April 16, 2018

India-Nordic Summit: Rethink the priorities we accord the five Scandinavian countries

The following article originally appeared in The Hindustan Times on 16 April 2018.

When Prime Minister Narendra Modi arrives in Sweden for the first India-Nordic Summit, one question to ask is why such a meeting took so long to materialise. Modi has already visited several European countries as prime minister, many on stopovers to North America or for multilateral summits, including France, Germany, Ireland, the United Kingdom, Belgium, Switzerland, Spain, Portugal, the Netherlands, and Switzerland.

But as India engages advanced economies in Europe and elsewhere in a bid to derive investment, technology, commercial contacts, immigration and education privileges, and other benefits, the Nordic countries (Sweden, Finland, Norway, Denmark, and Iceland) arguably have something more important to offer. For both political and economic reasons, the Nordic Model provides India a worthy object of study.

In his two-volume work, The Origins of Political Order, political theorist Francis Fukuyama writes about countries trying to ‘get to Denmark’. It is a catchy way of using Denmark as a stand-in for an ideal, well-governed, democratic, peaceful, and prosperous state. Indeed, Denmark and its fellow Nordic countries can be found at or near the top of almost every ranking of good governance. They all rate between 95 and 100 out of 100 for the quality of their democracy according to Freedom House (with Norway, Sweden, and Finland getting perfect scores). Four of them are among the six least corrupt countries, according to Transparency International. They are all among the eight least fragile states according to the Fund for Peace. And Denmark, Norway, and Finland rank among the top eight in government effectiveness according to the World Bank.

What sets the Nordic Model further apart is a strong social welfare state within a free-market framework, a balance that has helped propel their economies forward. Collectively, the five Nordics have a gross domestic product of $1.5 trillion, larger than that of Russia. They are home to enterprising companies engaged in both old (Statoil, Ikea, Maersk, Lego, Volvo) and new (Nokia, Telenor, Spotify) industries. They are sizeable trading nations on a per capita basis, and readily export their culture: consider Abba, Moomins, Lars von Trier, Jo Nesbo, or Bjork. Their socio-economic performances are no less impressive. All five countries have life expectancies of over 80 and feature among the top advanced economies in educational outcomes. Finland, Norway, Denmark, and Iceland rank in the top four of the World Happiness Report (Sweden is 9th).

And yet for all their commonalities, the Nordics have espoused rather different approaches to international relations. Only three of the five — Sweden, Denmark, and Finland — are members of the European Union, and only the last one uses the euro as its currency. Just three — Iceland, Norway, and Denmark — are members of the North Atlantic Treaty Organisation (Nato), as Sweden and Finland opted for neutrality during the Cold War.

Of course, there are some disconcerting signs beneath the surface even in these paragons of good governance. There have been economic setbacks, including a banking crisis in Iceland after 2008 and a recession in Finland more recently, in part due to an over-dependence on one company: Nokia.

The Nordic countries have also not been immune to the European phenomenon of identity politics and flawed multiculturalism contributing to social and political tensions. The recent influx of refugees has sometimes tested the inclusiveness of the otherwise rather homogeneous Nordic societies. In 2015 and 2016, some travel links between Denmark and Sweden were briefly suspended and border controls were re-established due to concerns about illegal migration. Immigrant-heavy Stockholm suburbs have witnessed occasional rioting in recent years. These disruptions have been mirrored in the rise of far Right, anti-immigration political parties. In 2014, the far-Right Sweden Democrats finished a strong third place in general elections, more than doubling their vote share from the previous poll. A year later, the Danish People’s Party became the second largest group in parliament, and supports the government.

In India, bilateral ties with the Nordics have often been in the news for the wrong reasons. For a certain generation, Swedish business became associated with Bofors, the arms manufacturer embroiled in a major corruption scandal that contributed to the fall of the Rajiv Gandhi government in 1989. A citizen of Denmark involved in an arms drop in West Bengal in 1995 became the subject of an extradition dispute that coloured India’s relations with that country. More recently, India and Norway expressed differences over a child welfare spat involving an Indian couple. What should have been relatively minor irritants instead created a widespread perception in India of typically European double-standards concerning corruption, terrorism, and human rights.

But despite the evident downsides and irritants, perhaps it’s time to rethink the priority India accords the Nordic countries. If one were genuinely interested in finding ways to balance social welfare with market reforms, improve governance at the local level, and increase entrepreneurship, it could do no harm to pay a little more attention to a few seemingly small northern European countries.