As populists surge, Nordic consensus politics fray

By Sabina Zawadzki and Alistair Scrutton COPENHAGEN/STOCKHOLM (Reuters) - A policy impasse in Sweden and a newly installed but fragile minority government in Denmark are the latest signs that the Nordic political consensus model is fraying at the hands of eurosceptic and anti-immigration parties. Danish Liberals leader Lars Lokke Rasmussen was forced to form a minority government with just 34 seats of 179 in parliament after failing to strike a coalition deal with the eurosceptic Danish People's Party (DF) over the weekend. Only one government, in 1973, had fewer members in parliament - and that lasted for just 14 months. Meanwhile, a minority government in Sweden, which avoided joining forces with the anti-immigrant Sweden Democrats, has failed to pass a budget and appears unable to find initiatives that will cool a housing market and reduce household debt. "The country is more divided than it used to be. People have lost in a sense their attachment to the parties that they used to have," said Rebecca Adler-Nissen, assistant professor at Copenhagen University, in comments about Denmark that could equally apply in Stockholm. In Finland, the eurosceptic and anti-immigrant Finns Party has entered a coalition, with its leader Timo Soini named as foreign minister. With the coalition just a month old, there are already tensions over spending cuts and immigration policy. For decades, the Nordics were governed by consensus between the center left and center right. Minority cabinets were common, but pragmatism across aisles allowed bills to be passed. In Sweden's last center right government the opposition Greens supported labor reform while in Denmark there has long been an understanding between mainstream parties to keep European Union ties stable if not closer. That is changing. Just before Denmark's June election the Liberals agreed to support Britain's bid to change its relationship with the EU, a position previously only held by DF. On Tuesday, Rasmussen's foreign minister said some controls would be placed around the border with Germany to catch illegal migrants and smugglers, fulfilling, if only partially, demands by DF to impose border controls. Though the Liberals were not able to form a coalition, they will still rely heavily on DF's support to pass legislation. Budget negotiations may be hard, however - DF wants to increase state spending contrary to Liberals policy. "If the chance arises and the government cannot find a majority on the budget ... then I am sure the Social Democrats will take the opportunity to topple the government," said Rune Stubager, professor at Aarhus University's Department of Political Science. THIRD FORCE What is new is the emergence of a third force that either doesn't completely fit with the mainstream, as in Denmark, or is deemed by either side of the center to be too unsavory to collaborate with, as in Sweden. Sweden Democrats won 13 percent of support at the last election to be the third largest party in parliament. In Denmark, DF received just over 20 percent of the vote to become the second largest force. "Mainstream politicians have just not evolved to deal with this third force in politics," said Ulf Bjereld, professor of political science at Gothenburg university. "In Sweden, we risk getting nothing done in terms of policy." With three blocs in the parliament, each skeptical of working together, policies from tax changes to infrastructure spending and labor reform are on the backburner. Mainstream parties have also pushed the envelope on the region's reputation for social tolerance, especially on one of voters' hottest topics - immigration. Once immigration champions, Sweden's Moderates Party have discussed cutting the number of child asylum seekers and the government is debating a clampdown on an influx of Roma beggars. In Finland, the government has reacted skeptically to EU plans to increase entries of asylum seekers, with the Finns Party want to cut numbers. The coalition has also announced it will be cutting foreign development aid by a quarter, part of The Finns Party election platform. The Nordic model still has some influence. In Sweden, an unprecedented deal between center left and center right was struck last year which, while unpopular on the right, still allows Prime Minister Stefan Lofven to pass his budgets, if little else. And the Danish government may well manage coalitions on various issues. But Nordic politics is far from what it used to be. (Editing by Jeremy Gaunt)