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A Swedish soldier during World War II

As in the First World War, Sweden remained officially neutral during World War II, although its neutrality during World War II has been disputed. Sweden was under German influence for much of the war, as ties to the rest of the world were cut off through blockades. The Swedish government felt that it was in no position to openly contest Germany, and therefore made some concessions. Sweden also supplied steel and machined parts to Germany throughout the war. The Swedish government unofficially supported Finland in the Winter War and the Continuation War by allowing volunteers and materiel to be shipped to Finland. However, Sweden supported Norwegian resistance against Germany, and in 1943 helped rescue Danish Jews from deportation to Nazi concentration camps.

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Raoul Wallenberg

During the last year of the war, Sweden began to play a role in humanitarian efforts, and many refugees, among them several thousand Jews from Nazi-occupied Europe, were rescued thanks to the Swedish rescue missions to internment camps and partly because Sweden served as a haven for refugees, primarily from the Nordic countries and the Baltic states. The Swedish diplomat Raoul Wallenberg and his colleagues ensured the safety of tens of thousands of Hungarian Jews. Nevertheless, both Swedes and others have argued that Sweden could have done more to oppose the Nazis’ war efforts, even if it meant increasing the risk of occupation.

Post-war era:

Sweden was officially a neutral country and remained outside NATO and Warsaw Pact membership during the Cold War, but privately Sweden’s leadership had strong ties with the United States and other western governments. Following the war, Sweden took advantage of an intact industrial base, social stability and its natural resources to expand its industry to supply the rebuilding of Europe. Sweden received aid under the Marshall Plan and participated in the OECD. During most of the post-war era, the country was governed by the Swedish Social Democratic Party largely in co-operation with trade unions and industry. The government actively pursued an internationally competitive manufacturing sector of primarily large corporations.

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Tage Erlander (left), Prime Minister under the ruling Swedish Social Democratic Party from 1946 to 1969.
Sweden was one of the founding states of the European Free Trade Area (EFTA). During the 1960s the EFTA countries were often referred to as the Outer Seven, as opposed to the Inner Six of the then-European Economic Community (EEC).

Sweden, like many industrialized countries, entered a period of economic decline and upheaval following the oil embargoes of 1973–74 and 1978–79. In the 1980s several key Swedish industries were significantly restructured. Shipbuilding was discontinued, wood pulp was integrated into modernized paper production, the steel industry was concentrated and specialised, and mechanical engineering was robotized.

Recent history:

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Sweden joined the European Union in 1995 and signed the Lisbon Treaty in 2007.

A bursting real estate bubble caused by inadequate controls on lending combined with an international recession and a policy switch from anti-unemployment policies to anti-inflationary policies resulted in a fiscal crisis in the early 1990s. Sweden’s GDP declined by around 5%. In 1992, a run on the currency caused the central bank to briefly increase interest rates to 500%.

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