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Archive for April, 2014

Seismic shift in Icelandic politics: new conservative vision in the making?

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The Independence party, the Icelandic conservative party, has mostly been the single right-of-centre party since its foundation in 1929. Now this hegemony seems threatened, induced by the party leadership wish to break off membership negotiations with the European Union. So far, history does not hold promises of a good fortune for this attempt – earlier break-out parties have been short-lived – but this time it might different. In addition, there is more than EU stance at stake.

Conservatives in Iceland have not only been conservative in outlook but also in its faithfulness to the only strong conservative option in Icelandic politics: Sjálfstæðisflokkurinn or the Independence party. While the Icelandic left wing has more or less been in constant flux since World War II, with new parties coming up, merging with others and then splitting, the right wing has been stable and steadfast. A new conservative party is colossal news in Icelandic politics – to say the least.

The only real right-wing contestant was former professional football player and businessman Albert Guðmundsson (1923-1994) who in 1987 was forced to resign due to a tax scandal. Feeling the party had not supported him he founded his own party, Borgaraflokkurinn or the Citizen party and won almost 11% in the following election. Guðmundsson left parliament and the party two years later to become the Icelandic ambassador in France and the party slowly faded.

What characterised Guðmundsson’s party and other disharmony within the Independence party has always been persons and not politics. Guðmundsson did lean towards populism, portraying himself as the only politician to stand up for the “little people” but he had done that within the party and would hardly have left the Icelandic GOP to form his own party had it not been for personal matters and the ensuing problems and bitterness.

This time it is, or might be, different – or so those who speak of a new party say: it is not about people but about politics. And though it springs from what some see as the party’s broken promises regarding the EU negotiations following the election a year ago this story, as often, goes back some time and to other issues. And it also not entirely unrelated to people, or rather to one person, Davíð Oddsson and, what some perceive, as his stronghold on the party leadership though Oddsson has no formal standing in the party except as a party member.

The Oddsson factor

Oddsson led a successful Icelandic membership of the European Economic Agreement in 1994, securing Iceland’s participation in the European single market. At the time, the leadership did seem positive towards at least contemplating Icelandic membership. That has changed. After being a much admired and longest serving prime minister 1991-2004, he became a governor of the Icelandic Central Bank, from where he watched the demise and later fall of the Icelandic financial system in October 2008. After demonstrations during the winter of 2008-2009 Oddsson was ousted from the bank by the left government that came to power in January 2009 (as a minority government, voted to power few months later).

The next career move was when Oddsson became the editor of Morgunblaðið, now owned 50-50 by companies connected to the Independence party and the Progressive party. The two parties came to power last year but it could be said that the coalition had already been tried and tested through the ownership of Morgunblaðið, overseen by Oddsson. It has often irritated his own party members how strongly the paper has endorsed progressive politicians. As an editor Oddsson has in particular had two themes running through his editorials: an anti-EU stance and rancour towards Rúv (the public broadcaster).

After losing power in early 2009, partly because the party was seen as being to blame for the collapse, the leadership of the Independence party set about to own up to the past and move on. This was formally done in a report written by an ad hoc party committee. However, when it came up at a party conference in spring 2009 Oddsson, unannounced, gave a speech where he singlehandedly ditched this “renaissance” report, which then was not discussed as had been intended. Many feel that this moment to face the past has ever since marred the party – and that Oddsson was to blame for this lost opportunity. Whatever view people have on this event it does show Oddsson’s grip on the party whose leadership he had left in 2005.

An echo from the business community

Oddsson has now been the talk of town the whole winter, both for his forceful writing and because many air the opinion that he exerts far too much influence on the present party leadership. People talk, also publicly, of a back-seat driver and a puppeteer. It was much noted last week when an email sent to many in the Icelandic business community written by Helgi Magnússon, former president of the Icelandic Federation of industries and very influential in the business community, was leaked by Kjarninna new Icelandic webzine. Magnússon wrote:

The soul of the former governor of the CBI is still scarred  from being ousted by the previous government after he had been instrumental in causing the bank’s (CBI) bankruptcy of ISK300bn (€1.93bn). Mbl (Morgunblaðið) has not written much on this bankruptcy and has not at all found it worthwhile to dedicate its front pages to such trivia. Which is why it needs to draw attention to other embarrassing matters at the bank. (This refers to Morgunblaðið’s extensive coverage of issues related to Már Guðmundsson’s salary and that the CBI paid cost related to him suing the bank for breach of salary contract; Guðmundsson lost).

