The Swedish Empire strikes back
By Abdul Turay
First published June 18, 2008
The following list may be familiar to anyone with even a cursory knowledge of the history of the region. Danes, Teutonic Knights, Swedes, Germans, Russians, Nazis, Soviets. These are the powers that have occupied and exploited the region, especially Estonia and Latvia, over the past millennium or so.
Conventional wisdom says that there are two gaps on this litany of foreign occupation – 1919 to 1939 and 1991 to present.
This is an illusion. The reality is, as recent events show, one of the old occupying powers is back and they mean business. The Baltics are controlled by Swedish capitalists. It could be called the new Swedish Empire.
Let us look at the evidence. In Estonia at the end of 2007, the share of SEB and Hansabank was 71 percent of the loan market and almost 100 percent of banking assets belonged to foreign-based credit institutions or investors.
Investors were attracted by the region’s flexible attitude towards foreigners.
Now that times are bad it appears the banks are turning the thumbscrews. SEB announced last week that it is sending in special debt collection units from Sweden to make sure that the bank is paid.
“At all times, bad or good, the banks are monitoring their debtors very closely,” Ahti Asmann, Chairman of the Management Board of SEB in Estonia, told The Baltic Times.
The rate of Swedish and Finnish takeover has accelerated in recent years. Hansabank has gone from being a flagship Estonian company in the late ’90s, to a bank where Swedes were the majority share holders, to a wholly owned subsidiary of Swedbank.
Hansabank now plans to change its name to Swedbank, finally ending any link with its Estonian origins.
Swedbank President Jan Linden defended the decision by saying it demonstrated the mother bank’s commitment to the region.
And it’s not just banking that is controlled by the Swedes and their co-conspirators the Finns. Take any major industry – telecommunications, travel and tourism, logging and timber, the bourse, retail and department stores – and you will invariable find that the parent company is based in Stockholm or, for variety, Helsinki.
Robert Juodka, a corporate lawyer based in Lithuania, believes that the slowdown in the Baltic economies has not been caused by structural problems in the region but by Swedish and Finnish owned banks cutting the money supply.
He believes Swedish banks lost money speculating in the sub prime market in America and now they are trying to get some of the money back from the Baltic states.
“Let’s be honest about it. The Estonian economy is controlled by Sweden and Finland,” he said.
“In Lithuania we still have a small banking sector and Latvia has strong ties with the Russian financial market. But the principal is the same in all three sectors and that is Scandinavian control,” he said.
Juodka said that Baltic economies are driven by consumption.
“As a result, when the banks tightened their lending criteria this had a knock-on effect on the overall economy because people did not have any money to consume,” Juodka said.
The bottom line is that Baltic governments have only limited control over their economies. This was even admitted by Lithuanian Prime Minister Kirkilas, who said recently that his government is powerless to stop inflation.
In Estonia, Prime Minister Andrus Ansip is more optimistic, but the fact is that Estonia’s economy has the largest amount of investment from the Nordic region. Some analysts believe the Estonian economy is on the verge of negative growth.
Many Balts who work with and for Swedish companies, however, are grateful that the companies came here.
Tonis Maar, an executive at telecommunications giant Ericsson, argues that the Swedes have not just brought money to the region they have brought good business practices.
“Swedish companies are more fully developed. Estonian companies are small companies. Not even companies, small firms. Swedish companies have regulations and structures that work quite well,” the businessman said
“Swedish companies are not corrupt at all. They are a good example for people to follow. People who have worked for Swedes adopt their practices when they leave,” he said.
Maar said the main reason Estonia is ahead of the other two countries in the region is because Swedish investment.
“Swedes had the power at the time. It has made our business culture more Scandinavian than Eastern European,” he said.
The Baltic Times spoke to workers at SEB, many of whom said the bank took a sensible approach to dealing with local people and are making informed decisions.
“The [important] thing is they do market research before making a decision. Some of our workers are from Sweden. That’s how they find out how it is here, by living here and then reporting back,” said Maris Poldveer, an executive at SEB.
The Swedes may be building an empire but it is a benign one. It seems the general feelings from both experts and ordinary people are that, despite the current hiccups, Swedish control is good because Swedes are culturally similar to Balts anyway.
“It was natural and inevitable, I don’t have problems with having the Swedes here, it is just they shouldn’t be the only ones,” Juodka said.
“In Estonia we don’t see it as bad. The fact that the Swedes and the Finns have invested in developing this country,” Maar said.
SEB argues that the Swedes are still here to help the region and they are in it for the long term.
“In a way, Swedish experience and funds have met Estonian entrepreneurship and initiative in running the business and it has been beneficial to the Estonian economy,” Asmann said
Juodka believes that the answer to the current economic woes is more foreign investment, not less.
“Our economy would be better by attracting world class banks, [such as] Barclays, Royal Bank of Scotland,” he said.
There are signs that this may be happening. OMX, the Swedish-Finnish owned stock market group, was bought out by NASDAQ in February 2008. Meanwhile, British retailers Marks and Spencer, BHS and Debenhams have all said that they are to open stores in the region.
How long the Swedes can keep hold of their new Empire remains to be seen. It is all part of the process of globalisation.