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Iceland - Politics

Is Iceland bigger than a breadbox? Probably not. Iceland has a total population of about a third of a million people, less than half the total population of a single Congressional District in the United States. Icelanders are an informal people, with everyone from the bus driver to the highest government official addressed by their first name and never their last name. Most Icelanders are related to one another. All politics is local.

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.

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, Jhanna Sigurardttir, is Iceland's first female Prime Minister and LG Chair Steingrmur J. Sigfsson 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 Ingibjrg Slrn Gsladttir 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.

Iceland's long-time President was lafur Ragnar Grmsson, a former political science professor who led the far-left People's Alliance in 1987-1995 and served as Finance Minister in 1988-91. Although Grmsson won office with only a 41% plurality in 1996, he was not challenged for re-election in 2000 and was re-elected again on June 26, 2004. In 2008, Grmsson was again re-elected by default. This followed a well-established tradition of giving deference to sitting presidents. Once in office, a president can generally count on serving as many terms as he or she likes, assuming good behavior. Reflecting the belief that the president is "above politics," presidential candidates run for election as individuals--since 1952, political parties have played no role in nominating or endorsing candidates.

On April 28, 2013 Iceland's center-right opposition declared victory in parliamentary elections, as voters punished the incumbent leftist government for harsh austerity measures imposed during its four years as ruling party. The win marked a return to power for the right wing Independence Party and the centrist-agrarian Progressive Party, which had been booted out of office in 2009 during the country's financial crisis. Both parties want to end the Atlantic island nation's European Union accession talks.

The 27 April 2013 parliamentary elections in Iceland were conducted in a pluralistic and transparent manner, but certain aspects of the electoral legal framework could benefit from further review, the OSCE Office for Democratic Institutions and Human Rights (ODIHR) says in its final report, which was released on 24 June 2013. The document notes that voters enjoyed a wide choice of political options, the electoral process was marked by a high degree of respect for fundamental rights and freedoms, and voters showed trust in the impartiality of the election administration. The assessment of the legal framework concluded that there was a generally sound basis for the conduct of democratic elections. The report acknowledges that the legislation underwent a number of amendments after the 2009 elections. It, however, recommends a further review of the legislation to reduce regional discrepancies in voting weight between constituencies.

The government in Reykjavik said 08 June 2015 capital controls - imposed after the collapse of the island's banking system in 2008 - would be eased. It added that legislation would be introduced shortly to unfreeze 1,200 billion Icelandic crowns ($9 billion, 8 billion euros) in assets that had been under restriction for seven years. The government emphasized that the measure would mean that assets recovered from failed banks would be able to leave the country, but would be subjected to a 39-percent levy Reykjavik chose to call a "stability tax." "We're taking unprecedented measures to address unprecedented circumstances," Prime Minister Sigmundur Gunnlaugsson said in a statement.

2016 Elections

Iceland's prime minister seemed to have resigned April 05, 2016 in a wave of massive protests following revelations about his questionable offshore investments. Icelands opposition party filed a motion of no-confidence. Almost 28,000 Icelanders, in a country of just 320,000 inhabitants, signed a petition demanding his resignation.

President Olafur Ragnar Grimsson, who cut short his US visit, refused Prime Minister Sigmundur David Gunnlaugsson's request to dissolve the government and parliament and call new elections, following the release of the so-called Panama Papers. Prime Minister Gunnlaugsson was under pressure to resign from thousands of protesters since documents showed he and his wife set up a company with the help of a Panamanian law firm at the center of a massive tax data leak. Gunnlaugsson denied doing anything illegal, saying all taxes were paid. Gunnlaugsson was among 140 politicians and public officials around the world named in the Panama Papers that raised questions about alleged financial misconduct.

By Iceland's prime minister later said he had not resigned, as previously reported, but has merely "suggested" that the vice chairman of his party take over the office "for an unspecified amount of time." He stepped aside ahead of a planned no-confidence vote in parliament, with the ruling Progressive Party naming its deputy leader, Sigurdur Ingi Johannsson, to take over as the country's new leader.

Icelanders elected historian Gudni Johannesson as their first new president in 20 years. The final count on 25 June 2016 showed 39 percent of Icelanders voted for him placing him ahead of a former prime minister and central bank governor. The post is largely ceremonial but does carry powers to block legislation. The political newcomer ran for presidency amid distrust of politicians and business leaders after the 2008 global financial crisis and the Panama papers scandal. In the end, more people than expected turned out with preliminary figures saying 185,000 out of 245,000 of those eligible to vote made it to polling stations. His first day in office was 01 August 2016, when he succeeded Olafur Ragnar Grimsson, who did not want to stand again after 20 years and five terms in office.

Icelanders' faith in their political and financial establishment was shaken after the 2008 financial crisis and further eroded this year when several senior government figures implicated in global tax evasion were outed by the release of the so-called Panama Papers. The biggest protests in the country's history ultimately led to the resignation of Prime Minister Sigmundur David Gunnlaugsson of the Progressive Party and the early election.

Elections for the Althingi were held on 29 October 2016. An April 2016 opinion poll by Icelandic media outfits Frttablai, St 2 and Vsir gave Icelands Pirate Party a record 43% of the vote. In a time of massive political unrest in Iceland, the open-democracy party has extended its lead as the nations most popular choice for the general elections. The current government parties beleaguered by the current worldwide Panama Papers scandal lost out in this poll. 21.6% percent would vote for the Independence Party, 11.2% for the Left-Green Movement, 10.2% for the Social Democratic Alliance, 7.9% for the Progressive Party, and 3.8% for Bright Future.

