30 years of Swedish EU-membership: From socialist outsider to frugal stalwart

As Sweden marks 30 years of European Union (EU) membership this year, a perplexing image emerges: a country which for large parts of the 20th century resisted membership in the Common Market is now one of the most pro-EU on the continent (a record 68 percent of the population supported membership in 2023, rising continuously since 2001).[1] At the same time, the implications of this membership are almost never discussed: the European parliamentary elections tend to focus on domestic issues, while the political class agrees on the need to block all attempts at further federalisation – or to “move more power to Brussels”, as the preferred expression has it.

This dynamic – an increasingly supportive public which nonetheless remains wholly uninterested in the dealings of the union, and an ever more pro-European political class whose stance remains firmly anti-federalist – might be unique in Europe. This is a problem, because the role Sweden plays in the EU is far from innocent; developments in recent years have revealed this Nordic “socialist paradise” to be one of the staunchest defenders of the EU’s neoliberal structure. This situation is especially problematic for the Swedish left – here seen through the lens of the Left Party – which is torn between its defence of national political sovereignty and its purported solidarity with workers in other countries – two ideals that the EU membership brings into conflict.

The “Four Ks”

Sweden’s 20th century history is overdetermined by the fate of the Social Democratic party, which has been in power for 79 of the past 105 years. The question of Swedish participation in the Common Market has, since the 1950s, therefore been largely a question of the Social Democrats’ willingness to countenance it. The party’s initial strong resistance was motivated by both economic and cultural arguments, often summed up in the popular description of the European Economic Community (EEC) as being characterised by “four Ks” (Cs in English): Capitalism, Catholicism, Conservatism, and Colonialism.[2]

When the issue was first put on the agenda in the early 1960s after the conclusion of the Rome Treaty, Social Democratic prime minister Tage Erlander argued in a famous speech to the Swedish steel workers’ union that EEC membership would endanger Sweden’s “self-determination in welfare policy”. The party’s social programme was seen as too progressive for continental European standards. Further to the left, the Swedish Communist Party (today’s Left Party) rejected the EEC in similar but more harshly phrased terms, arguing in a 1967 manifesto that it would not only threaten Sweden’s policy of neutrality, but would also undermine democracy in favour of “big business” and an increasingly globalised monopoly capitalism.[3]

“Where is Europe? How much does it cost?”

Such an emphasis on economic considerations is typical of Swedish views on European unification; the ideal of a continental peace project was always secondary for the historically neutral Swedes. This mix of aloofness and materialist priorities which characterised the Swedish stance was caustically summed up by German-Swedish historian Klaus Misgeld: “Where is Europe? How much does it cost?” (Misgeld 1990: 67) As a result, Swedish engagement in European cooperation remained limited to the rival and more loosely structured free-trade block EFTA.

Erlander’s speech would set the parameters of the debate for the rest of the Cold War, cementing support for EEC-membership as a right-wing position. When the more internationalist prime minister Olof Palme mulled a potential Swedish accession together with the UK, Ireland, Denmark and Norway (whose citizens voted no) in the early 1970s, the reaction from Social Democratic party grassroots was immediately hostile. It was only the concurrent events of a domestic financial crisis and the fall of the Berlin Wall that suddenly shifted the debate and made Swedish EC membership a possibility.

Death of the Swedish Model?

The process that led to Swedish accession to the EU is a nebulous one. It is clear, however, that the process of liberalisation which would ultimately culminate in EU membership started before that issue was even on the agenda. When the Social Democrats returned to power in 1982 after a brief conservative interlude, the second oil shock and soaring inflation had created a grim economic situation. The government launched a programme of devaluation and liberalisation to kick-start the ailing export industry. Then, in 1985, Olof Palme’s finance minister Kjell-Olof Feldt decided to deregulate the financial markets. This reform, modelled on Ronald Reagan’s “Q reform”, brought Sweden in line with the newly financially integrated Common Market, and resulted in a loan frenzy in the housing market. When the housing bubble burst in 1990, Sweden found itself in its worst financial situation since the Great Depression.

