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A common joke about the Sweden Democrats, a nativist right-wing party, goes like this: “Why do you call our party racist? In fact, we are the only Swedish political party that bans Nazi uniforms at our meetings.” That might be funny but what is not is that the party had to impose such a ban because its members were the only ones wearing them.

Having been founded by figures associated with the Swedish neo-Nazi movement in 1988, the Sweden Democrats counted among their followers many angry skinheads who also did Hitler salutes. The salutes too were banned. In fact, the party even embraced a zero-tolerance policy against outright racists and xenophobes.

But does this mean that Sweden’s legendary progressive politics have turned it into a decent and sensible force in the country? Actually, the reverse might be the case: It has managed to get Swedes to blame immigrants for problems created by the welfare state and labor market distortions. Indeed, by cloaking its anti-immigrant message in economic and cultural rather than racial terms, and embracing the country’s ultra-generous public assistance programs, it has prodded established mainstream parties to move in its direction, radicalizing the whole debate while giving the party a possible route to power and influence.

Initially, when the party was formed it sought international alliances with the likes of the White Aryan Resistance, a white supremacist group whose founder was a former Ku Klux Klan grand dragon. During the Balkan Wars and other conflicts in the mid-1990s when Sweden accepted a record number of refugees, many of them Muslims, the Sweden Democrats were primarily concerned with protecting Sweden’s ethnic purity. At the time, their platform advocated the forced repatriation of all immigrants who’d come to the country after 1970. Such extremist plans relegated the party to the fringe of Swedish politics.

But then it cleaned up its image and embraced an agenda that synthesized elements from the right and left, not unlike what President Donald Trump attempted in the United States. From the right, for example, it borrowed concerns about the cultural difficulty of assimilating Muslim immigrants and the strain refugees impose on the welfare state. From the left it borrowed a commitment to high social spending. Using this issue set, it managed to earn 5.7 percent of the national vote in 2010 and formally make an entry into the Swedish parliament.

But its big breakthrough moment came during the 2015 “migration crisis” when a million refugees from Syria and other countries streamed into Europe. The masses of migrants marching along the European highways and railway tracks searching for shelter created a fear of chaos and disorder across Europe, including in countries that had not been affected. In Sweden, these stories conjured up an old image of barbarian hordes storming the gates.

The Sweden Democrats exploited this crisis to convince the world that welfare-dependent refugees were turning their idyllic country into a crime-ridden warren of ghettos and no-go zones. None other than Trump peddled this trope in 2017 when he slammed Sweden’s refugee policies by noting: “They took in large numbers. They’re having problems like they never thought possible.”

A painfully slow labor market integration has indeed created problems: Certain forms of crime have increased, especially violence between drug gangs who have taken to killing rivals in public. Still, the general narrative is exaggerated when considered in the proper context.

Take, for instance, Sweden’s homicide rate. Sure, it increased from 1 to 1.2 per 100,000 people between 2010-2020. But in the US, it increased from 4.8 to 6.5 per 100,000 over the same time. Break-ins declined in Sweden in that period. Reports of muggings were stable, even though the share of men who say in polls that they have been mugged has increased in recent years. If we were really heading for the breakdown of civil order that many fear, it should be more discernible in the data.

Sweden’s welfare system has also made integration difficult. This system was built for a homogeneous, well-educated and productive workforce with high-end jobs where lower-wage sectors were gradually jettisoned. This model was not prepared for a growing part of the population with limited education, experience and language skills. The de facto minimum wage (through collective bargaining) in Sweden is almost 90 percent of the average wage in retail, hotels and restaurants. This means that anyone who is slightly less productive than the average gets priced out of the market, which is what is happening to a lot of immigrants. Sweden has the lowest share of “simple jobs” in the EU that require little or no education—5 percent compared to the EU average of 9.3 percent. At the same time, the country has the highest number of refugees per capita, many of them with little or no education. In combination with generous welfare benefits, this is a recipe for social exclusion.

