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The Game for Yemen: Saudi Arabia and Washington Both Pitch for Socotra Island

Saudi Arabia and the US cooperate – and compete – for control of strategic Yemen island which controls key oil routes and sea ways.

Catherine Shakdam

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It was US Navy Geostrategist Rear Admiral Alfred Thayus Mahan (1840-1914) who once commented:

“Whoever attains maritime supremacy in the Indian Ocean would be a prominent player on the international scene.”

What was at stake in Rear Admiral Mahan’s writings was the strategic control by the US of major Ocean sea ways and of the Indian Ocean in particular:

“This ocean is the key to the seven seas in the twenty-first century; the destiny of the world will be decided in these waters.”

The Rear Admiral was not a visionary, but rather a keen observer whose military background and understanding of nations’ political ambitions allowed him to rise above the immediate, to foresee the ultimate goal – domination.

Yemen of course plays an important role in this race for the Indian Ocean. A nation sitting atop geostrategic waterways, Yemen is in more ways than one a victim of its own dormant political power.

Now, for a quick lesson in geography: The Yemeni archipelago of Socotra in the Indian Ocean is located some 80 kilometres off the Horn of Africa and 380 kilometres South of the Yemeni coastline. The islands of Socotra are a wildlife reserve recognized by (UNESCO), as a World Natural Heritage Site. Socotra is at the crossroads of the strategic naval waterways of the Red Sea and the Gulf of Aden.

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You will note that Socotra allows for the monitoring of the world oil route, offering a bird eye view over both Bab al Mandan and the Strait of Hormuz. Needless to say that this one island has been coveted by more than just one empire … and though the US staked its claim on Yemen long ago, it is Saudi Arabia today which could soon succeed where others have failed.

Among Washington’s strategic objectives has always been the militarization of major sea ways.  This particular strategic waterway links the Mediterranean to South Asia and the Far East, through the Suez Canal, the Red Sea and the Gulf of Aden.

It is a major transit route for oil tankers. A large share of China’s industrial exports to Western Europe transits through this strategic waterway. Maritime trade from East and Southern Africa to Western Europe also transits within proximity of Socotra, through the Gulf of Aden and the Red Sea.

Militarily speaking Socotra stands a perfect vantage point. It was Amjed Jaaved who wrote in 2009 for the Pakistan Observer:

“The [Indian] Ocean is a major sea lane connecting the Middle East, East Asia and Africa with Europe and the Americas. It has four crucial access waterways facilitating international maritime trade, that is the Suez Canal in Egypt, Bab-el-Mandeb (bordering Djibouti and Yemen), Straits of Hormuz (bordering Iran and Oman), and Straits of Malacca (bordering Indonesia and Malaysia). These ‘chokepoints’ are critical to world oil trade as huge amounts of oil pass through them.”

Readers might be interested to know that some 3000 km away from Socotra lies an important military base: the US naval base of Diego Garcia – among America’s largest overseas military facilities.

The missing link in America’s arsenal, Washington was not exactly about to let go of Yemen’s island – territorial sovereignty or not, Socotra would have to be brought into the fold of America’s imperialism … only to be swept off by Saudi Arabia’s very own.

History it happens does not lack irony.

Let’s backtrack to January 2010 – then America was, we were told, coming to terms with the foiled Detroit Christmas bomb attack on Northwest flight 253 … America was scared, the world was calling for answers to its security questions, and of course, Washington neocons were on the prowl for fresh meat.

Need I say that Socotra acted as the proverbial lamb for the slaughter.

On January 2nd, 2010, a high-powered meeting took place between then-President Ali Abdullah Saleh and US General David Petraeus, Commander of the US Central Command.

The Saleh-Petraeus meeting was casually presented by the media as a timely response to the foiled Detroit Christmas bomb attack.   Of course America was in Yemen to guarantee the integrity of its territories – never to expand its military footprint in Southern Arabia! That would be insanity right?!

Can you see where I’m going with this? While I will not play into any conspiracy theory, we cannot deny that Terror’s timing, and its propensity to move in those areas most geostrategically crucial, have had a way of playing to the advantage of our friends in Washington.  Whether by design or opportunism, Washington has played both terror and radicalism to the tune of its own imperialism. I would imagine by now that we can all agree on this?

So there they were: Yemen’s head of state and the powerful US general, playing chess at the expense of Yemen’s territorial integrity.

