Sweden's Deputy PM Comes to Washington with climate change

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TAGS: PGOV PINR PREL ENRG SENV KGHG SW
SUBJECT: Sweden's Deputy PM Comes to Washington with climate change
on the mind

Ref: STOCKHOLM 88


1. Summary. Sweden's Deputy Prime Minister Maud Olofsson is the
pragmatic political leader of the Center Party that holds the
Cabinet positions for energy, environment, industry and agriculture.
She has a strong relationship with PM Reinfeldt and has worked
closely with him recently to reverse a long-standing national policy
banning new nuclear reactors. On climate change, she will start by
pushing for very high 2020 targets, but her pragmatic approach and
desire to work closely with us indicates a lot of room for
accommodation and compromise. Given Sweden's ambition to lead the
EU to a binding international agreement at COP-15, we recommend
engaging with Sweden intensively now, before they become the EU
President.
End Summary.

Background - Reinventing a Left of Center
Party
--------------


3. Maud Olofsson, 58, came up through the ranks of Sweden's Center
Party, called previously the Farmers Party in both Sweden and
Norway. These Center Parties were the original pro-environment and
anti-nuclear parties of Scandanavia in the 1970's through 1990's,
retaining a largely rural, small-town constituency and usually
placing third in national elections in Sweden (behind the Social
Democrats and Moderates). Becoming party leader in 2001, Olofsson
has re-oriented the party to attract more young, urban voters,
especially young women voters, many of whom rewarded Olofsson for
joining with Moderate leader Fredrik Reinfeldt to form an
alternative to the Social Democrats. She and Reinfeldt led the
four-party Alliance to victory in the September 2006 parliamentary
elections.


4. Since the 2006 elections, Olofsson has served as Deputy Prime
Minister with the portfolio of Energy and Enterprises (a combination
of the energy and industry ministries); she also has oversight of
the environmental portfolio through her Center Party colleague
Andreas Carlgren.


5. Olofsson's role in managing the financial crisis, especially her
public refusal to jeopardize taxpayers' money to rescue the troubled
car company SAAB, and her pragmatic approach to the nuclear issues,
has boosted support for the government and for her personally. In a
recent public opinion poll, ranking the party leaders' confidence
among the electorate, Maud Olofsson overtook Soc Dem Party Leader
Mona Sahlin, receiving support from 33 percent of the electorate.
Support for Sahlin is down to around 30 percent compared with 38
percent last year. Olofsson is now second only to Prime Minister
Reinfeldt who has a 52 percent .

A New Energy Policy
--------------


6. The Alliance's strong suit has been its proven ability to make
pragmatic compromises with its coalition partners. A ban on
building new nuclear power plants was for decades the rallying cry
of the Center Party. But when other partners in the Alliance pushed
for a new nuclear policy, Olofsson led her party to a compromise on
nuclear power: allowing the government to reverse the 1997
decision to phase out the country's 10 nuclear reactors. Olofsson
explains the party's new position as joining the others, stressing
that the Center Party got a lot in return, such as investments in
renewable energy. Olofsson plans on making energy and nuclear power
main issues in the parliament during for the 2010 elections.

The Automobile Crisis
--------------


7. The struggling car companies Volvo and SAAB are seen as Sweden's
industrial crown jewels. Saab, the Swedish unit of U.S. carmaker
General Motors, launched a legal restructuring process in Sweden
late last year in order to avoid bankruptcy. As Minister for
Enterprise, Olofsson has publicly announced that the Swedish
government has no intention to give loan guarantees to Saab as long
as the company lacks supportive ownership, and as long as it
"produces products nobody buys." Olofsson explained that she feels
a responsibility for the taxpayers' money. The GOS has not closed
the door on state loan guarantees for Saab, should the company get a
loan from the European Investment Bank, but that would require a new
owner backing up the company's future, per Olofsson. Saab is the
first major industrial crisis this government has faced and this
course set by the government will most likely apply should a similar
case appear in the future. Olofsson draws parallels to the Swedish
textile industry crises and the shipbuilding crises of earlier
decades, when government attempts to nationalize and own these

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industries didn't work.

Swedish EU Presidency and Climate Change
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8. The Government of Sweden has made the climate issue its top
priority during its EU Presidency in the second halfof 2009. PM
Reinfeldt plans to lead the EU to a binding international agreement
at COP-15 in Copenhagen. Sweden is one of two EU members that is
currently on track to meet and exceed its carbon emission targets
under the Kyoto framework agreement. Sweden believes in ambitious
2020 targets, and will push other EU members as well as the US to
adopt them. However, given the pragmatic bent of this Swedish
government, and its strong desire to be seen to work closely with
us, we believe there is a lot of room for compromise in the very
ambitious going in positions bythe Swedes. We recommend taking
advantage of upcoming meetings - like Olofsson's bilateral meetings
in Washington - to bilaterally engage the Swedes and get them on
board our climate talk goals, before they become the EU President in
July.


9. Action request: Maud Olofsson has requested a meeting with S/E
Stern during her upcoming visit to Washington. We understand she
will meet Secretary Chu at 11.15 am on March 30, and a 3 pm meeting
on the same day with Carol Browner is to be finally confirmed. She
further hopes to meet Treasury's senior advisor Ron Bloom to discuss
the ailing car industry. Post recommends both a Stern meeting and a
Browner meeting, as part of our climate talks engagement strategy.

SILVERMAN