If Norway's most conspicuously pro-Allied action went largely unremarked in the closing weeks of the war, Sweden was equally fortunate in being spared the consequences of a potentially far more dangerous dichotomy in its conduct towards the belligerents. In May 1918, at virtually the same time as the successful conclusion of a trade agreement with the Allied and Associated powers, Sweden entered into an agreement with Germany over the Åland Islands which effectively acknowledged German hegemony - the 'German Monroe Doctrine' - in the Baltic region. By 1917-18 the future of the Åland Islands had become a contentious issue. On the Swedish side, there was a desire for the permanent demilitarisation of the islands and, in conservative and activist circles, for annexation. King Gustav V in particular remained preoccupied with the idea of Swedish sovereignty over the Ålands. In Russia both the tsarist government (which had fortified the islands in January 1915) and its successor, the provisional government, aimed in the long term at the removal of the 'Åland servitude' of 1856. Germany had used the offer of sovereignty over the islands as a bait to lure Sweden into an alliance in 1915, and did so again in an attempt to influence Swedish policy in 1917-18. In addition, some leading German industrialists advocated annexing the islands to Germany in order to prevent Britain from cutting off supplies of iron ore from Sweden in a future war. Finally, the Åland Islands became an issue in the domestic politics of Finland (which declared its independence on 6 December 1917), as well as in relations between Finland, Germany and Sweden. The Swedish-speaking population of the islands expressed their desire to be rejoined to Sweden, while the Finnish government was determined not to relinquish its sovereignty over them.
German interest in the Åland Islands, largely dormant since the abortive overtures to Sweden of 1915, revived in 1917. The renewed German offensive against St Petersburg in the summer heightened the importance of the islands as one of the outlying defences of the Russian capital. Ludendorff considered occupying the islands but was eventually persuaded that the operation was impracticable and that it would impede the forthcoming peace negotiations with the new Bolshevik regime in Russia (these opened at Brest-Litovsk in December 1917). The political leadership thought differently. Richard von Kühlmann, the new Secretary of State at the Auswärtiges Amt, was attracted by the idea of occupying the islands as a means of strengthening Germany's hold over Sweden both in the short term and after the end of the war. Since, however, Germany lacked the means to carry out the operation, Kühlmann fell back on the option that had been raised earlier in the war: a Swedish occupation of the Åland Islands under German auspices.
Aware of King Gustav V's personal interest in the Åland question, Kühlmann made two secret overtures to the King, on 11 November and 17 December 1917, behind the back of Sweden's new left-wing government. The first requested 'an unofficial but authentic reply' to the question of what the King's attitude would be if Germany captured Åland and then offered the islands for occupation by Swedish troops. Following discussions with his ministers, the King returned a noncommittal reply which did not reject the German offer outright, but suggested that the question could best be discussed at a future peace conference. The second approach referred to the desire of the Åland islanders themselves for union with Sweden and promised to raise the issue in negotiations with Russia on certain conditions, including an increase in iron ore exports to Germany after the war. The King's reply was again cautious but the government clearly took this second German offer seriously. It sent a note on 23 December to Germany, Austria and Turkey (both of the latter powers being signatories of the Paris peace treaty of 1856) requesting that Sweden's interests in the Åland question should be safeguarded in the Brest-Litovsk negotiations. The note did not raise the question of sovereignty but asked that Russia should promise to dismantle the fortifications erected during the war, and proposed complete neutralisation as the best long-term solution to the status of the islands.
Unlike his French and Italian colleagues, Howard was not angered by the terms of the Swedish note. He advised the Foreign Office that Sweden was more likely than either Finland or Russia to keep the Ålands out of Germany's hands, and that Swedish possession of the islands was likely to set up a conflict of interests with Germany, the power striving for Baltic hegemony. Conversely, it would 'create an identity of interests between Sweden, with her control of the entrance to the Baltic, and ourselves in combatting the powers having naval domination in that sea'. On 2 January 1918 Kühlmann responded positively to the Swedish note. On 9 February, shortly before Trotsky dramatically broke off the negotiations at Brest-Litovsk, Kühlmann raised the prospect of neutralising the islands, but since this was of no advantage to Germany while the war lasted, the terms of the German-Russian treaty eventually concluded on 3 March merely stipulated that the Åland fortifications were 'to be removed as soon as possible', with their future status reserved for treatment by a 'special agreement' between Germany, Finland, Russia and Sweden, in consultation with 'other countries bordering upon the Baltic Sea'.
As the Brest-Litovsk talks continued, however, the Åland question became increasingly intractable. On 4 January 1918 Sweden recognised Finnish independence without reservation, but the King still hankered after annexation, a solution which was being demanded with increasing urgency by the Ålanders themselves as the political situation in Finland deterioriated. Following the outbreak of the Finnish civil war at the end of January, the Finnish Whites appealed to both Germany and Sweden for assistance. Germany's foreign policy leadership did not wish to intervene while negotiations with the Bolsheviks were in progress, but tried to persuade the Swedes to do so. Prince Viktor von Wied visited Stockholm in February with the message that intervention offered the last and only chance for Sweden to acquire the Åland Islands. Even the King realised, however, that a military expedition to Finland was a political impossibility. Meanwhile, within the German military leadership and even in the Auswärtiges Amt, opinion was moving against the idea of Swedish possession of the islands. In the light of the trade negotiations in progress between Sweden and Great Britain, Ludendorff had now come round to the view that Finland was a more reliable ally than Sweden: moreover, the Finns had held out the prospect that they might cede the islands to Gemany in return for military assistance.
