From Iceland — Lýðræðisvaktin (“The Iceland Democratic Party”) Interviewed

Lýðræðisvaktin (“The Iceland Democratic Party”) Interviewed

Published April 8, 2013

Lýðræðisvaktin (“The Iceland Democratic Party”) Interviewed

1.    Briefly describe your party’s general agenda in one sentence.
We, the people of Iceland, want to create a just society where everyone has a seat at the same table.
2.    Tell us about your party. What’s it all about? Does it have a history? Are you proud of that history?
The Iceland Democratic Party (IDP) was established partly in reaction to explicit threats by Independence Party members of parliament to thwart the will of the people expressed in the national referendum on October 20, 2012. In the referendum, 67% of the electorate declared their support for the constitutional bill drafted by the Constitutional Council, which was elected by the nation in 2010 and appointed by parliament in 2011.
Even if the majority of MPs in the current parliament have vowed to pass the bill before the April 2013 parliamentary election, the fate of the bill in parliament remains in doubt as we speak. One of the IDP’s main objectives is to help get the new constitution accepted by the new parliament in accordance with the will of the people.
Even so, the IDP has a comprehensive platform covering a broad range of issues as laid out on its interactive website The website is organised like that of the Constitutional Council, inviting the public to post comments and propose improvements on the party platform. Our platform is a work in progress.
3.    Is there a foreign sister party that you identify with, one that international readers might identify with?
4.    What do you consider the most important issue facing Iceland today? How about the most important issue to consider in this election?
There are two key issues facing Iceland today. One is the adoption of a new constitution that the parliament has promised but not delivered since 1944 and that the people laid the basis for at the National Assembly in 2010, and then accepted by an overwhelming majority in a referendum in 2012. In the referendum, the electorate accepted not only the constitutional bill as a whole but also, in their Yes or No answers to several additional questions, several key individual clauses in the bill such as about electoral reform (one person, one vote), public ownership of natural resources, and direct democracy through more frequent referenda. The new constitution thus promises to resolve several vital issues in keeping with the popular will, issues that representatives of special interests in parliament have long prevented from resolution, including electoral reform (supported by 67% of the electorate in the referendum) and natural resource management (83%).
The other key issue is economic policy laying the basis for a sustainable recovery of living standards from the financial crash of 2008. To date, the recovery has been too slow as can be seen from the fact that the foreign currency controls, initially announced as temporary, remain in place. The IDP wants to encourage job creation without igniting inflation.  
5.    What do you admire about the current coalition government and what it accomplished in the last four years? What do you dislike? What will you do better?
I admire the government’s ability to keep the country’s worst political offenders out of office for four years in a row as well as, in part, its general handling of the economic recovery after the crash, in close cooperation with the IMF.
I dislike the government’s lack of ambition and expediency. Two examples will suffice. The temporary foreign currency controls that the government declared in 2008 have recently been declared permanent, meaning that they will, with unchanged policies, be in force indefinitely. Further, the government, having just survived a vote of no confidence in parliament, still has proved unable to pass the constitutional bill after spending twenty months debating the bill that it gave the Constitutional Council four months to draft, a bill that the council passed unanimously with 25 votes against zero, no abstentions. Incompetence and corruption impede the parliament. Presumably, this is why the parliament adopted in September 2010 a unanimous resolution promising yet again a new constitution and denouncing Iceland’s political culture (no joke!).
6.    Was the financial crisis in 2008 and the problems Iceland now faces in some way caused by government policy and action or the lack thereof? Is your party in some way responsible for this? Why or why not?
Yes, the government was in large part to blame. Specifically, the root source of the crash was the incestuous relationship between the established political parties and bankers, culminating first in the corrupt, Russian-style privatisation of the banks in 1998–2003 and then in the banks’ collapse like a house of cards in 2008. The IDP is innocent in all this, having been established only a few weeks ago. Most of our key members and candidates have not been active in political parties before.
7.    Specifically, how do you plan to bring Iceland back to economic prosperity?
There are two main issued involved here. First, we need to know where we stand. We need foreign experts to provide a quick, independent assessment of the economic situation of the country, including the banks as well as state and local finances. Once we know where we stand we can decide how much needs to be and can be done, e.g., to compensate households for the losses inflicted on them by their net worth being significantly reduced or even obliterated by the effects of the collapse of the króna and the jump in prices following the crash in 2008 at a time when real estate prices plunged.