The meeting, the story goes, had apparently been scheduled on an ad hoc basis as a means of coordinating counter-terrorism initiatives directed against “Al Qaeda in Yemen”, including “the use [of] American drones and missiles on Yemen lands.”

Several reports, however, confirmed that the Saleh-Petraeus meetings were intent upon redefining US military involvement in Yemen, including the establishment of a full-fledged military base on the island of Socotra.

Yemen’s president Ali Abdullah Saleh was reported to have “surrendered Socotra to the Americans who would set up a military base, pointing out that U.S. officials and the Yemeni government agreed to set up a military base in Socotra to counter pirates and al-Qaeda.”

Have you ever wondered how President Saleh became America’s bulwark against terrorism? It was the title the US bestowed upon him! Have you ever wondered why Saleh ever agreed to open Yemen’s land to a foreign power? As often happens in politics: money, and the promise of political longevity.

A day before Gen. Petraeus and President Saleh met mainstream media reported that the US general had announced during a press conference in Baghdad that America’s “security assistance” to Yemen would double from $70 million to a whopping $150 million.

This doubling of military aid to Yemen was presented to World public opinion as a response to the Detroit bomb incident, which allegedly had been ordered by al-Qaeda operatives in Yemen.

Subtitles should then have read that Washington purchased a military lease on the island of Socotra!

The establishment of an air force base on the island of Socotra was described by the US media as part of the “Global war on Terrorism”:

“Among the new programs, Saleh and Petraeus agreed to allow the use of American aircraft, perhaps drones, as well as “seaborne missiles”–as long as the operations have prior approval from the Yemenis, according to a senior Yemeni official who requested anonymity when speaking about sensitive subjects. US officials say the island of Socotra, 200 miles off the Yemeni coast, will be beefed up from a small airstrip [under the jurisdiction of the Yemeni military] to a full base in order to support the larger aid program as well as battle Somali pirates. Petraeus is also trying to provide the Yemeni forces with basic equipment such as up-armoured Humvees and possibly more helicopters.”

Back then the US was already planning to develop Socotra into an important naval base – the military sentinel Washington always dreamt of but could never really pull off by lack of political opportunity.

No? What about this: a few days prior to the Petraeus-Saleh discussions, the Yemeni cabinet approved a US$14 million loan by Kuwait Fund for Arab Economic Development (KFAED) in support of the development of Socotra’s seaport project.

Yemen was all set up to meet America’s demands in exchange for political patronage.

Not exactly alone are we … playing the Game that is

If America has long coveted Southern Arabia for the openings it offers on Africa, the Middle East and of course Asia, the US is not the only power around to have woken up to the importance of Yemen.

Just like Afghanistan saw a great many empires fight over its land-locked territories, so Yemen would experience that too, finding out what it means to stand as a geo-political jewel amongst giants.

This Great Game over Yemen’s waterways dates back to the Soviet era, when Moscow ruled with an iron hand over Socotra and South Yemen. Just like Yemen, or rather, South Yemen, was a pawn in the Cold War between America and the Soviet Union, so unified Yemen still stands as a conquest to be had.

During-the-Cold-War-Russia-established-military-facilities-on-Socotra-The-remnants-of-them-can-still-be-seen-today-

An old Soviet tank – the Soviet Union had military facilities operating on the island during the days of the Cold War.

Petraeus was not the only military official courting Yemen this January 2010. A Russian Navy communiqué in January 25, 2010

“…..confirmed that Russia did not give up its plans to have bases for its ships… on Socotra island.”

Russia lost to the US.  President Saleh was not at that time ready to pull the plug on his American “alliance” and risk losing the power house he had spent decades building around his family.

But selling out to America only served to delay the inevitable.  Quite literally stuck in between a rock and a hard place: imperial America and imperial Saudi Arabia; Yemen stood no chance.

Still, Yemen was not about to throw in the towel … It is in resistance Yemen eventually found itself a path.  Only through resistance could Yemen carve a way forward.

To borrow former World Bank official Peter Koenig’s words: 

“….domination of Yemen is an important step in the Zionist-Anglo-Saxon Empire’s path towards world hegemony. Like Ukraine, Yemen is just another square on the geopolitical chess board which the exceptional nation aims to dominate.”

Today Saudi Arabia accounts among those exceptional nations.

