor of international politics at Gothenburg University, told The Local.
 
"This new information has stirred up an old discussion and brought new life into the issue. The question now is how many more heads may roll." 
 
The project, dubbed "Project Simoom", saw the Swedish Defence Research Agency (FOI, Totalförsvarets forskningsinstitut) allegedly creating a shell company called SSTI to handle dealings with Saudi Arabia in order to avoid any direct links between the FOI and the government, Sveriges Radio (SR) reported. 
 
A Swedish prosecutor began investigating the Saudi Affair in 2012, but dropped the case a few months later because the investigation showed "there was no reason to prosecute". 
 
SR has now revealed that classified documents prove that the Alliance government, which took office in 2006, broke off the deal with Saudi Arabia - but quickly repaired the burned bridges upon pressure from banker Marcus Wallenberg.
 

Banker and businessman Marcus Wallenberg. Photo: TT
 
Wallenberg, a prominent businessman on the board of directors for multiple Swedish companies including Ericsson, Electrolux, Saab, and AstraZeneca, wrote a letter to Sten Tolgfors and said that his "Saudi friends" in the business world were not happy, and that the decision to stop work on the factory "threatened important business interests". 
 
In particular, the government's decision threatened Saudi purchases of the Swedish airborne surveillance system Erieye - produced by Saab Electronic Defense Systems, formerly Ericsson Microwave Systems.
 
"My impression is that it is critical that this issue be solved quickly so that all parties are satisfied - otherwise there is unfortunately a risk that several other cooperation areas, not the least of which is Erieye, may fall into the danger zone", Wallenberg wrote in the classified letter to the defence minister.
 

A Saab 340AEW plane with an Ericsson Erieye radar system attached. Photo: Johan Nilsson/TT
 
The letter was published in full in a new book written by journalists Bo-Göran Bodin and Bo Öhman caleld "The Saudi Weapons" (Saudivapen).
 
After the letter was sent, the current Alliance government, led by Prime Minister Fredrik Reinfeldt, soon resumed the operation, and the prime minister re-approved the project at a government meeting in 2008.
 
State Secretary for Foreign Affairs Frank Belfrage, right-hand man of Foreign Minister Carl Bildt, was particularly involved, SR reported.
 
Bildt has only answered questions via Twitter, where he claimed he had never heard of any such letter and then reflected inquiries to the prior government.
 
Belfrage has referred questions to the Foreign Department in general, which has also kept quiet. The Prime Minister has also declined to comment.
 
"Everything I have to say about the Saudi Affair, I have already said to the Committee on the Constitution," Prime Minister Reinfeldt said on Monday
 
International politics professor Ekengren said silence may not be the most effective strategy.
 
"It may be a better strategy to face the storm," she told The Local. "But they're probably hoping the whole thing just blows over, like it did in 2012."
 
Ekengren said that the revelation of the classified letter had "interesting timing" considering general elections were less than one month away - but she doubted that the issue would develop into a game-changer.
 
The original "Saudi Affair" contract, which specified that Sweden would help build a weapons factory in Saudi Arabia in return for the Saudi purchase of Erieye, was drawn up by the Social Democratic-led government of Göran Persson in 2005 - meaning that the Social Democrat party may also have cobwebs to hide. 
 
"I don't think either party is eager to bring it up," Ekengren remarked.
 
"Just as in 2012, the Social Democrats are aware that this could fall back on them. So it may be an issue, but I don't think anyone is going to try to make it too much of an issue."
 
The Royal Family of Sweden has also been implicated in the drama. 
 
The project was in jeopardy in 2004, when Saudi interest in the Erieye radar system began to wane. A delegation - reportedly led by Crown Princess Victoria - was sent immediately to Saudi Arabia to secure business affairs. 
 

Crown Princess Victoria meeting a delegation from Saudi Arabia in 2008. Photo: Jessica Gow/TT
 
"Without Victoria the delegation would never have gained access to the country's highest political sphere," wrote Bodin and Öhman in their book. 
 
"Saudi Arabia is Sweden's largest trading partner in the Middle East, and Swedish exports to Saudi Arabia are worth nearly 6 billion kronor," Swedish diplomat Gunnar Lund, who accompanied Princess Victoria in the delegation, said in a statement shortly before the trip. "I see good possibilities for expanding our trade."
 
Certain parties, however, are not as engaged in the issue - and are not scared to bring it up. In light of the new information, Jonas Sjöstedt, leader of the anti-weapons Left Party, has demanded that Reinfeldt and Bildt come clean about what happened on their watch.
 
"This is a rotten affair from beginning to end," Sjöstedt told SR. "I think that both Carl Bildt and Fredrik Reinfeldt need to explain themselves."
 
Social Democrat leader Stefan Löfven, who also has a background in the weapons industry, has had few words for the press about the Saudi Affair. On Monday his comments were guarded.
 
"If this is true then it seems very peculiar," Löfven said. "We have made motions in parliament for many years to obstruct weapons exports to certain countries."
 
But while neither Löfven nor Reinfeldt may be eager to pick at the bones of the Saudi Affair, Ekengren said the battle was not over yet.
 
"It may not play a huge role in elections, but this discussion is just beginning."
 
Solveig Rundquist
Follow Solveig on Twitter.

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