Mar 13, 2009

The Swedes are bailing out the Baltics

New York Times: In its deep sense of ownership of the Baltics, Sweden’s own financial self-interest and a broader desire in Europe to avoid a new East-West divide are driving Sweden to spend more money.

Whether it will work to save the Baltics — and whether Swedish citizens will approve — remains to be seen.

Swedish banks have issued loans equivalent to roughly 20 percent of Sweden’s gross domestic product to the Baltic countries, an amount that only a few years ago looked like a wise bet. Now, according to Danske Bank, the loans could cost Sweden a total of 2 percent to 6 percent of its G.D.P. over several years, depending on how many Baltic borrowers default during the recessions ravaging the region.

The strong Scandinavian presence is fairly uncontroversial in the Baltics. The Russian occupation of the three countries for much of the 20th century makes Swedes seem rather benign.

I'm so proud of Sweden, today, for caring about the Baltics. I hope it eventually pays off.

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