A September 2016 opinion poll for the general elections indicated a massive surge in support for the centre-right Independence Party (Sjlfstisflokkurinn) which could mean that the current two-party coalition could hold on to power. The poll, published in Icelandic daily Frttablai, gave the Independence Party 34.6% of the vote. This was in stark contrast to many recent polls which put support for the party in the low to mid-twenties. The same poll showed a massive decline in support for the Pirate Party. Once polling in the high thirties, the open democracy Pirates garnered just 19.9% support.

A poll from Market and Media Research on 26 September 2016 showed the Independence Party and the Pirate Party at a statistical tie, and it was still too soon to say if the tide is turning for either of them. According to the poll results, both were polling at 22.7%. For the Pirates, this is up from 22.4% in the last poll and thus shows little change between polls, while the Independence Party polled at 24.6% last time around. As such, they remained the two highest-polling parties in the country, as they had been since March 2015.

A 27 October 2016 poll conducted by Visir and Stod 2 showed 37 percent support for the government parties, while the four opposition parties polled around 47 percent combined. Turnout in Iceland is normally high at about 80 percent, but as in most countries, young voters are less likely to cast their ballots.

Center-right Independence Party leader Bjarni Benediktsson declared his party the winner and expected to form the next ruling coalition. After his Progressive Party suffered a severe battering, losing 11 seats and dropping 13 percentage points, Prime Minister Sigurdur Ingi Johannsson has announced his resignation, paving the way for the next government. It appeared likely that the Independence Party will form a coalition with its allies, the Progressive Party and the Regeneration Party. The anti-establishment Pirate Party, tripled its seat tally to 10, but the Pirates' final tally was lower than the party had hoped for. In April, the party was polling at around 40 percent. It could take power in a left-leaning coalition with its three centre-left allies, but the coalition won 27 seats, not enough to upset the formation of a center-right coalition.

Icelands new government formally took office 11 January 2017, the products of months of negotiations that saw multiple failed attempts at coalition building since October elections. The three-party coalition comprises Prime Minister Bjarni Benediktssons conservative Independence Party, and two smaller liberal parties, the Reform Party and Bright Future. The Independence Party has six members in the 11-strong cabinet. One of them, Gudlaugur Thor Thordarson, was named foreign minister. The Reform Party secured three portfolios. The new governing parties differ on membership in the European Union. The government platform said that any possible proposals to resume membership talks would not be discussed until "the end of the legislative period."

2017 Elections

Prime Minister Bjarni Benediktsson called a snap election in September, after less than a year in government as a scandal involving his father prompted the Bright Future party to drop out of his ruling coalition. The centrist Bright Future Party accused Benediktsson of a "serious breach of trust" following allegations that the prime minister tried to cover up his father's role in clearing the record of a convicted pedophile. In addition to the political scandals, a growing sense of inequality and unease about immigration in one of the world's most ethnically homogeneous nations have rattled a democracy known for its political and social stability.

Icelanders, angry over a string of political scandals, ousted the center-right government in an election that could pave the way for a young charismatic opposition leader to form a left-leaning coalition, final vote counts showed on 29 October 2017. With the defeat of incumbent Benediktsson's coalition government, his main opponent, the Left-Green Movement's Katrin Jakobsdottir, may get a chance to form a narrow majority in parliament.

The parliament would split between eight parties. There are two new parties while one of the parties in the current tri-party government failed to secure enough votes to remain in parliament.

The Independence Party, the main partner in the current government coalition, lost 4 percentage points from the 2016 election to land 25 percent of the vote. The Left-Greens came in second with 17 percent, up 1 percentage point from 2016, and its probable ally the Social Democrats in third with 12 percent, almost doubling its share. The new Centre Party, which was formed in September by former Prime Minister Gunnlaugsson, won 11 percent of the votes. The Pirate Party, which rode on a wave of anger against the establishment to become the third biggest party in parliament, stood to get 9 percent of vote, down from 14 percent

The result showed a Left-Green-led coalition was possible if they joined forces with the Social Democrats, the Progressive Party and the Pirate Party as they would hold 32 of parliament's 63 seats. Typically the president tasks the leader of the party that won the most votes with trying to form the next government, which would be Benediktsson, who leads the Independence Party. But given that he has no clear path to forming a new government President Gudni Johannesson could task the head of the Greens with forming the next Cabinet.

Iceland on 30 November 2017 formed a highly unusual left-right coalition a month after a general election, in a bid to stabilise politics in the nation which has seen rising distrust of a scandal-ridden elite. Leader of the Left-Green Movement Katrin Jakobsdottir, 41, became Icelands second woman prime minister as her party reached an agreement with the conservative Independence Party and the centre-right Progressive Party. Its a very interesting moment actually in Icelandic political history because these three parties are very different, Jakobsdottir told AFP, adding it is highly unusual for them to cooperate. After a competitive election campaign, Jakobsdottir will now partner with former prime minister and Independence Party leader Bjarni Benediktsson, 47, who was her main rival in the October 28 snap vote. Mentioned in the Panama Papers, which exposed offshore tax havens, and accused of selling almost all his assets before the 2008 economic collapse, Benediktsson has faced heavy criticism by the opposition and in the media.

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