Swedish risk managers discuss impact of Nato membership

Sweden officially became Nato’s newest member on 7 March 2024, ending more than two centuries of neutrality.

“This is an epoch-making event for our country and entails a profound and immediate change in Sweden’s foreign and security policy,” said minister for foreign affairs Tobias Billstroem.

The accession to Nato was sparked by Russia’s invasion of Ukraine. As Billstroem said: “Russia’s full-scale invasion of Ukraine was an irreversible turning point, for Swedish, European and global security. Sweden’s membership of Nato is a direct result of this illegal, unprovoked and indefensible war of aggression.”

According to the minister, the move is part of Sweden’s long-term policy to counter Russian aggression and to provide more security for its inhabitants.

“In these dangerous times, Sweden’s and Finland’s membership of Nato makes the situation in our part of Europe more predictable. It raises the threshold for an armed conflict in our neighbourhood. It increases security and stability both for us and for our Allies,” he said.

But is this a view shared by risk managers and risk experts? At the recent Swerma event in Stockholm, Commercial Risk Europe asked risk managers, economists and political analysts for their views on this issue.

For Robert Bergvist, senior economist at Swedish bank SEB, there will be a limited impact economically from joining Nato. But there will be a social impact due to the various commitments to other member states. “For example, will we need to have a healthcare system that can support Nato allies? It will affect public finances in that sense.”

It is important to go back to the formation of NATO in 1949 and remember why we did not join, said Andreas von der Heide, CEO and co-founder of geopolitical consultancy Consilio International.

“It was the start of the Cold War and Finland borders both Sweden and Russia. Consequently joining NATO would have been viewed as a provocation.”

However, following the invasion of Ukraine and Finland’s subsequent request to join Nato, that approach is no longer valid, said von der Haide. “Sweden is definitely safer under the protection of Nato’s article 5 rather than not.

“War had already been declared by the time it joined. But was it the right club to join? Nato came from the old world but is it still fit for purpose in the new world? Does it need to be more global? More value based?” asked von der Haide.

The accession of Sweden and Finland has been welcomed by its new allies. According to Andreas Utterström, a commentator on US politics, Sweden is seen as a big asset to the alliance thanks to its well-developed engineering and manufacturing sectors.

In the short-term it will not change much, said Karl-John Rodert, group director, captive and insurance at Swedish motor vehicle manufacturer Autoliv and also chairman of Swerma.

“There are a number of bilateral agreements in place and most Swedish companies are already out of Russia but it could have long-term impacts on doing business in that part of the world.”

For other risk managers, it is not clear whether joining Nato will be more or less risky than remaining outside but there was at least some relief that at least it will be a “different” risk.

However, others have warned about short-term complacency towards security, especially within Sweden.

Since Finland and Sweden’s accession to Nato, the narrative around Baltic security among alliance members has been almost triumphant, said Dr Marion Messner, senior research fellow, international security programme at thinktank Chatham House.

“The Baltic Sea has been described as a ‘Nato lake’ and various Baltic countries have celebrated the increase in their security,” said Messner. “However, Russia’s recent activity in the Baltic shows that Nato members need to remain vigilant in the region, and even strengthen their defences.

“Increasingly paranoid about Nato’s intentions, Russia is likely to push back against the alliance in the Baltic. In the process it could significantly increase the risk of escalation, as it uses its hybrid playbook to test Nato’s defences – and conduct acts of sabotage where there is plausible deniability,” said Messner.