Martin Hagström: Swedish businesses should be more aware of opportunities in Cyprus and vice versa

“During my tenure, I would in particular like to see Swedish businesses becoming more aware of the opportunities that exist for them in Cyprus, and vice-versa, shares Martin Hagström, Ambassador of Sweden to Cyprus.

Speaking as part of the GOLD magazine’s February Cover Story, featuring 11 heads of diplomatic missions in Cyprus, Hagström also outlines the lessons that Cyprus can draw from Sweden’s successful energy transition and also talks about the historical ties between the two countries, gives an insight to Sweden’s socioeconomic development.

You are one of the frontrunners in developing a digital currency (e-krona). How is this project progressing and what lessons can the European Central Bank learn in its own efforts to create a digital euro?

Swedes tend to be early adopters when it comes to new technology and this has been extremely helpful, I think, in the development of a strong tech sector in Sweden which, in turn, has helped to drive development further. Of course, this can also create new challenges. One area in which this Swedish mindset has had a huge impact is payments, where we have seen a very strong shift away from cash. When asked, fewer than one in ten people in Sweden say that they made their last purchase in a shop with notes and coins. This is down from some 40% in 2010. As a result, Sweden has one of the lowest shares of cash in circulation in Europe. Personally, I cannot remember when I last used cash in Sweden…Instead of cash, payments are mostly made through private solutions like bank cards and, to a growing extent, an app developed by the major Swedish banks. Our Central Bank, the Riksbank, has been laying the groundwork for a potential implementation of the e-krona through a three-year pilot project, concluded in 2023. The purpose was to develop the tech and to investigate possibilities and hurdles. At this moment, however, there is no political decision to implement a digital currency in Sweden.

Nevertheless, concerns have been raised about whether cash could be entirely abolished, considering the potential risks of cyber-attacks or power crises hindering digital payment solutions. How can these fears be addressed?

This is true. As I said, the shift from cash in Sweden has mainly been driven by the behaviour of consumers and markets, which tend to find it easier not to have to deal with cash. This has led to a situation where some shops, kiosks and restaurants no longer accept coins and notes at all. And if you go to a Christmas or flea market in Sweden, it is quite common that cards are also not accepted and payments can only be made by using the app I mentioned. This poses some challenges, for example for foreign tourists but also for people with disabilities and the elderly, who may not be fully prepared to use digital solutions. It can also be a problem in different emergency situations and crises. Government inquiries have investigated this and different proposals are under consideration to make the system more accessible for all and more resilient from a civil preparedness point of view. For instance, the Governor of the Riksbank wants to see a system where some categories of shops are required to accept cash by law. Despite its falling popularity, there is also no discussion about abolishing cash in Sweden. Quite the opposite: all Swedes are officially recommended by the Civil Contingencies Agency, as well as the Riksbank, to hold cash in small denominations to cover our needs for one week, in case of crisis. Statistics from the Central Bank indicate that this is largely adhered to and that the demand for cash in Sweden increased after Russia’s full-scale invasion of Ukraine in 2022.

The Turkish parliament has given its long-awaited approval to Sweden’s membership of NATO. What does this mean for relations between the two countries?

Membership of NATO is a very high priority issue for Sweden. It constitutes a major shift in our security policy orientation, after more than two hundred years of neutrality and non-participation in military alliances. The Turkish ratification was an important milestone in this process. As soon as all current NATO member countries have finalised their ratifications, we look forward to becoming an active ally, deepening and widening our relations with all the other members of the Alliance.

Riksbank Governor Erik Thedéen recently indicated that Sweden’s growing crime problem is damaging the country’s long-term economic potential. He also added that high levels of trust act as a buffer in the economy, enhancing productivity and growth and if trust is eroded, businesses will face increased security costs. How do you see this crisis unfolding and how can it be tackled?

We do see a worrying increasing trend of gang-related violent crime in Sweden, which was for a long time one of the countries in Europe with the lowest levels of deadly violence and these levels were falling. Today, Sweden is a bit above the European average, at a level of deadly violence last seen in our country in the beginning of the 1990’s. The change has happened mainly in the last decade and, of course, this has created a lot of concern among the population, in particular in a traditionally high-trust society, as you mention. Countering this development is one of the most important priorities of the Swedish government and it has set in motion a far-reaching reform agenda, including new legal possibilities for police work and courts, longer sentencing times for relevant crimes, a stronger focus on victims of crime, and a special focus on young offenders, both in terms of sentencing and preemptive social work.

