From Iceland — Is The Government About To Collapse?

Is The Government About To Collapse?

Published December 5, 2011

Is The Government About To Collapse?

In many countries, the above question might lead to pundits punditing and even stock markets crashing. In Iceland, the possibility is taken in stride, and not just because we no longer have a stock market to speak of.
In fact, it has been asked pretty relentlessly ever since the current government took power in the aftermath of the ‘Pots and pans revolution’ of January 2009. And it has often been close. Even though this is the first left-wing government in this country in recent history, sometimes more seems to divide the parties than unite them. And this despite accolades from almost every foreign observer on their handling of the crisis.
The Social-Democratic Alliance (Samfylkingin) are still held in disgrace by many after having formed a ruling coalition with the conservative Independence Party in the years leading up to the economic collapse. It took the largest protests in Icelandic history in early 2009 for this government to resign. Even under a new party leader, Prime Minister Jóhanna Sigurðardóttir, many of their former ministers are still in office, the party leader included. This is not the new beginning many had hoped for. Some party leaders from smaller towns have resigned from the party, either claiming the party has ventured too far left, or not left enough.
Their partners, the Left-Green Party (Vinstrihreyfingin—grænt framboð), have a clean slate when it comes to pre-collapse guilt, having been out of power since the party was founded in 1999. This led to some success in the post-collapse election, but ever since the party seems like it has been falling apart. In fact, three of their MPs left the party last spring, bringing their Parliamentary strength down to twelve. This is in addition to twenty representatives of the Alliance party, out of the sixty-three members in the Icelandic Parliament in total.
This led to Independence Party Chair Bjarni Benediktsson, who had been weakened in his own party after supporting the government in the Icesave dispute, to try for a vote of no confidence last April. The government barely hung on by a majority of one. This means, in effect, that members of both ruling parties can hold the government hostage if they so choose. This is particularly difficult for the Left-Greens, where party discipline seems non-existent.
Two ministers in particular are known for going their own way. One is Minister of the Interior Ögmundur Jónasson, who has already left the government once (over the ever-present Icesave dispute) before being brought back. He recently caused a furore with the coalition Alliance Party when he refused to grant an exemption to allow Chinese investor Huang Nubo to buy land at Grímsstaðir to build a luxury hotel. Some claim that the land is a strange choice for a hotel, being quite remote, while questioning Mr. Nubo’s finances and suggesting he might be acting for the Chinese government instead. Mr. Nubo is a former roommate of the husband of former Alliance Party Chair Ingibjörg Sólrún Gísladóttir and thus well connected to that party.
Ögmundur, while arguing that he was simply following the letter of the law by denying land purchases to citizens outside the European Economic Area, is hardly unbiased himself, saying that he also opposes land sales to non-Icelandic EEA citizens. The Left-Greens have proclaimed themselves to be in favour of Ögmundur’s decision, further angering their coalition partners.
As if this wasn’t enough, the Minister of Fisheries and Agriculture, Left-Green Jón Bjarnason, is also acting on his own accord. One of the major goals of the current government is reform of the so-called quota system, which leaves control of Iceland’s fisheries in the hands of a few individuals. Jón had his own committee propose changes, which are not seen as going far enough, without consulting the government. The Prime Minister then decided to take the matter out of Jón’s hands. In this case, the Left-Greens have declined to support their minister.
According to recent updates, Jón may soon be removed from his post, and Minster of Industry Katrín Júlíusdóttir of the Alliance will soon go on maternity leave. This would lead to a considerable shake-up in ministry posts as both parties start to prepare for the next elections, due in the spring of 2013.
The question then is whether Jón will withdraw his support for the shaky majority. In this case, the government will have to rely on Guðmundur Steingrímsson, an MP without a party (voted to Alþingi as member of the Progressive Party), who has pledged his support.
Another major disruptive factor is EU membership, with the Alliance strongly in favour and the Left-Greens opposed. However, with Europe’s current economic troubles, the membership talks have little support from the nation and might not be concluded before the next elections anyway.
So, will the government hold up this time? As always, the situation is tenuous, but the fact is that neither party sees much hope in going elsewhere. Any new government would probably have to rely on the Independence Party, and neither one wants to go there. The Alliance is still reeling from their last collaboration with the conservatives, and the Left-Greens are even less willing to work with their ideological opposites, even if they now happen to agree on Europe. The government coalition might therefore hold up for a while yet, if only due to lack of alternatives. Then again, who can tell? It might burst by the time this goes to print!  

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