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Waiting for a new Government in Iceland – power and politics

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Speculating what Government will emerge from on-going coalition talks in Iceland is difficult – but guessing that the next four years will be as tough as the last four ones is easy. But first, the country needs a new Government. The election campaign revealed the power-sphere uniting the two parties that are seen as the most likely to form a coalition. But the longer it takes to form a Government, a coalition of three or more seem more likely.

Judging from the big smiles on party leaders’ faces as they left first deliberations with leader of the Progressive Party Sigmundur Davíð Gunnlaugsson, holder of the presidential mandate to form a Government, Gunnlaugsson must be good at telling them they are uniquely placed to be part of a Progressive-led coalition. Interestingly, Gunnlaugsson conducts the coalition talks alone and takes none of his fellow party members, according to Icelandic media. President Ólafur Ragnar Grímsson’s motivation for handing the mandate to Gunnlaugsson was that the several other leaders had pointed at him and that the Progressives had made the greatest election leap from 2009.

The crisp spring air in Reykjavík is thick with speculation as to if Gunnlaugsson will indeed succeed and, if not, who will be able to form a Government. Already before the election, it seemed credible that the two largest parties, Progressives and the Independence Party – the latter with more votes but both with same number of MPs – would form a coalition. The feeling now is that the longer it takes, the less likely the birth of this only option for a two-party coalition.

Apart from Gunnlaugsson and his party the focus is on the fate of the Independence Party. Traditionally the largest party in post-war Iceland, it was seen as the centre of political and financial power.

Although the President gave mandate to Gunnlaugsson, nothing excludes other party leaders to negotiate among themselves. Whoever comes first up with a credible coalition is free to go to the President and announce he/she now has a majority Government. No doubt various discussions are on-going, not only in the parties’ headquarters.

“Throw a dice”

The most remarkable comment so far on who should lead the much expected coalition of the Progressives and conservatives is that it does not really matter. The advice on Monday in an editorial of the daily Morgunblaðið was “Throw a dice.”

This gives an insight into Icelandic power politics. The editor of Morgunblaðið since autumn 2009 is Davíð Oddsson of extensive fame as the conservative leader who in secured the party the Prime Minister post from 1991 to 2004. He served as a Governor of the Central Bank 2005 to 2009 when he was ousted by the minority coalition of the social democrats and the Left Green.

Oddsson seems never to have reconciled himself with being out of power. With old allies in the Independence Party he has exerted – or tried to exert – power over the party, causing great and severe problems for the present leader, Bjarni Benediktsson.

Benediktsson went against Oddsson and his old guard by siding with the Left Government on Icesave two years ago. Only ten days before the election last Saturday a poll, allegedly paid for by a close friend of Oddsson, showed that half of those voting for the Progressives would vote for the IP if its vice-chairman Hanna Birna Kristjánsdóttir were its leader. This move, widely seen to be an attempt to get rid of Benediktsson, backfired and seemed to galvanise Benediktsson.

Oddsson’s political antipathy is strongly focused against the social democratic Alliance who many IP members see as being on a mission to destroy the Independence Party (even big parties can be paranoid). Social democrats were seen to be leaders of the pack that ousted Oddsson from the CBI but his grudge against the social democrats was allegedly born in 1994 when those who later founded the Alliance in 2000 gathered the left wing in local council elections and won majority in Reykjavík ending decades of IP rule. Consequently, Oddsson was fiercely against his successor Geir Haarde forming a coalition with the social democrats in 2007.

Morgunblaðið has, since the beginning of time, been closely connected to the conservatives and was for decades seen as a party organ. Hiring Oddsson as an editor came as a great surprise – after all, the paper had slowly developed a more independent stance from the party though its main owners were, as before, closely connected to the party.

Considering the old ties between Morgunblaðið and the IP, the paper’s favourable stance towards the Progressives, most notably to Gunnlaugsson, all through the election campaign has been surprising – unpleasantly so to some. As the Progressive fortune grew in the polls the IP fortune dwindled and Morgunblaðið did not seem at all bothered. Many devoted IP readers were dismayed, sensing that actually their old organ was much more admiring and supportive of Gunnlaugsson and the Progressives than Benediktsson and the editor’s old party.

Now, according to Morgunblaðið it does not matter who leads an IP-Progressive coalition. Just “throw a dice.”

Morgunblaðið and the merging interests

But why is the IP old guard, led by the former IP leader, suddenly so overtly pro-Progressives? Is it because it best safeguards IP interests to hook up with the Progressives – as many think – or is there a genuine Progressive rapprochement in the old guard?

The answer can possibly be found in the strife for power in Iceland. The Independence Party is not as strong as it used to be and the Progressives seem to have lurched into corners the biggest party earlier had to itself.

Here the ownership of Morgunblaðið and – as always in Iceland – personal connections are an intriguing indication of merging interests. Whereas the paper used to be owned by companies and individuals solely connected to the Independence Party it is now co-owned by entities connected to the IP – and to the Progressive Party.

After companies connected to Björgólfur Guðmundsson, the largest shareholder of Landsbanki together with his son Björgólfur Thor Björgólfsson, failed, Guðmundsson lost his ownership of Morgunblaðið. Forth came Guðbjörg Matthíasdóttir, a widow of an owner of one of the main Icelandic fishing companies she now runs together with her sons. She saved the paper and became its largest shareholder.

This was widely seen as a move by the fishing industry to secure a media to propagate its anti-EU stance, she hired Oddsson who with great zest and untiring diligence writes against the EU. Interestingly, the fishing industry makes good use of the EEA agreement to expand abroad but is equally suspicious of any foreign involvement in the fishing industry in Iceland.

