For Martin Hagstrom, in his first year as Sweden’s ambassador, Ukraine will know it has achieved an economic breakthrough when foreign investment shoots up.
“That’s the real breakthrough,” Hagstrom told the Kyiv Post in an interview that took place before two key dates — National Day on June 6 and the 6th Ukraine-Sweden Business Forum in Kyiv on June 15.
The boom in investment is not happening yet, with Ukraine attracting less than $40 billion in foreign investment since 1991 statehood. Sweden’s share is only $325 million.
Still, Sweden remains optimistic about Ukraine’s future and ready to continue supporting economically, politically and financially.
Many of the conditions for an investment breakthrough are in place, Hagstrom said, including a free-trade pact with the European Union and visa-free travel to most nations in Europe, starting June 11.
Now, he said, corruption must be tackled and rule of law established.
“We have a population impatient to see even quicker results,” he said. “This is also an asset. Ukraine has a strong civil society, a well-educated population. There are no reasons why Ukraine shouldn’t succeed. There are no guarantees, either, that it will succeed. So it requires continued efforts by these actors, also by donors and others.”
Economically, at least 100 Swedish businesses are working in the nation, but not yet IKEA (an international bellwether of investment climate).
Standing up to Russia
Politically, the Nordic nation of 10 million people has incurred the wrath of the Kremlin with its strong stance against Russia’s war on Ukraine and support for economic sanctions on the aggressor.
So much so that Sweden — a member of the European Union but not of NATO — has reintroduced conscription for military service to meet growing security threats from Russia.
Financially, Sweden is not only one of the richest nations in the world, it’s one of the most generous, giving 1 percent of its gross domestic product in foreign aid, mainly through the Swedish International Development Cooperation Agency. Out of $1.4 billion spent by SIDA, Ukraine annually gets $22 million to $28 million under a seven-year program that runs through 2020.
Sweden’s politics are built on consensus, high taxes and public trust, elements lacking in Ukraine. “Strengthening trust should be one of the priority tasks for the Ukrainian authorities,” he said. Existing distrust makes it hard to “carry out far-reaching reforms that, many of which, will not produce immediate results.”
Building democracy
Still, Hagstrom said, Sweden is not likely to reduce its commitment to help Ukraine transform into a resilient, “prosperous democracy” able to stand up to Russian aggression.
“We’re not going to change our principles,” Hagstrom said. “Our main tasks are supporting Ukrainian reformers and Ukraine’s European Union integration. That is how we can best help Ukraine to stand up for its own rights and its own development and become more resilient. Central to that is the fight against corruption.”
Since leaving journalism and joining the foreign service in 2002, Hagstrom has concentrated on Eastern Europe in various capacities. He studied Russian in high school and has also worked in Russia. He became ambassador to Ukraine, replacing Andreas von Beckerath, in September.
He left journalism partly because “it’s a very tough market and become even tougher over time.” But he found many of the skills and benefits are transferable to the foreign service, such as meeting new and interesting people from all walks of life.
While SIDA, the development assistance arm of the Swedish Ministry of Foreign Afairs, focuses on the world’s poorest countries, “the logic is different, it’s one of proximity” for Ukraine.
Swedes, he said, are positive about Ukraine, citing a poll by the German Marshall Fund of the United States from 2014 placing Sweden at the top of a country survey list of supporters.
The Swedish government started giving financial aid to Ukraine in the mid‑1990s. “For a large chunk of time that Sweden has been engaged here, we cannot boast of significant results in reforms. The last three years have been different in that sense. We clearly have more reforms.”
At the same time, “anyone would admit that corruption is a problem for Ukraine that needs to be tackled,” the ambassador said. “There are people who have benefitted and do benefit from corrupt practices…These forces will oppose change.”
But President Petro Poroshenko and Prime Minister Volodymyr Groysman, he said, have made it clear that they want European Union integration. And so Sweden will help.
$27.8 million in aid
Sweden assists in many ways, from a biomass heating project in Ivano-Frankivsk to promotion of gender equality and other areas. If there is a facet that sets Sweden apart, he said, it’s that financial assistance is directed to “core support” of organizations over long periods of time.
Sweden’s transparent culture makes it easy to find out what the nation is doing in Ukraine and around the globe. It’s all on the openaid.se website.