According to a recent report by Eurostat, Sweden used the most renewable energy in the EU in 2022, with nearly two-thirds of its gross final energy consumption derived from renewable sources. What lessons could Cyprus take from the Swedish example?

It is true that Sweden has the highest contribution of renewables in the energy mix in the EU. We have traditionally had a large share of hydro power generation and in the last two decades wind power generation has grown from almost nothing to about 20% of our electricity production. Sweden is currently the largest net exporter of electricity in the EU, thanks in part also to our nuclear power, which is also set to grow in the future. Of course, we also have a strong focus on energy saving. Conditions differ greatly when it comes to energy production and use in different countries but perhaps one take-away from Sweden, relevant also to Cyprus, is the use of conditions related to our natural geography for producing renewable energy. In Sweden, this has meant a strong traditional focus on hydro, bioenergy and, more recently, an expansion of wind power. In a similar vein, we now see an important growth of solar power in Cyprus, which is also attracting Swedish investors. At the Embassy, we are looking into Swedish technical solutions and know-how, which could be relevant in the ongoing green transition of Cyprus, not least in the area of energy efficiency.

Are there any specific policy changes that you believe would be instrumental in further boosting bilateral relations between Cyprus and Sweden?

As fellow EU member states, Cyprus and Sweden are already close partners, and we have a rich common history. Since coming here, I have been impressed by the close and longstanding relations we have in the field of archaeology, starting from the Swedish Cyprus Expedition 1927-1931 and continuing in various ways to this day. The more than 28,000 Swedes who served in UNFICYP over the years, many of whom still regularly visit the island, the hundreds of thousands of Swedish tourists who have spent quality time on the island and the enormous popularity of halloumi in Sweden are but some examples of the strong foundations of our relations. For more than a decade, the Embassy has also been involved in an important confidence-building initiative, focused on human rights and the facilitation of dialogue among the religious leaders of Cyprus. As an Embassy, we want to continue to build on all these existing relations and ties. During my tenure, I would in particular like to see Swedish businesses becoming more aware of the opportunities that exist for them in Cyprus, and vice-versa.

What do Swedish citizens find attractive about Cyprus as a tourism destination? Are there any initiatives underway to further promote tourism and foster enhanced collaboration between the two nations in this pivotal sector?

Cyprus remains a very popular destination among Swedish tourists and it is easy to understand why. When I returned from spending Christmas and New Year’s Eve in Stockholm, the difference in temperature was almost 40 degrees! Seeing how many Cypriots flock to Troodos when there is snow, I see a strong potential also for more Cypriot winter tourists to Sweden. And in the summer too, to relax a bit from the heat. Apart from that, the promotion of stronger trade and business ties between our countries is one of the most important priorities of the Embassy. Many Swedish companies and brands are already present in the Cypriot market but we see a clear potential to increase this. We have asked our trade promotion agency, Business Sweden, to look into areas where a strong Swedish offering and Cypriot plans could meet. Some areas, at which we are now looking more closely, are the green transition, new digital solutions and health.

What can you tell us about the number of Swedish citizens residing in Cyprus and their main occupations?

As an Embassy, we advise all Swedes to register with us when they stay in Cyprus. But we are, of course, aware that not all feel the need to do so, which means that we do not have exact numbers. Our current estimate, however, is that there are a couple of thousand Swedes residing in Cyprus, on a more or less permanent basis. Many are retired citizens, enjoying the Cypriot winter in particular. Many also work with services for the Swedish market, in tourism, as teleworkers or in IT and finance services companies. As with most foreign nationals in Cyprus, we see a particular concentration along the coast.

How do you perceive Cyprus’ lifestyle and culture? Are there specific aspects of local life that have left a lasting impression on you during your time here?

Living in Cyprus has been a very positive experience for me and my family, although I must admit that the summer heat has sometimes proven to be a bit more of a challenge than we perhaps expected! With Nicosia as a starting point, the whole island is easily accessible and we have realised that there is a lot to discover, from ancient heritage and mountain village tavernas to the beautiful beaches. And we have only just started our explorations. I have also found the Cypriots to be very open, friendly and accessible. Personally, I really enjoy this time of the year, when the island turns green and is less crowded. And from a Scandinavian point of view, the sea temperature is still perfectly tolerable.

(This interview first appeared in the February edition of GOLD magazine. Click here to view it.)