Another Brick in the Wall?

The era of Swedish political exceptionalism may come to an end

For the first time in modern history, Sweden is heading towards an election with the strong likelihood that no winner will emerge on the night of the ballot. In consensusdriven Sweden, where the political system is essentially engineered for minority governance, this is an extraordinary development that attests to the country’s deep discontent despite a strong economy.

The party programs and manifestos are riddled with buzzwords such as automation, digitalization, electrification and AI, but voters have made it clear that this election is all about security and migration. Security in the broader sense, including everything from addressing violent crimes the suburbs of urban areas of Gothenburg and Malmö, to increased defense spending to counter increased geopolitical instability in the Nordic/Baltic region. The focus on security puts the populist right-wing Sweden Democrat Party, Sverigedemokraterna, in a favourable position, as they, like their European counterparts, provide simple answers to challenging political issues. Sweden is thus set to become another brick in the wall among EU member states and indeed fellow Nordic countries, with a Social Democrat party in decline, right-wing populists becoming a regular fixture in the political ecosystem and a rising distrust of media and public institutions.

This outcome portends a potential realignment in Swedish politics and more political horse-trading. The potential political vacuum created as a result of difficulties to form a sustainable government will likely force companies to broaden their stakeholder engagement base to include even more influencers in policy and beyond and raise the Swedish risk premium, although major shifts in economic policy are unlikely.

Political realignment in the cards

As one of the most successful centre-left parties in European history, the Social Democrats, Socialdemokraterna, are potentially facing their worst election result ever. But they are not alone. Most traditional parties, including the Conservatives, Moderaterna, and the Liberals, Liberalerna, are also polling well below their traditional figures.

The greatest likely winner, however, is without a doubt the populist right-wing, Sverigedemokraterna, which could become one of the largest parliamentary parties with more than 20 percent of the seats. More than just a swing vote, they would essentially form a third block in Sweden’s traditional left-right two-block politics. Meanwhile, The Left Party, Vänsterpartiet, has successfully positioned itself as the credible option for voters favoring a left-wing Swedish model with a substantial public sector and welfare system reliant on higher taxes. Regardless of the outcome, the winners of the elections will be on the fringes of the left/right scale. The emergence of a strong right-wing, populist party and the fact that there will most likely not be a clear winner is big news in Sweden.

Discontent a clear driver

According to the polls, Swedish voters are clearly dissatisfied with several central policies and the ability of politicians to deliver upon their commitments. It is, however, not without irony, as the country is performing well from an economic perspective. Looking at several key figures, such as economic growth, Sweden has outperformed the euro area for four consecutive years. The fact that the 2008 financial crisis hardly left a dent is a testimony to the strength of the Swedish economy.

Therefore, to understand the key drivers behind this anomaly, one needs to recognize the difficulties of the traditional Swedish political hegemony and the inability of the
established political parties to create a credible political narrative for the future development of Swedish society.

For many, the only party that has been able to tell a compelling story in the past two elections has been Sverigedemokraterna, which points almost exclusively to migration as the root of all major issues facing society. Meanwhile, the traditional parties have been too late out of the gates in adapting their messaging and strategies to tackle Sverigedemokraterna, which has led to them lose control over the debate on migration.

 

Security and welfare are top of mind

Migration has without a doubt been the most challenging political issue for the mainstream parties to address. Despite several attempts to pivot towards a more integration-focused debate, Sverigedemokraterna kept a firm grip on the narrative. To completely understand the gravity of the issue, one must recognize the exceptional history of Swedish migration policy. Since the 1980’s, Sweden has had one of the most liberal migration policies in the world.

The lack of solidarity on this issue within the EU has been a constant thorn in the side for Sweden who continue to lobby for a revised common asylum policy, respect for the Dublin ordinance and a European distribution mechanism of refugee quotas. However, the migration crisis took the Swedish policy to a point of no return. At the height of the crisis, the government opted to close the borders and make it more difficult to enter the country, including the introduction of passport controls along the southern border with Denmark.

Although this may seem like an extraordinary measure, it is in fact in alignment with other Northern European countries. Norway, Finland and Denmark have had more restrictive migration policies, in comparison to Sweden, for many years. In the run-up to the Swedish elections, Prime Minister Stefan Löfven concluded that it was not an option to return to a more liberal migration policy, as there continued to be a lack of solidarity among EU member states.

Another can that the mainstream politicians, especially Socialdemokraterna, have been keen to kick down the road is what kind of role privately held welfare companies should play. Privatization of welfare has been a difficult nut to crack as many Social Democrats locally have had strong personal ties to companies operating in the sector. However, opposition to profits in the welfare sector is part of their election platform; a move clearly made to appease the party’s grass roots.

 

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