2009 Elections - Parliament
In 2008, an overinflated banking sector went bust overnight as a result of the global financial collapse, and threatened to take the North Atlantic island state with it on its descent into the abyss. Panic gripped the Icelanders. The crisis saw Iceland's three biggest banks and its oversized financial sector collapse. A string of bankers were jailed, the failed banks were temporarily nationalized and then sold, and foreign investors had to accept write-downs on their debt holdings.
Following the economic disaster of October 2008 and the collapse of the country's banking sector, the government continues to take a beating in the polls. Public support for the government fell to 46 percent by the end of October, down 30 points from the beginning of the year. While support for the Social Democratic Alliance (the junior coalition partner) has held steady or increased slightly, Prime Minister Haarde's Independence Party (IP) has been hammered. The IP, after nearly two continuous decades as Iceland's largest political party, is now third behind the SDA and the opposition Left-Greens, pulling only 22 percent in the polls. The opposition parties and a growing portion of the electorate are now calling for elections before the current term ends in 2011. A poll at the end of October showed 60 percent support for early elections, and the Chairman of the Left-Greens showed up at the Embassy's Election Night event gleefully working the room with that encouraging datum. Demonstrations calling for -- among other things -- a new government continue to grow, with the latest protest on November 8 drawing over 3000 participants.
That the public blames the IP specifically for the economic crisis is no coincidence -- the Prime Minister and Minister of Finance are both from the party, and the IP's 2007 campaign was based on the notion that only the Independence Party could be counted on to maintain Iceland's then-world-beating prosperity and quality of life. More significantly, many domestic and international observers blame former PM and Grand Old Man of the Independence Party David Oddsson for Iceland's stunning loss of credibility in the financial world. Oddsson has served as the highly controversial Chairman of the Central Bank since 2005. He made a number of ill-considered statements to the media early in the crisis, and many suspect it was at least partially due to his wounded pride that Iceland did not immediately seek IMF assistance. Haarde's apparent inability to "control" or remove his predecessor as IP Chair has led many to blame the Independence Party for the continuing economic bad news.
In the wake of 2008's financial crash, Iceland swept a left-leaning coalition into power, accusing the country's right wing of allowing out-of-control privatization, ultimately collapsing three banks and pushing the country deep into the red. Iceland's government consisted in 2009 of a majority coalition between the center-left Social Democratic Alliance (SDA) and the leftist, environmentally focused Left-Green Movement (LG). The SDA-LG coalition, which holds 34 out of the 63 seats in parliament, was elected on April 25, 2009 in early parliamentary elections that were prompted by the country's economic crisis in the fall of 2008. The Chair of the SDA party, Jóhanna Sigurðardóttir, is Iceland's first female Prime Minister and LG Chair Steingrímur J. Sigfússon serves as the country's Finance Minister. The government, during its short tenure, has initiated significant economic reforms and has submitted Iceland's application to join the European Union (EU).
The previous government, a coalition comprised of the Independence Party (IP) and the SDA, came into power following regular parliamentary elections in 2007. The IP and SDA formed a strong majority with then-IP Chair Geir Haarde as Prime Minister and then-SDA Chair Ingibjörg Sólrún Gísladóttir as Foreign Minister. However, when the Icelandic banking sector collapsed in fall 2008, precipitating Iceland's economic crisis, opinion polls showed less than 50% of the public had confidence in the government's ability to manage the crisis. The public expressed its disapproval in protests that were Iceland's most serious since the riots over NATO membership in 1949. Tensions between the IP and SDA resulted in the breakup of the coalition on January 26, 2009 and the appointment of a temporary SDA-LG government that was later returned to power in the April elections.
The 25 April 2009 elections were held against the backdrop of the global financial crisis which brought down the Government in January 2009. They were constitutionally due by May 2011. In the Parliament (Althing), 54 members are elected through an open-list proportional representation system to serve 4-year terms and 9 members are elected by open list proportional representation in multi-member constituencies to serve 4-year terms. There are six mult-member districts. Each compensatory seat corresponds to a multi-member district. These seats are awarded to parties from the same open lists in order to make the parties' overall seat shares proportional to their national vote shares.
