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DE RUEHSM #0625/01 2740517
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O 010517Z OCT 09
FM AMEMBASSY STOCKHOLM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4768
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUEAWJB/DEPT OF JUSTICE WASHDC IMMEDIATE
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1068

UNCLAS SECTION 01 OF 02 STOCKHOLM 000625 
 
STATE PLEASE PASS TO USTR DAVID WEINER 
 
TREASURY FOR RON BLOOM, DAVID WRIGHT, ERIC MEYER 
 
SIPDIS 
 
SENSITIVE, PLEASE HANDLE ACCORDINGLY 
 
E.O. 12958: N/A 
TAGS: KIPR EINV ETRD PREL SW CM
SUBJECT: SWEDEN ASKS FOR U.S. VIEWS ON CHINESE PURCHASE OF VOLVO AND 
SAAB, AND WHETHER WE'D WANT TO PRESS CHINA BEFOREHAND 
 
This is an action request.  Please see paragraph 2. 
 
¶1.  (SBU) Summary:   During a meeting with the Ambassador, Swedish 
State Secretary for Enterprise Goran Hagglund described "very strong 
Chinese interest" in buying 100% of Volvo-cars, which is owned by 
Ford, and 30-40% of Saab which is owned by GM. He said his 
government had asked the companies to hold off any announcing any 
deals involving China to give the Swedish government time to talk 
with the Chinese government about IPR and other trade concerns (i.e. 
Chinese tariffs on cars imported into China.) He argued that China's 
eagerness to buy into these U.S. companies gave Sweden and the U.S. 
a limited time with leverage to press for IPR and trade-related 
guarantees.  Hagglund asked whether the possible sales to China 
posed concerns for the USG, and whether we'd like to coordinate with 
Sweden on raising such concerns with the Chinese government. 
Regarding the future of the Saab sale, Hagglund said GM and the 
Swedish Government would have to plan future actions based on the 
fact that the designated Norwegian buyers Koenigseeg had been less 
than forthright in their dealings with GM and the Swedish 
government. He also briefly discussed the sale of Opel and areas for 
broader U.S.-Sweden cooperation.  End Summary 
 
¶2. (SBU) ACTION REQUEST: Please provide guidance on how Post should 
respond to the question of whether the USG has concerns over the 
possible sale of Volvo and GM to Chinese firms, and whether we'd 
want to join the Swedish government in raising such concerns with 
the Chinese government.  Please also advise whether rules for USG 
review of foreign investments would apply to Chinese purchases of 
Volvo and Saab.  End Action request. 
 
Good Communication with Ford and GM 
------ ------ ------ ------ ------ 
 
¶3. (SBU) On September 28, the Ambassador paid his initial courtesy 
call on State Secretary for Enterprise Goran Hagglund.  Hagglund 
described the good communication and cooperation he has with Ford 
regarding Volvo and GM regarding Saab.  He said he talks with Ford 
every other week, and with GM every day. 
 
¶4.  (SBU) Hagglund said that Ford is not in a position where it must 
sell Volvo, but has decided that it has no room for Volvo in its 
future focus on "one Ford."  Despite the fact that GM is driven by 
economic necessity to sell Saab, Hagglund said, his government would 
treat both companies equally.  He noted his government's position 
that there would be no Swedish government ownership of either 
company. 
 
Koenigsegg Problems with the Saab Purchase 
------ ------ ------ ------ ------ ------ 
 
¶5. (SBU) The Ambassador asked about recent press reports that GM's 
designated buyers for Saab the Koenigseeg group of Norwegian 
investors might not go through with the deal due to ownership 
conflicts within the company.  Hagglund responded that there was 
"some mistrust" within the Koenigseeg group, and in what Koenigseeg 
had been telling the Swedish government and GM. Based on the latter 
Hagglund said, "We need to draw our own conclusions from that about 
what we do in the future." 
 
¶6.  (SBU) Comment:  On August 18 GM announced it had signed a deal 
for Koenigseeg to buy Saab, although certain financing details 
remained to be completed.  The September 30 Swedish press reports 
that Koenigseeg is meeting with the European Investment Bank, which 
will not provide Koenigseeg as large of a loan as they need for the 
purchase.  End comment. 
 
