Time Capsule: Sweden and North Korea Volvo Car Dispute in 1974.

Table of Contents

• Background

• Sweden

• Trouble begins

• Aftermath

Background

At the end of the Korean War, North Korea began rebuilding its country and economy. In the 1970s, the North Korean government started importing equipment from Western countries to modernize its economy and industrial infrastructure. Due to these efforts, North Korea was seen by many nations as an emerging economy and viewed by exporters as a potential market for making money.

Sweden

Sweden saw an opportunity to do business with North Korea. Volvo, a Swedish car company, was trying to make inroads into other markets around the world, including the US. Volvo viewed the emerging economy of North Korea as a good business opportunity. North Korea, in turn, saw doing business with Sweden as beneficial, as it would give them access to foreign technology and capital, as well as establish a relationship with the West.

In 1974, the Swedish government and Swedish companies struck a deal with North Korea that included 1,000 Volvo cars (mostly of the 140-series, primarily the Volvo 144 sedans) along with other equipment, costing approximately $73 million at the time. The Swedish government played a key role in facilitating and guaranteeing these trade deals. Due to the strong trade ties between Sweden and North Korea, the Swedish government decided to establish an embassy in Pyongyang.

Trouble begins

Soon after the Swedish government moved to Pyongyang, it became apparent that payments from the North Korean government to its trade partners had stalled or stopped indefinitely. It is unclear whether the leaders in the North Korean government couldn't pay for the order or simply didn't want to. It may have been that North Korea set high economic targets that were not realistically achievable given their existing infrastructure, technological base, and management practices, leading to an inability to pay back what they owed.

Aftermath

While the deals were with Swedish companies like Volvo, the Swedish government was heavily involved through the provision of credit guarantees and subsequent reimbursement when North Korea defaulted. Although the Swedish government reimbursed Volvo, they are still waiting for payment from the North Korean regime. With interest, the total amount now exceeds $300 million. The Swedish government sends annual invoices to the North Korean government in an attempt to recover the money, but there is no response. Tourists and journalists visiting North Korea (under very strict supervision) still see the Volvos driving around the city, which has a very limited number of automobiles.

The Swedish embassy remains in Pyongyang and serves as a protecting power for the US, which does not have an embassy in North Korea, and offers consular services to countries such as Canada and Australia. The embassy becomes especially significant in times of emergency.

@thestandardlens

Time Capsule: Sweden and North Korea Volvo Car Dispute in 1974. In 1974, North Korea received 1,000 Volvo cars and equipment from Sweden b... See more

Thanks for reading, subscribe to The Standard Lens for more.