After weeks of bartering following the September 15 general elections, Goran Persson’s Social Democrats (SAP) have negotiated a new arrangement with the Green and Left parties. This will continue the arrangement in the last parliament, where both parties supported the SAP despite being denied ministerial posts. Prime Minister Persson again intends to rely on the Lefts and Greens on budgetary and social policies and on the opposition Moderates on international issues.

Persson’s SAP won 144 of the 349 seats in parliament, against 158 taken by the four centre right parties led by the Moderates. Counting on the support of the 30 seats of the Left Party, this meant that the SAP was one seat short of a majority in the single chamber Riksdag.

With 17 seats the Greens held the balance of power, which they used to try to extract ministerial posts by threatening to support a right wing vote of no confidence in Persson. Eventually, however, the Greens came to terms with the SAP on a similar basis to that agreed after the latter’s weak showing in the 1998 elections but with expanded influence within government ministries. This guarantees that the SAP can muster enough votes to survive any no-confidence vote and pass its annual budget.

Persson welcomed the Greens’ renewed cooperation by calling for the development of a “green welfare state”. Green Party spokesman Peter Eriksson agreed ecstatically, proclaiming, “This is the best deal the Green Party has ever made”.

Klas Eklund, chief economist at the SEB bank, said, “There is no alternative to a Social Democratic government.” His statement articulates the demands of the dominant section of Swedish capital which wants an administration that can deliver a “yes” vote in next year’s expected referendum on adopting the European Union’s single currency, the euro. Most economic and political analysts agree that a Persson government is best placed to successfully lead a “yes” campaign.

Persson rejected the demands of the Greens, and the more muted requests of the Left Party, for cabinet positions because of differences between the three parties over Sweden’s participation in the European Union (EU). The Greens and Lefts oppose the European Union and the single currency on the stated basis that membership necessitates cuts in public spending. This has not stopped them from repeatedly voting through SAP budgets.

Additionally, the SAP wants to maintain present levels of defence spending, and deepen Sweden’s cooperation with NATO. The Greens and Lefts retain support for Sweden’s traditional policy of neutrality and call for reduced defence spending.

These differences might cause Persson more problems but for the fact that there is an increasing convergence of Social Democratic foreign policy with that of the Moderates, who paved the way for EU membership in 1995. The Moderates campaigned with the Social Democratic government for a “yes” vote in the referendum on joining. Since then the Persson government has cautiously supported deepening Swedish participation in the EU, including joining the euro currency zone, while the Moderates openly support the idea of the single currency. It seems certain that the two will jointly call for a pro-euro vote in the forthcoming referendum.

The Social Democrats have effectively scrapped the traditional policy of Swedish neutrality. In November 2000, Persson declared that Sweden was no longer a neutral country, rather an alliance-free one. With this sleight of hand Persson opened up the possibility of future membership of multinational military organisations. The SAP government supported the bombing of Serbia in 1999 and put the country’s armed forces under KFOR command in Kosovo, and both IFOR and SFOR command in Bosnia.

Persson has built on the links established with NATO under previous Moderate Prime Minister Carl Bildt, who in 1992 allowed the country to join the NATO Partnership for Peace (PfP) initiative. It seems that both parties have their sights set on NATO membership and the Persson government hopes to rely on the Moderates to ride roughshod over any protests that might be raised by the Lefts and Greens.