Sigrún Davíðsdóttir's Icelog

The coming elections in Iceland are characterised by greater voter volatility than previously seen. Fifteen parties – up from five in the present Parliament – are courting the voters. In spite of turning the economy from recession to growth in record time the coalition Government has lost trust. Voters, sticking to the two parties that have been the mainstay of Icelandic politics for decades, seem to long for the past.

The Government and its unrewarded and squandered success

In spite of extensive write-down of private debt, orchestrated by the present Government of social democrats, Samfylkingin, the “Alliance, and Vinstri grænir, “Left Green,” private debt is the main election issue in Iceland. Framsóknarflokkurinn, the “Progressive Party,” has earlier promised to write down all private debt by 20% but is now talking of distributing ISK200-300bn (€) to those with debt, no matter if they can repay their debt or not, meaning the party will help indebted wealthy individual. The party claims it will extract this money, not clear how, from the estates of the two failed banks, Kaupthing and Glitnir.

Judging from the debate and the enormous loss of favour suffered by the two coalition parties it could be thought that the present Government had ignored the problems rising from the surge of private debt after the collapse of the three big Icelandic banks in October 2008. But that is not the case at all. More has been done in Iceland than in any other European country in crisis. Debt has been written down – mortgages cannot be higher than 110% of the value of the property and morgages are consequently written down to that level. Bankruptcy laws have been amended, meaning that bankruptcy period is now two years (only recently have the Irish taken steps to chang their bankruptcy law).

Compared to the situation in other debt-ridden countries, i.a. Ireland, where private debt is high and no public policies have been introduced to assist indebted individuals, the enormous discontent in Iceland is a mystery. Part of the explanation is surely that Icelanders compare their lifestyle to 2007 – not to the situation in other European countries in crisis.

The present Government has been eminently bad at taking credit for the turn-around in the economy. In the summer of 2011, as recession had turned to growth, minister of finance and then leader of the Left Green Steingrímur J. Sigfússon was interviewed on Rúv. When so many of his European colleagues would have announced a growth of 2% with fanfare, Sigfússon lamented the growth was “only” 2% (it ended in 2.9% that year, 2011).

This week, when asked about the poor performance in opinion polls newly elected leader of the social democrats, Árni Páll Árnason said the party’s fate was similar to the fate of other parties in government in European crisis-struck countries, i.e. the voters punish governments for the crisis. For some reason, Árnason did not mention that there is this not so trivial difference: in Iceland, the Government has actually turned the economy around.

Fifteen parties – up from five

The “Four-Party,” Fjórflokkurinn, is the nickname often used for the four old parties: the conservative Independence Party, traditionally the largest party, the progressives, the social democrats and the Left Green. This name underlines the latent sense of many voters that there is “the same arse” (excuse my language, this is an old Icelandic expression) under all of them, meaning there is no real difference between them and that they really look only after their own interests, not the interest of the voters.

In addition to the “Four-Party” there have often been one or two new parties in the run. In addition to the “Four-Party” in Parliament there is now the “Movement,” Hreyfingin, a protest party that ran for the first time in the elections in March 2009 but which has now split.

Following the success of the “Best Party,” Besti flokkurinn, in Reykjavík in the local election in 2010, the “Four-Party” has had good reasons to worry if some unexpected surprise, in the shape of a new party, would spring up in parliamentary election and steal votes. For a while, it seemed as if “Bright Future,” Björt framtíð, a centre-liberal pro-EU party, would be the only new party.

It now turns out there are eleven new parties. Out of the fifteen parties running, eleven are running in all six constituencies. The only one of the new parties, apart from Bright Future that might get more than five per cent of votes is the Pirate Party, led by Birgitta Jónsdóttir who started her political career in the “Movement.” She became an international celebrity for her role in Wikileaks earlier but is now a well-known activist on media freedom and the Internet.

According to the latest poll, the Progressives top the list with 32.64%, Independence Party 22.88%, the social democrats 10.39%, Bright Future 9.49%, the Pirate Party 8.99% and Left Green 6.69%.

The historic loss of the Independence Party 

It is still too early to say if the Independence Party will indeed fare as badly as forecasted by the polls. After a consistent 30% or more in the polls for the last few years their luck turned following their party conference earlier this year. Their leader, Bjarni Benediktsson, was re-elected with a convincing majority but failed to rouse the spirit outside the party faithful and has been unable to connect to latent conservatives voters.

Behind the scenes the old guard has been plotting ferociously against him, meaning the Davíð Oddsson and the die-hard followers of this former leader, prime minister and Governor of the Central Bank, now editor of the once (not any more) largest and most powerful newspaper, Morgunblaðið. In spite of the party’s lacklustre performance Morgunblaðið’s editor has not used his sharp pen to rouse conservative voters. And in spite of the surge of the Progressives, quite obviously stealing votes from the conservatives, Morgunblaðið has been most sweet towards the Progressives.

