Total Defense: How small, neutral Sweden built a large arms industry

More than 60,000 of them were created, they were in service in 84 countries around the world and managed to visit the battlefields of almost all wars – from World War II to the modern Russian-Ukrainian war.

Meet the Bofors 40mm, a legendary anti-aircraft gun that has already become a symbol of its era. Its development began back in 1928, and almost a century later, its "descendant" – the Bofors L70 – defends the Ukrainian skies.

Here's another example: the CV90 or Stridsfordon 90, one of the first NATO-standard infantry fighting vehicles to appear in Ukraine in 2023. This 38-ton vehicle has one of the best levels of protection among its competitors, especially when compared to its Soviet counterparts.

Both of these weapons systems are united by their homeland, Sweden. Sweden is rarely associated with military power – rather with peace, neutrality and a welfare state.

And therein lies the paradox: the policy of neutrality has forced Sweden to build one of the most efficient defense-industrial complexes in the world. As early as 2023, it has significantly strengthened NATO's capabilities, and the country has reached annual arms exports of $3 billion.

This story about a small state with limited resources that was able to turn neutrality into a powerful incentive for the development of the defense industry is an invaluable experience that can also be a lesson for Ukraine.

Total defense

The history of the modern Swedish defense industry began in the 17th century. Rich deposits of iron ore and endless forests gave the country a foundation for the development of metallurgy and mechanical engineering.

This is how the first gunsmiths appeared – from the Husqvarna factory to the state-owned Carl Gustafs Stads Gevärsfaktori factory, which produced rifles that quickly found demand abroad.

Despite a century of neutrality, World War I hit Sweden hard. The British blockade and internal political disputes caused a serious socio-economic crisis.

After the war, Sweden set about rebuilding its economy and successfully capitalized on the growing demand for steel, timber, pulp, and manufactured goods. However, challenges arose again: the 1921–22 crises and the Great Depression in the United States had a painful impact on production and exports.

In the 1930s, two decisions were made that forever defined the face of the country.

The first is the concept of folkhemmet ("people's home"), which became the foundation of the famous "Swedish model." It combined a market economy with a strong welfare state that cared for the well-being of citizens.

The second was the adoption of the idea of Totalförsvaret ("total defense"), which became the basis of the defense-industrial complex. Its main principle was simple and strict: neutrality is only possible when a country is able to defend it.

This concept involved not only the army, navy, and air force, but also the entire society. Men were subject to compulsory service and mobilization, while women were involved in medicine, administration, or logistics.

Shelters and government bunkers were built in cities, strategic reserves of fuel, food, and ammunition were created. The economy also became part of defense: factories were designed so that in case of threat they could be instantly converted to military use.

But Totalförsvaret was not only a strategy – it was also a psychological project. Every citizen had to be aware of their responsibility for the country and understand that neutrality is not a granted peace, but daily work and readiness to defend their home.

A century-old industry of innovation

Unlike Israel's defense-industrial complex, which was essentially built from scratch, Sweden's was built on deep traditions. Companies like Bofors and Carl Gustafs Stads Gevärsfaktori had existed for centuries and had a strong industrial base. This gave the country a unique start.

The development of its own defense industry became a logical continuation of the concept of "total defense", where independence and self-sufficiency were key conditions.

Swedish weapons were created taking into account the realities of the country: the complex landscape, climate, and likely application scenarios.

It was then that the legendary Bofors L60 anti-aircraft gun was born – one of the most successful in the world. It proved so successful that it was used by both sides in World War II. However, Bofors was not limited to anti-aircraft guns: the company produced tank barrels, naval and land artillery of various calibers, as well as ammunition.

But the real breakthrough came in 1937, when Sweden decided to create its own aviation industry. Thus was born Svenska Aeroplan Aktiebolaget, or SAAB - the future symbol of Swedish innovation.

"Our country should produce as much of its own weapons as possible. We have good shipyards and arsenals, but we do not produce military aircraft," Prime Minister Per Albin Hansson emphasized in 1936.

