Substantial quantities of silver coins minted in Baghdad in the early Islamic era have been unearthed in northern Europe over the last century, the majority of them in Gotland in northern Sweden. The coins - known as 'dirkems' by the Vikings - indicate the wealth of opportunities for trading and raiding expeditions in the Middle East in the early medieval period.
Then as now, the nearby markets of Europe and the Baltic account for most Scandinavian trade, but the Middle East still provides a reliable 3-4 per cent proportion of export revenues. A modest slice of the cake it may be, but for many small and medium-sized companies, the region accounts for a substantial part of their business.
'The Middle East is one of the markets with the greatest potential besides central and eastern Europe,' says Birger Riis-Jorgensen, state secretary for trade at the Danish Foreign Affairs Ministry. 'We have seen significant growth figures recently - last year it was 11 per cent, compared with overall growth of 7.5 per cent in commodity exports to other regions. While it is still not much overall, to individual companies it can be very significant.'
The volume of trade between the Scandinavian economies and the Middle East last year was largely dictated by the economic performance of the main Arab trade partners. Given the comparatively small amount of traffic between the two regions, year-on-year export levels to particular Middle East countries can fluctuate wildly. This effect is exaggerated by the composition of northern European exports, as technology and consumer goods are often the first casualty of spending cuts.
The most striking changes to the trade profile in 2001 were the slump in exports to Egypt, which remained in the grip of recession, and the strong performance of Saudi Arabia, which boosted spending on the back of high oil prices. Finland, which has slender ties to the Middle East in comparison with its neighbours, saw a 52 per cent rise in exports to Saudi Arabia last year, spurred by a series of lucrative orders placed by Saudi Telecom with Nokia.
Iran continued to provide steady business for Scandinavian exporters, while the previously inaccessible markets of Iraq and Libya have begun to feature more prominently in export league tables.
Scandinavian companies are perfect candidates for the lucrative trade in humanitarian supplies to Iraq through the UN oil-for-food programme: food, food-related products and processing equipment are traditional strengths of the Danish and Swedish manufacturing industries, and Iraq featured prominently in the export league tables of both countries last year.
The bulk of Norway's exports are oil and gas, and there has been co-ordination recently between Norwegian producers and the Algerian government over breaking into the European market. In late August, following an official Algerian complaint that producers were not being consulted over the EU's liberalisation of its gas market, the president of Norsk Hydro, Eivind Reiren, commented: 'I think the EU carries some responsibility. It's still very monopoly-like on the buy-side, and I very much agree with the Algerian government'.
Norway's other trade ties with the Middle East are slender ones. While a few Norwegian companies are still active in consultancy work across the region, the country's trade ties were pared back even further last year, mirroring a general decline in exports caused by high wage inflation and a significant strengthening of the krone.
Export figures do not always give an accurate picture of market penetration. 'Nokia, which accounts for at least 30 per cent of Finland's total exports, doesn't give out trade figures. As they are an multinational company they - and we - are never entirely sure which country they are selling from,' says Hans Ottelin of the Finnish Foreign Affairs Ministry. 'Export figures for the UAE are also a little misleading, as they tend to re-export goods to smaller markets from there.'
The picture is also confused by the role played by services in the Scandinavian economies. 'Swedes are very active in the healthcare sector, particularly in Saudi Arabia and the UAE,' says Johan Hagglof of the Swedish Trade Council. 'Besides building hospitals and exporting medical supplies, we also provide doctors and nurses.' Christian Wittenkamp of the Confederation of Danish Industries says that Denmark, has also seen a surge in the number of medical staff looking for recruitment in the Gulf.
Consultancy firms such as COWI figure high on the list of invisible trade between Denmark and the Middle East. As one COWI engineer remarks: 'You could almost say we are exporting Danish competence.'
Besides Saudi Arabia, the Gulf is not a significant market for Scandinavian exports, but analysts say this is likely to change. 'Saudi Arabia is already our number one export market in the Middle East, especially now that their interest in US companies is not as strong as before,' says Ulf Sormark, senior adviser on the Middle East for the Swedish Foreign Affairs Ministry. 'We have recently opened a new embassy in Abu Dhabi, and this reflects a new concentration on the Gulf.'
Maintaining a permanent presence on the ground is a first step to cracking the local market, but does not always guarantee success. 'Our only field office is in Riyadh, which reflects how well we are already doing there,' says Hagglof. 'But we were hoping for business in Kuwait after the Gulf War, when Sweden first opened an embassy there, and it never really fulfilled its promise.'
The growth in exports to countries such as Iraq and Libya indicates that Scandinavian companies are beginning to explore new markets in the region. 'You have a really big mix in the Middle East. Countries like Kuwait and the UAE have excellent risk profiles, but then you have those countries which are close to being basket cases and where we don't have any medium or long-term cover,' says Stefan Karlsson of the Swedish Exports Guarantee Board (EKN). 'Then again, Jordan seems to be moving in the right direction, and Iran has improved tremendously in the last few years.'
Iran is now Sweden's fourth largest export market in the region, accounting for SKr 2,277 million in 2001, a modest 2 per cent drop on the previous year. It is also the largest recipient of export cover from EKN, which has about 7 per cent of its total commitments in the Middle East. The Iranian mining sector has provided an opening for industrial equipment suppliers, and EKN points to the sovereign guarantees offered on most transactions as a major incentive for exporters.
With the rise in anti-US sentiment in the Middle East the Scandinavian countries' reputation for political neutrality is likely to work to their advantage if they are to win a greater share of the export market in the Middle East. 'It is hard to see any objective evidence, but everyone seems to be saying the same thing: that you have a power vacuum which should make it much easier to take a share of the markets,' says Haggloff. 'But it's still a tough region. While we're persuading Swedish companies to look at the market, we're up against the headlines. When our exporters take a step outside Europe they tend to end up in Asia, instead of taking a smaller step to look at opportunities on their doorstep.'