HELSINKI — Sweden is moving swiftly to defuse the potential for a catastrophic nose-dive in trade with Arab nations by proposing bridge-building and damage-limitation diplomatic talks.

The moves come in the wake of the dramatic fallout over the ruling Socialist-led government's decision not to renew a five-year defense-industrial cooperation with Saudi Arabia.

Tensions between Sweden and Middle Eastern countries heightened following remarks by senior Swedish government officials, including Foreign Minister Margot Wallström, which described Saudi Arabia's track-record on social and legal freedoms as "oppressive" and "medieval."

The response from Arab nations was swift. Wallström's invitation to address a meeting of the Arab League in Cairo on March 9 was canceled. In protest, both Saudi Arabia and the UAE recalled their ambassadors from Sweden. Moreover, Saudi Arabia notified Sweden that it has stopped issuing business visas to Swedish nationals and companies, a move that Sweden fears other Arab states will could follow.

Wallström has defended herself from criticism from Arab nations, including the Organization of Islamic Cooperation. The minister contends that her comments of Saudi Arabia's human rights record was not an attack on Islam.

"My observations are not an attack Islam as a world religion. We have very many Muslims in Sweden. This government will do everything it can to restore our relationship with the Saudi government," she said. "We intend to use all our diplomatic tools to ensure that we can restore our bilateral relationship." saidWallström said.

Battling criticism from political quarters and industry leaders in Sweden, Socialist Prime Minister Stefan Löfven's Cabinet has turned to the cross-party National Advisory Council (NAC) for strategic direction on how best to overcome the present crisis with Saudi Arabia and the Arab world.

"We will work to normalize relations. We want to re-establish good relations, and do not want this situation with Saudi Arabia to continue," Löfven told reporters. "We intend to work seriously and systematically to restore relations." said Löfven (Press briefing, Stockholm).

Significantly, the government's damage-limitation plan has also resulted in the convening of a roundtable meeting chaired by Mikael Damberg, the minister for enterprise and innovation (MII), with senior executives from Sweden's top 50 companies within the niche areas of defense, engineering, IT, metals, construction and services' exports.

The meeting was held as against a backdrop where the government moves moving ahead with plans to launch its 2020 Global Exports Drive in partnership with the country's leading firms. industrials.

"This was a meeting of listening and exchanging views on the current situation from corporations active in the Middle Eastern region," Damberg said. "It was to deal with any problems they may be encountering, and misunderstandings that may have arisen. We looked at how we can best help each other." saidDamberg said.

A priority, according to Damberg, is to accelerate dialogue to "normalize relations" with Saudi Arabia in order to prevent current tensions from "spreading to more countries."

"We must emphasize that the government's decision not to renew our military collaboration with Saudi Arabia had the support of a very strong political majority in the Swedish parliament," said Damberg said.

The government's handling of the defense-industrial cooperation agreement with Saudi Arabia undermines Sweden's reputation as a reliable trading partner globally, said Pieter Reeman, a political analyst based in The Hague.

"In some respects, the Swedish government traded the potential for a crisis on the homefront if it backed a military cooperation deal with Saudi Arabia for a political-trade crisis on the international front, which has hurt its relations with all Arab states and not just Saudi Arabia," said Reeman said.

The Swedish government is now clearly in a relations-building "repair mode," Reeman said.

"The government has even sought the support of Sweden's royal family in helping to mend relations with Saudi Arabia and the Muslim world. The final mend could, potentially, produce a settlement where the government may reconsider its deal breaker and even re-engage with Saudi Arabia to produce a diluted alternative form of defense-industrial collaboration," said Reeman said.

The crisis with Arab nations over the spurned defense-industrial agreement could hurt impact negatively on Sweden's chances to generate support for its efforts to secure a seat at the UN Security Council in 2017-2018, said Karin Enström, the opposition Moderates spokeswoman on foreign affairs, and defense minister in the previous center-right administration.

"In the case of Saudi Arabia and the Muslim world, we need to keep all channels for trade and political dialogue open, especially to those we may be critical of," she said. "Strong relations are at the root of good diplomacy. This is the foundation that enables countries like Sweden to make a difference in the world." Enström said.

Sweden's arms exports totaled amounted to around $1 billion in 2014. According to the Stockholm International Peace Research Institute, SIPRI, the Stockholm-based think tank, Sweden is currently ranks as the world's 11th biggest weapons exporter.

Furthermore, exports to countries where democratic freedoms and human rights have been called into question by past and present Swedish governments have ranged between 20 and 25 percent in the period 2004-2014.

Not all political parties in Sweden support the government's push, "at any cost," to repair trade and political relations with Saudi Arabia. The Liberal Party is concerned that the government's fixation on restoring strong relations with Saudi Arabia could affect impact on the outcome of the parliamentary Military Materials Export Oversight Committee's (MMEOC's) / Krigsmaterielexportöversynskommittén) work to produce a new set of proposals to tighten weapons export rules to so-called "undemocratic states."

"It is already evident that the government's statements on Saudi Arabia have become more reverential in tone," said Allan Widman, the Liberal's' spokesman on defense. "The government has made a decision not to renew defense-industrial cooperation, and it should not move from its commitment,"

The cross-party MMEOC was to have presented its recommendations in mid-April. However, the flaring of the trade-political crisis with Saudi Arabia contributed to a two-month delay. The committee's findings are now due to be handed in to the government in June.

"The postponement may be coincidental, but it may also be influenced by a new political reality to both tone down both the language used and proposals on restrictions on defense exports to so-called undemocratic states," Reeman said. "Referring to certain Arab nations as dictator states has been a common feature of similar-type reports in the past." said Reeman said.

The state-run Inspectorate of Strategic Products (ISP), together with the Export Control Council, are responsible for screening military equipment sales and issuing export permits under Sweden's existing legislative compliance and controls. Established in 1996, these two agencies operate under the direction of State trade and foreign affairs departments.