Further, Magnússon writes of the widespread feeling of the political blame for the collapse:

The corrupt mentality of the progressives and Independence people, widely criticised and seen as part of the reasons for the collapse in 2008, is still there. The 50-50 moral (the concept generally used in Icelandic debate, referring to the sense that these two parties divide the goods between the two parties; most noticeably in the privatisation of the banks where people connected to Independence party bought ca. 40% of Landsbanki and those with progressive connections bought an equal stake in Kaupthing) is still in full force. And that’s where the CBI has a major role. The bank oversees a holding company that takes over assets rising from the winding up of bankrupt estates and other issues. What is ahead is that this holding company will absorb ISK assets from the estates of Kaupthing and Glitnir, i.a. shares in Arion and Íslandsbanki (the two new banks founded with deposits from respectively Kaupthing and Glitnir). Then it will be important that progressives get one bank at a very good price and trusted Independence people the other. Under such circumstances none other can be at the steering wheel of the CBI than “thoroughly honest” (Magnússon’s quotation marks) messengers of the party.

As most other prominent Icelandic business leaders Magnússon can hardly be seen as being part of the loony left. His clear-cut description of the state of things will be read by many with great attention.

The effect of broken promises

Under the leadership of Sigmundur Davíð Gunnlaugsson the Progressive party is an anti-EU party and so are most of its voters. So as not to alienate its pro-EU voters Independence leader Benediktsson promised its voter – or so they understood – that the EU negotiations would not be broken off unless there was a referendum on this move. The progressives made the same promise but their voters are not as upset as Independence voters due to the different voter sentiment in these two parties. Then it turned out that this wasn’t really the meaning and Gunnar Bragi Sveinsson (progressive) minister of foreign affairs brusquely put forth a bill to end the negotiations. Since then there have been weekly protests every Saturday where plenty of people who have never protested against anything in public have shown up and even given speeches.

As can be gauged from Magnússon’s mail the anger does not only stem from the stance on EU. It seems that many Independence party voters simply do not trust the present leader to act independently. Though respected and generally well liked he is also seen as weak and far too close to Oddsson. And, as can also be read from Magnússon’s mail, the fear is that it will be politics and not economics that dictate decisions in the matter of capital controls: a huge worry within the Icelandic business community. In addition, many feel that the stance on capital controls is unclear, though both coalition leaders keep repeating that the controls could be abolished soon. Also the economic policy in general does not convince the business community and many others.

Only this week several business leaders have express grave worries as to the future for Icelandic industries within capital controls and aired the opinion that the only sensible policy is to move their companies abroad. Hilmar Veigar Pétursson CEO of the video game company CCP gave a speech recently at the annual conference of the Federation of Icelandic Industries. He pointed out there were only emotional reasons for keeping the CCP headquarters in Iceland. He asked if the only government policy was to keep the króna as currency, ending his speech with an echoing: is this the policy “for real?”

In his speech at the annual conference of the Confederation of Icelandic Employers this week Gunnlaugsson said:

The grand plan for the economy consists in believing in Iceland, in harnessing the forces found in the people, the country and the fishing grounds, believe in our selves and the opportunities we have, to have the discipline to take on good as well as bad time and to be, our selves, in control over our resources… (Icelanders should stop) dissing its land and its people.

 Viewing the discontent within the business community it seems that many find little faith in the grand plan.

A new party in the making?

Yesterday, at the weekly protest on Austurvöllur by the parliament, yet another unexpected speaker stood on the podium. Benedikt Jóhannesson is a successful and much respected business man who has long been a major force, though not publicly much in sight, within the Independence party. He is closely related to party leader Benediktsson – theirs is a closely knit family, connected for decades to Icelandic businesses and politics. Jóhannesson will not have taken the steps upon the podium without serious pondering.

Jóhannesson has over winter been airing his discontent with the party’s EU stance but always in the most subdued mild manner. That he has now stepped forward not only to speak at a demonstration rally but to air the possibility, in a radio interview, that there might be a new conservative party in the making indicates a truly seismic move among the core of prominent conservative voters.

The business community and many others are not only upset about breaking off the EU negotiations, in a move they see as isolating Iceland when little other is in sight. They are also upset that Iceland seems to be leaning towards China and Russia, led the Icelandic president. Formally the president has no power but he often airs his views abroad. Foreign media usually does not realise that these are only his private views and not the views of the Icelandic government. It keeps causing irritation on the right wing of Icelandic politics that the president, very close to China and Russia and fervently anti-EU, seems to be forming Icelandic foreign policy. Those who speak of a new party say it will not only be pro-EU but pro-Western values and not bound by the old “50-50 rule,” nepotism, cronyism and political patronage of businesses and resources.

Within those conservative quarters now airing the possibility of a new conservative party there is the fear that Iceland is isolating itself at a time when a strong alliance is needed, also to solve the problems underlying the capital controls. If a new party does indeed come into being it could well be said to be a belated reaction to a renaissance that never happened, or was prevented from happening, in 2009.

*Quotes above, in italics, are my own translations since these texts are only in Icelandic.

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Written by Sigrún Davídsdóttir

April 6th, 2014 at 3:32 pm

Posted in Iceland