And if the US military coveted Socotra – and Yemen for that matter – a decade before Gen. Petraeus’s coveted catch, it is Riyadh today which is set to reap what Washington sowed.

In 1999, Socotra was chosen “as a site upon which the United States planned to build a signal intelligence system….” Yemeni opposition news media reported that “Yemen’s administration had agreed to allow the U.S. military access to both a port and an airport on Socotra.” According to the opposition daily Al-Haq, “a new civilian airport built on Socotra to promote tourism had conveniently been constructed in accordance with U.S. military specifications.” (Pittsburgh Post-Gazette (Pennsylvania), October 18, 2000)

Allow me to elaborate by pointing out some interesting queries.

Have you ever wondered why the US would stand side by side with Saudi Arabia against Yemen, while Washington exerted so much efforts brokering peace in the impoverished nation in the first place? I would argue the US does not want to see the fruits of its labour in Socotra and Southern Yemen lost.

I would argue that it was Washington’s overt dependence on Saudi Arabia to “look after” its interests in southern Arabia which has created this political mess.  A new exceptional power is rising to the table where empires come to rest.   The Saudi Kingdom propelled itself ahead of the flock, a grand master over its former master.

Like I said … history does not lack irony.

Forget America’s military footprint … Riyadh is now on the prowl – a very oil wealthy, and lobby strong Riyadh!

Here is how Abdul Sattar Ghazali, the Chief Editor of the Journal of America summarized the situation:

“The Bab el-Mandeb Strait is a chokepoint between the Horn of Africa and the Middle East, and it is a strategic link between the Mediterranean Sea and the Indian Ocean. The strait is located between Yemen, Djibouti, and Eritrea, and connects the Red Sea with the Gulf of Aden and the Arabian Sea. Most exports from the Persian Gulf that transit the Suez Canal and SUMED Pipeline also pass through Bab el-Mandeb.

An estimated 3.8 million bbl/d of crude oil and refined petroleum products flowed through this waterway in 2013 toward Europe, the United States, and Asia, an increase from 2.9 million bbl/d in 2009. Oil shipped through the strait decreased by almost one-third in 2009 because of the global economic downturn and the decline in northbound oil shipments to Europe. Northbound oil shipments increased through Bab el-Mandeb Strait in 2013, and more than half of the traffic, about 2.1 million bbl/d, moved northbound to the Suez Canal and SUMED Pipeline.

The Bab el-Mandeb Strait is 18 miles wide at its narrowest point, limiting tanker traffic to two 2-mile-wide channels for inbound and outbound shipments. Closure of the Bab el-Mandeb could keep tankers from the Persian Gulf from reaching the Suez Canal or SUMED Pipeline, diverting them around the southern tip of Africa, adding to transit time and cost. In addition, European and North African southbound oil flows could no longer take the most direct route to Asian markets via the Suez Canal and Bab el-Mandeb.

Any hostile air or sea presence in Yemen could threaten the entire traffic through the Suez Canal, as well as a daily flow of oil and petroleum products that the EIA estimates increased from 2.9 mmb/d in 2009 to 3.8 mmb/d in 2013. Such a threat also can be largely covert or indirect. Libya demonstrated this under Qaddafi when he had a cargo ship drop mines in the Red Sea.”

But what Saudi Arabia you may say?

Well Saudi Arabia has been a keen student of the United States of America when it comes to playing its partners’ weaknesses to weave its own imperial web.

A monarchy without a military, Riyadh was nevertheless able to force nations to do its bidding – chequebook in hand and political threat on the lips. These days, few are the powers who dare to oppose al-Saud’s political will. I would say that the United Nations’ latest run in with the Kingdom this June 2016 firmly anchored that ship.

In February 2016 Press TV ran a report in which it confirmed that resigned Yemeni President Abdo Rabbo Mansour Hadi has leased Socotra to the UAE for a period of 99 years, hoping to encourage Abu Dhabi to support his claim on power.

“Abdo Rabbo Mansur Hadi has offered the Indian Ocean isle to the UAE in an attempt to get Abu Dhabi’s support amid the ongoing conflict in Yemen, the Lebanese al-Mayadeen satellite television channel reported. The report, however, did not elaborate on details of the development. Other reports have suggested that Socotra may come under the US control. The Yemeni island will reportedly be hired for the investments of touristic, economic and navigation fields.”