On 13 February 1918 reports (greatly exaggerated) of atrocities
committed by Russian soldiers on Åland led the Swedish government
to decide to send an expedition to the islands - the 'first time
troops had left Swedish territory in 110 years'. Humanitarian
motives were ostensibly uppermost, but there is little doubt that
the King and Queen, as well as the Minister of Marine, Erik Palmstierna,
were thinking primarily in terms of annexation. A week later,
however, the Germans themselves decided to occupy the islands.
They did so in response to a new request for military support
from the Finnish Whites (itself prompted by the German military
high command following the breaking-off of the Brest-Litovsk negotiations
by Trotsky). The Swedes were informed of the German decision on
21 February and ordered to remove their own forces from the islands,
but were subsequently appeased by a decision that the islands
should be divided between the occupying forces of the two countries.
After Brest-Litovsk, and in the light of the devastating success of Ludendorff's March offensive on the western front, an increasingly assertive note entered into German statements on Baltic questions in general and on the Ålands in particular. They conveyed the message that the war had resulted in a wholly new situation in the Baltic. Germany had won the right to shape the future of the region and Russia was no longer a factor of any significance. Non-Baltic powers were to be excluded from a position of influence - the Baltic agreement of 1908 was cited as a model for future arrangements - and Sweden must face the fact that a settlement of the Åland question was impossible except on Germany's terms. Scandinavian cooperation was desirable as a means of excluding Western influence from the region and erecting a barrier to 'Slavdom and Bolshevism', and for this a close relationship between Sweden and Finland was vital. But however insistent German propaganda might be, the Swedes could not ignore more subtle reminders that the Entente still had a voice in Baltic affairs and the means to make its wishes felt. Howard took every opportunity to assure the Swedish Foreign Minister that Britain favoured Swedish sovereignty over the Ålands, but that this must be achieved through agreement with the Entente - Britain and France were, unlike Sweden or Germany, signatories of the 1856 treaty - and, if possible, by means of an understanding between Sweden and Finland. At a time when Sweden was negotiating for a trade agreement with the Western powers, these arguments were undoubtedly persuasive. Howard was able to observe with satisfaction the way in which Swedish conservatives were coming to regard Germany rather than Russia as the chief threat to Sweden.
In the meantime, however, Sweden had to extricate itself from its Åland entanglements. The Swedish occupation of the islands had led to bitter recriminations with Finland; the German occupation had resulted in a severe loss of prestige for Sweden; the Western powers had indicated that no solution could be reached without their participation. On 25 April the government finally decided to remove Swedish troops from the islands. A few days later Sweden secured German agreement to the publication of a communiqué announcing that Sweden, Germany and Finland were prepared in principle to start negotiations for dismantling the Åland fortifications. The Swedish government appeared to have achieved its immediate objectives: Sweden had not retreated in the face of Finnish protests, and a solution to the fortifications question was in sight. It still held to the view that a definitive settlement of the status of the Åland Islands (entailing, so it hoped, a decision in favour of Swedish sovereignty) could be achieved only through the agreement of all the signatories of the Paris treaty of 1856.
The German government acted swiftly to disabuse the Swedes of the notion that Britain and France could have any say in Baltic affairs. The Swedish minister in Berlin was informed on 8 May of Germany's 'astonishment' that Sweden was still seeking to draw the Western powers into the question. Two days later the Swedish Foreign Minister was told that in Germany's opinion the Åland servitude had lapsed with Russia's fortification of the islands in 1915, and that the question would now be regulated exclusively by the treaty of Brest-Litovsk and the German-Finnish peace treaty of March 1918. The Western powers had no role to play in this or any other Baltic question. In this alarming situation the Swedish government decided to send Trolle to negotiate in Berlin for the second time within a month. On 17 May he achieved a compromise by which Sweden avoided a public acceptance of Germany's interpretation of the 1856 treaty, but secretly promised to enter into no negotiations with the Western powers on the Åland question without Germany's prior consent. When the Swedish government discussed the agreement on 21 May, both the Prime Minister and the Foreign Minister spoke in favour of acceptance. Sweden had no choice in view of Germany's dominant position in the Baltic, and the Western powers had, after all, stated that Sweden had no rights under the 1856 convention. After initial disagreements, the government decided to accept the agreement. Sweden's right to a say in the Åland question would henceforth depend on Germany, but at least Sweden would possess such a right - something which both Germany and the Western powers had hitherto denied.
Sweden had had to pay a very high price for Germany's concession
on the dismantlement question. The government had tried to avoid
becoming dependent on Germany or antagonising the Entente. Now,
however, a left-wing government had entered into an agreement
which entailed precisely those dangers which it had striven so
long to evade. Yet it seemed reasonable to assume, in the spring
of 1918, that Germany would remain the dominant power in the Baltic,
and that Sweden must adapt itself to that reality. No-one could
have anticipated the sudden collapse of German military power
that occurred in the autumn. Even in the absence of a decisive
German victory, therefore, Sweden would have to rely on Germany
if it wished to achieve a satisfactory solution to the Åland
question. Germany's defeat in November 1918 naturally led to the
lapse of the agreement of 17 May. The Åland question now
became one of the many to be dealt with by the peacemakers at
Versailles, and ultimately by the League of Nations. That Germany
had not lost sight of its long-term goals is, however, made clear
by a letter of 13 January 1919 to Lucius from Brockdorff-Rantzau,
now German Foreign Minister. It was no longer possible, he said,
to exclude the Western powers from the Baltic; a Swedish-Finnish
agreement on the demilitarisation of the Åland islands was
thus preferable to an international agreement from the German
point of view. Agreements concluded by Baltic powers among themselves
were still the best way to deny the Entente, especially Great
Britain, a legal pretext to meddle in Baltic affairs. Demilitarisation
of the Ålands was also in Germany's interest since it was
the best means of keeping the Gulf of Bothnia open and securing
German supplies of Swedish iron ore.