The rise of Swedish imperialism in the Baltics

In the 17th century, Swedish military might enabled its dominance over the Baltics, before they became a part of the Russian empire after Russia defeated Sweden at Poltava 1709. Today, Sweden has regained its dominance in the region – not through military power, but economic power.

[Originally published in Swedish at marxist.se]

In 2019, Swedish banks controlled a total of 65 percent of Estonia's banking market, 49 percent of Latvia's and 59 percent of Lithuania's. Many of the largest and most profitable companies in the Baltics are Swedish.

Swedish capital has given the Baltic peoples the blessing of the free market: the right to be sucked dry in the interests of a handful of rich people. In January 2025, the first Swedish NATO troops were sent to Latvia to defend this setup.

‘Eastern cooperation’

Swedish imperialism's incursion into the Baltics began with the dissolution of the Soviet Union in 1991. New, fertile markets opened up for Swedish capital, especially in the Baltic states of Estonia, Latvia and Lithuania. The Swedish state and capital aided each other to capitalise on the new opportunities, and gradually reshaped the countries' economies to suit their interests.

Sweden's encroachment began with the Swedish government programme: ‘Eastern cooperation’ (Östsammarbetet), which sent an army of Swedish consultants and experts to guide the countries' militaries, economists and civil servants.

Most importantly, Sweden led the privatisation of the banking sector, in cooperation with the World Bank. Through the state aid agency Swedfund, the Baltic countries' finance ministries were staffed with ‘Swedish banking expertise’. Conveniently, the Swedes themselves also became shareholders and financiers of several of these banks, providing both insight into the Baltic markets and opportunities to influence the banks' boards.

Other government programmes were designed in the following years to complement this ‘Eastern cooperation’, most notably Östersjömiljarderna (the ‘Baltic Sea Billions’), with the stated aim of “aggressively promoting Swedish business interests in the region”. All this positioned Swedish companies to reap profits from these economies, which had been newly opened to the markets, mainly by bringing more and more of the banking system under their control.

Towards the end of the 1990s, the banking sector was judged to be sufficiently stable for Swedfund's holdings to be wound up and handed over to the market – or rather, to the Swedish banks, SEB and Swedbank. SEB bought stakes directly from Swedfund in the Estonian Ühispank, the Latvian Unibanka and the Lithuanian Vilniaus Bankas.

Swedbank had an ownership stake in a small Estonian bank and, by buying Swedfund's shares and merging with other Swedfund-supported banks, managed to gain a foothold in the bank Hansapank, which they gradually took over.

Through state aid, both social democratic and right-wing governments had eagerly paved the way for businesses and banks to enter and conquer these new markets in Estonia, Latvia and Lithuania.

With a stable banking system in place, the foundation was laid for major investments and capital inflows. American economics professor Jeffery Summers described the situation in an interview with Lithuanian media outlet LRT:

“If you are Swedbank or SEB and you come to Riga, it's like being a Spanish Conquistador in the 16th century. You see wealth everywhere, all these great buildings and none of them are loaded with any debt. So you start loading debt on them, injecting money into the economies. Anyone could get a loan at this time.”

The Baltic tigers?

Between 2000 and 2007, the Baltic countries had the highest growth rate in Europe – eight to ten percent a year – and were seen as an economic miracle – the ‘Baltic Tigers’. All the economic curves were pointing upwards. But under the leadership of Swedish banks, a huge bubble had been created.

Between 2000 and 2007, the Baltic countries had the highest growth rate in Europe / Image: Y1337, Wikimedia Commons

In the autumn of 2008, Swedbank, SEB and Nordea's total lending in the Baltics amounted to SEK 425 billion. Swedbank had SEK 200 billion in loans, SEB had SEK 150 billion and Nordea had SEK 75 billion.

The banks competed to gain market share, lending absurd amounts to anyone who wanted to borrow. They had dreams of expanding into Russia and establishing a new version of the domination Sweden had enjoyed during the 17th century – this time through credit and banking services.

According to Summers, around 70 percent of these investments were used for speculation, mainly on housing and consumption, instead of actual production. Banks were chasing and finding quick cash. In the year before the crash in 2009, the three former Soviet republics accounted for a third of Swedbank's profits and a fifth of SEB's.

The two big banks together made 25 billion in profits in 2004-2009 alone. Other large companies such as Telia were also able to earn billions of euros in their new foreign markets, which often constituted their most profitable divisions.

The financial crisis

The capitalist crisis of 2007-2009 exposed the growth of the previous years for what it was: a massive speculation bubble of loans that could not be repaid.