Through the UAE, Saudi Arabia clearly entered the fray.

Why use the UAE? Because Abu Dhabi needs Yemen on a tight leash if Dubai is to remain the sheikhdom’s golden calf. Let’s not pretend that Southern Yemen would easily rival Dubai given half a chance at growth …

By all accounts Saudi Arabia’s war against Yemen is playing into very important political lay lines – which if we are not careful could soon re-arrange a map of the region we won’t be too happy to look at.

The author is the Programs Director for the Shafaqna Institute for Middle Eastern Studies and the author of Arabia’s Rising – Under The Banner Of The First Imam.  She is currently a columnist for RT, a TV & radio commentator for RT, Press TV, Sputnik, and CCTV.  She has also written for Ayatollah Khameini’s website, al-Akhbar, Epic Times, NEO, Katehon think tank, Mintpress, Foreign Policy Journal and many others.

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“I’m Not A Racist, But I’m A Nationalist”: Why Sweden Faces A Historic Election Upset

Sweden is set to have a political earthquake in September.

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Via Zerohedge


“Trains and hospitals don’t work, but immigration continues,” Roger Mathson, a retired vegetable oil factory worker in Sweden, told Bloomberg on the same day as the violent, coordinated rampage by masked gangs of youths across five Swedish cities.

We noted earlier that Swedish politicians were quick to react with anti-immigrant party ‘Sweden Democrats’ seeing a surge in the polls ahead of the September 9th election.

“I’m not a racist, but I’m a nationalist,” Mathson said. “I don’t like seeing the town square full of Niqab-clad ladies and people fighting with each other.”

Is Sweden set to have its own political earthquake in September, where general elections could end a century of Social Democratic dominance and bring to power a little known (on the world stage), but the now hugely popular nationalist party often dubbed far-right and right-wing populist, called Sweden Democrats?

Sweden, a historically largely homogeneous population of 10 million, took in an astounding 600,000 refugees over the past five years, and after Swedes across various cities looked out their windows Tuesday to see cars exploding, smoke filling the skies, and possibly armed masked men hurling explosives around busy parking lots, it appears they’ve had enough.

Over the past years of their rise as a political force in Swedish politics, the country’s media have routinely labelled the Sweden Democrats as “racists” and “Nazis” due to their seemingly single issue focus of anti-immigration and strong Euroscepticism.

A poll at the start of this week indicated the Sweden Democrats slid back to third place after topping three previous polls as the September election nears; however, Tuesday’s national crisis and what could legitimately be dubbed a serious domestic terror threat is likely to boost their popularity.

Bloomberg’s profile of their leader, Jimmie Akesson, echoes the tone of establishment Swedish media in the way they commonly cast the movement, beginning as follows:

Viking rock music and whole pigs roasting on spits drew thousands of Swedes to a festival hosted by nationalists poised to deliver their country’s biggest political upheaval in a century.

The Sweden Democrats have been led since 2005 by a clean-cut and bespectacled man, Jimmie Akesson. He’s gentrified a party that traces its roots back to the country’s neo-Nazi, white supremacist fringe. Some polls now show the group may become the biggest in Sweden’s parliament after general elections on Sept. 9. Such an outcome would end 100 years of Social Democratic dominance.

The group’s popularity began surging after the 2015 immigration crisis began, which first hit Europe’s southern Mediterranean shores and quickly moved northward as shocking wave after wave of migrants came.

Jimmie Akesson (right). Image source: Getty via Daily Express

Akesson emphasizes something akin to a “Sweden-first” platform which European media often compares to Trump’s “America First”; and the party has long been accused of preaching forced assimilation into Swedish culture to be become a citizen.

Bloomberg’s report surveys opinions at a large political rally held in Akkeson’s hometown of Solvesborg, and some of the statements are sure to be increasingly common sentiment after this week’s coordinated multi-city attack:

At his party’s festival, Akesson revved up the crowd by slamming the establishment’s failures, calling the last two governments the worst in Swedish history. T-shirts calling for a Swexit, or an exit from the EU, were exchanged as bands played nationalist tunes.

Ted Lorentsson, a retiree from the island of Tjorn, said he’s an enthusiastic backer of the Sweden Democrats. “I think they want to improve elderly care, health care, child care,” he said. “Bring back the old Sweden.” But he also acknowledges his view has led to disagreement within his family as his daughter recoils at what she feels is the “Hitler”-like rhetoric.