Within a few years, the Saab 17 saw the light of day – the first Swedish bomber and reconnaissance aircraft, then the Saab 18 and the revolutionary Saab 21, which went down in history as one of the first aircraft with an ejection seat for the pilot.

Given the task of creating a powerful aviation industry as a response to external threats, SAAB began to actively cooperate with the state. It was this symbiosis between the state, industry and scientists that allowed Sweden to create a new technological giant.

The conditions in which Sweden found itself left no choice: innovation had to become the main value. After the end of the war, the company immediately began to move towards the creation of jet aircraft.

The result was not long in coming – during the Cold War, the world saw the Saab 29 Tunnan ("flying barrel"), the first successful European jet fighter with a swept wing.

Then came the Saab Draken and Saab Viggen, Western Europe's first supersonic fighter and one of the first aircraft to feature a digital flight computer. They looked so futuristic that they resembled machines from the Star Wars universe – even before they were on the screen.

The Viggen managed to intercept the fastest aircraft in history, the American SR-71 Blackbird, five times. On one occasion, the Swedish fighter even escorted an American with a faulty engine, earning it a special place in aviation history.

The key to SAAB's success was the ability to combine state demand with private initiative in the "Triple Helix" model: the state set strategic goals, science created innovations, and industry quickly implemented them in production.

This is how SAAB became and remains one of Sweden's "crown" industrial assets.

Although SAAB remained private, the company received priority in strategic projects – from fighters and radars to submarines. Over time, other giants – Bofors and FFV-Carl Gustaf – came under SAAB's wing. Even after part of their assets were bought out by the American United Defense Industries, and later BAE Systems, SAAB retained the ability to produce a wide range of weapons, from aircraft to artillery.

At the same time, Sweden did not forget about armored vehicles. In the 1950s and 1960s, preparing for a potential invasion by the USSR, the country set itself the task of creating a tank that was no longer offensive, but purely defensive. So Bofors created the unique Strv 103.

Its low profile, powerful gun integrated into the hull, hydropneumatic suspension and gas turbine engine all made it unique for its time. The Strv 103 could move backwards as fast as forwards, and its design was ideally suited to the Swedish defensive strategy and landscape.

The Strv 103 became a symbol of how Sweden creates weapons not for "prestige", but for its own needs.

A country with a gray past

After the end of the Cold War in 1991, Sweden, which had built its security on the principle of "total defense" for decades, decided that times had changed.

It seemed that the new European security architecture made mass mobilizations and powerful military production unnecessary. The army began to be reduced, the defense budget was reduced, and many units were disbanded.

This also hit the industry hard – entire sectors of defense production found themselves on the verge of decline.

In such conditions, companies involved in weapons production were forced to look for new approaches, especially since they already had experience with this.

In the 1980s, a high-profile scandal erupted with Bofors, which escalated into the largest political crisis in India: the company paid a bribe of $60 million to obtain a contract for the supply of FH-77B howitzers worth $1.4 billion.

This story made Stockholm think about systemic control, and in 1996 the Strategic Products Inspectorate (ISP) was established, which was given the authority to inspect deals and regulate the export of weapons and dual-use goods. To maintain transparency, the Export Control Council (ECC) was also introduced, which was supposed to approve risky contracts.

But even such steps did not protect against new crises. In 2012, the country was rocked by the "Project Simoom" scandal: it was revealed that Sweden had secretly collaborated with Saudi Arabia to build a munitions factory.

Although the arms deal to Riyadh had not previously been a secret, the scale and format of the deal could have violated Swedish law. The leak sparked public outrage, with the opposition saying the country could not cooperate with a dictatorship.

An attempt to keep the project secret and hand it over to private companies only deepened the crisis, leading to the resignation of Defense Minister Sten Tolgfors. The incident forced the government to tighten regulations, and in 2018 a "democratic criterion" was introduced : arms sales were only allowed to countries that respect human rights, democracy, and gender equality.

However, the new rules have not always worked smoothly. In 2019, Sweden, together with Finland, banned arms exports to Turkey over its operation in Syria against the Kurds. However, in 2022, both countries lifted the embargo so that Turkey would not block their accession to NATO.

