Swedish Foreign Minister Margot Wallstrom Saudi
Swedish Foreign Minister Margot Wallstrom described Saudi Arabia as a dictatorship. Reuters

A diplomatic row between Sweden and Saudi Arabia over military ties and human rights has escalated with Riyadh recalling its ambassador from Stockholm.

The move came a day after the Scandinavian country announced it would not renew a lucrative defence cooperation deal with the oil-rich Middle Eastern Kingdom because of its poor record for democracy and civil liberties.

"Diplomatic relations are not broken. But Saudi Arabia's ambassador has been recalled," Sweden's foreign ministry told the AFP.

Ministry spokesman Gabriel Wernstedt explained that Riyadh demanded its envoy, Ibrahim bin Saad Al-Ibrahim, leaves the country because of "Sweden's criticism regarding human rights and democracy".

Later, the Saudi government explained the diplomatic slight accusing Stockholm of "flagrant interference" in its home affairs, the news agency reported.

The rift started earlier this week, as Sweden's left-leaning government said it was not to extend a 2005 military cooperation agreement with the ultra-conservative country.

The deal, which is due to expire in May and included exchanges in military systems, technology and training, earned Stockholm some 4.8bn crowns (£370m, $561m) over the past four years, according to Reuters.

The decision to scrap it was announced after Swedish Foreign Minister Margot Wallstrom said Saudi Arabia barred her from delivering an address to the Arab League in Cairo earlier this week, following her criticism of the country.

In February, the minister had bashed Saudi authorities for the treatment of jailed blogger Raif Badawi, describing the kingdom as a "dictatorship" that also violated women's rights, during a speech to the Swedish Parliament, the BBC reported.

The cancellation of the deal was criticised Sweden's former foreign minister Carl Bildt.

"This is not least about Sweden's credibility as a contractual partner. That credibility is important to a relatively small country like Sweden," he wrote on his blog, according to The Local. "What has happened is unfortunate. Sweden has been damaged".

Bildt's conservative administration lost the elections to the current Social Democrat-led government in autumn last year.