No doubt, the media and Eurocrats in Brussels will take simple, innocent statements from elderly retirees like “bring back the old Sweden” as nothing short of declaration of a race war, but such views will only solidify after this week.

Another Sweden Democrat supporter, a 60-year old woman who works at a distillery, told Bloomberg, “I think you need to start seeing the whole picture in Sweden and save the original Swedish population,” she said. “I’m not racist, because I’m a realist.”

Sweden’s two biggest parties, the Social Democrats and Moderates, are now feeling the pressure as Swedes increasingly worry about key issues preached by Akesson like immigration, law and order, and health care – seen as under threat by a mass influx of immigrants that the system can’t handle.

Bloomberg explains further:

But even young voters are turning their backs on the establishment. One potential SD supporter is law student Oscar Persson. Though he hasn’t yet decided how he’ll vote, he says it’s time for the mainstream parties to stop treating the Sweden Democrats like a pariah. “This game they are playing now, where the other parties don’t want to talk to them but still want their support, is something I don’t really understand,” he said.

Akesson has managed to entice voters from both sides of the political spectrum with a message of more welfare, lower taxes and savings based on immigration cuts.

With many Swedes now saying immigration has “gone too far” and as this week’s events have once again thrust the issue before both a national and global audience, the next round of polling will mostly like put Sweden’s conservative-right movements on top

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The Turkish Emerging Market Timebomb

Turkish President Recep Tayyip Erdoğan’s populist economic policies have finally caught up to him.

The Duran

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Authored by Jim O’Neill, originally on Project Syndicate:


As the Turkish lira continues to depreciate against the dollar, fears of a classic emerging-market crisis have come to the fore. Turkish President Recep Tayyip Erdoğan’s populist economic policies have finally caught up to him, and sooner or later, he will have to make nice with his country’s traditional Western allies.

Turkey’s falling currency and deteriorating financial conditions lend credence, at least for some people, to the notion that “a crisis is a terrible thing to waste.” I suspect that many Western policymakers, in particular, are not entirely unhappy about Turkey’s plight.

To veteran economic observers, Turkey’s troubles are almost a textbook case of an emerging-market flop. It is August, after all, and back in the 1990s, one could barely go a single year without some kind of financial crisis striking in the dog days of summer.

But more to the point, Turkey has a large, persistent current-account deficit, and a belligerent leader who does not realize – or refuses to acknowledge – that his populist economic policies are unsustainable. Moreover, Turkey has become increasingly dependent on overseas investors (and probably some wealthy domestic investors, too).

Given these slowly gestating factors, markets have long assumed that Turkey was headed for a currency crisis. In fact, such worries were widespread as far back as the fall of 2013, when I was in Istanbul interviewing business and financial leaders for a BBC Radio series on emerging economies. At that time, markets were beginning to fear that monetary-policy normalization and an end to quantitative easing in the United States would have dire consequences globally. The Turkish lira has been flirting with disaster ever since.

Now that the crisis has finally come to pass, it is Turkey’s population that will bear the brunt of it. The country must drastically tighten its domestic monetary policy, curtail foreign borrowing, and prepare for the likelihood of a full-blown economic recession, during which time domestic saving will slowly have to be rebuilt.

Turkish President Recep Tayyip Erdoğan’s leadership will both complicate matters and give Turkey some leverage. Erdoğan has  constitutional powers, reducing those of the parliament, and undercutting the independence of monetary and fiscal policymaking. And to top it off, he seems to be reveling in an escalating feud with US President Donald Trump’s administration over Turkey’s imprisonment of an American pastor and purchase of a Russian S-400 missile-defense system.

This is a dangerous brew for the leader of an emerging economy to imbibe, particularly when the United States itself has embarked on a Ronald Reagan-style fiscal expansion that has pushed the US Federal Reserve to raise interest rates faster than it would have otherwise. Given the unlikelihood of some external source of funding emerging, Erdoğan will eventually have to back down on some of his unorthodox policies. My guess is that we’ll see a return to a more conventional monetary policy, and possibly a new fiscal-policy framework.

