According to the numbers I am waking up to, the Independence Party and the Progressive Party have the same number of members of Parliament each, 19 MPs each although the Independence Party has 26.7% and the Progressives 24.4%. The reason is, as I explained last night, different weight of votes between rural areas – where the Progressives get most of their votes – and the urban constituencies in Reykjavík – where the Independence Party has most followers.
The present coalition has lost 27% of its vote, a significant slap – the social democrats, the Alliance, lose 11 seats, have now 9 MPs; the Left Green loses 7 MPs, keeps 7 MPs, with respectively 12.8% and 10.8%.
Bright Future and the Pirates are the only new parties that gain MPs, Bright Future gets 6 MPs, 8.2% and Pirates 3 MPs, 5.1%.
The next step towards a new Government will be taken by the President of Iceland Ólafur Ragnar Grímsson. He now has to choose which of the two leaders of the two biggest parties, Sigmundur Davíð Gunnlaugsson from the Progressives and Bjarni Benediktsson leader of the Independence Party gets the opportunity to form a Government. The Progressives have given the voters generous offers with very little details as to how to fulfill their promises. If the Progressives will be asked first the Independence Party might be worried to join a Progressive-led Government.
The only chance of a two-party coalition with a strong majority is a Government with the two largest parties. It is still too early to see if other routes will be taken but it now seems likely that two anti-EU parties will be in coalition. The Progressives have used bold words about squeezing money out of foreign creditors of the two collapsed banks, Glitnir and Kaupthing. Both the sovereign itself and some major Icelandic companies will need loans to refinance debt in the coming years. These will have to be foreign loans in foreign currency. Any move that closes international capital markets to Iceland will endanger the economic progress so far. The last four years have been tough – and so will the coming years be.
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