 
Possible Chinese Purchase of Saab and Volvo 
------ ------ ------ ------ ------ ------ 
 
¶7.  (SBU) Hagglund said discussions about Saab included possible 
Chinese co-ownership of 30-40% over the next year. He said there 
were discussions about 100% Chinese ownership of Volvo. He explained 
that because financing was so difficult for the purchase of any car 
company, "unconventional financing, which will involve China in some 
way" was being considered.  He noted, however, that the European 
Investment Bank "was not keen about loans to brands owned by a 
Chinese company," but he did not know if they made a distinction 
between 100% or 30-40% ownership. 
 
¶8. (SBU) Hagglund said his government had told GM it would be good 
for GM to retain part of Saab in some way for several years in order 
to control IPR, and as a message to Sweden and European audiences 
 
STOCKHOLM 00000625  002 OF 002 
 
 
that they are not just "letting it all away." Ministry of Enterprise 
Deputy Director for Research, Innovation and Industry Development 
Hans Pettersson, said his government had advised GM that it could be 
useful to keep a good eye on the business from the inside to detect 
any theft of IPR, and to follow up in the event of any problems. 
 
What Does the USG Think About Chinese Ownership? 
------ ------ ------ ------ ------ ------ ------ 
 
¶9.  (U) Hagglund asked what USG views were on Chinese ownership or 
co-ownership given serious IPR concerns if these valuable companies 
should come under Chinese ownership.  He speculated that suppliers 
and others might want to stop a deal for 100% Chinese ownership of 
Volvo due to IPR concerns. He noted that Sweden believed in free 
trade and open societies, "but we have to deal with real 
circumstances." 
 
Would the U.S. Want to Join Sweden in Raising Concerns with China? 
------ ------ ------ ------ ------ ------ ------ ------ 
 
¶10.  (SBU) Hagglund stressed how eager the Chinese government was 
for Chinese firms to purchase Volvo and Saab in order for China to 
become a major player in the global automobile trade.  He argued 
that Chinese eagerness gave the U.S. and Sweden a limited period of 
leverage to press for guarantees related to our IPR trade concerns. 
He said the trade concerns were China's 40% tariff on foreign cars 
that prevents Sweden and others from importing cars into that 
market. 
 
¶11.  (SBU) Hagglund said he had told Ford that if China is the only 
option at the end, the Swedish government would like enough time 
before announcement of the deal so that governments could talk to 
the Chinese government about "some specific issues." 
 
¶12.  (SBU) Hagglund asked whether the U.S. would like to join Sweden 
in an approach to the Chinese government seeking guarantees related 
to IPR and other trade concerns. 
 
Opel Forced to Sell to Magna? 
------ ------ ------ ------ - 
 
¶13.  (SBU) Discussion then turned to the Opel sale.  Hagglund said 
he had heard that Magna was a political, rather than the 
economically efficient choice.  He said the German Ministry of Trade 
had been forced to accept the sale to Magna due to the pressure of 
the German Parliamentary elections.  Now, he said Spain, Belgium, 
Poland and the United Kingdom were closely watching how Germany 
handles the deal. 
 
Other Areas for U.S.-Sweden Cooperation 
------ ------ ------ ------ ------ ---- 
 
¶14.  (U) The meeting ended with discussion of possible areas for 
U.S.-Sweden cooperation beyond currently robust cooperation on 
alternative energy and clean technology.  Hagglund agreed with the 
Ambassador that there was potential to enhance cooperation between 
Swedish and U.S. entrepreneurs in other areas, and said his 
government would be willing to introduce programs to enhance such 
cooperation.  Specific areas of cooperation would need to be 
discussed further, Hagglund said, but he suggested  innovation and 
women entrepreneurship.  Hagglund said Sweden had done a 
considerable amount of research on women entrepreneurship, and would 
be pleased to share its experience with the United States. 
 
SILVERMAN