The Social Democratic government and its conservative successor rammed through harsh austerity measures, described by one representative of the employers’ federation as nothing less than the “death of the Swedish model”. These included slashing of benefits and social spending, drastic interest rate hikes, abandonment of full employment, privatisation of 35 companies, and lifting of foreign exchange controls, among other things. But Ingvar Carlson, who had taken over as prime minister after the assassination of Palme in 1986, also formally applied for EC membership. In doing so, he took advantage of a sudden shift in favour of the EC among Social Democratic party members.

The crisis was partly seen as an effect of Sweden’s declining export industry, which by the 1980s had become more dependent on international markets than at any time since the 1930s and had been losing ground to the increasingly integrated European market.[4] This made EC membership seem like an enticing long-term solution. Coupled with the fall of the Soviet Union, which made the neutrality argument lose its salience, this reasoning convinced most Social Democrats of the need to join the burgeoning EU.

Locking in neoliberalism

For the Swedish right, which had always supported membership, the motivation was different. Scholars like Mark Blyth and David Harvey have argued that the EU was used by the Swedish right and business class to introduce neoliberal reforms which they had been unable to push through domestically.[5] For Carl Bildt’s conservative coalition government, elected in 1991, EU membership was necessary to make sure any austerity reforms would not be rolled back by a future Social Democratic government. Bildt himself admitted that membership would make tax and spending cuts “more or less inevitable”. In a speech to European commissioners in Bonn shortly before the 1992 Maastricht summit, he declared that Sweden was ready to adhere to the new European Union, no matter what was decided at Maastricht.[6]

In this way, then, the EU became a way to “lock in” neoliberalism in Sweden. As one anonymous economist at the Swedish trade union confederation LO put it: “In 1993-1994 we became EU members and essentially adopted a neo-liberal strategy as neoliberalism is built into EU institutions. It takes away all your strong means to combat unemployment.” (Blyth 2002: 235) Indeed, most of the liberalising reforms were not rolled back when the Social Democrats came back into power in 1994. In the following decades unemployment would hover between 7-10 percent, levels unthinkable only a decade earlier.

Transformation of the welfare state

This analysis is compelling, but flawed, since it is difficult to pinpoint the line of cause and effect. The transformation of Sweden by way of EU membership did not occur in a vacuum but took place precisely at a time when the EC/EU itself was being transformed by wider global forces: neoliberalisation happened to both at the same time. As one scholar argues, the Swedish reforms of the last decades should be seen as the indirect result of the pressures of globalisation and a general tendency toward free trade, as well as the direct consequence of the policy alignment demanded by EU accession.[7]

Domestically, too, Sweden’s entry into the EU and its liberalising effects were only one part of a wider transformation of the welfare state. This had come under increasing criticism from both the neoliberal right and the communitarian left for being too overbearing and stifling of free choice.[8] It is this complex entanglement that makes a reading of the EU’s effects on Sweden and vice versa so challenging.

Chicken and egg dilemma

For example, many of the reforms implemented during the 1990s were explicit criteria for EU membership, such as the Maastricht rules capping of budget deficits and government debt levels at 3 percent and 60 percent of GDP respectively. Other reforms, such as central bank independence, were mandatory but were also implemented in non-EU countries in the same period, such as Norway. Finally, some reforms were not demanded by Brussels but were pushed through anyway. One example is the “fiscal policy framework”, a set of informal budget rules adopted in 1996 on recommendation of the so-called Lindbeck Commission in the wake of the early 1990s financial crisis that curbed government spending much further than the Maastricht criteria demanded.

Other reforms that exceeded EU demands include the 1998 pension reform, the introduction of for-profit charter schools, and the scrapping of wealth and inheritance tax, to name but a few. The question that needs a convincing answer is which of these and subsequent liberalising reforms would not have been implemented had Swedish citizens not voted to join the EU in 1994. True, the negative result in the 2003 referendum on whether to also adopt the euro signals a certain regret over the EU accession on part of the Swedish voters but given the general direction of Swedish politics since the 1980s, that question is harder to answer than it might seem.

