By Johan Ahlander and Simon Johnson
STOCKHOLM (Reuters) - Annie Loof, leader of Sweden's Centre Party, has been called a traitor for her decision to abandon her centre-right allies and back long-time political foe, Social Democrat leader Stefan Lofven, as prime minister after an inconclusive election.
The 35-year old, who has named former British prime minister Margaret Thatcher as a role model, once said she would rather "eat her right shoe" than help ex-union leader Lofven, whose Social Democrats have dominated Swedish politics for a century.
But on Friday Loof's Centre Party played a decisive role in allowing Lofven to win a second term by abstaining in a parliamentary vote on a new prime minister, ending more than four months of political deadlock.
The reason for her abrupt U-turn is the rise of the Sweden Democrats, a populist, anti-immigration party with roots in the white supremacist fringe.
"The Sweden Democrats are a xenophobic party," Loof told Reuters. "It is a party the Centre Party will not negotiate with nor cooperate with."
The Sweden Democrats have repeatedly denied the accusations and have adopted a zero-tolerance policy on racism.
The Centre Party and the allied Liberal Party will not join Lofven's new Social Democrat-Green coalition but will support it in return for pursuing such centre-right policies as tax cuts and deregulation of the labour and property rental markets.
The new government offers an alternative model to that seen in Norway, Denmark and some other European nations where mainstream parties have co-opted nationalist, populist movements, hoping to disarm them or capture their voters.
For Loof, who espouses free markets, liberal social values, generous immigration rules and individual freedom, that was not an option.
At school in the 1990s, she shared a class with children of refugees fleeing wars in the Balkans, reinforcing her belief in Sweden's humanitarian responsibilities.
"There I got to know them and realized that no matter where you are from, you can become friends. That has shaped my views."
Her economic views were shaped by an ethos of self-reliance and hard work she grew up with in southern Sweden.
Under Loof's tenure, however, the party - originally a farmers' union strong in Sweden's conservative countryside - has sometimes been out of sync with voters and even its own members.
A policy outline from 2012 - a year after Loof became party leader - advocated open borders, flat taxes, and the right to take several spouses. It was withdrawn amid internal criticism.
Her decision to dump two centre-right partners - the Moderates and Christian Democrats - in favour of Lofven will test whether voters are ready to abandon the traditional left-right divide in Swedish politics.
For some on the right, she is already a hate figure.
Sara Skyttedal, the Christian Democrats' leading candidate for the European Parliament elections in May, called Loof and her liberal allies "crooks and Quislings". Vidkun Quisling was a Norwegian Nazi collaborator during World War Two.
Loof's backing of the Social Democrats and Greens is fraught with danger as they are ideologically poles apart, despite the joint policy platform they hammered out this month.
"There are huge risks," said Fredrick Federley, a Centre Party member of the European Parliament and one of Loof's closest confidants.
"If this deal does not deliver, I think we will see a conservative bloc run the country for many, many years."
The last time the Centre Party backed the Social Democrats, 25 years ago, it nearly dropped out of parliament in the following election.
And with the Centre and Liberals gone, the rump of the old centre-right Alliance grouping, the Moderates and the Christian Democrats, may begin forging new partnerships.
"The Alliance is now dead, and some of its remnants are now bound to look instead at the possibility of an understanding with the Sweden Democrats," said political scientist Nick Aylott of Sodertorn University.
(Additional reporting by Johan Sennero; editing by Niklas Pollard and Gareth Jones)