Oddsson fought Icesave tooth and nail and, from his point of view, Benediktsson committed the cardinal sin of taking the opposite view: after the last attempt to negotiate with the Brits and the Dutch, Benediktsson supported the agreement, which then failed in a referendum, in spite of gathering a large majority in the Parliament. Oddsson – and the Progressives who were on his side – felt hugely victorious when the EFTA Court ruled in favour of Iceland on Icesave. Hence, the mild Morgunblaðið tone towards the Progressive Party.

Also on EU Oddsson and the Progressive see eye to eye, both being firmly against. Benediktsson used to be seen as pro-EU but has turned on that issue following the collapse and, probably more importantly, as he has had to fight the Oddsson wing of the party.

Oddsson was ousted from the post of Governor of the Central Bank in early 2009. When a report on the collapse and necessary lessons from it was presented at a party conference in 2009 Oddsson held an unannounced speech and not only shredded the report but taunted those who had written it. Many feel that by preventing a much-needed discussion of the past Oddsson caused great harm to the party. This incident still looms in the discussion now and throws a shadow, shaped like Oddsson, on the party.

When a poll was published last week, showing that half of those now in favour of the Progressives, would vote for the conservatives if Hanna Birna Kristjánsdóttir, vice-chairman of the Independence Party, would led it, Benediktsson said he needed to consider his position. This was widely taken as a hint he was stepping down but he quit the idea of quitting and showed a tougher and more resolute side than earlier. Rumours said that supporters of Kristjánsdóttir had paid for the poll and this is now seen to have been greatly damaging to her. Again, this is seen as a plot to de-throne Benediktsson, stemming from the old guard.

Morgunblaðið’s owners have always been companies and individuals closely linked to the Independence Party. Interestingly, this is no longer so. Among the owners there are now companies with strong links to the Progressives, one of them being Kaupfélag Skagfirðinga, a remnant of the once so powerful co-op movement in Iceland, always part of the Progressive’s sphere in Icelandic politics. The CEO of KS is Þórólfur Gíslason, one of the country’s most powerful men though not at all a well-known name in Iceland.

Morgunblaðið, formerly a conservative stronghold, has at present strong ties to the two parties – the Independence Party and the Progressives – which together have ruled Iceland in total for 26 years since 1944.* The editor of Morgunblaðið once led a coalition government of the two parties for nine years, from 1995 to 2004. Morgunblaðið seems to have been doing its best to shape the ground for such a coalition. Bar unexpected events, it is difficult to what could exclude a coalition government led by the Progressives, together with the Independence Party.

The leaders of the two biggest parties– and the return to the past

Sigmundur Davíð Gunnlaugsson leader of the Progressive Party is born into the party. His father, Gunnlaugur Sigmundsson, was also briefly an MP for the party. Sigmundsson was on the board of a public IT company, Kögun, which he later bought when it was privatised and became a wealthy man. Recently, Teitur Atlason, a blogger living in Norway, accused Sigmundsson of corruption in connection to Kögun. Sigmundsson sued the blogger for libel but lost. Atlason’s allegations were not new and had been published in Icelandic media more than ten years ago. Sigmundsson claims they are wholly unfounded and he has never been charged in relation to Kögun. Anna Pálsdóttir, Gunnlaugson’s wife, is independently wealthy, being the daughter of Páll Samúelsson who in 2005 sold Toyota Iceland.

Also Bjarni Benediktsson is born into his party, the Independence Party. For the most part of the last century his family has been both wealthy and powerful. As so many in his family Benediktsson is a lawyer. His father and uncle were in business with Milestone, a now failed holding company, owned by Karl Wernersson. Milestone was a big shareholder in Íslandsbanki (later named Glitnir) and the insurance company Sjóvá. Benediktsson is seen by many as being tainted by investigations into the affairs of Milestone, which is being investigated by Office of the Special Prosecutor.

It is interesting that less than five years after the collapse, two parties and two leaders seen to be closely connected to politics and businesses before the collapse are now doing immensely well in the polls – and might very well be the powers to be in Icelandic politics, thus connecting the past to the present. Possibly because this past, i.e. the 1990s, is seen as a time of prosperity and stability.

The voters seem to seek confidence in the two parties, which have been the political backbone in Icelandic politics and more than any other parties shaped Iceland in the decade before the boom, which led to the collapse that turned everything upside down in Iceland almost five years ago.

*The 26 years refers to years when both parties have been in two together in Government. In 1958-1959 and 1979-1980 the social democrats were in Government and then from 2009 to 2013 the social democrats and the Left Green. Out of the 69 years since the foundation of the Icelandic republic, the Independence Party or the Progressives or both have been in Government for 63 years. See here for a Wikipedia list (in Icelandic) of Icelandic Cabinets. The social democrats have been through many metamorphosis. Their fate, as well as the fate of left parties, has been to split at regular intervals.

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