Situated on the Scandinavian peninsula with Norway to its west, Sweden is a densely forested country with numerous lakes. The north of Sweden falls within the Arctic Circle; much of the south is fertile and widely cultivated. Sweden has one of the most extensive welfare systems in the world, and is among the world's leading proponents of equal rights for women. Its economic strengths include high-tech industries, such as Ericsson, and car production, most notably Volvo and Saab. Unlike neighboring Norway, it joined the EU in January 1995.

As in all of Scandinavia, the nuclear family forms the basis of society. The birthrate is low with, on average, fewer than two children per family. Marriage is declining, and cohabitation outside marriage is common.

Swedish society has an egalitarian tradition. The role of the state is seen as providing conditions allowing each person to gain economic independence through employment. The welfare system is one of the most extensive in the world. However, in the early 1990s, recession reduced benefits; mothers in particular face problems with the closure of childcare facilities. Women make up nearly half the workforce. Over 40% of MPs are women, the highest percentage in the world. In 1999 the Swedish cabinet became the first in the world to have a majority of women ministers.

Sweden has generous asylum laws, and immigrants comprise about 10% of the population. A 17,000-strong minority of Sami live in northern Sweden. Their traditional way of life is protected.

The Evangelical Lutheran church was disestablished in 2000.

Strengths

Companies of global importance, including Saab, Volvo, Electrolux and SKF, the world's biggest roller bearing manufacturer. Highly developed and constantly updated infrastructure. Sophisticated technology. Skilled labor force virtually bilingual in English.

Weaknesses

Labor costs remain uncompetitive. Highest taxation in the OECD, accounting for over 60% of GDP. Peripheral location, raising costs for producers and exporters. Ericsson, giant telecoms company, suffere major losses.

Profile

The state plays a significant role in the economy, particularly the services sector and infrastructure. Sweden's industrial giants have mostly been private-sector companies. Although the early 1990s saw a shift in economic policy to favor business, greater growth did not follow, and unemployment and welfare costs drove up the budget deficit to one of the OECD's highest in 1994. Growth has now resumed, the deficit has been cut back, unemployment halved, but inflation has started to rise. The world downturn in 2001 brought the krona under pressure. Sweden opted not to introduce the euro from 1999, but the ruling SAP adopted a pro-euro stance in March 2000; the issue is to be decided by national referendum.

Sweden is a constitutional monarchy with an elected parliament under the leadership of the prime minister.

Profile

Politics have traditionally been split between the SAP and trade unions on the left, and a host of moderate center and right-wing parties. Since the 1930s, the SAP has governed every term, except in 1976–1982 and 1991–1994. A shift to the right in 1991 was reversed in the 1994 elections, but the SAP failed to gain an absolute majority of seats. Ingvar Carlsson, SAP leader, formed a minority government but resigned in 1996 and was replaced by Göran Persson. The SAP lost ground in elections in 1998, leaving Persson more heavily dependent on support from the Left Party and the Greens.

Main Political Issues

EU membership

Sweden joined the EU in 1995 with Austria and Finland, but, like the UK and Denmark, has opted out of introducing the eurozone. It supports EU membership for central European states.

High cost of the welfare state

The cost of the welfare system contributed to enormous budget deficits in the late 1980s and early 1990s. While this has been brought under control, social security pressures remain from the relatively high level of unemployment and the growing number of pensioners.

Sweden's main recent foreign policy concern has been adjustment to EU membership, which it achieved in 1995. In 1998 parliament voted to join the Schengen passport-free zone linking nine EU states. In the 1980s, Sweden was a vociferous critic of the USA's antagonistic policy toward the USSR. Since the collapse of the Soviet Union, and more recently the September 2001 attack on the USA, Sweden has altered its traditionally neutral stance. Sweden has WEU observer status, and participates in NATO exercises and several UN peacekeeping operations.

Sweden's sophisticated and powerful military force is supplied with weaponry manufactured by its advanced home defense industry, including Saab fighter jets and Bofor antiaircraft guns. However, with the end of the Cold War, strategic priorities have changed. Sweden feels less bound to its neutral stance; it has participated in NATO's Partnerships for Peace program since 1994 and has WEU observer status. In 1999 spending cuts were announced, foreshadowing halving the size of the armed forces, because of the reduced military threat in the Scandinavian and Baltic region. A ten-year reform program began in 2001, offering personnel regular office hours and canceling large-scale exercises.

Sweden is rich in minerals, including iron, copper, and silver. While mining and quarrying account for only 0.3% of GDP, they underpin other industrial sectors. In a referendum in 1980 Sweden decided, on environmental grounds, to abandon nuclear power – which in the 1990s accounted for about half of electricity generation – by the year 2010. However, problems in securing sufficient new energy supplies and in reducing consumption meant that, by the end of 2000, only one of the country's four nuclear reactors had been closed down.

Since its pioneering Environment Protection Act in 1969, Sweden has invested heavily in environmental protection measures. It has blamed the considerable acid rain damage to forests and lakes on airborne sulfur dioxide from factories in western Europe. Swedish nuclear reactors are said to be very safe, with filtered venting systems designed to retain 90% of all radioactivity released in the event of a core meltdown. Nonetheless, one of the main reactors is due to be shut down by 2003.

