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PARIS (Reuters) - The crash of Sweden's long-ruling Social Democrats to their worst defeat since 1914 highlights the decline of socialist parties in much of Europe, drained by social change, economic crisis and the rise of new issues.
The re-election of a center-right Swedish government for the first time in modern history and the entry of a hard-right anti-immigrant party into parliament show how far the times have changed, even in social democracy's north European heartland.
How the center-left should respond, and whether it can regain the ascendancy in Europe at a time when loyalties are shifting across the political spectrum, are now being fought out in internal party tussles in Britain and France in particular.
In Sweden as in Germany, France, Denmark or the Netherlands, the main party of the center-left has hemorrhaged votes in all directions -- to the hard left, the ecologist Greens, the populist far right but also to mainstream conservatives.
"Social democracy comes across as a victim of the crisis, when it should appear as a refuge or a hope after years of neo-liberal excess," French political scientist Laurent Bouvet wrote earlier this year.
Technological change and globalization have shrunk the traditional industrial working class and the trade unions, made jobs more precarious and thrown up new issues such as climate change, population aging, immigration, obesity and drugs.
The mainstream left is torn between trying to reconnect with a lost popular electorate and reaching out to an aspiring new class in the knowledge economy.
Swedish Social Democratic leader Mona Sahlin alienated some centrist supporters by agreeing to a formal coalition with the ex-communist Left party -- a move that the German Social Democratic Party (SPD) continues to eschew.
In countries such as Britain, France and Germany, where the center-left was in government in the early 2000s, it is regarded by many voters as having been a zealous accomplice in financial deregulation and economic liberalism.
Rising income inequality gave a hollow ring to the left's proclaimed ambition to redistribute wealth.
Now that most European countries are burdened with high deficits and debt mountains due to the financial crisis, the "big government" left is not seen as offering a credible answer to the question of where and how to shrink the state.
In many countries, public employees are the biggest bloc of socialist party members and constitute a brake on reform.
Socialists' long-standing support for European unification, religious tolerance and integrating immigrants has made them vulnerable to right-wing populists like the Sweden Democrats, Geert Wilders' Dutch Freedom Party or France's National Front.
These dilemmas are the backdrop to the choice of a new leader by Britain's opposition Labor Party this week, and of a presidential candidate by the French Socialist party next year.
In Britain, the choice is between sticking to the market-friendly New Labor ideology that marked Tony Blair's decade in office from 1997, or shifting to the left to try to win back disenchanted working class and public sector voters.
"We need to become 'effective state' social democrats, not 'big state' social democrats," Roger Liddle, one of the thinkers behind the New Labor project, said in a speech last week.
Former foreign secretary David Miliband embodies Blairite continuity, while his younger brother Ed, former cabinet minister Ed Balls and left-wing stalwart Diane Abbott offer varying degrees of the latter approach.
In France, the Socialists face a potential three-way choice between a social-liberal (International Monetary Fund chief Dominique Strauss-Kahn), an old-style socialist (current party leader Martine Aubry), and a left-populist (defeated 2007 presidential candidate Segolene Royal).
Aubry and Royal have vowed to reverse President Nicolas Sarkozy's pension reform, which pushes back the retirement age from 60 to 62 and makes many work until 67 for a full pension. Strauss-Kahn says retirement at 60 cannot be a "dogma" when people are living ever longer.
An ecologist list ran neck-and-neck with the French Socialist party in last year's European Parliament elections, siphoning off so-called Bobo voters (the bohemian bourgeois), while ex-communists and Trotskyists split another 10 percent.
In Germany, the Greens are snapping at the heels of the opposition SPD in opinion polls and may get a chance to lead a regional state government for the first time next year.
But the SPD has also lost support to the hardline Left party among working class and elderly voters who felt betrayed by its reduction of unemployment benefits and extension of the retirement age while in government over the last decade.
Where socialists are still in office, in Spain, Portugal and Greece, they risk alienating their core electorate by having to implement austerity measures mandated by the IMF and the European Union in exchange for financial support.
Only Greek Prime Minister George Papandreou has managed to retain his lead in opinion polls so far despite eye-watering spending cuts -- perhaps because his conservative opponents made such a shambles of running public finances until last year.
additional reporting by Patrick Lannin in Stockholm; Editing by Kevin Liffey