A new Sweden

Nonetheless, it is undeniable that Sweden has changed as a result of its 30 years of EU membership. Beyond policy alignment during the application process, big shifts have occurred in areas ranging from economic and social policy to education, agriculture, and migration policy, among others. With about 80 percent of all Swedish legislation deriving from EU directives and regulations, membership has entailed a clear loss of political control on the part of national elites.[9] With some exceptions, such as in agriculture, environment and anti-discrimination legislation, most changes have been of a deregulatory or liberalising nature, emphasising market-based competition.

EU state aid rules and competition legislation have made the sort of industrial policy Sweden pursued to combat the economic crisis in the 1970s and 80s impossible. In education, the Bologna process and the PISA framework have led to a market-based approach where quality is measured in terms of employability and economic growth. Because a common market with free movement of capital and labour risks leading to a fiscal race to the bottom that favours capital at the expense of labour, EU membership has also had spillover effects into areas that are not EU competencies, such as social policy. Swedish income tax levels are today at the lower end of the spectrum among member states and unemployment benefits are among the lowest in the whole union.[10]

“Best student in class”

In other areas it is precisely the lack of a functioning European policy framework that has led to sweeping changes. One example is asylum policy, where the breakdown of the Common European Asylum System during the “migration crisis” of 2015 made Sweden shift from the most generous migration policy to one of the most restrictive on the continent in the space of a few months. Sweden’s tendency to implement new EU legislation straight away – which it shares with other small Northern member states like the Netherlands and Finland, and which has given the elites a self-image of being the “best student in the class” – has also made the country hyper aware of major policy changes in Brussels.

One can expect further such changes, for example in the realm of labour policy: unless the Commission allows Nordic member states to opt out of legislation guaranteeing an EU-wide minimum wage, local minimum wage levels would actually decrease in many sectors, as the Swedish model of collective bargaining could come undone. Even so, the most eye-catching changes of Swedish society in the past 30 years – which have given it a wealth concentration on par with Russia and the most rapidly rising inequality levels in the OECD, and a charter school system only matched by Augusto Pinochet’s Chile and some US states – are entirely homegrown.

The most frugal of the four

One of the more interesting and overlooked effects of EU membership has been Sweden’s transformation into a regional champion of what since the eurocrisis of the 2010s has been called “frugal” economic policy. This is a result of the Swedish elites’ long-standing view of the European project as one of interstate cooperation and trade rather than a federalist one, their increasingly neoliberal domestic policies, and Sweden’s status as a net contributor to the EU budget. The UK’s departure due to Brexit, and the subsequent Covid crisis, led to the formation of the so-called “frugal four” in the spring of 2020, in response to Germany and France proposing an unexpected EU-wide recovery fund.

No longer able to hide behind the staunchly anti-federalist UK, Sweden, the Netherlands, Austria, and Denmark (and sometimes Finland), banded together in an attempt to block the NextGenerationEU proposal designed to aid southern member states reeling from the pandemic and containing – for the first time – a mechanism allowing joint EU borrowing. Then Social Democratic finance minister and current party leader Magdalena Andersson proudly declared herself to be the “stingiest in the EU”. Given the Danish government’s recent abandonment of the frugal club, that goal would now arguably have been reached.

A cross-party consensus

Echoing the eurocrisis, these European Council negotiations in the summer of 2020 were often framed in Swedish media as a hostage situation, with the more fiscally “responsible” northern states being strong-armed into helping profligate southern states balance their budgets. Most surprising of all, perhaps, was that this was not a matter of ideological debate: all parties, from the far-right Sweden Democrats to the post-communist Left Party, supported Social Democratic prime minister Stefan Löfven’s opposition to helping countries like Italy and Spain. Each party had its own reasons for resisting the Covid recovery package – from the Sweden Democrats’ anti-European nationalism to the Left Party’s unwillingness to further empower “unelected bureaucrats” in Brussels – but they all shared the view of the union as predominantly a bloc of loose cooperation and trade.