Maintaining and improving transportation links are of prime concern in what is Europe's fourth-largest country. Swedish governments have traditionally spent large sums on infrastructure, as a way of boosting the economy as a whole.

A 16-km (10-mile) Øresund road and rail link by bridge and tunnel connecting Malmö with Copenhagen opened in 2000, providing Sweden with a new road and rail link with Denmark and the rest of Europe. A new rail link between Arlanda airport and Stockholm is also planned. By law, cars must travel with their headlights on at all times, and there are very strict regulations against drink-driving.

Sweden's health care system is comprehensive and of a universally high standard. Spending fell by an average of 2% in real terms in the 1990s, but the trend is now being reversed. Savings have been made by increasing outpatient care, reducing hospital beds, and cutting jobs. Since 1994 individuals have had the right to choose their own doctor, while doctors and specialists can now set up private practices. In 1999 the government agreed to compensate more than 60,000 people subjected to enforced sterilization in 1935–1975.

Education spending (public and private) is among the OECD's highest as a percentage of GDP.

Coeducational comprehensive schools are the norm. The higher education system is freely available to most of the population, and many adults return to college to do further courses.

Crime rates are below the European average, although they are the highest among Scandinavian countries. Assault, rape, and theft are growing problems, especially in the cities.

Sweden has small income differentials, and Swedish executives are paid less than some of their European counterparts. Social competition and a sense of hierarchy are limited compared with other European states or the USA. Despite some cuts in services, the welfare system still rates highly in Europe.

Swedes are keen overseas property buyers, particularly of villas in Italy and France. Net overseas per capita investment remains among the highest in the world and about two-thirds of households own shares. PC ownership is high, and over 50% of Swedes had Internet access by 2001.

Sweden expanded rapidly as a tourist destination in the 1970s and 1980s. Stockholm is renowned for the beauty of its setting, its Old Town, and the Vasa, a magnificent 17th-century warship raised from the seabed in the 1960s.

Sweden has fewer lakes than Finland, and lacks Norway's dramatic scenery, but it has many natural attractions. The mountains of the "Midnight Sun" lie north of the Arctic Circle, while the southern coast has many white sandy beaches. The vast tracts of deserted landscape and the simple country communal living also attract visitors, but the cost of travel to Sweden means that most visitors come from other Scandinavian countries and Germany.

Sweden's history has been closely linked to the control of the Baltic Sea and its highly profitable trade routes. Under the house of Vasa, Sweden became a major power, controlling much of the Baltic region. By the 18th century, however, Sweden's position had been eroded by its regional rivals, particularly Russia.

• 1814–1815 Congress of Vienna. Sweden cedes territory to Russia and Denmark. Period of unbroken peace begins.
• 1865–1866 Riksdag (parliament) reformed into a bicameral structure.
• 1905 Norway gains independence from Sweden.
• 1911 First Liberal government.
• 1914 Government resigns over defense policy.
• 1914–1917 Sweden remains neutral but supplies Germany. Allied blockade.
• 1917 Food shortages. Conservative government falls. Nils Edén forms a Liberal government: limits exports contributing to German war effort.
• 1919 Universal adult suffrage.
• 1921 Finland gains Åland Islands as retribution for Sweden's war role.
• 1932 Severe recession. Social Democrat government under Per Albin Hansson elected.
• 1939–1945 Sweden neutral. Grants transit rights to German forces.
• 1945–1976 Continuing Social Democratic rule under Tage Erlander establishes Sweden as world's most advanced welfare state, and one of the most affluent.
• 1950 Gustav VI Adolf becomes king.
• 1953 Nordic Council member.
• 1959 Founder member of EFTA.
• 1969 Erlander succeeded by Olof Palme as prime minister.
• 1973 Carl XVI Gustaf on throne.
• 1975 Major constitutional reform. Riksdag (parliament) becomes unicameral with a three-year term. Role of monarchy reduced to ceremonial functions.
• 1976 SAP loses power. Nonsocialist coalition led by Thorbjörn Fälldin in government.
• 1978 Fälldin resigns over issue of nuclear power. Ola Ullsten prime minister.
• 1979 Fälldin prime minister again.
• 1982 Elections. SAP forms minority government. Palme returns as prime minister.
• 1986 Palme shot dead. His deputy, Ingvar Carlsson, succeeds him. Police fail to find killer.
• 1990 Carlsson introduces moderate austerity package, cuts government spending, raises indirect taxes.
• 1991 Sweden applies to join EU. SAP wins election but is unable to form government; Carlsson resigns. Carl Bildt, leader of MS, forms coalition of nonsocialist parties in middle of serious recession.
• 1992 Austerity measures succeed in reducing inflation but SAP refuses to support further spending cuts.
• 1994 EU membership terms agreed. Elections return SAP to power. Referendum favors joining EU.
• 1995 Joins EU.
• 1996 Carlsson resigns; replaced by Göran Persson.
• 1998 Persson remains in office, despite SAP losses in elections; dependent on Left and Greens for parliamentary majority.
• 2001 Defense reform program begun: personnel work office hours, large-scale exercises canceled.