Sweden: Political Brief August 2021

Mar 29, 2022, 06:55 AM

The Prime Minister to step down: A turbulent Autumn after a messy Summer

August Take-Aways:

•Prime Minister Stefan Löfven announced his resignation in a speech on Sunday.

•Löfven will step down as chairman of the Social Democratic Party at the beginning of November, and as Prime Minister probably 8 November.

•The Speaker will then consult the party leaders and propose a new Prime Ministerial candidate to parliament.

•The process to form a new government will take place parallel with the parliament’s discussions and decision on the State Budget. That vote is likely to take place 24th November.

•This leaves very little, or even no time, for a new Prime Minister to negotiate with the other parties and secure majority backing.

•Löfven’s biggest achievement was success in dividing the Alliance opposition parties, thus securing Social Democratic governments.

•But in doing so he abandoned traditional Social Democratic policies to implement liberal reform policy, initiated by the Centre Party and the Liberal Party.

•He leaves a government and party under pressure and in need of new leadership and political direction.

The Prime Minister to step down
Prime Minister Stefan Löfven announced his resignation in a speech on Sunday. His time in office has been turbulent. He has been Party Chairman since 2012 and Prime Minister since 2014, even though he has been voted out once and seen two of his State Budgets being turned down by Parliament.

Löfven’s biggest political achievement might be success in dividing the opposition parties of the former centre-right Alliance, thus securing Social Democratic governments. But in doing so he had to abandon traditional Social Democratic policies and values to implement liberal reform policy, initiated by the Centre Party and the Liberal Party.

Löfven will step down as chairman of the Social Democratic Party in the beginning of November, and as Prime Minister probably on 8 November. This means that the Speaker will again have to consult the party leaders and propose a new Prime Ministerial candidate. Parliament will then vote on the proposal and as long as there is not a majority against the proposal, the candidate would be confirmed.

Interestingly, this process will take place in parallel with the parliament’s discussions and decision on the State Budget. The vote is likely to take place 24 November. As the red-green government has not secured a majority backing for the State Budget, the new Prime Minister will have a very short time at her or his disposal to negotiate with the other parties. This has the potential to be a very turbulent or even chaotic time in Swedish politics. It is by no means certain that the next leader of the Social Democratic Party will succeed in being confirmed as Prime Minister. Even if the Centre Party and the Left Party remain actively or passively supportive, a red-green government would have a one-vote majority, possibly lost by individual parliamentarians voting their own way.

The Social Democratic Party will now have a chance to find a leader rhetorically well suited for a new, much more confrontative political climate. This leader will need to renew the political agenda and messaging of the party. She or he will also need to revisit the strategy for creating a credible Social Democratic government alternative. The party seems to be asking for a much more left-oriented political agenda, and Löfven has invested his credibility in compromises with the Centre Party, thus pushing liberal reforms of, for instance, the labour market and income tax.

A new leader will –if able to be confirmed as Prime Minister –also have the opportunity to reshuffle the government, often strongly criticized, prior to the election.

Löfven leaves a government and party under pressure and in need of new leadership and political direction. His main strength has often been an even bigger lack of direction and cohesion among the opposition. Constant hard negotiations, first within the red-green government and then in parliament, has taken its toll.

A Messy Summer
A backdrop to the Prime Minister’s resignation was the government crisis in June, when Parliament voted the red-green government out. The centre-right opposition parties, together with the Sweden Democrats and the Left Party, formed a majority for a vote of no-confidence in the Social Democratic Prime Minister, Stefan Löfven, leading to the resignation of the government.

The leader of the opposition, Ulf Kristersson of the Moderate Party, was given the opportunity to investigate if he could form a new government. He returned to the Speaker with the conclusion that he would not be able to find support for a new government.

The Speaker then turned to the former Prime Minister, Stefan Löfven of the Social Democratic Party, who was tasked to investigate if he could form a new government. Due to the fact that a Prime Ministerial candidate does not need a majority backing her or him, just to be tolerated by the parliament, he was confirmed as new Prime Minister with a minority backing.

Löfven returned to office weakened, but with the understanding that the opposition had also been weakened by the process, as they had been proven unable to form government. A question now at hand is why he did not step down then, giving a successor more time to refresh the parties’ policies and make use of the opportunity for a government make-over. Löfven might have reasoned that him staying was the best way to secure the Social Democratic government position. The Party Congress had also been delayed from Spring to Autumn due to the Corona pandemic.

When the former red-green government fell, so did the 2019 73-point political agreement with the Centre Party and the Liberal Party, on which it was based. The Liberal Party ended its cooperation with the red-green government and declared its will and intention to see a Prime Minister from the centre-right, in other words, Ulf Kristersson.