Matthíasdóttir’s ownership is well know in Iceland but few have noticed that the group of owners is now more diverse than earlier. Another Morgunblaðið shareholder is Kaupfélag Skagfirðinga (the Skagafjörður Co-op), KS, a remnant of the co-op movement, which until it collapsed in the 1990s was the financial part of the Progressives’ power sphere. KS is a thriving company (I have not studied its ownership) and exerts great power in Northern Iceland and farther afield, both in fishing and agriculture. The man who has turned a small-time co-op into a modern conglomerate is Þórólfur Gíslason, one of the island’s most powerful men, who happens to be related to Oddsson. Another Morgunblaðið shareholder with a Progressive connection is a company owned by the family of Halldór Ásgrímsson leader of the Progressive party during its years of coalition with the Independence Party – and Oddsson.

One of the more peculiar comments to the election was in Morgunblaðið’s weekly Sunday column, traditionally written by its editor. Since the Sunday paper is actually distributed on Saturdays this column was written before the results were clear. In unusually big font and with striking graphs, the centerfold article quoted an old article from a business magazine, extolling the fantastic accomplishment of Governments led by Oddsson until 2004, of which his party was in coalition with the Progressives from 1995. – Whether the article was intended to remind readers of this glorious coalition, the great Prime Minister or both, many a Morgunblaðið reader (said to be much fewer now than when Oddsson became editor) whispered this truly was the strangest of many strange articles penned by the editor.

Only two years ago, it would have been impossible to imagine that the old conservative party organ would one day so openly be supporting the Progressive Party. If Morgunblaðið’s predilection has indeed migrated to the Progressive Party it indicates that power is more important than ideology. Unless the IP’s old guard thinks like Il Gattopardo in Giuseppe di Lampedusa’s novel: it is necessary to change in order to keep things as they are.

The Morgunblaðið power-sphere and the EU

This joint ownership of IP and Progressive interests in Morgunblaðið may explain the paper’s political position and the fact that to its editor is does not really matter who leads a coalition of the two parties. No matter who of the two parties leads, the Morgunblaðið two-party power-base will be close to – even at heart of – the political power in Iceland.  Consequently, both parties do equally well, thank you very much – and, most importantly, seen from the point of view of Morgunblaðið’s power-sphere, both parties should be in Government, not only one of the two parties.

But does the two-party power centre at Morgunblaðið exert any real power or is just a club of old have-beens? Gauging the extent of power is never easy. Considering the web of personal relations emanating out of Morgunblaðið it is safe to say that that this web reaches into many an Icelandic corner of business interests in the fishing sector, which have always been at the centre of politics and power in Iceland, and other companies.

If this is indeed a joint power-base of the IP and the Progressives is there anything to threaten it? Judging from the fervour the Progressives – the party is tied to interests of both fishing and agriculture – put into their anti-EU stance, only equalled by some IP leaders but outdone by the editorials of Morgunblaðið, it seems that these forces see an Icelandic EU-membership as a great threat to their power and interests.

It is however interesting to note that the Independence Party is split on the issue. As with the British Conservatives, to whom its Icelandic sister party has long looked with reverence and awe (especially during the Thatcher-years), its leadership is now thoroughly anti-EU whereas many of its members are in favour of EU-membership. For the moment, being pro-EU is not a great career-move among Icelandic conservatives.

Partly by keeping EU-membership off the political agenda so far, the Independence Party has prevented the issue from splitting the party. A referendum on membership would be a serious test, which is possibly why IP anti-EU members are doing their best to stop the negotiations, thus avoiding this difficult topic. The same avoidance can be seen among many who are opposed to EU membership, no matter from which party. The history of Swedish membership might scare: there was a Swedish majority against membership until the day of the referendum in 1994 when Swedes surprisingly voted for EU membership.

Other alternatives than a two-party coalition

The feeling is that the longer the coalition discussions drag out the less likely a two-party coalition. Although the Progressive parliamentary party is young and unattached to the party’s past, many IP members fear the stench of old corruption emanating from the Progressives. These members might favour some left collaboration rather than a two-party coalition, especially if that is the only way to secure an IP Prime Minister. Such a Government will win no favour with the IP old guard and their followers.

During the election campaign, many in the Independence party, sensing that voters were susceptible to Progressive promises of extensive debt write-down – the main reason for the Progressive’s success – were pointing out that the Progressives had a natural inclination to the left. Consequently, a vote for the Progressives meant a vote to the left, they said. But leading Progressive members took care to keep all options open, never admitting to any preferences of political directions.

With six parties in Government there are various numerical options to choose from. Though an absolute exception in Icelandic politics, some are even talking of a minority Government of Progressives. It seems however far too early to imagine this outcome, also because the problems ahead will demand strong and steady political leadership (more on the future later). Yet, it seems difficult to see who would like to be led by the Progressives with their fantastical promises of debt-relief.

Ultimately, it is the political reality and trust that counts. Although Gunnlaugsson is young in politics there are already those who allegedly whisper, even in his own party, that he is somewhat unreliable. Benediktsson is seen as someone who can easily talk to everyone. Although it now seems that one of those two is the most likely Prime Minister in spe, it is still too early to tell. There are, after all, six leaders to choose from.

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Written by Sigrún Davídsdóttir

May 2nd, 2013 at 6:38 pm

Posted in Iceland

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  1. […] latest report, from this weekend’s Morgunblaðið, interestingly close to both parties, says that a new Government is almost there, just few remaining issues to be […]

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