Response to interpellation 2023/24:489 on Sweden's defense industry and increased manufacturing capacity
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
M considers the defense industry to be a national asset crucial for security 1. M argues that state investments are a necessary form of state interventionism to secure the ammunition supply 2. M emphasizes that entrepreneurs have a better ability to run the operations than the state 3 and that previous privatizations have been good. S wants to see more urgent action to strengthen self-sufficiency. S considers that state co-financing is too low and advocates for stronger economic muscles. S argues that the defense industry requires state intervention and that the private industry could have done more with the help of the state.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Försvarsministern Pål Jonson (M)
Madam Speaker! Markus Selin has asked me what measures I have taken or intend to take, through the EU or nationally, so that the manufacturing capacity of the Swedish defense industry shall increase.
In the new security policy situation, the defense industry and production capacity constitute a significant part of our collective defense capability. Sweden's defense industry is a national asset that contributes to our country's security and defense. It is in Sweden's interest to maintain a strong domestic defense industrial base. The defense industry contributes critical competence, production capacity, and innovative power. In the budget bill for 2024, the government states that the security of supply should continue to be developed so that the requirements for the war units' endurance can be met.
The government is therefore looking broadly at all possibilities to strengthen the defense industry's production capacity. The state has begun to place more long-term orders in order to provide the companies with greater predictability and thus better opportunities to increase their production capacity. Furthermore, work is ongoing to develop strategic partnership agreements with companies in order to ensure a satisfactory level of security of supply. Sweden has also agreed with other Nordic countries on joint procurement of ammunition, and a first such order has been placed. Finally, the Defence Materiel Administration has signed an agreement with the ammunition manufacturer Nammo to support the company's project application within the framework of the EU initiative ASAP, Act in Support of Ammunition Production, for investment in increased production capacity of artillery ammunition in Sweden. The agreement also aims to increase deliveries of 155-millimeter artillery ammunition and strengthen the security of supply.
Markus Selin (S)
Madam Speaker! I thank the Minister of Defence for a substantial and quite appealing answer. It was exhaustive and contained keywords that I, as a Social Democrat, like: national asset, long-term perspective, partnership agreements, and joint procurement. The ammunition issue is also highlighted. That is good, but as a Social Democrat, I am proud but not satisfied. The fact is that the state, the Armed Forces, and the defense industry must join forces. We must act now in an even more stringent manner. The needs are very large. And it is urgent, Madam Speaker.
Why do I stand here as a Social Democrat and speak about the defense industry and the importance of us doing as much as we can here in Sweden? There are many dimensions to this, Madam Speaker. Ultimately, it is about our common security and about self-sufficiency. It means that when ammunition, weapons, bullets, and gunpowder are needed, we know that we can largely achieve that within our own borders as far as possible. The better the self-sufficiency when it comes to bullets, gunpowder, and defense materiel, the better it is.
We Social Democrats also speak about the importance of defense materiel and industrial production, because we know that it is better that our women, men, and they - assemblers and engineers - can, want to, and shall do it. We are good at technology. We are a knowledge nation, an engineering nation.
It is actually few countries in the world per capita that manufacture such high-tech defense materiel as Sweden. Deep down, however, I have several cost items that I would rather speak about than the defense industry and the investments there, for example better welfare, school, healthcare, elderly care and higher pensions. But we live in the time we live in now. We have once again an escalating war in Europe, and it is urgent.
We export weapons and defense materiel, and it also creates jobs throughout the country. That is how we Social Democrats work.
The Supreme Commander usually speaks of the active defense in the form of a four-field matrix: deterrence, support for Ukraine, NATO accession, and growth. Both our own defense and growth were needed. And just as the Minister for Defence highlights, the need for ammunition here and now is incredibly glaring and urgent.
The Minister of Defence mentioned the joint project ASAP, which is an interesting acronym for ASAP can also be read as as soon as possible in English. Excuse me, Madam Speaker, for temporarily speaking English in the chamber. It is a good direction and expression of will in the acronym, because it is very urgent. Ukraine is currently standing up for all of Europe's democracy against Vladimir Putin's regime.
It is an exciting time with a balance between doing it yourself and trusting others. I would very much like to hear the Minister for Defence elaborate on the thoughts regarding what I have said.
Försvarsministern Pål Jonson (M)
Madam Speaker! I thank Markus Selin for an important interpellation.
Markus Selin expresses the Social Democratic view, but I can state that it does not differ very much from the Moderate view in this area.
Let me begin by establishing a number of things. A strong defense industry constitutes a part of our collective defense capability, which is something we have seen in connection with the war in Ukraine, which is a war of attrition but also – excuse the upcoming anglicism – a war of warehouses or a war between different warehouses. Having a strong defense industry is necessary for a strong defense and a deterrent capability. It is also something that I have seen with all clarity in the EU and Ukraine.
