Saudi Arabia has recalled its ambassador to Stockholm, the Swedish Foreign Ministry said Wednesday, as a rift between the two countries deepened with Sweden cutting military ties after a row over a human rights speech.

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

Sweden scrapped a long-standing military deal with the Saudis on Tuesday after accusing the country of blocking Swedish Foreign Minister Margot Wallstroem from speaking at an Arab League meeting in Cairo on Monday.

Saudi Arabia is the third largest non-Western buyer of Swedish arms. In 2014, Riyadh bought equipment worth 338 million kronor (37 million euros, $39 million).

Wallstroem had been invited as an honorary guest to the Arab ministers' meeting in praise of her government's decision to recognise Palestine in October.

But an opening speech she was due to give in which she stressed human rights, with a particular emphasis on rights for women, was cancelled. The speech was later published by the Swedish Foreign Ministry.

Wallstroem has rarely commented on Saudi Arabia but in January she condemned the kingdom's treatment of blogger Raef Badawi, who had been sentenced to 1,000 lashes and 10 years in prison for insulting Islam.

The day after she was prevented from speaking in Cairo, her government scrapped its military cooperation deal with the Saudis after coming under intense domestic pressure.

Wallstroem told news agency TT on Wednesday her government had made the "correct" decision by ending the agreement.

"I feel that when I speak about democracy and human rights, I do with the support of the Swedish people," she said.

The scrapped deal involved exchanges of military products, logistics, technology and training. Signed by a left-wing government in 2005 and renewed in 2010, it sparked a heated debate after Swedish Radio in 2011 revealed that Sweden had secretly helped the Saudis construct a weapons factory.

The Swedish defence minister said on Tuesday only cooperation in medicine and gender studies would remain on offer.

"What we have is an open invitation to partake in medical and gender training, but the Saudi side has not shown any interest," Peter Hultqvist told public broadcaster SVT.

"It's very hard for Swedes to accept that Saudi citizens condone this political and judicial system: hands that are cut off for robbers, women convicted for being unfaithful, lashings," political scientist Thord Janson at Gothenburg University told AFP.

"So the government doesn't want to have a military bond with such a country. It's a logic that's internal to Sweden," he added.

- 'Moral power' -

Social Democrat Prime Minister Stefan Loefven's government came to power in October 2014 announcing a "feminist foreign policy" and promptly decided to recognise Palestine, becoming the first major Western European nation to do so.

The decision caused a diplomatic spat with Israel, which temporarily recalled its ambassador from Sweden.

Commenting on the severed military ties, liberal writer Fredrik Segerfeldt wrote that Sweden's objective was "to become a moral power" on the world stage.

Such policies recall the bold statements of slain Social Democrat Prime Minister Olof Palme, who made radically anti-US remarks on the Vietnam War and slammed the apartheid regime in South Africa as well as the rule of Augusto Pinochet in Chile before being shot dead on a Stockholm street in 1986.

But taking a stance against Saudi Arabia today risked Sweden's credibility as a business partner, according to some centre-right opposition politicians and the Swedish business community.

"Foreign policy is not only about other countries," right-wing daily Svenska Dagbladet wrote in an editorial, noting that Swedish industry "must be allowed to trade... even with dictatorships".