The Swedish banks had been peddling cheap money for many years. They were like doctors who turned their patients into addicts to keep them in a profitable state of dependence. In Latvia, which would be hardest hit by the crisis, nine-tenths of loans to households and businesses were in foreign currencies, with Sweden as the biggest lender. But all three countries were in a similar situation.

When Parex Bank, the second largest bank in Latvia, came close to collapse in November 2008, the crisis became a fact. In Latvia’s negotiations for an emergency loan, the IMF, Sweden and the other imperialists – who had made a fortune in the good years – were quick to say: we will not pay.

The IMF’s negotiations with Latvia on the emergency loan were led by the Swede Jens Henriksson, later CEO of the Stockholm Stock Exchange and Swedbank, among others. He was handpicked for the position by the Governor of the Swedish Central Bank together with the Moderate Swedish Finance Minister Anders Borg, who had been a close friend of Henriksson and had made him godfather to one of his daughters.

They made sure that Latvia did not devalue its currency, the lats, as this would reduce the value of its foreign loans and assets. Instead, Latvia would have to make terrible cuts to one-tenth of its state budget.

Public employees' salaries in Latvia were cut by up to 40 percent. Half of the country's hospitals were closed, as were many schools. In autumn 2009, food sales fell by 23 percent compared to the previous year. It was a starvation diet for the Latvian working class, which was now sacrificed for the profits of the Swedish banks.

Meanwhile, Swedish Finance Minister Borg made sure to publicly vent his dissatisfaction with the cuts, which he argued had been insufficient. He urged the Latvian government to go further.

In October 2009, journalist Didzis Melbiksis wrote in a response in Expressen, under the headline “Stop tormenting us Latvians, Sweden”.

“It is impossible to cut back ... as Sweden promptly demands, without Latvia falling apart. Anders Borg and Fredrik Reinfeldt [the Swedish PM at the time] know this very well. But they continue to squeeze their already weak neighbour – for the sake of the big Swedish banks. The same banks that created the Latvian loan bubble that has now burst.

“... Latvia has already undergone massive cuts. The poor pensioners, like my visually impaired father, have to pay dearly even though they are not one bit to blame for the crisis. Teachers and doctors are paid so poorly that, as one hospital director told me recently, ‘there are no swear words in our lexicon to describe it’. Public service broadcasting is on the brink of collapse.”

‘Ambassadors for the European idea’

The most vulnerable were made to pay in order to protect the riches of the capitalists, in particular the Swedish capitalists. During the crisis, the real wages of already poor Balts fell by around a fifth. Unemployment tripled to around 20 percent in all three countries and remained high for many years.

On top of that, there were massive public sector cuts and tax increases on consumer goods. Almost 10 percent of the Latvian population fled the country and 80,000 people left Lithuania in 2010 alone.

These were reminiscent of scenes from a war-torn country – and it was the work of Swedish imperialism: the destruction of education, health and social care on a mass scale. A population reduced to poverty and hundreds of thousands fleeing in desperation.

But the vultures were satisfied. In 2014, on the 25th anniversary of the fall of the Berlin Wall, the three Baltic presidents were honoured for their crisis management with the ‘Golden Victoria’ award, presented by the German media association VDZ.

The German president hailed his colleagues as ‘ambassadors of the European idea’. What exactly that idea is is not hard to see: the right of banks and corporations to plunder and exploit.

At the beginning of the Ukraine war, Swedish Prime Minister Magdalena Andersson gave an agitated speech against Russia / Image: President.gov.ua, Wikimedia Commons

“No room for spheres of influence”

At the beginning of the Ukraine war, Swedish Prime Minister Magdalena Andersson gave an agitated speech against Russia: “The Kremlin claims that Ukraine belongs to a special Russian sphere of influence. But in today's Europe there is no room for spheres of influence.”

The question is: what else can you call the interests of Swedish capital in the Baltics – vigorously supported by the Swedish government?

First, the experts were sent, then the traders – and this year Swedish soldiers are being sent to Latvia to defend the interests of Swedish capital in the Baltics, by military means if necessary. The only thing that separates the deliberations of our hypocritical Swedish politicians from those of Mr Putin or Mr Trump is their ability – as a small nation on the fringes of Europe – to impose their interests on others.

Instead of asking the politicians of capital to defend the rights, peace and prosperity of the people, we must rise up and overthrow them and the capitalists. The vultures circling over Eastern Europe have nothing to offer workers in Sweden or the Baltics.