How can we then support Ukraine in this area? We can actually do that in three ways. We can donate artillery ammunition from our own stocks, but we know that our own stocks are not unlimited. There are demands on our own stocks for our own defense capability and also demands within Nato. We have donated artillery ammunition to Ukraine.
The second dimension is about jointly procuring artillery ammunition together with other countries, and we are already doing that. We have done this together with Norway and Denmark in order to be able to send ammunition to Ukraine directly from the defense industry. The advantage with the joint procurements is that we can place larger orders. Then one can create a larger workload for the defense industry, so that the industry knows they will receive their orders, and one can also, to some extent, press the prices.
The third thing we can do is to use economic means for other countries or actors to procure artillery ammunition. We have also used that. There is an EU initiative in this area. There is also, as Markus Selin surely knows, a Czech initiative in this area. We are currently holding close discussions with the Czech Republic, and I hope that we will be able to reach a goal there as well.
These are some of the things we do to support Ukraine with artillery ammunition. It is absolutely necessary. Ukraine has an almost acute need for both more air defense systems and artillery ammunition.
Among what we do at home to stimulate the long-term demand that the defense industry is clear about needing, I can mention that we have started placing longer orders that run over several years. For example, we have procured 84-millimeter ammunition for Carl Gustaf from General Dynamics. Försvarets materielverk is now in discussions regarding what are called strategic partnership agreements with defense companies in order to be able to create capacity for security of supply, so that the defense industry has the ability to deliver in peace, crisis, and war. The defense industry should also be able to know that there are conditions in place to receive longer orders.
We have also chosen to exclude caliber-specific ammunition from competitive procurements. This may result in a higher price, but the point is that we can place orders and target orders over several years ahead. The defense industry must, not least when it comes to artillery ammunition, know that there will be orders over time. By us being able to target procurements towards a limited number of suppliers through these measures, they also have the opportunity to invest in their production capacity.
In conclusion: We also do this in close cooperation with the defense companies. Through ASAP, we are allocating state funds, in this case to step in and finance foundry operations within the framework of Nammo. I think it is good that there is a European cooperation. It is not enough just with what Sweden does, but it is good that there is a coordinated cooperation within the entire EU when it comes to the availability of artillery ammunition.
Markus Selin (S)
Madam Speaker! Thank you, the Minister for Defence, for the contribution! As Social Democrats, we drive the defense materiel strategy. Just as the Minister for Defence touched upon, we want to see even more long-term perspective in procurement, production, and development.
Something I thought was good in the Minister for Defence's contribution was precisely the state co-financing that was mentioned. I do believe, as the Social Democrats, that it is too low and too small. We will need to stretch the bow even further.
One thing that is good but that the Minister for Defence did not mention is the defense innovation capability and the new directives to, among others, Vinnova. I believe that in the long run it can lead to better conditions.
When we Social Democrats submitted our committee motion on our collective defense last autumn, it contained 61 motions on approximately 33 pages. A third of these motions concern technology in one way or another. When we talk about technology here, it eventually becomes bullets, gunpowder, and materiel. The defense materiel strategy that I mentioned is an important part of this precisely to achieve what the Minister for Defence highlights regarding long-term perspective.
Then I think there is an exciting ideological nerve in this discussion that perhaps does not fully come across. We Social Democrats are convinced that the defense materiel industry is not just any market. There are many vague desires and security policy trade-offs to give and take.
Then there are clear and more concrete difficulties with the fact that these are long-term orders. All of this is about a high-tech world. It is about supplier conditions that take years or perhaps decades to build up.
Then there is this matter of the economy and the ideological nerve. We Social Democrats do not shrink from words like state guarantees and credits. These are actually two value words that are missing from the Defense Minister's response. We know that this is not just any market, and we Social Democrats also know that it cannot be handled like just any market. Therefore, we are interested in quite a lot - I was about to say most - to finance our defense industry. It can be about funds. It can also be long contracts and orders, which the Defense Minister took up. Co-financing and joint procurement were also mentioned. We can even imagine partial ownership, even.
We have raised ideas about partial ownership so that the state should take a greater grip in this. It might sound a bit exotic, almost, but ten years ago, on April 8, 2014, we, that is, ultimately Sweden, in a dawn raid were forced on paper to enter two private companies and take control over very important technology and knowledge for our common security. I say this to highlight a point in this, because ultimately it is not just about private companies but about our common security.
Madam Speaker! What is the Minister for Defence's view on defense materiel strategies and on putting more economic muscle into defense materiel production?
Försvarsministern Pål Jonson (M)
Madam Speaker! It is an interesting debate about where the ideological dividing lines lie in this area. But let me try to clarify some of the things that Markus Selin raises.
