Sweden’s Contemporary History Part IV

System change and financial crisis

Parliamentary elections September 17, 2006 brought the four bourgeois parties – the Alliance – to power. The leader of the right-wing Moderate Assembly Party, Fredrik Reinfeldt, thus formed a government, on the basis of the extensive and in many ways historical joint program that the bourgeois had carved out. The Moderate Assembly, the Center Party, the People’s Party Liberals and the Christian Democrats achieved a total of 48% of the vote, against 46% to the Social Democrats and its support parties the Left Party and the Environment Party. The Social Democrats, who had been in power for 52 of the 61 years since World War II, now made their worst choice in 90 years, with 35%. Power arrogance and wear problems were highlighted as explanatory contributions. The Moderates rose to 26.2% from the Wave Valley of 15.1% at the 2002 election. During the Alliance building, the party made a clear center turn, under the motto “We are the new Labor Party”, while the Center Party seemed to capture new voter groups on the right in the landscape. The largest decline in the elections was the People’s Party and the Left Party. The strongly immigration-critical party of Sweden Democrats doubled its membership, to 2.9%, and was thus represented in a number of new municipalities and in three counties (counties) – but did not reach the threshold for the parliament; elections to all three levels are held at the same time. After a somewhat turbulent start, with a quick departure for two of the fresh ministers, the Reinfeldt government started tax cuts, the sale of state shares in large companies and new measures, among other things. in the areas of working life, elderly care and education, in line with the Alliance’s program. In the election campaign, in particular, the Moderates highlighted the bourgeois “work line” as a break from the “contribution line” to which it was claimed that the Social Democratic “people home” idea had fallen into place. The ruling parties parted ways when, in June 2008, the Swedish Parliament passed by a hardly majority, a strongly contested law that gives the Defense Radio Agency (the “FRA Act”) access to monitor all cable-based Internet and e-mail traffic to, from and via Sweden.

In the wake of the election defeat, and as he had long predicted, Göran Persson resigned as party leader at the Social Democrats’ extraordinary party congress in March 2007. Mona Sahlin took over the post, as the first woman in the party’s 118-year history. She highlighted the climate and environmental problems of today’s class struggle. This was also the first change of leadership since 1925 when the newly elected party leader was not also prime minister. On the polls, the majority of the bourgeois lost one month after the election, and the rival bloc’s leadership showed an increasing trend over the next couple of years. In December 2008, the Social Democrats, the Left Party and the Environment Party declared that they will form a red-green unity government if they get a majority in the 2010 election; a historic step for the “state-bearing” social democracy,

A broad-based climate committee was set up in the fall of 2007 to examine the basis for the political decisions needed to achieve the radical targets for CO ₂ cuts that the Persson government had drawn up. The role of nuclear power was included in the mandate, which gave this traditional battle issue a certain boost. According to a technical report, the Swedish nuclear power plants, which still cover 45% of the country’s energy needs, will fulfill the safety requirements until 2067. The major player Vattenfall, in turn, initiated a major investment in wind power, and in the autumn of 2008 could also inaugurate the world’s first plant for the capture and storage of CO ₂ from coal-fired power plants.

In November 2007, Finance Minister Anders Borg announced that the protracted economic boom had probably reached the top, a cyclical wave where Swedish business had peaked in the Nordic region – incidentally also in the case of illegal insider trading, where the management of several well-known major corporations was arrested. At the turn of the year 2008/09, the impact of the international financial crisis was stronger and the economy shrank faster than in most comparably comparable countries. A 4.9 per cent reduction in gross domestic product in the fourth quarter of 2008 compared to the same period last year resulted in the term “historical collapse” in major banks’ analyzes – worse figures than for crisis-hit Iceland. Unemployment was 5.7% in the fall of 2006 – enough to become a main theme in the election campaign. In March 2009, unemployment reached 8% – or 387,000 people – and blasted all gloomy forecasts; Norway had around 70,000 unemployed at the same time. In the autumn, the government presented crisis packages of around NOK 40 billion, with cuts in the employer’s tax and strengthened continuing education and job training as key elements, before entering into a state guarantee and support package for Volvo and Saab to a total value of 28 billion.

Long-standing, underlying problems also for the Swedish car industry were dramatically exacerbated by the international setback – placing the two producers among the hardest hit in Sweden’s heavily export-driven economy, with industrial production experiencing the biggest decline since the 1992/93 crisis. The rescue package gained wide support in the Riksdag and from a trade union movement that, through several agreements, opened for voluntary wage reductions. From a steady and steep increase in interest rates since the turn of the year 2006/07, to almost 5%, in the autumn of 2008, the central bank sent the key interest rate almost freely, in February of the following year it reached 1%. But the mass resignations and layoff notices continued, triggering demands for further government action.