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Sustainable Growth in the Baltic Sea Region Sweden's Prime Minister Fredrik Reinfeldt gave a lecture at the Stockholm School of Economics in Riga headlined 'Sustainable Growth in the Baltic Sea Region', in connection with a February 18th official visit to his counterpart in Latvia, Valdis Dombrovskis.

Gunnar Ljungdahl, Chairman of the Swedish Chamber of Commerce in Latvia and Senior Vice President at the Stockholm School of Economics in Riga, reports:

- Mr Reinfeldt was accompanied by Sweden's Foreign Minister, Carl Bildt, and had, what was described as very positive, discussions with his Latvian colleague and also paid a visit to the President of Latvia, Valdis Zatlers, tells Gunnar Ljungdahl. Fredrik Reinfeldt had also made it a point to give a lecture at the Stockholm School of Economics in Riga. He talked on Sustainable Growth in the Baltic Sea Region to a full auditorium of students, faculty and invited guests, and gave an account of how it was possible for the very export depending Swedish economy to come out in such a good shape from the recent international financial crisis.

- He pointed out that this was due to the fact that Sweden had learnt some lessons from its financial crisis in the early 1990's; the necessity of sound public finances, the importance of an independent central bank and other measures - like his Government's resistance to all requests for subsidies to preserve the low employment level's status quo. Instead Mr Reinfeldt's Government introduced the work-first principle - having one of five Swedes in working age outside the labor market was simply not acceptable.

- The Swedish measures taken on the labor market included lowered income tax by implementing an in-work tax credit for low and medium earners, better conditions for running a business and employing people, and reformation of the unemployment insurance and sickness insurance systems. All this lead to increased labor force participation and a historically high level of employment, when the downturn struck Sweden.

- In Mr Reinfeldt's view the main priorities in his Government's crisis management included sound public finances and achieving a sustainable economic policy. Furthermore he stressed the need to stick to a long term reform programme, based on the insight that every individual wants to contribute and make a difference, and that politics should be used to create the conditions needed to make this possible. For example, Sweden is now making substantial investments in research and development, the largest in Sweden's modern history, concludes Gunnar Ljungdahl.

Fredrik Reinfeldt's lecture in Riga was to a large part connected to what he, and the Minister for Finance Anders Borg, the Minister for Foreign Affairs Carl Bildt, and the Minister for International Development Cooperation Gunilla Carlsson, in a recent Swedish article headlined as ‘A new image of Sweden is emerging':

"In a flurry of international encouragement, where our economy has been likened in strength to Pippi Longstocking, it is important to remember that our strong position builds on long-term reform efforts that have sometimes been very hard. Sweden has drawn important conclusions from previous crises that have affected us."

"The image of a country with a world title in tax burdens on low and middle income earners, a rigid labor market and social insurance systems that pushed people into sick leave and early retirement is now changing", wrote the four Swedish Government representatives.

Fredrik Reinfeldt's speech at the Stockholm School of Economics in Riga is available online here.