The Supreme Court has ruled that the banks broke the law by providing housing loans indexed to foreign currencies. The Central Bank must have known these loans were illegal because one of its governors drafted the law making them illegal. These loans are now in the process of being grudgingly written off by the banks. The indexation of housing loans to domestic prices is also being challenged in the courts on the grounds that those loan contracts, too, violate consumer protection laws. All those issues need to be settled before concrete, long-term decisions can be made about how to proceed.
Second, and this part of the answer is clearly complicated by the first, economic recovery needs to be accelerated. The banking sector needs to be put on a firm and lasting foundation, with owners who satisfy stringent legal conditions. Perhaps one state bank and one or two banks owned by impeccable foreign banks would be an appropriate solution. We cannot have banks that behave like casinos, or worse, as like a state within the state, which is what we had before the crash.
The IDP will follow prudent tax-and-spend policies, striving to keep both general taxation and public spending under tight control, aware of the acute need to gradually reduce the crushing public debt burden imposed on the public by the reckless perpetrators of the crash. The IDP will likewise follow sound monetary policies, keeping inflation under control by issuing strict instructions to the Central Bank and the commercial banks. The instructions will, among other things, prescribe speed limits that can be imposed, e.g., through credit ceilings, a time-honoured method of monetary management. The Financial Supervisory Authority must be strengthened so that it can effectively monitor the banks.
In general, there is a dire need for strengthening the capacity of the civil service that was not exactly complimented for excellence by the parliament’s Special Investigation Commission in its scathing nine-volume report published in 2010. Part of the problem is corrupt appointments to public office. The Supreme Court has even found it necessary to reprimand a minister for not appointing the most qualified candidate for a judgeship. The IDP wants to stamp out such practices in accordance with the new constitution. The ultimate goal is to restore living standards in Iceland to approximate parity with those in the rest of the Nordic region.
8.    Do you want to weaken, strengthen or keep unchanged the regulation of the financial industry and other business activity in Iceland?
We want to significantly strengthen financial regulation.
9.    Do you plan to increase or decrease the total tax burden in Iceland?
We want to reduce the total tax burden but also to make tax revenue collection more efficient through increased reliance on user fees, especially resource utilisation charges in keeping with the new constitution, as well as taxes on windfall gains. We expect this to create conditions for providing well for education, health care, and the welfare system as time passes. Current government neglect of education and health care is unacceptable as a long-run proposition.
10.    Do you believe in the Icelandic króna? Or will you work to adopt an alternative currency? If so, which one?
The IDP does not take a position, religious or otherwise, on the króna, or on EU membership for that matter. The IDP wants to finish the on-going accession negotiations with the EU and then put the agreement to a binding national referendum as required by the new constitution if and when it comes into force. Walking away from the negotiations mid-stream, as advocated by the Independence Party, is inadvisable, and would be unfair because it would violate the government’s promise to hold a referendum on the agreement with the EU. In the referendum, the people will decide whether to stick to the króna, dependent as it is on strict currency controls that are incompatible with Iceland’s obligations as a member of the European Economic Area (EES) except as a temporary emergency measure, or adopt the euro instead as part of Iceland’s joining the EU. Both options entail significant costs and risks. The people will decide. If the promised referendum is held, as it must be, IDP members will be seen and heard on both sides of the debate. A third currency option appears far-fetched, but, should such a proposal be put on the table, it would have to be voted on in a referendum according to the new constitution. Direct democracy through more frequent use of national referenda relieves political parties of the need to take a stand on such issues, freeing them to concentrate on other matters.
11.    Do you support the newly passed law removing an expiration date from Iceland’s capital controls? Will your party work to lift these controls? Does it have a timeframe in mind?
The IDP will work to lift the capital controls as soon as possible, but not before there can be reasonable certainty that the króna will not collapse yet again because of the sudden exit of money that has been held captive in Iceland since 2008. The currency overhang must be significantly reduced or eliminated. One way to do this is to allow the stakeholders to take their money out of Iceland gradually in an orderly fashion over an extended period. Another way is to levy an exit charge. Neither option is attractive, but neither is the prospect of yet another currency collapse and burst of inflation with terrible consequences for many households and firms. This is but one example of the disastrous legacy that the established political parties leave behind.