How do I view a material supply strategy? I definitely think we need a new material supply strategy, but we also need a defense industry strategy. They are to some extent two sides of the same coin. Therefore, the government is now working on developing a new defense industry and material supply strategy. We are also aided by the fact that the previous government commissioned an inquiry which Gunnar Holmgren conducted. I hope that we will be able to convert that into a defense industry and material supply strategy before the end of the year, because it will be needed.
There are aspects of this market that mean it is not just any buyer's and seller's market. There are certain state interventionist elements. Markus Selin speaks about state guarantees, and the question is well what is meant by that. Now we are entering together with the company Nammo and the EU and co-financing casting operations at a company. That means that we will be investing in that company. For me, it is a form of state guarantee. We are willing to do our part, the company is willing to do its part, and it remains to be seen if the EU is willing to do its part. But this is, therefore, a state interventionist aspect of this. It is needed if we are to produce artillery ammunition.
If we are to be successful with what is called ASAP, the company has said that within a couple of years one could achieve a tripling of the production of artillery shells. It will be needed. I can also state that the company is now producing twice as many artillery shells as it did some years ago. The defense industry itself has also taken measures.
Where then is the ideological difference? I usually say that we should stick to our own defense industry. I think that is reasonable, because it is part of our defense capability.
Then one can look at the ownership conditions. We have, under a Social Democratic Defense Minister, Björn von Sydow, chosen to privatize the entire defense industry. We did that in 1998. Then we made important choices within the defense industry. You privatized the entire defense industry. Celsius was the last state-owned part. You also opened up for foreign ownership, and that has probably been good fundamentally. I am not entirely sure that defense companies such as Bofors and Hägglunds would have survived as private companies during the period when there were large cuts. The third thing you did was that you encouraged the defense companies to go out into the international market and export.
I fundamentally believe that Björn von Sydow had a reasonable approach at that time. Now that we need the defense industry again, we enter Nato with a strong defense industry because we have maintained competence. Now the defense industry is increasing in strength and scope, and it is an important part of our collective defense capability. On the other hand, I am not convinced that it is precisely the ownership conditions that are decisive for production.
One can argue back and forth regarding the appropriateness of this. I do not rule out that it is linked to different forms of golden shares and so on. But I am not sure that we are served by a state-owned defense industry. That is the case in, for example, Southern Europe. I am not sure that the state is more efficient when it comes to running defense companies than entrepreneurs are. Then, of course, this activity is surrounded by special considerations.
Markus Selin (S)
Madam Speaker! I can begin by saying: When Björn von Sydow speaks, I listen. He is a very wise gentleman.
To balance this, I could say it like this: I believe that there and then, on the private market for the defense industry, the private industry could have done even more. One could, for example, look at one of the world's best fighter jets, the acronym JAS. I am convinced that it could have been sold more partly with the effort of the private sector and with the help of the state, i.e., us. That is what I believe.
EU and ASAP have been mentioned. I will tell the audience that ASAP actually means that we have promised to produce 1 million artillery shells for Ukraine so that Ukraine can stand up for democracy on our continent. Well, that has gone so-so. That was why I said in the opening statement exactly that it is urgent and pressing, Madam Speaker, because Ukraine stands up for us and our common security.
I will also say a few words about the EU. It is a current issue. On Tuesday, the EU Commission submitted a proposal regarding precisely a defense industrial strategy. There are some points that I will not elaborate on here, but simply put, one could say that it is about us in the EU being able to do more. We can do more in the EU, and we can do more together. That approach appeals to me—it is not against me. But a man is his own best servant when it comes to our common security, regardless of whether we are part of defense alliances or not. We need to build up our own defense and also a defense industry that we can be proud of today.
Försvarsministern Pål Jonson (M)
Madam Speaker! Thank you, Markus Selin, for the interpellation debate! The Swedish defense industry has been and is successful. It is entirely privately owned. I actually believe that it has fundamentally been good that it has not been nationalized, because I believe that these defense companies and engineers in several respects have a better ability to run that operation. Then, I do not rule out that one needs to review the ownership. There are also requirements. It is about the risk of foreign acquisition of defense companies and such. We must, of course, look further into that.
Let me bring up something that I know is close to Markus Selin's heart but which has not been touched upon. It concerns the access to engineers for the defense industry. The interpellation touched upon what we can do regarding this. Many of the defense companies say when I meet them that the basis for their operations is that there is a strong technical and natural science activity in Sweden. It is often said that it is very important that the kids learn math and science in school. I know that several of these companies make targeted investments in universities but also in upper secondary schools when it comes to this.
The government is also investing in what is called STEM, as Markus Selin knows. These are special initiatives so that more people will choose the engineering profession. It is important for our prosperity. But it is also important for the defense industry's competence supply that the tactical and natural science base is further developed in Sweden, given that this is a very qualified technical activity. I just wanted to conclude with that dimension.
I thank Markus Selin very much for this interpellation debate.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.