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Swedish vote could end love story with left as center-right bloc seeks historic re-election

STOCKHOLM (AP) — Swedish politics used to be like a long marriage with brief spells of infidelity.

Voters always returned to the long-governing Social Democrats — guardians of the Nordic country's high-tax welfare state — after short-lived flirts with center-right coalitions.

That love story, it appears, may be coming to an end as Sweden heads into national elections Sept. 19.

Most recent polls suggest Prime Minister Fredrik Reinfeldt, 45, can capitalize on the Swedish economy's strong revival after the global slump to pull off what no center-right leader has done before: winning re-election after serving a full term.

Meanwhile, the Social Democrats have not enjoyed their habitual rebound after a 35-percent showing in the previous election four years ago, their worst result since universal suffrage was adopted in 1919. Only a last-hour surge can avert an even lower result next Sunday, and for the first time the Social Democrats have had to join up with environmentalists and former communists in a Red-Green alliance to have any chance of regaining power.

"I think we have shown, and we have won the confidence among the Swedish people, that we are able to govern," Reinfeldt told foreign reporters on Sept. 7.

Boosting his case are statistics showing Sweden's economy is one of Europe's strongest — it's expected to grow by more than 4 percent this year — while the 2010 budget deficit is on track to be the smallest in the 27-nation EU. His program of trimming taxes in a nation long accustomed to some of the highest tax rates in the world appears to have caught on with the public.

Still, it's not a done deal for Reinfeldt. Polls show his four-party coalition is about five percentage points clear of the Red-Green alliance led by Social Democratic leader Mona Sahlin, but the gap typically narrows in the final days of Swedish election campaigns.

On the sidelines of that contest, Sweden could join the swelling ranks of European countries with a far-right, Islam-bashing party in Parliament. If the Sweden Democrats clear the 4 percent bar — recent polls place them just above it — they could deny either bloc a majority and prompt messy coalition talks.

This political reality is new to a country accustomed to near-constant Social Democratic rule since the 1930s, either with an outright majority or with the backing of the smaller Left and Green parties. Legendary Social Democratic leaders include Tage Erlander, who was prime minister for 23 years following World War II, and Olof Palme, who was shot in Stockholm in 1986 in a still-unsolved murder.

"It's a big historic change that the Social Democrats have become a regular political party," said political analyst Arne Modig. "Voters long believed the Social Democrats had a special ability to run the country. But that perception has changed in recent years."

That doesn't mean the country of 9.4 million people has given up on its cherished social model of using high taxes to sustain a cradle-to-grave welfare system that provides free education, affordable health care and protection for the sick and poor, and lets working couples share 16 months of paid parental leave.

A generous welfare system is taken for granted in Scandinavian countries, and campaigning against it would be political suicide.

Reinfeldt insists that his conservative Moderate Party, the biggest of the four coalition parties, wants to secure the welfare system by getting more people to work and paying taxes.

To that end, his government has cut income taxes while restricting benefits for the sick and unemployed. Compensation levels are still relatively high: Workers who lose their jobs can receive a maximum of 80 percent of their previous salary for up to 200 days and 70 percent for the next 100 days.

Sweden's jobless rate was 8.5 percent in July, below the EU average of 9.6 percent.

The tax breaks have affected all income brackets, helping dispel the long-held perception that the Moderates only look after Sweden's wealthy elite. They have not forgotten about the rich, though. The government abolished Sweden's wealth tax in 2007.

Sahlin, a 53-year-old avid Bruce Springsteen fan who hopes to become Sweden's first female prime minister, says the Moderates' transformation into a welfare-conscious party is an illusion.

"We've had during four years a very united, strategic, Moderate-led government with a very clear mission: It's been about putting tax cuts ahead of continuing to build the welfare system," Sahlin said in an interview with The Associated Press.

"If they were to continue four more years, the image of Swedish welfare as it has been known, will look totally different."

Sweden retains some of the world's highest taxes. Reinfeldt said total tax revenue as a percentage of gross domestic product is down to just above 45 percent, from more than 50 percent during the previous Social Democratic government that held power for 12 years.

By comparison, the tax-to-GDP ratio was 28.3 percent in the U.S. and 36.6 percent in Britain, according to 2007 statistics from the Organization for Economic Cooperation and Development.

Perhaps the most obvious change since Reinfeldt's government took office is about 110,000 people were receiving long-term sickness benefits at the end of last year, down from nearly 300,000 seven years earlier.

Critics say the government is forcing sick people back to their jobs by strangling their benefits. Supporters contend that the measures are putting welfare cheats back to work.

Reinfeldt's coalition has also come under fire from senior citizens, who felt shortchanged when taxes on salaries were cut, but not pensions.

Both the Red-Green bloc and Reinfeldt's coalition have promised tax cuts for pensioners if they win the election.

Previous center-right governments, in 1976-1982 and 1991-1994, were marred by internal dissent and budget deficits, which Reinfeldt said had given his side a reputation of being unfit to govern.

"Is it different this time?" he asked. "I think you can walk the streets of Stockholm and other parts of Sweden and they will say 'yes.'"

But Farnaz Gerogan, a 53-year-old immigrant from Iran, said she would vote for the Social Democrats because "they think about everyone: people who don't have jobs and people who need help."

"I don't want Sweden to become a capitalist country," said Gerogan, a Stockholm resident who has been unemployed for the past three months. "Social Democracy is an advantage for Sweden. That's why immigrants come here."

Jonas Lundvall, a 42-year-old banker, said he would back one of the center-right parties.

"We have to take care of those who work too, not just focus on the sick and elderly," he said. "After all it's those who work who generate money for society by paying taxes."

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Associated Press Writer Louise Nordstrom contributed to this report.