This left the new red-green government freer, but also very uncertain of its parliamentary backing. It would need to negotiate broadly to find majority support for its propositions.

The Centre Party continued to be open for cooperation with the red-green government, but demanded that both the Left Party and the Sweden Democrats should be isolated politically. The question is how the Centre Party will reason regarding a new Prime Minister.

Prime Minister Stefan Löfven had made it clear that should his government lose the vote in parliament on the State Budget Bill, then he was not prepared to rule on someone else’s budget. This was new, since he already twice before, in 2014 and 2018, had lost budget votes and still not resigned. Instead, he had chosen to remain in office and govern on the opposition’s budget.

To complicate things, the Centre Party refuses to support any State Budget Bill negotiated with the Left Party, no matter its content or policy proposals. They claim that the government is free to negotiate with anyone, but the Centre Party will not support any budget negotiated with the wrong party. The red-green government was and is left with a dilemma, since it must gather support from both the Centre Party and the Left Party to see its state budget bill passed. It is a very hard task, indeed.

The Left Party has therefore presented its demands to consider supporting the government’s budget proposal in a newspaper article, claiming that the government now knows what to do without negotiations. The measures proposed were generally not very appealing to the Centre Party.

Four demands were made by the Left Party for it to consider accepting the Budget Bill: Any tax cut must be matched with equally large tax increases, public spending should be increased by financial support to regions and municipalities, measures to increase economic equality must be introduced and, fourthly, proposals and spending regarding climate change and jobs need to be included.

Thus, the government must form the State Budget Bill without talking to one of the parties which support it needs for the Budget vote. If it listens too well, then the Centre Party will reject the Budget and just support its own budget proposal.

It is clear that the red-green government was and is facing a very real risk of losing the vote on the State Budget in November. That would be a unique third budget vote loss for a Prime Minister also being the first to be voted out of office by parliament. The Prime Minister was caught between a rock and a hard place, with no obvious way out. The end of the road was approaching.

A guess is that the Social Democratic Party will use the opportunity to increase the redistribution aspects of the State Budget and increase public spending by financially supporting regions and municipalities, in order to gain leverage prior to the September 2022 general election.

Another assumption of ours is that the government will push for tax increases on what it will brand “rich people”, by at least talking about reintroducing taxation of property, wealth tax and inheritance tax. It could well be that increased income tax on higher end wages will be demanded, but not implemented before the election.

A new Party Leader will have very little time to negotiate support for the budget or to put her or his own mark on the State Budget Bill, even if swiftly confirmed by parliament. But a new Party Leader will need to renew the party’s policy and messaging prior to the election.

For the Centre Party to get any tax cuts accepted, it will be forced to accept increased taxation as well, which could mean increased climate related taxation, since that is the request of the Green Party. If the Centre Party and the Left Party refuse to accept this, then the Social Democratic Party is handed a number of election campaign issues.

Should these rocky waters not have been properly navigated by the red-green government, then it would have fallen again this autumn. Now, it is clear that it will resign in November, anyway.

It would appear to be the most difficult timing possible for the party to change leader and try to retain the Prime Minister position. It would be more understandable if the Prime Minister had already accepted that the government would have had to resign in November anyway, after losing the State Budget vote. These types of situations have their own dynamics, still the actions of the opposition remain to be seen.

Organised Crime and Shootings
One key political issue, illustrative of the fact that it is no longer the political issues close to the Prime Minister’s heart, such as labour market affairs, which are dominating the debate, is organised crime and gun violence.

Up until mid-August of 2021 there had been 192 shootings, according to the Police, killing 26 people and injuring 57. In 2020 there were 366 shootings leaving 47 dead and 117 injured.

Mainly, the shootings are gang related crimes committed against members of other gangs, but there have been several occasions when civilians and children have been injured or even killed by such gunfire.

The opposition demands longer prison sentences, abolishment of shortened and age-related sentences, increased authority for the police and much more. The government is blamed, deemed to be slow and hesitant in acting against organised crime, and has had a hard time adjusting to a new political climate almost uninterested in social issues as the causes of crime and prevention as a method against crime.

The entire situation is politically linked to migration and immigrants, adding to an already toxic political mix where ethnicity and lack of economic, social and cultural integration is used as an explanation for the increase in organised crime.