The largest share of Sweden’s $27.8 million in support to Ukraine for 79 projects in 2016 came under the heading of “democracy, governance, human rights and gender equality.” It got 44 percent of total aid. The biggest share in this $12.2 million category went to government decentralization projects, which received $1.7 million. But other money went to support media, including $397,000 for Hromadske TV and $177,000 to Media Detector, which analyzes the industry in Ukraine.
SIDA also has a comprehensive website at http://www.sida.se/English/
Attracting investment
While many Swedish companies have been here a long time, Hagstrom said, many of those are still recovering from Ukraine’s sharp recession of 2014–2015.
To attract new investors, the ambassador said, Ukraine needs “to persuade foreign companies that the fight against corruption is producing results, to demonstrate that the reform of the judiciary is happening and, for example, reform of some other state structures, like the fiscal (tax & customs) service.”
Sweden’s Ambassador to Ukraine Martin Hagstrom speaks with guests in the ambassador’s residence on June 5 in Kyiv. (Volodymyr Petrov)
About Martin Hagstrom
Job: Sweden’s ambassador to Ukraine
Age: 44
Family: Wife, 3 children
Born: Stockholm, Sweden
How to succeed in Ukraine: “The key to success wherever you are is to meet and know a lot of people… I am still in a situation where I learn something new every day. I hope I will remain like that.”
Did you know? Before joining the foreign service in 2002, Hagstrom worked as a journalist in Sweden.
Once foreign investors see enough “positive movement,” he said, “I see no reason why they wouldn’t come here.”
Sweden has made “massive investments” in the Baltic nations and Poland, so the next logical step is for companies to move further east.”
Ukraine-Sweden bilateral trade is finally moving up again, hitting $418 million in 2015, but still has not returned to pre‑2014 crisis levels.
Still, a Swedish sawmill in Rivne Oblast is opening up, Hagstrom said, giving an example of a new investment.
“For new entrants, they listen a lot to the companies that are here already,” he said, making it essential for Ukraine to tackle corruption and establish rule of law.
The ex-journalist also said that the general news media is not so helpful” by focusing on “crisis, conflict and problems.” Unless a person looks for other types of news, “you will get the feeling that everyone in the world is more or less in crisis, including in Ukraine.”
Poll: Sweden supports Ukraine’s EU membership, economic aid
According to a 2014 “Transatlantic Trends” survey by the German Marshall Fund of the United States, Swedes strongly supported providing economic and political support to Ukraine — even at the risk of increasing conflict with Russia (73%). When asked how the European Union should react to Russian actions in Ukraine, a plurality of Swedes opposed offering NATO membership to Ukraine (49%),but supported offering EU membership (56%) and increasing economic aid (72%). Swedes were more hesitant about providing military supplies and equipment to Ukraine (54% were opposed), but supported stronger sanctions against Russia (68%).
Source: http://trends.gmfus.org/transatlantic-trends/country-profiles-2014/country-profiles-sweden-2014/ n
Sweden at a glance
Total area: 450,295 square kilometers
Population: 10 million
Government type: Parliamentary constitutional monarchy
Head of state: King Carl XVI Gustaf (since Sept. 19, 1973); Heir Apparent Princess Victoria Ingrid Alice Desiree, daughter of the monarch
Head of government: Prime Minister Stefan Lofven (since Oct. 3, 2014); Deputy Prime Minister Isabella Lovin (since May 25)
GDP, PPP: $498.1 billion
GDP per capita, PPP: $48,800
Main sectors of the economy: motor vehicles, timber, hydropower, iron and steel, precision equipment (bearings, radio and telephone parts, armaments), wood pulp and paper products, processed foods.
Bilateral relations
Trade: $418 million (2015)
Exports from Sweden to Ukraine: Machines and mechanisms, chemicals, paper, transport equipment
Exports from Ukraine to Sweden: Engines and motors, wood products, printed materials, furniture, transport equipment
Swedish investment in Ukraine: $350.3 million (cumulative as of December 2016)
Main business partners: Scania, Volvo, SEB Corporate Bank, Ericsson, SKF, Sigma Software.
Number of Swedes in Ukraine: 100
Number of Ukrainians in Sweden: 8,000.
Sources: Central Intelligence Agency, Embassy of Sweden in Ukraine, Business Sweden, Ukrainian State Statistics Service, Department for Trade and Policy Developments of Sweden.