This dynamic is also an expression of what the British political scientist Christopher Bickerton has described as the transformation of nation-states into member states. Politics has been displaced from the national arena – characterised by the contest between actors of different ideological stripes –  to the supranational European arena, where it is dominated by clashing “national interests” and where voters are represented by their governments. (Bickerton 2012: 3–5) Such a homogenisation of national politics is readily visible in member states like Sweden, where a common national position is hastily hashed out by politicians before EU summits and meetings. Sweden’s intergovernmental view of the EU, and the cross-party consensus on the need to block further federalisation, have important implications for the rest of the EU. This fact should lead to more self-reflection from the political parties than it has thus far, especially on the left.

The European ‘Catallaxy’?

Some have argued the present-day EU functions like a Hayekian “catallaxy”: a federal construct where sovereignty over entire policy areas is removed to a supranational level without any concomitant attempt to recreate a federal democratic political framework. (Streeck 2013: 146; Anderson 2011: 30) This democratic deficit leads to a depoliticisation and technocratisation of politics which favours neoliberal policies. For example, the lack of a common fiscal policy framework is often identified as the main reason for the depth of the eurocrisis, which left the ECB to handle the crisis via monetary policy and, thus, austerity.

Any attempt to put such a framework in place, however – which would be of vital importance for economically weaker euro member states in the southern periphery – would also constitute a significant move toward a federal EU state. Swedish intransigence against any such proposal can easily be justified along culturalist and thinly veiled xenophobic lines by right-wing and centre-left parties. But it places the Left Party, which prides itself on its international solidarity, in a bind, because its Eurosceptic stance contributes to keeping large parts of Southern Europe in perpetual austerity.

An incoherent left

Since the Swedish accession in 1995, the Left Party has resisted every attempt at further federalisation, while officially calling for Sweden to leave the EU. This strategy was consistent as long as the party program called for a “Swexit”, but in recent years the Left’s position on EU membership has begun to change. Already in the 1990s, a few rare voices called for dropping the Swexit demand. In 2004, the founding of the internal opposition faction Vägval Vänster brought the issue to the fore. Among the group’s demands for a renewal of the party was a more pro-European stance. The initiative failed to redirect the party from its Eurosceptic line, but among the signatories of its program was Jonas Sjöstedt, MEP from 1995 to 2006.

When Sjöstedt became party leader in 2012, he did not openly call for dropping the demand to exit the EU, but in the lead-up to the 2019 European elections he announced that the party would “pause” it. He justified this by saying that the party did not want to be seen as towing the same line as the far-right Sweden Democrats, especially in the wake of Brexit and Donald Trump’s victory in the US. Ironically, only a few months later the Sweden Democrats declared that they too would no longer campaign for a Swexit, leaving the Swedish parliament without any de facto Eurosceptic party for the first time ever.

At the last Left Party congress, a motion to completely drop the exit demand garnered stronger support than ever, even if it was not adopted. While the party remains critical of Western imperialism and Sweden’s entry into NATO, its co-founding of a new pro-Ukrainian European left party in 2024, in the wake of the divisions over Russia’s invasion of Ukraine, has further distanced it from its historically traditional positions on international matters. In many ways, the party is only following in the steps of the increasingly pro-European electorate.

Feigned pro-Europeanism

But these “renewals” are not wholly innocent. For while a more pro-European stance could on paper be seen as a step toward a more constructive position on the EU, it has not yet been matched by a change on the ground in the European parliament; the Left Party remains sceptical of any further federalisation, and while it votes in favour of most progressive bills regarding migration, climate and civil rights, it remains wedded to what can only be described as a frugal position when it comes to the EU budget and financing. Clearly, a common European fiscal framework would be several bridges too far. In this way, the Left contributes to keeping the EU’s structure on economic matters in the Hayekian limbo, where it eludes both national and European popular sovereignty, and becomes an area reserved for the bankers at the ECB.

