SWEDEN'S ELECTIONS: CENTER/RIGHT ALLIANCE FOR

C O N F I D E N T I A L SECTION 01 OF 02 STOCKHOLM 001501

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/18/2016
TAGS: PGOV PREL PINR SW
SUBJECT: SWEDEN'S ELECTIONS: CENTER/RIGHT ALLIANCE FOR
SWEDEN WINS

REF: A. STOCKHOLM 1489


B. STOCKHOLM 1421

C. STOCKHOLM 952

D. STOCKHOLM 913

Classified By: Polcouns Casey Christensen, reason 1.4 (b) and (d).

Summary
--------------

1. (c) Sweden voted Social Democrat Prime Minister Goran
Persson out of office September 17, giving the mandate to
Moderate Fredrik Reinfeldt and the center/right Alliance for
Sweden. Reinfeldt is the big winner, with his Moderate party
earning a larger vote total than his three Alliance allies --
Liberal, Center, and Christian Democrat parties -- combined.
Persson has submitted his resignation from the government,
and said he will stand down as party leader in March.
Reinfeldt's campaign focused on job issues and the economy,
and we expect the first attentions of his government, which
will be announced October 3, will be in the same direction.
We expect the new government will seek positive Euro-Atlantic
relations, while making no abrupt changes with the foreign
policy of its predecessor. End Summary.

A Clean Sweep
--------------

2. (c) Sweden has ousted the Social Democrat Prime Minister
Persson and turned the government over to a coalition of
center-right parties led by Prime Minister designate Fredrik
Reinfeldt, the Moderate Party leader. In September 17
parliamentary elections, voters gave the Alliance for Sweden
(consisting of the Moderate, Center, Liberal, and Christian
Democrat parties) a total of 48.1 percent of the votes,
versus 46.2 percent for the Social Democrats and their Green
and Left supporters. This will translate into 178 seats for
the Alliance majority vs. 171 seats for the SDP, Left, and
Greens in the Riksdag, Sweden's parliament. Reinfeldt and
his new cabinet of ministers will be formally announced
October 3. Jockeying is now underway among the Alliance
parties for distribution of ministries. The big winner in
the government sweepstakes is expected to be the Moderate
party, which garnered on its own 26.1 percent of the votes,
compared with a total of 22 percent for its three alliance
partners taken together (Center 7.9, Liberal 7.5, Christian
Democrat 6.6). Other then Reinfeldt's designation as the
prospective Prime Minister, all ministries are under
negotiation; the outcome may not be clear before the
beginning of October.


3. (c) Prime Minister Persson suffered an historic loss,
with the Social Democrats scoring their lowest percentage of
votes (35.2 percent) since 1914. Persson conceded defeat in
the election and said he would step down as party leader at a
special party congress to be called in March 2007 and turn
the reins over to the next generation. The succession battle
has already begun, with calls for additional resignations
from party leadership positions.


4. (c) Although Sweden's economy appears to be doing well,
with growth above European averages and unemployment
officially at 4.6 percent, Reinfeldt found a message on jobs
that resonated with frustrated job seekers and concerned
Swedes. He demonstrated that real unemployment figures are
much higher if standard methods for accounting for sick leave
and job-training regimes are applied. Reinfeldt called for
reduced unemployment benefits, decreased payroll taxes for
low-income workers, and tax breaks to businesses that hire
the long-term unemployed, while assuring voters he would
preserve the essentials of Sweden's popular welfare state.
This gave the Moderates -- and the Alliance -- a boost among
disillusioned job-seekers and others concerned about the
sustainability of Sweden's welfare system. Another key
factor in the Alliance victory was dissatisfaction with PM
Persson, who was often characterized as complacent, arrogant,
and tired.


5. (u) Other than the Moderates, which made an unprecedented
jump from 15.2 percent in the 2002 parliamentary elections to
26.1 this time, and the Alliance parties riding their
shirttails, there were no big winners. The same seven
parties will remain in the Riksdag, but with considerable
shifts in the numbers. The Liberal members of the Alliance
for Sweden suffered a major setback, falling from 13.3 to 7.5
percent. Some of this can be attributed to a late-breaking
scandal regarding Liberal party staffers hacking the Social
Democrats internal web site. Most of the Liberal votes
appear to have gone, as we noted earlier (ref B),to the
Moderates, and so were not much of a net loss for the
Alliance. The Christian Democrats declined from 9.1 to 6.6
percent. The Center party had a modest increase, from 6.1 to
7.9 percent.


STOCKHOLM 00001501 002 OF 002



6. (u) On the other side of the aisle, the Social Democrats
were down from 39.8 to 35.2 percent, while the Left continued
its intermittent decline, falling from 8.3 to 5.8 percent,
compared with the 2002 election. The Greens did especially
well among young voters, rising modestly from 4.6 to 5.2
percent of total votes.


7. (u) None of the small parties made it over the four
percent threshold to enter parliament. The nationalistic,
anti-immigration Sweden Democrats earned, according to exit
polls, about 2.0 percent of the vote, which would be a major
gain for them. In a few localities, they appear to have
received figures as high as 20 percent. (Note: official
figures for the small parties will not be available until the
20th.) The Feminist Initiative appears to have garnered
about one percent.

Foreign Policy
--------------

8. (c) We expect that the fundamentals of bilateral
relations following an Alliance victory will likely remain
much the same in the short term. We may hear a difference in
tone, with less vocal criticism of U.S. foreign policy.
Within the Alliance for Sweden, the Liberals (openly) and
Moderate (circumspectly) support Sweden joining NATO, but
call for a national consensus on the issue. The Christian
Democrats are agnostic on the issue and the Center Party is
skeptical, but says it is amenable if the SDP also joined
consensus. Eventually, if the political constellations line
up (and this will take into account Afghanistan, where Sweden
leads a PRT, and Iraq),there could be more open advocacy for
NATO membership. In Sweden's government, decisions on major
issues are collective and taken by consensus of all
ministers, including those whose portfolio does not relate to
the issue at hand. The Center party, which is now the
second-largest in the Alliance for Sweden, has traditionally
taken a foreign policy line very similar to that of the
Social Democrats, whom it has supported in prior governments.
The section on foreign policy in the Alliance's joint
program differs only in emphasis (more action on Darfur, and
on democratizing Eastern Europe, for example),but not in
essence from that of the Social Democrats. Seismic shifts in
Sweden's foreign policy are not likely in the short run.

What Manner of Man
--------------
9, (c) Reinfeldt is, like his predecessor Persson, a
pragmatist and a centrist. By co-opting labor issues from
the Social Democrats, he has pulled what amounts to a Tony
Blair, but in reverse. In contrast to the traditional
Moderate party position, Reinfeldt and the "New Moderates"
have promised not to dismantle the welfare state. The Social
Democrats grumbled throughout the campaign that Reinfeldt was
simply claiming he would be a better social democrat than
they were. When we asked a group of prominent business
leaders about Reinfeldt's approach, the shared opinion was
that most of Sweden's parties -- including the "New
Moderates" -- are really social democratic. Reinfeldt has
stated publicly that Bill Clinton is his favorite American
politician and underscored this point to the Ambassador
privately (ref C),adding that he had no problem with nearly
all of the policies of Clinton, but disagreed with some of
the foreign policy of the current administration.


10. (c) Reinfeldt is married and the father of three
children. He lives in a modestly upscale suburb of
Stockholm. He holds a degree in economics from Stockholm
University, and speaks excellent English. An updated bio
will follow.
WOOD