12.    Do you believe that the collapse was more than an economic one? If so, what else failed in 2008 and does it still need fixing?
The collapse has deep roots. This view is reflected in the several provisions of the constitutional bill aimed at superimposing a US-style layer of checks and balances on top of our existing semi-presidential parliamentary form of government. The fact that two ministers could on their own take Iceland to war in Iraq in 2003 without any recourse for parliament is a clear example of executive overreach that the constitutional bill aims to prevent.
13.    How can the government best serve Icelandic homes?
There needs to be a general write-down of mortgage debt in view of the general principle that responsibility for heavy debts ought to be shared by borrowers and lenders alike. As a rule, no one should ever be asked to carry an unbearable debt burden. Large debts need to be renegotiated. This is a universal principle, widely acknowledged in foreign relations between heavily indebted nations and their creditors, and it needs to be applied also at the national level if at all possible. Some home mortgages need to be written down in much the same way as the Supreme Court has instructed the banks to write down mortgages illegally indexed to foreign currencies. But how far it is possible to go in this direction in the name of efficiency and fairness remains to be seen; it depends, among other things, on cost and available means of bearing and sharing that cost.
14.    What is your stance on Iceland’s application to the European Union? Do you ultimately think Icelanders’ interests would be best served by being part of this coalition?
As a matter of principle, the IDP does not have a stance on the EU application. We favour finishing the on-going negotiations with the EU and then having a binding referendum as required by the new constitution if and when it comes into force. The question of EU membership is for the people to decide. If the promised referendum on EU membership is held, IDP members will be seen and heard on both sides of the debate. Again, direct democracy relieves political parties of the need to take a stand on such issues.
15.    What is your stance on the new constitution that was called for in the wake of Iceland’s financial crisis? Are you for or against pushing the current draft through parliament? Why or why not?
The IDP was formed primarily to promote the new constitution and to rise against those Independent Party forces that have declared that, if they fail to do so in the current parliament, they will try to thwart the popular will in next parliament by voting down the constitutional bill that 67% of the electorate said they want in the national referendum held in 2012. The constitutional bill is better than the provisional constitution from 1944 which harks back to 1849, and offers many important provisions intended to move Iceland forward, including provisions securing one person, one vote; public ownership of natural resources; freedom of information, including protection of whistle-blowers; environmental protection; appointment of competent persons to public office; and direct democracy, to name but a few. The constitutional bill is, in essence, the long written version of the IDP platform.
16.    Will your party do something to protect the land and its resources? Is a more stringent regulative framework needed to ensure conservation of the environment?
Here the IDP platform is best described by the corresponding clauses in the constitutional bill. The new constitution aims to significantly strengthen environmental protection, e.g., by making it possible for those who feel that their rights have been infringed by polluters to take those polluters to court. The natural resource clause stipulates that “government authorities may grant permits for the use or utilization of resources or other limited public goods against full consideration and for a reasonable period of time. Such permits shall be granted on a non-discriminatory basis and shall never entail ownership or irrevocable control of the resources.” This clause is, among other things, intended to instruct parliament to rewrite the law on fisheries management in a way that will effectively restore to the people of Iceland their rightful claim to the fish in the sea within Iceland’s jurisdiction as well as to the rents and revenues earned from the fisheries.
17.    Is gender equality a problem in Iceland? If so, what does your plan to do to ensure equality?
Yes, gender equality is a big issue in Iceland. The IDP will work for equal pay for equal work and a host of other issues intended to bring about gender equality in accordance with the increased emphasis on human rights in the new constitution.
18.    Where do you stand on immigration issues?
The preamble to the new constitution outlines IDP policy on immigration. It states: “Our different origins enrich the whole, and together we are responsible for the heritage of the generations, the land and history, nature, language and culture.”
19.    Does your party harbour any ideas about the role of religion in governance?
20.    Are there any parties that your party will not work with in a coalition government? Why?

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