By Simon Johnson and Johan Sennero
STOCKHOLM (Reuters) - Sweden has not yet been paid by North Korea for the hundreds of Volvo saloons it imported in the 1970s and which can still be seen on the streets of the communist country.
While the deal was not the commercial success Sweden had hoped for, it serves as a reminder of its long involvement in North Korea. This raises the question of whether Sweden could use its special relationship to act as an intermediary in the nuclear crisis between North Korea and the United States.
The United States has no formal diplomatic relations with North Korea, limiting the options for the two sides to reduce tensions over North Korea's missile and nuclear weapons programs.
Sweden, however, plays a crucial diplomatic role with the secretive government in North Korea, most often seen when it acts on behalf of the West when Westerners get into trouble.
Ulv Hanssen, Research Assistant and Associate Fellow at the Swedish Institute of International Affairs, said it was not unthinkable that Sweden could act as an intermediary between Washington and Pyongyang in the current crisis.
"Sweden has done so on numerous occasions before, especially in relation to imprisoned Americans," he said.
"Acting as a mediator between two states on the brink of war is unquestionably a very demanding task, but Sweden has the advantage of enjoying the trust of not only Washington, but also Pyongyang," he added.
The Swedish Foreign Ministry declined to comment.
Sweden's role in the release of Canadian pastor Hyeon Soo Lim this month and of U.S. student Otto Warmbier earlier this year reflects historical connections that go back nearly half a century to the end of the Korean War, a legacy no other country in the West can match.
North and South Korea are still technically at war, but Sweden is a member of the Neutral Nations Supervisory Commission, which was set up to oversee the armistice, undertake inspections, observe military exercises and promote trust between the two sides.
Analysts say that while Pyongyang remains deeply suspicious of the West, Sweden's neutral status has helped it to play an albeit limited role as "honest broker" with the North.
Sweden was the first Western European nation to establish diplomatic relations with the North, in 1973, and the first to set up an embassy in Pyongyang in 1975.
During the period, Sweden was critical of the Vietnam War and was a major player in the non-aligned movement, gaining credibility as an independent actor on the international stage.
"DIALOGUE AND INTERACTIONS"
Sweden distributes large amounts of humanitarian aid in North Korea, channeling the money through the United Nations, the Red Cross and other organizations.
Stockholm has also been host and sponsor of talks between U.S. and North Korean representatives. These are not direct talks between the two governments, but conducted by academics and current and former State Department officials.
After Pastor Lim's release, Swedish Foreign Minister Margot Wallstrom said: "Our presence in North Korea enables us to engage in dialogue and interactions. We take this role very seriously."
One diplomat said the relationship between Sweden and North Korea was mostly consular, not aimed at ways to find a solution to the nuclear crisis.
A source with knowledge of the matter said the United States needed someone who can deal with consular issues and Sweden can do that with the consent of the North Koreans.
"Generally, the North Koreans are very stringent. You can't just charge in and get what you want. You can't make demands of them," the source said.
But the source also made clear that Sweden's role is not purely consular.
"Sweden has been able to share information with the major players in the region and we are still doing that. We have mainly acted as a source of information and made sure that information reaches the most important actors," the source added.
At the moment, Washington and Pyongyang maintain contacts through their United Nations missions, their embassies in Beijing and meetings between military officers at Panmunjom, where the Korean War truce was signed.
As for the Volvos, they seem to be doing well more than 40 years on. The Swedish embassy in Pyongyang last October tweeted a picture of one of the cars in use as a taxi in the city of Chongjin with almost 500,000 km on the clock and "still unpaid for" by the North Koreans.
(Writing by Giles Elgood; editing by Peter Millership)