Sweden has said it would provide several hundred billion dollars in liquidity guarantees to Nordic and Baltic energy companies to avert a financial crisis sparked by Russia’s Gazprom shutting the Nord Stream 1 gas pipeline.
Prime Minister Magdalena Andersson warned that Sweden was facing the prospect of a “war winter” because of Europe’s energy crunch, and said the exact details of the guarantees remained to be worked out.
Speaking to reporters on Saturday, Andersson said the guarantees were aimed at giving energy groups “the breathing room that is needed”.
She said there was “a clear security policy agenda behind Russia’s actions”.
Moscow has blamed sanctions imposed by the West following Russia’s invasion of Ukraine for impeding routine maintenance on the pipeline, but some European Union officials have accused Russia of using energy as a weapon.
“Russia’s energy war is having serious consequences for Europe and Swedish households and companies, especially in southern Sweden which is dependent on electricity prices in Germany, which in turn is very dependent on gas,” she said.
“This threatens our financial stability. If we don’t act soon it could lead to serious disruptions in the Nordics and Baltics,” she said.
“In the worst-case scenario, we could fall into a financial crisis.”
The announcement came after Russia said on Friday it was cutting off the Nord Stream gas pipeline to Germany indefinitely due to what it said were leaks in a turbine – deepening Europe’s difficulties in securing winter fuel.
The closure is expected to lead to even higher production prices for electricity companies when the market opens on Monday.
Speaking at the same news conference, Finance Minister Mikael Damberg said the government will put forward a proposal that allows it to issue credit guarantees, adding that all of the country’s parliamentary parties and the speaker had been informed.
Damberg also said the Swedish decision would “secure financial stability not only in Sweden, but in the entire Nordic region”.
The guarantees were expected to be in place on Monday before the stock market closing and would cover all Nordic and Baltic actors within the next two weeks.
Sweden’s parliament has been called in from its summer break to hold a vote on the government’s proposal on Monday.
Sweden is experiencing its highest inflation in 30 years, and the central bank has raised rates twice this year, with more steep hikes expected before yearend.
Soaring electricity bills, rising interest rates and stalling economic growth have dominated campaigning ahead of the general election on September 11.
On Wednesday, Damberg said the government expected to have $8.36bn available to help ease consumers’ pain of record electricity prices this year and next.