The Role of Industry in Sweden’s Total Defence: Past, Present, and Future
This article by Pär Malmberg, Jan Ottosson, Martin Eriksson, and Olle Jansson discusses Sweden’s work with industry as part of its total defence concept and whole-of-society approach to national preparedness. The article covers the past and the formative years in the early 1960s, up to the gradual discontinuation of total defence planning at the turn of the 21st century. It also presents the status and possible future developments in the context of changing industrial and geopolitical realities. The focus is on the forms of collaboration and coordination between the State and companies, both private and publicly owned.
The Swedish total defence concept was introduced during the post-war period and consisted originally of the four components of military defence, civil defence, economic defence, and psychological defence. The economic defence—contingency plans aimed at securing food and other vital resources during a crisis or war—can be described as the civilian counterpart to the military industrial complex. The economic defence of Swedish neutrality was created through private-public collaboration, which was pivotal for the defence efforts during the Cold War but decommissioned and abandoned thereafter.
In this historical introduction on economic defence, it is vital to take further steps back in history. Although neutral Sweden was not directly involved in the two world wars of the 20th century, the country’s small and open economy was adversely affected during both. Disturbances to trade, particularly unrestricted submarine warfare, led to shortages of vital resources for the economy and the population. Most notably threatened were sources of energy such as coal and oil—both economically important but lacking as a domestic supply in Sweden—and foodstuffs.
During both world wars, the government was forced to take a more active role in the economy. A starting point was the creation of Krigsberedskapskommissionen (The Commission for War Preparedness). It was established by an initiative from the economic historian and economist Eli Heckscher (internationally known for the Heckscher–Ohlin theorem on international trade) during the First World War. This Commission was temporary, but the experiences gained were important in the creation of a more permanent government agency that would have the responsibility for peacetime planning and fortification of reserve stocks for socially important raw materials. This started with Rikskommissionen för ekonomisk försvarsberedskap (The National Commission for Economic Defence Preparedness) in 1928.
This preparedness helped the country deal with the stresses of the Second World War in a more orderly fashion. This form of contingency planning continued during the Cold War. From an international perspective, this level of organisation was extensive. During the 1950s and 1960s, Sweden—together with Switzerland—invested most resources in the world in terms of GDP per capita to prepare society for the economic consequences of war or other forms of disturbances to the supply of vital resources. The economic defence was thus aimed at ensuring that the production and distribution of critical goods could continue during so-called peacetime crises, blockades, and wars. Sweden would thereby be prepared to be self-sufficient in certain selected economic areas.
The contingency plans were based on an established political, administrative, and economic system. It was built on the collaboration between private and public companies and authorities around critical supply chains of, for example, food, medicines, and fuels, but also products such as shoes, clothing, and healthcare equipment. The planning was coordinated sectorally—in so called funktioner (functions) —by a lead agency. In the case of infrastructure and network industries like telecommunications and rail, these were controlled by government corporations which allowed for a significant share of the cost being carried by the state in these areas. The companies that were part of the economic defence were called crisis and war-important companies: krigsviktiga företag or “K-companies”. These agreements and plans formed the core of Sweden’s economic defence. The K-companies operated as usual on the private market during normal times but were, in the event of a crisis or war, bound by contract to supply goods and services. Plans were drawn up to make this possible. As in other forms of public-private collaboration, this presumably entailed a form of give and take that benefitted both parties. Through agreements with the state, K-companies were forced to adapt their organisation and production concerning the plans for economic defence. In the 1990s, about 11,000 companies were contracted as K-companies.
These contracts were discontinued a few years after the end of the Cold War, although the system was by that time already significantly strained. During the establishment of post-war contingency planning, the Swedish economy was close to self-sufficiency concerning several everyday commodities, such as food, clothes, and shoes. During the 1950s and 1960s, production facilities owned by Swedish companies—often supplied by domestic raw materials—could adequately supply the civilian population (and the military) with these goods. Many supplies were also stored in large warehouses throughout Sweden. Rising international trade, leading to increased imports and international supply chains, put domestic producers under considerable competitive pressure by the early 1970s and the economic crisis of that decade. By the mid-1980s, the domestic production of textiles, clothes, shoes, fertilisers, batteries, and more, within the country was non-existent or below targets for sustaining the country during a crisis. This resulted in the government either increasing its economic support to companies in distressed sectors producing vital products and materials or expanding the warehousing of these products or materials at a significant cost. These public resources were not forthcoming as the government created other priorities. As a consequence, the ambitious contingency planning of the economic defence was in practice—albeit not in principle—gradually dismantled even before the end of the Cold War.
The present era of Swedish total defence essentially began with the 2015 Defence Bill (covering the years 2016–20). It noted a deteriorating security situation and outlined a reorientation of the military defence from expeditionary contributions back to national defence, as well as a renewed focus on total defence—defined as the combination of military and civil defence since 1992.
