Long regarded as the most effective political system in the modern world, the Nordic model appeals to many with its emphasis on social justice, equality and freedom. The Swedish system in particular combines the effectiveness of free market capitalism with considerable social benefits and encourages cooperation between the individual and the government, promoting an egalitarian society supported by quality public services and a developing private sector economy. However, the prevalence of government services does not come without a cost to the local population and to the entrepreneur, with Sweden implementing a top personal income tax rate of 57% and a corporate tax rate of 22% (Heritage Foundation, 2017). Despite the high level of taxation imposed the government expenditure continues to exceed the tax revenue collected. In order to continue providing its citizens with the high quality public services, Sweden has sacrificed other areas of importance, mainly military and defence spending. Since 1960 Sweden's military spending has contracted significantly, representing only 2% of GDP in 2016 (World Bank, 2017). This lack of investment has become increasingly apparent, with fewer than 20,000 active military personnel employed to protect 170,000 square miles of land (Gordon F. Sander, 2015). Yet the lack of armed forces has not particularly threatened the well-being of Sweden, a peaceful nation with a long history of neutrality in regards to foreign conflict.
Since the turn of the decade however, Sweden's geopolitical location has left it feeling threatened. With the invasion of Crimea, Russia has unsettled the vast majority of Eastern Europe as well as the Scandinavian nations that are in close proximity to it. Swedish airspace and its maritime borders have consistently been breached by Russian aircraft while NATO has admitted that Russia has conducted mock nuclear trials against Sweden (Telegraph, 2016). Accompanied with an increase in undocumented migration into the country and a potential influx of radicalism into the nation, Swedish security forces have struggled to cope with the situation, in part due to the chronic underfunding of the military. As the regional situation continues to deteriorate and with the US wavering in its commitments towards European protection, Sweden has changed its approach towards its security, forming the Nordic Defense Cooperation alongside Norway and Finland (Business Insider, 2017). Sweden has also strengthened military cooperation with the Baltic states and NATO in order to deal with the imminent threats it faces, while the government has agreed to invest an additional $250 million into its military, a sum which is projected to rise in the next few years as the security forces demand $1 billion in extra spending between 2017-2020 in order to rebuild strength and operational capabilities (Business Insider, 2017). The move has been welcomed by people within Sweden and its neighbours, however the emphasis on defence and security will surely have a negative effect on the quality of essential public services provided by the government. The question is, can the Swedish population cope with the long-term effects of that move?
Swedish public services have already begun to face the problem of inefficiency that is common amongst government institutions. The European Central Bank estimated public sector inefficiency in Sweden to be greater than that of its larger European counterparts, including Britain and France (Economist, 2006), that have been frequently criticized for underinvestment in their public services. This was arguably encouraged by former Prime Minister Fredrik Reinfeldt, who introduced a system of tax cuts aimed at income, profits and wealth, a move that would be celebrated in the majority of European nations but was widely criticized in Sweden as it strained two key areas of public investment, education and healthcare (Reuters, 2014). To make matters worse, the declining state of public finances has been accompanied with an influx of immigrants looking to benefit from Sweden's welfare state, a situation which has and will continue to place excess strain on government finances. Refugees are projected to cost the Swedish government a bare minimum of $18.6 billion in 2017, with significant legal and living costs being incurred (Spencer P. Morrison, 2017). Various benefits that citizens enjoyed are being cut out of the program: student aid to certain students is being cut and unemployment benefits are falling (The Local, 2014). Sweden is already struggling to balance the budget, and additional military spending is bound to tighten the shackles.
As a nation which has built a reputation on its service for its people, Sweden is beginning to fail them. Unfortunately, in essence there are not a variety of options available for the Swedish government. Critics can make the claim that the extra military spending is not an immediate necessity, with Finland separating Sweden from Russia and Sweden's history of neutrality and small population making it an unlikely target for Russia's wrath. However, it must be considered that Sweden's greatest present threat comes from hidden extremists within the number of refugees and immigrants it continues to welcome. Sweden has experienced a series of attacks coming from members of the immigrant community and additional spending is a requirement in order to maintain peace and encourage integration. Economically, the Swedish economy has experienced an artificial boom as the government has increased spending due to the refugee influx (Johan Carlstrom, 2017), however this spending has been on refugee welfare rather than Swedish infrastructure and public services.
Sweden's best option at this moment in time is to abandon its opposition to tax cuts and generate additional government revenue through taxation in the short term, while also becoming open to the possibility of operating with a fiscal deficit, a situation which previous governments have managed effectively. The government must look to maintain an effective policy of social integration for refugees and a presence in the camps and ethnic ghettos that have been set up within the nation. Sweden's main security issues are coming from within its own borders and that is where focus needs to be placed, rather than on the empty threats from Russia. Addressing the refugee influx has become a point of contention for Sweden, as well as the majority of Europe, and a proper system of border maintenance and a documented refugee system is of essence. The influx of immigrants has the potential to remain a long-term problem, despite the development of situations in the Levant, so the government must look to establish effective infrastructure for the integration of migrants into the Swedish population rather than allowing problems to fester within ethnic enclaves.
Despite the situation it faces, Sweden's political history paints a picture of peace, sustainability and long-term development. It remains to be seen whether the current Swedish government will follow the same track at this time of crisis
Heritage Foundation (2017) 2017 Index of Economic Freedom, Available at: http://www.heritage.org/index/explore?view=by-variables (Accessed: 20th August 2017).
World Bank () Military expenditure (% of GDP), Available at: http://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS (Accessed: 20th August 2017).
Gordon F. Sander (2015) Is Sweden's military too small even for its peacenik ways?, : Christian Science Monitor
Business Insider (2017) Finland, Norway, and Sweden are conducting a massive air exercise amid Russia tensions, Available at: http://www.businessinsider.com/finland-norway-sweden-b-52-air-force-russia-ace-17-2017-5 (Accessed: 20th August 2017).
Telegraph (2016) Russia 'simulated a nuclear strike' against Sweden, Nato admits, Available at: http://www.telegraph.co.uk/news/worldnews/europe/russia/12139943/Russia-simulated-a-nuclear-strike-against-Sweden-Nato-admits.html (Accessed: 20th August 2017).
Economist (2006) The Swedish model: Admire the best, forget the rest, Available at: http://www.economist.com/node/7880173 (Accessed: 20th August 2017).
Reuters (2014) Swedes tire of tax cuts as welfare state shows strains, Available at: http://www.reuters.com/article/us-sweden-economy-insight-idUSBREA2G0KA20140317(Accessed: 20th August 2017).
Spencer P. Morrison (2017) Refugees Will Cost Sweden $18.6 Billion This Year—9.3x Over-Budget, : National Economics Editorial .
The Local (2014) Sweden 'slimmest Nordic welfare state ', Available at: https://www.thelocal.se/20140121/swedens-welfare-state-most-scaled-back-in-nordics(Accessed: 20th August 2017).
Johan Carlstrom (2017) Sweden Taps Wider Surpluses to Boost Spending on Police, Defense, Available at: https://www.bloomberg.com/news/articles/2017-04-18/sweden-predicts-wider-surpluses-as-spending-raised-on-police (Accessed: 20th August 2017).
Business Insider (2017) Sweden is raising its military budget and reintroducing the draft amid Russia fears, Available at: http://www.businessinsider.com/r-sweden-to-raise-military-budget-by-sek-6-billion-through-2020-swedish-radio-2017-8 (Accessed: 20th August 2017).