Sweden faces uncertainty sans viable coalition

Bloomberg

Sweden’s political establishment contained a nationalist surge. Now it may need to throw away the old rules to form a viable government.
Both of Sweden’s traditional blocs, one led by the Social Democrats and one by the conservative Moderates, claimed victory after Sunday’s election that’s still too close to call. The nationalist Sweden Democrats surged to about 17.6 percent, but fell short of some polls showing it could emerge as the biggest amid a groundswell of anti-immigrant sentiment.
Sweden likely faces days, if not weeks, of tense discussions. Prime Minister Stefan Lofven has refused calls to resign, putting pressure on the opposition Alliance led by Moderate Party leader Ulf Kristersson. The Alliance is meeting to find common ground, but must also convince the nationalist Sweden Democrats to give it the necessary backing to rule.
At least one bank in Sweden took a look at the tight results and concluded that a failure to bridge differences can’t be ruled out. “A highly protracted government formation process, or even another election, can’t be ruled out,” Anders Bergvall, a senior economist at Svenska Handelsbanken, said in a note. Lofven has tried through the campaign to shave off the two smaller alliance parties, the Center Party and the Liberals, from the center-right coalition. That has so far proved fruitless, but success will be key for him if he wants to survive a potential no confidence vote as soon as September 25.His case did a get small boost overnight when the Alliance lost one seat to the Sweden Democrats due to a miscount.
Carl Bildt, Sweden’s former conservative prime minister, said Lofven is unlikely to succeed. “I’m not quite certain that the voters of the Center party and the Liberals would like to see them to support a new government under Mr. Lofven,” he said in an interview with Bloomberg TV.
“I think that’s quite unlikely.”

Stable Democracy
After leading the Social Democrats to its worst result in history, Lofven on Sunday reiterated a plea that Sweden must move beyond left-right bloc politics to deny the nationalists influence. The election should be a “funeral” for bloc politics, he said.
The chief executive at Swedish insurer Folksam, Jens Henriksson, said that the only thing certain now is that the premier will be voted out when parliament reconvenes with a new speaker and that Kristersson will likely be asked to form a new government given the right-wing majority in parliament.
“Sweden is a stable democracy,” said Henriksson. “I don’t think it matters that much if the government formation process sways a bit for a few weeks, that won’t have a big effect on the economy.”
The Social Democrats’ leader in parliament, Anders Ygeman, met the press while Lofven kept a low profile, staying out of the limelight along with other party leaders.