Many people around the world seem fond of the Swedish welfare system. As a DJ on XM Radio, Bob Dylan chose the theme "rich and poor" for one of his new shows. After playing a number of songs on class differences in the United States, Dylan said: "In Sweden, they have a system of higher taxes but welfare for everyone. They call it the Swedish model. Well, I could go for a Swedish model right about now."

Maybe it was both a political hint as well as a joke about beautiful Swedish women. I don't know. But Dylan is not alone. The Guardian journalist Polly Toynbee named Sweden, in October 2005, "the most successful society the world has ever known." The United Nations puts Sweden among the top six in the league-table for human development.

Admired, respected, even revered around the world - but no longer, it seems, by Swedes themselves, who voted on 17 September 2006 for a change of government. The Socialdemokraterna (Social Democratic Party) had been in power since 1994, only the latest phase of a political hegemony that had seen it govern for all but nine years since 1932. Now, the centre-right alliance led by Fredrik Reinfeldt's Nya Moderaterna (New Moderates) will take its place. To many observers, it seems as much a change of regime as a change of government.

Mats Engström is editorial writer at the Swedish newspaper Aftonbladet. He was special advisor and deputy state secretary to Anna Lindh from 1994-2001, and is author of Rebooting Europe: Digital Deliberation and European Democracy (Foreign Policy Centre, 2002). His website is here

Also by Mats Engström in openDemocracy:

"The European Union and genetic information: time to act" (July 2003)

"Remember Anna Lindh" (September 2003)

"Democracy is hard, but the only way"
(June 2005)

"The fear haunting Europe" (26 May 2006)

The model won...

So have Swedish voters indeed rejected their famous model? My answer is no, on two grounds. First, there is the tightness of the vote: the "red-green" side (the Social Democrats and its allies) received 46.2% of the vote against the four-party Alliance for Sweden's 48.1%. The close result will be reflected in the balance of power in the new Riksdag (parliament), where the left bloc will have 171 seats to the right's 178.

Second, there is the changing profile of the opposition itself. In its earlier incarnation, the Moderaterna was seen by many voters as a rightwing party which threatened public welfare. In order to win, the party has had to rebrand itself, embrace the welfare state - the essence of the "model" - and try to look more like the model's principal defenders, the Social Democrats.

In the previous election in 2002, Reinfeldt's predecessor Bo Lundgren had proposed radical tax cuts. The Social Democrats labelled the plan a "system change" and won a comfortable victory. Göran Persson, prime minister since 1996, continued to lead a minority government, supported in parliament by the Miljöpartiet de Gröna (Green Party) and the ex-communist Vänsterpartiet (Left Party).

Reinfeldt and his team learned a painful lesson from a defeat that had brought his party close to the abyss. They unofficially but insistedly added the prefix nya (new) to the party's title at every opportunity; and their explicit debt to Tony Blair's example in Britain extended even to frequent usage of the label "New Labour Party" in parallel with Nya Moderaterna. The echoes continued in Reinfeldt's post-election victory speech, which replicated Blair's own 1997 declaration almost exactly: "We campaigned as the New Moderates, we won as the New Moderates, and together with our alliance partners we will rule Sweden as the New Moderates".

But the rebranding was, to a great degree, also a cloning. "Every promise the Social Democrats make on social welfare, we will agree to and improve", Reinfeldt said in one of his campaign speeches. The Nya Moderaterna also focused on the key centre-left issue of jobs, albeit with a centre-right twist. Reinfeldt's tax-cutting emphasis switched from the rich to the low-waged, and his labour-market policy combined attacks on unemployment-benefit levels with increasing the incentives to work. He survived furious attacks by trade unions to emerge with higher credibility than the Social Democrats in fighting unemployment. In Swedish terms, this is indeed a political sensation.

In the last televised debate before the vote, the Greens tried to remind voters that the number of adults of working age in Sweden is, at 76%, among the highest in the OECD countries The people, evidently, were not convinced.

The opposition also succeeded in overcoming voters' wariness of a coalition of four distinct parties which in the past had competed against each other. This time Reinfeldt was able to bring them together under the banner of the "Alliance for Sweden", creating an impression of unity not seen on the right for decades. The alliance was able to weather two bad campaign moments: an internal fight over cutting property taxes, and a bugging scandal when Folkpartiet liberalerna officials were found to have hacked into the Social Democrats' computer system, using the information in their campaign.

The government lost...

But a change of government when annual GNP growth is running at more than 4% (and at 5.6% in the second quarter of 2006) requires the incumbent to lose as well as the opposition to win. Göran Persson had performed impressively in restoring stability to the Swedish economy after the crisis of the early 1990s, and earned his election victories in 1998 and 2002. Indeed, he never planned to stay in power and contest a third election, but the murder of foreign minister Anna Lindh in September 2003 changed the Swedish political landscape. After it, Persson never regained the same energy that he had in the earlier, successful years. In this election campaign, he often seemed irritated, even arrogant.

The problem extended beyond personality to become one of trust, especially over the issue of social exclusion. Many voters came to sense a contrast between the prime minister's depiction of Swedish society and their own experience. "Only 1,500 young people have been unemployed for three months or more", he declared in one televised debate. That might be true in terms of the official statistics, but anyone who visits Sweden's poor urban areas where large numbers of immigrants live can sense that tens of thousands operate outside the labour market.

A state committee recently reported that more than 20,000 young people (in a country of 9 million) are neither in work nor education. Göran Persson made no reference to their plight. The Social Democrats were also unable to escape accusations that they had concealed the true levels of unemployment by omitting the high numbers of people on long-term sick leave from the count. Persson's apparent complacency over jobs and the labour market probably hurt his party's credibility on other issues.

Furthermore, the election result was influenced by the fact that smaller parties made significant gains in the election yet fell below the 4% threshold to enter the Riksdag. Among them were the anti-immigration Sverigedemokraterna and the Feminist Initiative; each drew most of its support from working-class and/or leftwing voters who might otherwise have voted for the red-green bloc. 

In the election aftermath, Göran Persson declared his intention to resign as party chairman in March 2007. This might trigger a much-needed renewal of the party, but only after a painful internal debate to overcome its differences over deregulation and Europe. A special congress will elect Persson's successor; the candidates include trade-union chairman Wanja Lundby-Wedin, outgoing environment minister Mona Sahlin, European Union commissioner Margot Wallström, and (a close Persson ally) outgoing finance minister Pär Nuder.

The new order plans...

Frederik Reinfeldt's post-election honeymoon may not last much longer after the Riksdag votes for the new prime minister on 5 October. There are strong forces inside the alliance seeking more radical change. Its more conservative elements in big cities like Stockholm have their own power-bases and ideological motivations, and will not obey every word from the party chairman. They will, for example, continue with their campaigns to privatise hospitals and cut taxes more drastically.

The Nya Moderaterna's 26.1% of the vote at a national level, compared with 35.2% for the Social Democrats, was more than its three coalition partners combined. Its performance was even stronger in Stockholm, where it won 37.3%, and this will encourage party leaders there to resist the principle of tax compensation to Sweden's poorer regions to ensure equality of social provision. This issue may create tensions among the coalition partners.

In foreign affairs, the government will be less critical of the current policies of the United States and Israel. Within the European Union, there will be more attention to the internal market and less on social issues like the environment and workers' rights. The Social Democrats' setback will be felt here too. But Fredrik Reinfeldt cannot move too far from the ground he has claimed. If you declare your love for the Swedish model, what will the voters say next time if your wedding promises are unfulfilled?