A potential introduction of the euro, which a growing coalition is now advocating, would make the Swedish left’s problematic position even more visible. In fact, the small rhetorical steps taken in a more pro-European direction in recent years might force the party’s representatives to take an even more intransigent stance on budgetary issues to placate members frustrated with what many see as a right-wing turn. True, the Left along with the Greens were the only Swedish parties to support the French and Spanish move to renegotiate the Stability and Growth pact in 2022-2024, but the real test of the party’s European solidarity will be the next crisis, be it in the form of a new pandemic or something else.

Jonas Elvander is the international editor at the left-wing newspaper Flamman, doctoral researcher in history at the European University Institute in Florence, and author of a book on the EU and neoliberalism: Disciplinerad demokrati: EU:s nyliberala historia (2024, Verbal förlag)

Bibliography

Anderson, Perry, The New Old World, London: Verso, 2011

Andersson, Jenny, “Drivkrafterna bakom nyliberaliseringen kom från många olika håll”, Respons, 1/2020

Bickerton, Christopher, European Integration: From Nation-States to Member States, Oxford: Oxford University Press, 2012

Blyth, Mark, Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century, New York: Cambridge University Press, 2002

Eddie, Graeme D., “Sweden: Krona Crisis Stalls ’New Start’”, The World Today, January 1993, Vol. 49, No. 1

Harvey, David, A Brief History of Neoliberalism, Oxford & New York: Oxford University Press, 2007

Huldt, Bo; Misgeld, Klaus (eds.), Socialdemokratin och svensk utrikespolitik från Branting till Palme, Stockholm: Utrikespolitiska institutet, 1990

Pontusson, Jonas, “Sweden: After the Golden Age”, in Perry Anderson & Patrick Camiller (eds.), Mapping the West European Left, London: Verso, 1994

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[1] “Svensk EU-opinion, 1992–2022”, SOM-institutet, Göteborgs universitet, 2023, 3.

[2] This was a Swedish version of the German SPD leader Kurt Schumacher’s famous quip that the project of European unification was based on “capitalism, clericalism, conservatism, and cartels.” Klaus Misgeld, “Den svenska socialdemokratin och Europa från slutet av 1920-talet till början av 1970-taIet”, in Bo Huldt & Klaus Misgeld (eds.), Socialdemokratin och svensk utrikespolitik från Branting till Palme, Stockholm: Utrikespolitiska institutet, 1990, 69.

[3] Socialistiskt alternativ. Program för Vänsterpartiet kommunisterna 1967, 30.

[4] Jonas Pontusson, “Sweden: After the Golden Age”, in Perry Anderson & Patrick Camiller (eds.), Mapping the West European Left, London: Verso, 1994, 40.

[5] Mark Blyth, Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century, New York: Cambridge University Press, 2002, 231–235; David Harvey, A Brief History of Neoliberalism, Oxford & New York: Oxford University Press, 2007, 112–115.

[6] Graeme D. Eddie, “Sweden: Krona Crisis Stalls ’New Start’”, The World Today, January 1993, Vol. 49, No. 1, 9; Blyth, 2002, 232–233.

[7] Tobias Bromander, “Economic Policy: Changed Conditions for Entrepreneurship and Competition in Sweden”, in Daniel Silander & Mats Öhlén (eds.), Sweden and the European Union, Stockholm: Santérus, 2020, 8–9.

[8] Jenny Andersson, “Drivkrafterna bakom nyliberaliseringen kom från många olika håll”, Respons, 1/2020.

[9] Daniel Silander & Mats Öhlén, “Swedish Politics and the EU”, in Silander & Öhlén, 2020, 11–12; Daniel Silander & Mats Öhlén, “Europeanisation, Governance and Policy Processes”, in Silander & Öhlén, 2020, 10.

[10] Ingrid Grosse, “Social Policy”, in Silander & Öhlén, 2020, 14–16; Charlotte Silander, “Education Policy”, in Silander & Öhlén, 2020, 32–33.