8. The Policy Watch

The Policy Watch is a weekly update which aims to provide concise insights into the current policy landscape. Tailored for our members and individuals interested in international affairs, this update offers a brief yet comprehensive summary of key developments affecting policy decisions and political trends in the UK, Sweden, and the EU.

CONSERVATIVES LOSES 9TH AND 10TH BY-ELECTION SINCE 2019

On Thursday, two by-elections were held in Wellingborough and Kingswood. Both constituencies had earlier been represented by Conservative MPs who had been removed from their seats.

In both by-elections, the ‘Tories’ lost to ‘Labour’ with Labour’s Damien Egan (44.9%) winning in Kingswood and Labour’s Gen Kitchen (45.9%) winning in Wellingborough.

OFFICIALLY A RECESSION LAST YEAR IN THE UK

According to The Office for National Statistics (ONS), the UK GDP fell 0.3% in the last quarter of 2023. As the GDP also fell during Q3 2023 (0.1%), it has fallen two quarters in a row and, thus, officially fell into an economic recession last year.

The OECD, however, predicts that the UK economy will grow 0.7% this year and 1.2% in 2025.

GOVERNMENT PRESENTS FOREIGN POLICY FOCUS AND PRIORITIES FOR 2024

On Valentine’s Day, Minister for Foreign Policy Tobias Billström presented the Government’s Statement on Foreign Policy for 2024. The Statement formalises the Swedish Government’s focus for its foreign policy, as well as its goals and priorities for the coming year. Among these priorities were the continued support for Ukraine, Swedish NATO membership, and the deepened cooperation with the Nordic and Baltic states.

GOVERNMENT PROPOSE CHANGES TO THE UNEMPLOYMENT INSURANCE SYSTEM

The Swedish Government has proposed alterations to the unemployment insurance system after having earlier agreed with the Sweden Democrats about overhauling the laws. The proposed changes include raising the current ceiling of benefits from 33,000 to 34,000 kronor and, at the same time, introducing a gradual reduction in benefits for long-term unemployment. Furthermore, the proposal also makes the unemployment benefits income-based instead of being based on work duration. This marks the biggest reform of Sweden’s unemployment insurance in 40 years, according to Minister for Labour Johan Pehrson.

The government argues that these changes are necessary to adapt the insurance system to the current job market and encourage more people to qualify for benefits while simplifying reporting requirements for businesses.

SWEDEN COULD MAKE EUROPE SELF-SUFFICIENT IN METALS AND MINERALS NEEDED FOR THE GREEN TRANSITION

A report from the Royal Swedish Academy of Engineering Sciences suggests that Sweden could lead Europe in metal self-sufficiency for the green transition. Led by Magnus Ericsson, the report underscores Europe’s heavy metal consumption versus its low production, proposing Sweden, with its advanced mining sector and mineral-rich geology, as a key player. Ericsson advises market-driven expansion and exploring deals on opening mines in other countries, such as Namibia, as it might be more economically viable than open mines in Sweden.

The report advocates for sustainable mining, increased research, and learning from countries like Canada and Australia for efficient permit processes. Additionally, Ericsson stresses the importance of public awareness and education about the mining industry, with further reports on recycling and land disputes expected from IVA in the spring.

SWEDEN’S ELECTRICITY GRID MIGHT BE A NATIONAL SECURITY RISK

According to DN, Sweden’s electricity grid does not comply with EU regulations on emergency preparedness and constitutes a potential national security risk, with three crucial and mandatory plans incomplete or unapproved since 2017. These plans, including islanding, dead grid restarts, and comprehensive emergency response measures, are designed to ensure grid resilience during crises. Svenska kraftnät, the entity responsible for the plans, is blaming the shortcomings on prioritising daily operations instead of emergency preparedness.

The Swedish Energy Markets Inspectorate has initiated a supervisory case against Svenska kraftnät, and failure to complete the plans by March 2024 could lead to further action.

EU TO SANCTION CHINESE COMPANIES FOR AIDING RUSSIA IN BYPASSING SANCTIONS

The EU is preparing to impose sanctions on companies in mainland China, Turkey, India, and Serbia for allegedly assisting Russia in bypassing sanctions and acquiring dual-use goods (i.e. microelectronics, ball bearings, etc.). The move comes amid reports of China aiding Russia’s invasion of Ukraine and Brussels aiming to finalise a 13th package of sanctions against Russia before the second anniversary of the invasion on Feb. 24.

The proposed sanctions would target four Chinese entities believed to be aiding the Kremlin’s acquisition of European dual-use goods, with the EU urging national governments to strengthen sanctions enforcement. The plan, which also includes entities from other countries such as Kazakhstan, Thailand, and Sri Lanka, seeks to restrict European firms from engaging with these companies, marking the EU’s first open targeting of mainland Chinese companies if agreed upon by all 27 EU governments.

EU TOP DIPLOMAT CRITICISE THE US FOR MILITARY SUPPORT TO ISRAEL 

EU foreign affairs chief Josep Borrell urged the international community, and particularly the U.S., to halt arms supply to Israel due to the rising civilian casualties in Gaza. Borrell questioned the acceptable number of civilian deaths and suggested reevaluating arms provision if concerned about the death toll. He referenced a Dutch court’s ruling to stop supplying components to Israel for F-35 fighter jets.

Borrell’s remarks follow criticism from U.S. President Joe Biden regarding Israel’s response to Hamas, with the death toll from Israel’s bombings after October 7 surpassing 28,000 according to Gaza’s health authorities.

EU OPENS FOR RUSSIAN FROZEN ASSET PROFITS TO BE SENT TO UKRAINE

The Council of the EU has adopted a decision and regulation permitting profits from seized Russian assets to aid Ukraine’s reconstruction, following steps taken by the G7. This decision establishes a legislative route for frozen assets’ profits to support Ukraine via the EU budget under specific circumstances. The Council’s decision sets the stage for potential financial contributions from these profits to aid Ukraine’s recovery and was welcomed by Ukrainian Foreign Minister Dmytro Kuleba, who urges further action in making Russian assets available to Ukraine.

Russia has earlier vowed to retaliate for the freezing of Russian assets.

DIGITAL SERVICE ACT TURNS INTO FORCE

On Saturday, the Digital Service Act came into force for online platforms with fewer than 45 million European users, affecting companies such as Telegram, Spotify, Reddit, OnlyFans, and eBay.

The Digital Service Act aims to ensure user safety, protect fundamental rights, and create a fair and open online platform environment. More Specifically, it compels online platforms to promptly eliminate illicit content such as child sexual abuse material and hazardous products while consistently disclosing their content moderation practices. The legislation will be enforced by the national regulatory bodies in which the companies have their European HQs.

NATO DEFENCE MINISTERS ON NATO DETERRENCE CAPABILITIES AND FURTHER SUPPORT TO UKRAINE

Following the NATO defence minister summit on 15 February, Secretary General Jens Stoltenberg highlighted significant progress in defence investment among European Allies and Canada, with a projected addition of over $600 billion by the end of 2024, aiming for 18 Allies to meet the 2% GDP defence spending target this year. NATO discussed the urgency of increasing ammunition production to support Ukraine and reiterated the Alliance’s readiness to respond to any potential threats, with ongoing exercises showcasing capabilities to defend the eastern flank. Additionally, the Allies affirmed their commitment to Ukraine through various forms of support, including equipment and training, and the establishment of a new NATO-Ukraine Joint Analysis, Training, and Education Centre in Poland.