Ericsson CEO criticizes Swedish Government for closing embassies

subscriber | 22 December, 2007

JOHANNESBURG. Swedish telecom giant Ericsson's CEO Carl-Henric Svanberg criticizes the Swedish governments plans to close embassies in Angola, Botswana and a number of other emerging market countries in a letter, in Africascan's possession, to Foreign minister Carl Bildt and Trade minister Ewa Björling.

Ill thought through closures of embassies, Mr. Svanberg says, could have devastating effects on Swedish competitiveness in a number of emerging markets not the least in Africa. Ericsson, Africa's largest telecom infrastructure supplier by far, holds more than 50 percent of mobile phone infrastructure share in Africa. This amounts to 10 percent of Ericsson's sales in Africa.

"As opposed to EU and OECD countries Swedish presence here (in emerging markets) would have a decisive effect on the ability for Swedish companies to pursue business successfully. Our competitor's governments, not the least China but also Europe and North America, are ever growing their official presence in these markets", says Carl-Henric Svanberg.

The Swedish government last year decided to close down embassies in Botswana and Nicaragua as well as consulates in Gdansk in Poland and Phuket in Thailand. According to new, not yet published plans, it wants to open up in Afghanistan, Belo-Russia and Sudan.

Likewise the plan, not confirmed publicly, is to close down in Angola, which the Ericsson CEO is unhappy about:

"Angola, as a concrete example, is important also for other Swedish companies. There is a clear risk that we will loose out on business deals (most in fact) that are linked to the (Angolan) state or companies close to the Government", writes Carl-Henric Svanberg.

Ericsson has won US $ 100 million underwater cable to Angola and hopes to expand its business with Angola Telecom. Ericsson's fear is that an embassy closure would backfire for the diplomatically hyper sensitive Angolan government - which likes bilateral relations and state-to-state talks.

Swiss-Swedish ABB is also unhappy about a possible closure of the Swedish embassy in Luanda. ABB also has won a contract to roll out an undersea cable. It also hopes to gain when Angola decides on contacts for planned hydroelectric power stations.

Carl-Henric Svanberg also touches upon a Swedish tendency to get out of a country that does not need any further bilateral aid assistance, as is the case with Namibia where the embassy will close next September, as well as Botswana.

"It is very often the case that this (to exit) co-insides with positive economic development, which means that there is an even stronger reason for Sweden to continue to assist and further the aims of (Swedish) export and investment ambitions, which creates revenues and jobs in Sweden", writes the Ericsson CEO.

Swedish Foreign office spokesperson Cecilia Juhlin says that the government is not in the position to comment on Svanberg's (and others) letter at the moment. She confirms the motive is to cut back on the some SEK 2 billion Sweden spends on its embassies across the world. The social democratic opposition is critical to embassy closures and proposes to expand embassy budget allocations.

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