Stefan Loefven, Prime Minister of Sweden, leaves an event in New York, U.S., on Nov. 21, 2014.
The Sweden Democrats, the third-largest party in the legislature, plunged the Nordic nation into a crisis yesterday after vowing to oppose any government budget that promoted immigration. Loefven, 57, in late night talks with the four-party Alliance opposition was then unable to reach any agreement on a way forward for his budget of tax increases and higher welfare spending.
“There was no will to have a dialog on the budget issue,” said Loefven, who may go down in history as Sweden’s shortest-serving premier in about 80 years. The parties are
now debating the budget in parliament, which is scheduled to end in the late afternoon.
The former union boss led the Social Democrats back into power by oustingFredrik Reinfeldt’s center-right coalition in September elections. The premier said last night he will also explore the option of resubmitting his budget to the finance committee in parliament. Another option is for snap elections to be called for the first time since 1958.
Small Chance?
The krona, which slid as much as 1.2 percent against the dollar after the Sweden Democrats’ revealed its plan yesterday, gained against the euro and dollar today while bond yields were little changed. The largest Nordic economy is still struggling to recover from an export slump as unemployment hovers above 8 percent and deflation takes hold.
“The government will do everything it can to continue to probe the possibility of reaching some form of agreement,” said Anders Wallstroem, chief analyst at Nordea Bank AB. “I still think the risk of an extra election is rather small,” though it has increased, he said.
The Social Democrats in October formed a minority coalition with the Green Party, vowing to cut Swedish unemployment to the lowest rate in the European Union. To finance more spending, it plans to roll back some of the tax cuts pushed through by the previous government over the past eight years. Loefven’s efforts to create a broader coalition have so far been dismissed by a united opposition.
The Sweden Democrats, which has held the balance of power since September, will reject all government budgets that support increased immigration, Mattias Karlsson, the group’s acting leader, said at a press conference in parliament in Stockholm.
‘Quiet Majority’
“The quiet majority in this country must have a voice in this question,” he said. “Someone must say that the emperor has no clothes unless we are to see a collapse of the system.”The unprecedented move goes against parliamentary tradition, which is designed to ease minority rule. The Sweden Democrats, which other parties in the legislature have refused to work with, called on the government to cut immigration by 50 percent and give “signals” in the right direction in order to gain its support.
The party won 13 percent of votes in the election on a pledge to reduce immigration. Sweden, a country of about 10 million people, has become a magnet for immigrants fleeing war in Syria, Iraq and other trouble spots. The Migration Board last month raised its forecast for the number of asylum seekers expected next year and now sees a main scenario of 95,000. That would exceed the previous record of 84,000 in 1992 during the wars in the former Yugoslavia.
Loefven, a former welder who was raised by foster parents after his mother abandoned him at 10 months, took over as leader of the Social Democrats in 2012. Back then, Sweden’s biggest political group was hemorrhaging voters after a series of scandals forced Hakan Juholt to resign as party leader after just 10 months.
The decision yesterday by the Sweden Democrats “puts Sweden in a new political situation,” said Tomas Eneroth, group leader in parliament for the Social Democrats. “We have to ask ourselves the question if Sweden isn’t approaching an extra election.”
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