Sweden is 'no longer a country that cannot be trusted'

War, cross-border conflicts, and geopolitical turbulence are often considered detrimental to business. However, the Russian invasion of Ukraine appears to have had a positive impact on its two western neighbors, Finland and Sweden.

Of course, this impact was not directly generated. Rather, it was the response of these two Nordic countries to the invasion that transformed fear into hope. About three months after the winter invasion, both countries applied to join NATO, the Western defense alliance, in May 2022.

Less than three years later, they have both become official members, gaining benefits in both national security and the economy. "We are no longer a country that cannot be trusted," said Micael Johansson, CEO of Swedish defense company Saab, referring to Sweden's historical neutrality.

He pointed out that in the year since Sweden joined NATO in March 2024, Saab has reached a framework agreement with the NATO Support and Procurement Agency (NSPA). NSPA is the agency responsible for organizing NATO's orders to defense companies. Johansson added that it is now easier to understand the dynamics within the alliance. "We didn't have access to NSPA before," he said.

Jukka Siukosaari, the Finnish Ambassador to the UK, agreed with this. "Being part of NATO puts us on an equal footing with other allies. This expands the possibilities for Finnish companies in the defense sector and beyond." Private companies will benefit from NATO member states' commitment to increasing defense spending.

Currently, only 23 of NATO's 32 member states have reached the target of 2% of GDP for defense spending, but this target has been raised in recent months, and even more significantly in recent weeks and days due to turbulence within the alliance. Although the future direction of NATO is uncertain, there is no doubt that these higher spending commitments will remain unchanged, or may even be strengthened, if Europe decides it can no longer rely on the United States.

The spending commitments of NATO's newest members already exceed those of some existing members. Last year, Finland's defense spending accounted for 2.4% of GDP, and Sweden's was 2.2%, both of which plan to increase this proportion to between 2.6% and 3% in the next three years. In the Northern European region, new NATO initiatives include the establishment of new NATO bases and the establishment of joint defense forces in northern Finland.

In addition, a joint Nordic Air Force Command has been formed, which places the 250 front-line combat aircraft of Finland, Sweden, Norway, and Denmark under a unified command structure, with the support of flexible base deployment and shared intelligence. Johansson pointed out that substantial investment is also needed to replenish inventories of advanced weapon systems, including missiles and anti-tank systems.

Although the White House announced this week a suspension of US military aid to Ukraine, European leaders have announced that they will be involved in the long term, so we can also expect continued large-scale spending on weapons. With the resurgence of tensions between Russia and the West, the demand for aerial surveillance programs and underwater systems is also increasing, bringing a new chill to the Arctic region.

In these areas, Saab's head is eager to promote its own solutions, such as the GlobalEye airborne early warning and control platform, and the Sea Wasp, a remotely controlled underwater vehicle that can eliminate explosive devices. However, given Donald Trump's strong emphasis on "America First," he is unlikely to be happy to see European NATO members choose Saab, or any other European defense company, over American competitors.

Europe will need to balance its desire to reduce its dependence on the United States with its apparent need to maintain US support. European member states also need to consider the complexity and interdependence of NATO's defense systems. They often combine technologies and machines, weapons and ammunition, vehicles, crafts, and ships produced in several different NATO countries.

In a sense, the alliance is maintained by complex supply chains and contractual agreements that cannot be unraveled overnight. "The transatlantic relationship in Europe will always remain important," Johansson said, although he also noted that "Europe is increasingly aware that we must rely more on ourselves."

"The United States does protect its own defense industry, and we should do the same in Europe," he said, welcoming "fierce competition" between commercial defense companies. However, this competition may mainly occur between new entrants to the defense industry. Business Finland, a Finnish government agency, has issued a guide providing companies with advice on how to do business with NATO.

The author of the guide predicts that armed forces on both sides of the Atlantic will have "a large number of new demands for services and equipment, including high-tech and low-tech." The guide states that many of these needs will need to be met by startups and established small and medium-sized companies, rather than just large, established defense companies.

Johan Sjöberg, a security and defense policy advisor at the Swedish Enterprise Federation, said that joining NATO has opened up opportunities for Swedish companies, especially because "the perception of them has changed in other countries and companies." Sjöberg added that he favors a "holistic view that security is good for business because increased security and stability provide long-term credibility."

In Finland, joining NATO has also created new opportunities, especially for the large number of small and medium-sized companies that Ambassador Siukosaari calls "Nokia spin-offs." These companies are expected to increasingly provide cutting-edge technologies, such as drones, sensors, and digital monitoring systems, for projects such as the "drone wall" from Norway to Poland, which six NATO member states are developing to defend the border with Russia.

In fact, as the nature of warfare changes, European security may increasingly depend on cyber defense and the protection of civilian infrastructure, such as system-critical subsea pipelines and cables. But perhaps the most revolutionary idea to emerge from NATO's Nordic expansion is the region's concept of "total defense."

This concept, which has also been adopted by Norway and Denmark, treats national infrastructure (such as the Internet and telephone, energy production and distribution, road networks, and a secure supply of food and medicine) as part of a comprehensive defense system. Many of these may not register as defense spending in the statistics, but at the same time, none of these are free.

Ambassador Siukosaari pointed out that in addition to civilian infrastructure spending, for example, national conscription sometimes takes people away from economic production sectors. But perhaps what they provide is more of a benefit to the country than simply providing products and services?

NATO's newest members believe they can teach other allies something about defense. They are clearly providing new perspectives on how to measure defense spending and how civil society and private enterprise can play a role.