As for Turkey’s leverage in the current crisis, it is worth remembering that the country has a large and youthful population, and thus the potential to grow into a much larger economy in the future. It also enjoys a privileged geographic position at the crossroads of Europe, the Middle East, and Central Asia, which means that many major players have a stake in ensuring its stability. Indeed, many Europeans still hold out hope that Turkey will embrace Western-style capitalism, despite the damage that Erdoğan has done to the country’s European Union accession bid.

Among the regional powers, Russia is sometimes mentioned as a potential savior for Turkey. There is no doubt that Russian President Vladimir Putin would love to use Turkey’s crisis to pull it even further away from its NATO allies. But Erdoğan and his advisers would be deeply mistaken to think that Russia can fill Turkey’s financial void. A Kremlin intervention would do little for Turkey, and would likely exacerbate Russia’s own .

The other two potential patrons are Qatar and, of course, China. But while Qatar, one of Turkey’s closest Gulf allies, could provide financial aid, it does not ultimately have the wherewithal to pull Turkey out of its crisis singlehandedly.

As for China, though it will not want to waste the opportunity to increase its influence vis-à-vis Turkey, it is not the country’s style to step into such a volatile situation, much less assume responsibility for solving the problem. The more likely outcome – as we are seeing in Greece – is that China will unleash its companies to pursue investment opportunities after the dust settles.

That means that Turkey’s economic salvation lies with its conventional Western allies: the US and the EU (particularly France and Germany). On August 13, a White House spokesperson confirmed that the Trump administration is watching the financial-market response to Turkey’s crisis “very closely.” The last thing that Trump wants is a crumbling world economy and a massive dollar rally, which could derail his domestic economic ambitions. So a classic Trump “trade” is probably there for Erdoğan, if he is willing to come to the negotiating table.

Likewise, some of Europe’s biggest and most fragile banks have significant exposure to Turkey. Combine that with the ongoing political crisis over migration, and you have a recipe for deeper destabilization within the EU. I, for one, cannot imagine that European leaders will sit by and do nothing while Turkey implodes on their border.

Despite his escalating rhetoric, Erdoğan may soon find that he has little choice but to abandon his isolationist and antagonistic policies of the last few years. If he does, many investors may look back next year and wish that they had snapped up a few lira when they had the chance.

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Why Scandinavia Isn’t Exceptional

Scandinavia is entirely unexceptional.

The Duran

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Authored by Per Bylund via The Mises Institute:


[From the Quarterly Journal of Austrian Economics.]

The Scandinavian countries, and primary among them Sweden, are commonly referred to as anomalies or inspirations, depending on one’s political point of view. The reason is that the countries do not appear to fit the general pattern: they are enormously successful whereas they “shouldn’t” be. Indeed, Scandinavians enjoy very high living standards despite having very large, progressive welfare states for which they pay the world’s highest taxes.

As a result, a large and growing literature, both propagandist and scholarly, has emerged that tries to identify the reasons for this Scandinavian exceptionalism—especially as pertains to their welfare states. I have myself contributed to this literature1 and have previously reviewed others’ contributions to it in this journal.2 But what has been missing is a summary analysis that is accessible to non-scholars. It was therefore a delight to read Nima Sanandaji’s Scandinavian Unexceptionalism: Culture, Markets, and the Failure of Third-Way Socialism, published by British Institute for Economic Affairs.

Dr. Sanandaji is a political-economy analyst and writer, well known in both Sweden and Europe, and as expected does an excellent job summarizing the state of scholarship. He also uses examples and quotes from articles published in Scandinavian news media to illustrate the narrative. The result is a short and informative but easy to read answer to both how and why the Scandinavian welfare states seem to work so well.

The short book provides the reader with insight into Scandinavian culture, an explanation of the causes of the nations’ exceptional rise from poverty, an overview of their recent political-economic history, the distinct structure and evolution of the Scandinavian welfare state, the origins of their egalitarianism and gender equality, and the effect of immigration. I will briefly touch on three of these areas.

First, Sanandaji makes clear that the rosy story of the Scandinavian welfare state, as it is usually told, is at best incomplete. The Scandinavian countries were among the European continent’s poorest by the end of the 19th century and were largely unaffected by the industrialization that had started centuries earlier in the United Kingdom. A combination of classical liberal reform and the adoption of industrialized production created a century-long “golden age,” as Bergh (2014) denotes the period approximately 1870–1970 in Sweden, of economic growth and rapidly rising standards of living.