It's not just Turkey that Stockholm has had a mixed relationship with. In Yemen, Sweden was one of the largest humanitarian donors to civilians, while continuing to supply weapons to Saudi Arabia, which was waging war there.

The reason is simple – the ban only applied to new contracts, while old agreements remained valid.

In addition to political scandals, the industry had another challenge – competition. SAAB with the Gripen fighter entered a market already dominated by the Eurofighter, Rafale, F-16, Su-30/35 and Chinese counterparts.

To survive, the company has relied not only on selling finished aircraft, but also on exporting technology and licensed production. In Brazil, Gripen E is assembled locally, which gave the country access to advanced technology, while the Czech Republic has leased aircraft, which allowed it to strengthen its air force without huge one-time costs.

But the main problem remained – dependence on imports. The Gripen C/D and the newest Gripen E are equipped with General Electric engines, which ties part of Sweden's defense capabilities and activities on the global market to Washington's political decisions.

Still, the fact that the country was able to create its own fourth-generation fighter is impressive. Where Germany, Britain, Italy, and Spain had to join forces for the Eurofighter, Sweden did it itself, albeit with imported components.

Return to roots

The situation for Sweden changed dramatically after 2014. The annexation of Crimea and Russia's aggressive policy in Eastern Europe forced Stockholm to abandon the illusion of security and reconsider its own defense strategy.

It was then that the concept of "total defense" was revived, integrating military and civilian structures into a single system. Mobilization reserves began to be formed, and investments were made in shelters, strategic reserves, and critical infrastructure.

In 2017, the state even reinstated mandatory military conscription, which had been abolished in 2010.

At the same time, the FMV Defense Procurement Agency was created, which not only conducts procurement, but also forms technical requirements and concludes long-term contracts with national manufacturers.

This model allowed the state to guarantee the expected volume of orders, and manufacturers to plan the development and expansion of production capacities.

Additionally, the Inspectorate for Strategic Products (ISP) was given the authority to monitor foreign investments, verify strategic agreements, and the results of scientific research to prevent the leakage of critical technologies.

Following Russia's full-scale invasion of Ukraine in 2022, Sweden announced an increase in its defense budget to over 2% of GDP and embarked on a strategic rapprochement with NATO. It now spends almost 2.7% of GDP on defense, exceeding most European allies.

In 2023, the parliament voted to join the Alliance, and in March 2024, the country became a full member. This was a real historical turning point: a state that had maintained neutrality for more than two centuries officially switched to a position of collective defense.

In parallel, the government developed a long-term financial program that directed funds not only to the military, but also to the civilian part of "total defense."

It finances large-scale rearmament and creates debt instruments for investments in production, which guarantees stable orders and allows companies to boldly expand capacity.

At the same time, the state stimulates the localization of production, supports the diversification of supply chains, and attracts resources from European initiatives for the development of the defense industry.

Innovation has not been forgotten either. Through the Vinnova agency, the government has launched special programs for civil-military developments, subsidies and grants for small and medium-sized businesses, as well as tax incentives for R&D, which help keep engineers and laboratories in the country.

All this yielded tangible results: in 2024, Swedish arms exports reached 29 billion kronor (approximately 2.9 billion US dollars), and the country's defense-industrial complex entered a new stage of development, combining the traditions of "armed neutrality" with the realities of collective security.

Sweden could become a strong partner for the Ukrainian defense industry as well. Hints of this have been heard since 2023, when a framework agreement was signed on joint production, service, and training for CV90 infantry fighting vehicles.

Sweden not only provides military support, but also allocates tens of millions of euros to purchase weapons from Ukrainian factories according to the "Danish model."

In the same year, the parties signed a letter of intent to jointly manufacture defense products in Sweden – combining Ukraine's combat experience with Sweden's powerful technologies and industrial base.

And Ukrainian President Zelenskyy said in his address that "a strong project for decades regarding combat aviation" is being prepared with the Swedes. He was probably talking about JAS 39 Grippen aircraft.

So perhaps, over the years, Ukraine and Sweden will strengthen each other both in the face of the Russian threat and in the global market.