In the previous elections held in May 2007 then Prime Minister Geir Haarde's Independence Party (IP) won 25 seats. The IP has dominated Icelandic politics since the country gained independence from Denmark in 1944. Since 1995 it had led a coalition government with the Progressive Party (PP). After the 2007 elections however Mr. Haarde formed a new coalition government with the Social Democratic Alliance Party (SDA) which took 18 seats.
The nation of 315 000 inhabitants had enjoyed rapid economic growth thanks to investments in the financial sector. However the financial crisis that erupted in the United States in 2008 severely damaged Iceland's economy. In October 2008 the country's three main banks collapsed within the space of a week. The national debt soared to ten times the gross domestic product.
Despite emergency aid of nearly US$ 1.4 billion under the International Monetary Fund (IMF) bailout plan and an additional loan of US$ 2.5 billion from its Nordic neighbours (Finland Norway Denmark and Sweden) the country's currency the krona continued to plummet and unemployment and inflation spiralled. The IMF predicted that the economy would shrink by 9.6 per cent in 2009 the biggest slump since independence. On 24 January 2009 nearly 7 000 citizens protested in front of the parliament building demanding that the Prime Minister resign. The Prime Minister tried in vain to save the situation by proposing early elections in May but ultimately announced that he would step down on 26 January.
On 1 February 2009 a caretaker government was formed by the SDA and the Left - Green Movement (LGM). Ms. Johanna Sigurdardottir (SDA) became the country's first female prime minister. On 13 March President Olafur Ragnar Grimsson issued a decree dissolving parliament and calling elections for 25 April. Former Prime Minister Haarde announced that he would not run for health reasons. Mr. Bjarni Benediktsson Jr. led the IP in the 2009 elections.
The main contenders were the SDA the LGM the IP the PP and the Liberal Party (which took four seats in 2004). Two new parties formed after the financial crisis - the Civic Movement (CM) and the Democracy Movement (DC) - were also vying for seats.
Although the SDA and the LGM said they would form a new coalition government they disagreed on a key issue the country's accession to the European Union (EU). Ms. Sigurdardottir's SDA pledged to join the EU and introduce its currency the euro in order to save the country's economy. The LGM on the other hand led by Finance Minister Steingrimur Sigfusson proposed a currency union with Norway. It pledged to organize a referendum before the country joins the EU as did the CM.
The other parties were also divided over EU membership. The IP argued that accession would not be in the country's interests because Iceland's fisheries would be regulated by the EU while the PP promised to start discussions on EU membership.
In all 85.10 percent of some 228 000 registered voters turned out at the polls. The SDA came in first with 20 seats; its coalition partner the LGM took 14. The IP and the PP took 16 and nine seats respectively. The CM won four while the LP and the DC failed to win parliamentary representation. The number of women increased to 27 (42.86 per cent) up from 20 (31.75 per cent) in the 2007 elections. The elections also resulted in a high turnover of members with 27 candidates being elected to parliament for the first time.
Iceland President Ólafur Ragnar Grímsson asked Social Democratic Alliance leader (and outgoing Minister for Foreign Affairs) Ingibjörg Sólrún Gísladóttir to form a minority coalition government with the Left-Green Movement, which would also be supported by the Progressive Party. However, Gísladóttir, who underwent a brain tumor operation last year, was expected to appoint Minister of Social Affairs Jóhanna Sigurðardóttir as interim prime minister. Sigurðardóttir - who remained highly popular - became Iceland's first ever female premier and the world's first openly gay head of government.
On 15 May the newly elected Parliament held its first session and elected Ms. Ásta R. Jóhannesdóttirof (SDA) as its new Speaker. In the meantime on 11 May the SDA and the LGM formed a new coalition government thus renewing Ms. Sigurdardottir's premiership. It was the first left-wing government in Iceland. For the first time in over six decades the IP did not participate in the government.
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