During World War I, Sweden maintained a policy of neutrality, avoiding direct involvement in the conflict while grappling with internal political and economic pressures. Although many Swedish elites, including King Gustaf V, held pro-German sympathies due to cultural ties and mutual concerns about Russia, Sweden did not enter the war. The country maintained armed neutrality, continuing trade with both the Central Powers (Germany) and the Entente (Allied Powers). This trade, especially the export of iron ore to Germany, led to tensions with the Allies and contributed to food shortages in Sweden due to blockades imposed by the Entente.
The resulting economic hardship, exacerbated by poor harvests and public unrest, led to the resignation of the conservative Prime Minister Hjalmar Hammarskjöld in 1917. His government had resisted trading agreements with the Allies to avoid angering Germany. In his place, a liberal-social democratic government under Nils Edén took power, marking the beginning of major political reforms in Sweden, including the eventual implementation of universal suffrage.
In foreign affairs, Sweden intervened briefly in the Åland Islands, which had a significant Swedish-speaking population, during the Finnish Civil War in 1918 but withdrew after Finnish protests. Although Sweden did not sign the Treaty of Versailles that concluded World War I, it joined the League of Nations in 1920. Despite its neutrality, Sweden covertly assisted Germany’s rearmament in the postwar period, helping German companies evade restrictions imposed by the treaty. This support would have lasting effects, contributing to Germany’s military buildup before World War II.