Crime will be a central issue in the election campaign and unless the red-green government is able to present additional measures it is an issue that could cost the Social Democratic Party the election. It goes to the core of government credibility, the state’s responsibilities for safe communities and the state’s and the police’s violence monopoly presently being bluntly challenged by the gangs. It is also an issue symbolic of the change in the political climate during the last years. The tone of voice is often harsh, the rhetoric confrontative and the debate is not focused on finding broad political solutions. In other words, the way the issue is debated does not suit the more careful and at least in rhetoric consensus oriented Prime Minister.

Public Opinion
When Stefan Löfven was elected leader of the Social Democratic Party, support was 24.6%, deemed to be a historical low. When Stefan Löfven, nine years later, announced his resignation, the support for the Social Democratic Party is on 24.1% in a poll published by SIFO on the 21st August. This could either be seen as if Löfven has managed to stabilise the support numbers during a difficult time, or as he has failed to increase the support or bring the party back to being the leading, natural or dominating government party.

Since the election of 2018, the Social Democrats have lost 4.2% of its voters. That is more than any other party. During the same time, the Left Party has increased by 3.9% and the political arch-enemy, the Moderate Party, by 2%. Since much of Löfven’s strategy has been to isolate the Sweden Democrats, it is concerning that they have increased by 3%. In fact, the two parties on the far right and left has grown considerably and both the Left Party and the Sweden Democrats have attracted former Social Democratic core voters, namely blue-collar organized workers.

The parties of the red-green government come in with a combined 28.3% support. The position of the Social Democratic Party as a natural government contender is very much contested.

Public opinion according to Kantar Sifo:

A new Party Leader will be elected during the Party Congress 3-7 of November. There are four candidates to succeed Stefan Löfven as leader of the Social Democratic Party and as the party’s Prime Ministerial Candidate:

  • Magdalena Andersson - presently Minister of Finance

  • Mikael Damberg - presently Minister for Home Affairs

  • Lena Hallengren - presently Minister for Health and Social Affairs

  • Ardalan Shekarabi - presently Minister for Social Security

Two more candidates will be discussed during the Social Democrats' nomination process which will end by 1st October:

  • Anders Ygeman - presently Minister for Energy and Digital Development

  • Ibrahim Baylan - presently Minister for Business, Industry and Innovation

German Elections
On the 26th of September, Germany will elect a new Bundestag. This will be of historic significance, since it marks the end of the Angela Merkel era, as she steps down after 16 years as Bundeskansler.

The Christian Democratic Party’s (CDU) Chancellor candidate and guardian of the political inheritance of Angela Merkel, Armin Laschet, is facing a challenge from Annalena Baerbock, candidate of the Green Party, who is representing a new political generation. He is also facing the candidate of the Social Democratic Party’s (SPD), Olaf Scholz, who is politically well-experienced as former mayor of Hamburg and current Federal Minister of Finance.

On an individual level, Scholz is receiving significantly more support from the population (around 30% can imagine him as the new chancellor) than the other two candidates, whose election campaigns were so far marked by missteps and negative media presence.

On the party level, however, the competition is more open than ever. Whilst in spring, the Greens had passed the CDU/CSU in the polls at the federal level and the SPD was still well behind these two parties, the latest polls are closer than ever. According to them, SPD has just passed the Green Party after a long time, while the CDU/CSU continues to hold on to the lead by a minimal margin (all three parties revolve around 20%). FDP and AFD both stand at 10-12% and the Left Party comes in at about 7%.

Hence, it is safe to say, that Germany will be ruled by a coalition government. However, as of now it is hard to tell how a coalition will eventually look like. Laschet might have the chance to photo-finish with a coalition with Greens and Liberals. But a Coalition led by the SPD with the Liberals and the Greens, or even a socialist government with SPD, Greens and Left Party is also possible and presently enjoys a small majority in the polls.

It will also be a special election campaign since it could well become one of the first elections in which climate change and a shift to renewable fuels and power sources are important enough to contribute to determine the outcome, at least in the western part of the country. Recent flooding in the Rhein valley and rise in global temperature spurs the discussion. Germany is set to stop using nuclear power during 2022 and is to do away with coal power at the latest 2038, even though there are calls heard to do this earlier. Energy policy is also security policy.

Germany is in the middle of a power struggle in between the USA and Russia, not least regarding North Stream II, and the USA and the Peoples Republic of China, something mirrored in the domestic debate. The USA will look for German and European support, as Europe will try to retain a freer stance to act according to own interests.

Regarding the EU, always looking to Germany for leadership, it is more a question of which chancellor candidate will manage to lead the EU forward, than who is interested in doing so. The EU will also need to navigate in between the USA and Russia and China respectively, and Germany’s position will be crucial.