Sweden's PM refuses to resign after cyber security scandal

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(Bloomberg) -- Sweden’s prime minister, Stefan Lofven, defied speculation he would resign and instead replaced a number of ministers in his Cabinet amid a political crisis triggered by a government agency’s failure to protect classified data.

“I don’t want political chaos in Sweden, that’s not what we need right now,” Lofven said. “I will take responsibility and ensure we don’t get a political crisis.” But opposition members were already signaling they weren’t satisfied with the steps taken, and Lofven’s government remains far from secure.

The prime minister said Sweden’s home affairs and infrastructure ministers will leave the Cabinet, as parties representing a majority in parliament prepared no-confidence motions against them. But Lofven told reporters he will keep his defense minister, arguing the specific motion against him was “not serious.”

The announcement follows speculation the prime minister would himself be forced to resign, or call an early election, in response to the deepening scandal. With the reshuffle, Lofven is buying himself time to negotiate with parliament.

A day earlier, Anna Kinberg Batra, head of the Moderate Party that leads the opposition, had blamed Lofven for throwing Sweden into “a serious security crisis.”

Lofven had started the week with a pledge to begin an investigation into the Swedish Transport Agency’s decision to outsource its IT operations to IBM in 2015. The agency ignored warnings from the Swedish Security Service, and sidestepped rules on outsourcing. Romania and the Czech Republic were among countries handling the contract, with foreign personnel who didn’t have Swedish security clearance gaining access to classified information. This included data on military vehicles, protected identities and Sweden’s register of drivers’ licenses.

Not EnoughMoments after Lofven’s announcement of a reshuffle on Thursday, some opposition parties signaled the steps taken didn’t go far enough, with renewed pledges to continue with the planned no-confidence motion against the government’s defense minister.

In a tweet, Danske Bank’s chief economist for Sweden, Michael Grahn, said it’s likely the defense minister “will fail” to survive the motion. “If so, Lofven will resign?”

The opposition Christian Democrats, which had backed the original no-confidence motions against all three ministers, were quick to underline their determination to pursue the defense minister. The party’s “decision stands,” Ebba Busch Thor, Christian Democrat leader, wrote on Twitter.

“Confidence in the defense minister is exhausted,” she said. “The prime minister hasn’t taken responsibility -- so we will demand responsibility in parliament.” The anti-immigration Sweden Democrats also said they remained committed to a no-confidence vote.

SEB AB, one of Sweden’s biggest banks, also said the defense minister was unlikely to escape a no-confidence motion. “The opposition will continue to put pressure on the government to show political strength,” SEB wrote in a note to clients.

Swedes first learned of the breaches in July after the agency’s director general was fired and fined by prosecutors. Lofven says the government acted as soon as the situation was made known to the Justice Department. He says he was first informed of the issue in January.

--With assistance from Niclas Rolander and Kim Robert McLaughlin

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