Still, despite such odds, immigrants are getting ahead. The share of the foreign born who have a job has increased from less than 50 percent to 65 percent over the last two decades. (This is higher than the average employment rate for natives in Greece and Spain.) One could make the case that Sweden’s difficulties with immigration are getting better not worse.

However, with more immigrants in the population, the issue has become more salient among voters because even declining use per capita can translate into a higher total fiscal burden. This posed a dilemma for established parties like the progressive Social Democrats and the center-right Moderate Party: They could either fight the immigrant bashing that the Sweden Democrats were engaging in and fix the labor market to make integration work. Or they could cave.

They chose the latter.

Since Sweden is so attached to its welfare state and its powerful trade unions, blaming such policies for the country’s integration problems was too politically risky. It was far more expedient for the Social Democrats and the Moderate Party to join the Sweden Democrats in turning their backs on immigrants. Around mid-2016, the entire political establishment made a dramatic about turn and Sweden switched from being Europe´s most generous country in terms of admitting refugees to one of the most restrictive.

One reason that the established parties turned on immigration was that they thought that this would take the wind out of the populist sails of the Sweden Democrats. That turned out to be an epic miscalculation.

Many Swedes view this reversal as an admission that the Sweden Democrats were right all along and have started wondering why the party’s other policies should be shunned. Indeed, it increased its vote share to almost 18 percent in the 2018 election. At its peak, just before the pandemic, it polled at 25 percent, becoming Sweden’s largest party. It lost its lead, however, when the pandemic led voters back to established parties, and the Sweden Democrats attacked Sweden’s popular decision to stay open (it was the only party to demand school closures for example). Even so, its poll numbers have stabilized at around 20 percent.

So what does this portend for national elections next September and Sweden’s political future?

Given that all the main parties are now competing to portray themselves as anti-immigration, their reasons to reject cooperation with the Sweden Democrats have withered away. Not surprisingly, the Moderates have made an informal alliance with them to unseat the Social Democrats who have ruled the country for all but 17 years since 1932.

The Social Democrats will no doubt cast suspicion on the Moderates for cooperating with a former Nazi party. That is the only way that they can maintain their coalition with the Center Party, a small but important free market player in Swedish politics that fiercely rejects both big government and the Sweden Democrats.

But some observers suspect that this might be the last campaign in which the Social Democrats do that. They have a habit of sharp reversals in policy and strategy to stay in power. And as the cordon sanitaire around the Sweden Democrats collapses, they may well strike a grand bargain in which both embrace a generous welfare state for Swedes only.

No doubt the Social Democrats and other establishment parties believe and hope that they can continue to tame and neutralize the Sweden Democrats’ worst instincts, especially given how much the party seems to have already changed. Indeed, when a disappointed Sweden Democrat activist six years ago asked on Facebook why the party was not more radical, the party secretary, Richard Jomshof, famously replied: “Because Sweden is not Hungary, because we are not in government (yet) and because the media in Sweden is not like the media in Hungary, we have to adapt to the reality that prevails here. This means that we must adapt our rhetoric to the current situation.”

But how you dress and behave during the date is not necessarily who you are. The party has dressed up in respectable garb and become a force to be reckoned with in Swedish politics, which is why Steve Bannon, the architect of Trump’s populist nationalist America First message, considered it a “perfect” partner in Europe. But its present leadership joined the party when it was still if not a Nazi party then at least a party for Nazis —and it has tried mainly to hide its past, not fully reject and repudiate it.

It is not at all unlikely that next year the country and the world will find out what the party will do when it is the one calling the shots and no longer has to adapt its rhetoric to what’s acceptable in Sweden’s liberal democracy. Either way, Sweden Democrats are living proof that the present wave of populism is rooted in the ugliest historical incarnations of authoritarian nationalism.

Johan Norberg, a Swedish author and documentary filmmaker, is a senior fellow at The Cato Institute. His most recent book is Open: The Story of Human Progress.

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