However, compared to the situation during the Cold War, the industry component of civil defence—and primarily of security of supply—was now being reconstituted under vastly different circumstances. Sweden was now a member of the EU and more reliant on international markets for important goods and services, but also under stricter internal market rules for public procurement and state aid. Several key sectors had been deregulated and elements of key state agencies, together with many previously state-owned companies, were now corporatised and even privatised. As in many countries, foreign ownership of businesses and strategic infrastructure had grown through foreign firms entering the Swedish market, and through increased international ownership of traditional, Swedish flagship companies. Digitalisation had also increased, as had industry’s general efficiency drive with just-in-time supply chains, in many cases starting in distant, low-cost countries. All this resulted in increased vulnerabilities from a security of supply perspective. Additionally, the logistical and support capacity of the armed forces, for instance regarding military hospitals, transportation capacity, and energy supply, had been dramatically reduced. What remained in place was most of the key laws governing how Swedish society should function at a heightened state of alert or if at war (for instance, on the use of privately-owned resources) as well as how business should participate in total defence planning. Also largely unchanged was the Swedish public administration model characterised by a high degree of decentralisation, both from the government to state agencies, and geographically from the state level to regions and municipalities. So, Sweden was now seeking to rebuild civil defence and integrate industry into this. It thus faced many challenges, one of which was the fact that it could not simply reintroduce the solutions of the Cold War.
Over the years since 2015, Sweden has carried out substantial development work to establish policy objectives, sectoral and capability priorities, administrative structures and processes, using instruments like the Defence Commission, the 2020 Defence Bill (covering the years 2021–25), several governmental inquiries, as well as government-initiated work at the state agency level. Now, in early 2023, Sweden has established seven objectives for civil defence. Two can specifically be seen as particularly dependent on the contribution of industry: to safeguard the most important societal functions and to maintain the supply of goods and services. Seven sectors were prioritised in the early stages. Recent legislation has now also defined ten readiness sectors with ten state agencies responsible for sector readiness, including the contributions of businesses. Collaboration has been carried out between the Swedish Armed Forces, the Swedish Civil Contingencies Agency, as well as other state agencies to establish priorities for the support of civil defence to military defence, and to develop integrated planning processes. In addition, the current government has decided to recombine the responsibilities for military and civil defence under the Ministry of Defence—civil defence was under the Ministry of Justice during the years 2014–22—and even to appoint a separate Minister for Civil Defence under the Minister for Defence.
Although progress has been made since total defence planning was resumed in 2015, several important questions remain unresolved and need to be addressed in the coming years.
Concerning the security of supply, a national coordination mechanism—in terms of its tasks, organisation, and financing—needs to be defined, with key goods and services identified, and supply and demand management strategies developed. Companies need to be integrated with this planning and into the broader total defence objectives. This will require resolving possible legal obstacles for supply agreements for a heightened state of alert, and may involve reintroducing some variant of the “K-company” solution of the Cold War. Further, the prospect of Sweden joining NATO together with Finland may also require special attention, both relative to the alliance as a whole and in terms of practical civil defence collaboration with the other Nordic countries, e.g., on Host Nation Support and Internally Displaced People.
Important development work also needs to be carried out by the companies themselves in terms of defining and staffing a wartime organisation, as well as ensuring secure management locations and communication channels. Companies must also work on their protective security in the broadest sense.
Industry’s role in Sweden’s defence is no less critical today than it was during the Cold War. However, there are challenges as Sweden considers how to rebuild its civil defence and how to integrate industry in this, not in the least because of foreign ownership in important societal sectors, and the national and EU legislation governing the public procurement of goods and services. A lesson learned from the Cold War experiences in Sweden concerns the difficulties in planning industry’s role during a rapid economic structural transformation. As noted above, we are also facing a new industrial revolution in many critical sectors. However, the Cold War experiences are important as the roles of industry-state relations are central today and in the future. Industry appears ready and willing to move forward but the onus is on the government to define the strategies, structures, and processes required to integrate the privately and publicly owned companies into total defence. Critically, these solutions must be commercially sound so as not to penalise the often multinational companies for having a strong base in Sweden.
Reintegrating industry into total defence may well be the most important task over the coming years for strengthening Sweden’s readiness and security.
About the Authors
Pär Malmberg is Chair of the Swedish Government’s Inquiry on Enhanced Security of Supply of Goods and Services, Lieutenant Colonel at the Swedish Armed Forces Defence Staff, and a PhD Student at the Stockholm School of Economics. Jan Ottosson is Professor of Economic History at the Department of Economic History, Uppsala University, Sweden. Martin Eriksson is Associate Professor of Economic History at the Unit of Economic History, Umeå University, Sweden. Olle Jansson is Associate Professor of Economic History at the Department of Economic History, Uppsala University, Sweden. Ottosson (PI), Eriksson, and Jansson are collaborators on the research project “A mutual commitment? The state, the K-companies and the Swedish economic defense 1962–2002”, funded with a grant from the Swedish Research Council.
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Photo: Göteborgs Hamn AB