Only Way Out of Sweden’s Political Turmoil Could Be an Election
(Bloomberg) -- Sweden is facing its worst political crisis in decades after Social Democrat leader Stefan Lofven became the country’s first prime minister to lose a confidence vote in parliament. He now has until midnight Monday to broker a new deal and try to stitch together a new coalition. Failing that he can let the opposition have a go at forming a government or call a snap election.
1. Why is it so messy?
The Social Democrats are the oldest and biggest party in Sweden, closely associated with the creation of a famously generous, though expensive, welfare state. But their influence has been waning for decades and the 2018 elections resulted in a hung parliament that revealed a broken political system.
The problem at the time was finding a way to keep out the far-right Swedish Democrats that are now the third biggest force in parliament. The solution for Lofven was an agreement with center-right parties, his traditional opponents, which allowed him to form a coalition government that also relied on outside support from the Left Party, with its own competing socialist agenda. The result was a fragile government dependent on parties hopelessly split over labor policies, taxes and housing reforms.
2. What brought things finally to a head?
The tipping point was a plan to deregulate rents for new-built apartments. The Center Party, which has long advocated market-oriented reform of Sweden’s housing market, was pushing to let landlords charge market rates for new rental apartments. A long-simmering housing shortage has led to a surge in home prices, as well as calls to shake up a rental system based on negotiations between tenants’ and landlords’ organizations.
But the mere suggestion of some kind of deregulation is anathema to the formerly communist Left Party. Sensing an opportunity to bring down the government, the far-right Swedish Democrats called a vote of no confidence that Lofven lost when his socialist allies sided against him.
3. What are the options?
Before Tuesday, Lofven will have to either call an extra election or resign.
The 63-year-old former union leader and welder has found ways out of tight political binds before and is negotiating behind the scenes to form a new government that can hold until next year’s scheduled elections. On Wednesday, he was given a lifeline when the Center Party dropped their demand for rent deregulation. It all comes to parliamentary maths and those will be tricky for any party trying to stitch together a coalition.
4. Would an election shake things up?
Maybe. For most parties, it’s a risk. For the Sweden Democrats, it offers a path to power. In the past they stood alone, but the center-right Moderates have offered them an olive branch. A conservative government with the support of the nationalists would signal a new era in Swedish politics that have shifted from left to right. It normalizes the prospect of other populist governments in Europe — in France, for example with Marine Le Pen.
The majority of center-right parties no longer treat the Swedish Democrats as pariahs and the party has tried to weed out extremists and abandoned its pledge to leave the European Union. Interestingly, the pandemic is not foremost on the minds of voters even as the controversial laissez-faire response to the coronavirus was criticized by many, including the King.
Another beneficiary could be Left Party leader Nooshi Dadgostar, a relatively fresh face who could ride a wave of support for standing firm on rent controls. An early vote would be the first snap election in 1958, though under the Swedish system scheduled elections must still go ahead. Those will take place in September 2022 so any new government would be short-lived.
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