This growth was partly also made possible by a distinct Scandinavian culture, which is characterized by the “[h]igh levels of trust, a strong work ethic and social cohesion [that] are the perfect starting point for successful economies” (p. 7). As Sanandaji points out, the market-aligned virtues of Scandinavian culture also explain the limited impact of the welfare state as it was erected and ballooned in the 1930s and beyond. Cultural change takes time, and thus old values lag in the face of political change. So it took time for the Scandinavian virtues to give way to the destructive incentives of the welfare state.

It should also be noted, though Sanandaji fails to make this point clearly, that after the welfare state was established, and during its several decades of expansion, it’s growth rate tended to be lower than that of the overall economy. The increasing burden was therefore, in relative terms, marginal. That is, until the radical 1960s and 1970s when Scandinavian governments, and the Swedish government in particular, adopted very expansionist welfare policies. (This political shift is analyzed in detail in, e.g., Bergh.)3

Sanandaji also presents interesting data with respect to Scandinavian gender equality. His discussion begins with the internationally enviable women’s labor market participation rate in Scandinavian countries, and especially Sweden. The background, however, is that Sweden’s government had adopted a radical agenda for population control formulated by Gunnar and Alva Myrdal (yes, the same Gunnar Myrdal who shared the 1974 economics prize with Hayek). The gist of this reform was to enforce a shared responsibility between parents and “the community” for children’s upbringing. By raising taxes on income while offering government-run daycare services, families were incentivized (if not “forced,” economically speaking) to secure two full-time incomes.

Interestingly, while this indeed rapidly increased women’s participation in the labor market, Sanandaji notes that “few women in the Nordic nations reach the position of business leaders, and even fewer manage to climb to the very top positions of directors and chief executives” (p. 102). Part of the reason is that jobs that women typically choose, including education and healthcare, are monopolized in the vast public sectors. As a result, women at trapped in careers where employers do not compete for their competence and many leadership positions are political.

This development is indirectly illustrated in a terrifying statistic from Sweden’s labor market: “Between 1950 and 2000, the Swedish population grew from seven to almost nine million. But astonishingly the net job creation in the private sector was close to zero” (p. 33).

Finally, Sanandaji addresses the issue of immigration and shows that the Scandinavian nations were exceptionally good at integration, with greater labor participation for immigrants than other Western nations, prior to the radicalization of the welfare state. Thereafter, due to rigid labor regulations and vast welfare benefits, immigrants were more or less kept out of Scandinavian job markets.

The literature identifies two potential explanations. First, the anti-business and job-protection policies practically exclude anyone with a lack of work experience, highly sought-after skills, or those with lacking proficiency in the language or limited network. This keeps immigrants as well as young people unemployed (the very high youth unemployment rates in Scandinavia illustrate this problem). Second, the promises of the universal welfare state tend to attract people who are less interested in working their way to the top and thus have a lacking work ethic.

This explains the recent problems in Scandinavia with respect to immigration, which is essentially an integration and policy problem — not a foreign-people problem.

Overall, Sanandaji’s book provides plenty of insights and a coherent explanation for the rise of the Scandinavian nations and their welfare states. Their impressive standard of living is a free-market story, which is rooted in an economically sound culture. This culture also supported the welfare state, until decades of destructive incentives eroded the nations’ sound values. The welfare state, after its radicalization, was soon crushed under its own weight, and Scandinavia has since undergone vast free-market reforms that again have contributed to economic growth and prosperity.

Considering the full story, Sanandaji summarizes the example of the Northern European welfare states simply and bluntly: “Scandinavia is entirely unexceptional.”

  • 1.Bylund, Per L. 2010. “The Modern Welfare State: Leading the Way on the Road to Serfdom.” In Thomas E. Woods, ed., Back on the Road to Serfdom: The Resurgence of Statism. Wilmington, Del.: ISI Books.
  • 2.2015. “Book Review: Sweden and the Revival of the Capitalist Welfare State by Andreas Bergh,” Quarterly Journal of Austrian Economics 18, no. 1: 75–81.
  • 3.Bergh, Andreas. 2014. Sweden and the Revival of the Capitalist Welfare State. Cheltenham, U.K.: Edward Elgar.

Per Bylund is assistant professor of entrepreneurship & Records-Johnston Professor of Free Enterprise in the School of Entrepreneurship at Oklahoma State University. Website: PerBylund.com.

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