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State of the Left Sweden

Löfven gets down to governing

Katrine Marçal - 21 March 2015

The opposition parties blink first, giving Sweden’s social democrats the chance to rewrite the nation’s fiscal rules and challenge Saudi Arabia’s human rights abuses

A lot has happened in Swedish politics lately. A cancelled election, a massive diplomatic crisis with Saudi Arabia and the crumbling of a two-decade-long consensus around the fiscal framework.

But let’s take it from the beginning. There will not be a snap election in Sweden this month. Social democratic prime minister Stefan Löfven gambled high and won. When the xenophobic Sweden Democrats party voted down his budget in October in a surprise move, the centre right thought they might be able to get back into power. The only solution at this stage was for the prime minister to negotiate some form of grand coalition or to resign.

Löfven’s government, a coalition between the social democrats and the Greens, had high hopes about being able to reach a deal with some of the smaller parties of the centre right. However, they proved stubborn and  Löfven lost his patience. He chose to call a snap election for March instead. It was an unprecedented move in the very consensus-oriented world of Swedish politics.

After the prime minister’s announcement it was just a question of who would blink first: him or the opposition. An election in March did not look like a good prospect for the main opposition party, Moderaterna. Its leader of more than ten years, former prime minister Fredrik Reinfeldt had just resigned. His successor, Anna Kinberg Batra, had not even been formally elected. Secret negotiations with the government started in December and lead to a deal being announced over Christmas. The opposition had blinked first.

According to the new deal whichever political bloc is in opposition would abstain from voting on a minority government’s budget. The social democrats would continue to govern with the Greens but would co-operate with the four centre-right parties on defence, pensions, and energy. Now the prime minister could focus on governing.

Which leads us to our second point. Swedish economic policy might have become a bit overshadowed by the news that former finance minister Anders Borg is getting divorced and is now dating a former euro pop star. It was as if George Osborne had started a relationship with Mel B from Spice Girls so maybe you cannot blame the Swedish media for going a bit crazy. However, the real thing that has happened in the area of economic policy is that finance minister Magdalena Andersson has announced that she wants to remove the country’s budget surplus target. The target of a one per cent surplus over a business cycle was introduced by the social democrats in the wake of Sweden’s very severe financial crisis of the 1990s. However, Andersson has now announced that the government considers it out-dated. It was never the idea that the public sector should run a budget surplus for eternity, and today Sweden’s public finances are very strong. The finance minister would like to use the money freed up by the target for investments in infrastructure, housing, climate change, research and education. This is big news in a country as committed to its fiscal framework as Sweden. Times have indeed changed.

The big international headlines caused by Sweden, however, have had to do with foreign minister, Margot Wallströms. “At last, a Western country stands up to Saudi Arabia on human rights,” declared the Washington Post. Wallström, who has declared that she will pursue a “feminist foreign policy”, has been at the middle of a diplomatic crisis, which led to Saudi Arabia withdrawing its Stockholm ambassador.

There is hypocrisy of a sort built into Swedish social democracy. On the one hand, Swedish social democratic governments have always wanted Sweden to be a “moral super power”: the small country which stands up for human rights on the world stage, Legendary prime minister Olof Palme and his critique of the Vietnam war is a famous example. Sweden has also at many times been able to punch above its weight because of its outspokenness on human rights.

On the other hand, the Swedish social democrats have constructed a welfare state based on exports. The basic idea behind the Swedish model is a high-productivity and high-tech economy that produces things that the country can sell abroad. High productivity leads to high wages and high wages can be taxed heavily to fund the welfare state. So far, so good. However, exports in this case also includes arms export. Per capita Sweden is the world’s third largest arms exporter and its political history is full of scandals involving its arms industry. You cannot sell weapons to dictators and then criticise the same dictators for not respecting human rights. This conflict was at the heart of the diplomatic crisis with Saudi Arabia.

Sweden has a decade-long weapons memorandum with the Saudis. It does not sit well with Wallström’s idea of a “feminist foreign policy” or with what the Greens, the government’s junior coalition party, wants. First the foreign minister was banned by Saudi officials from giving a speech on issues including women’s rights at an Arab League meeting and then, the following day, Stockholm announced it would be ending its long-standing arms agreement with Saudi Arabia.

It was a case of the Swedish centre left choosing to emphasise the idea of Sweden as a “moral super power” at the expense of Swedish business interests. The move has been controversial; it has made Wallström popular among many ordinary people, but the enemy of powerful economic interests. This is probably not the last we hear of the matter.

Katrine Marçal is a columnist for Aftonbladet

A contribution to State of the Left - Policy Network's monthly insight bulletin that reports from across the world of social democratic politics


Tags: Sweden , Policy Network , Katrine Marçal , State of the Left , Europe , Sweden Democrats , Stefan Löfven ,

Comments

Rutger Kahn
19 March 2015 16:29

Wallström vi skall inte spekulera låt oss hantera detta. Walllström bör avgå!!

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The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.

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