From Iceland — Minority Government Likely

Minority Government Likely

Published January 27, 2009

A minority government comprised of the Social Democratic Party and the
Left-Green Party, with the Progressive Party to create a more secure
majority, will in all likelihood be formed today, with Social Democrat Jóhanna
Sigurðardóttir as Iceland’s new Prime Minister, according to sources
who spoke with Morgunblaðið. Chairmen of the different political parties met with the Icelandic president yesterday to give their input on what they believe the future government should be.
According to the source who spoke to Morgunblaðið, when it became clear that the government collapsed, the Left-Greens initially suggested a popular government – one in which all five parties would share power, dividing up the ministries amongst themselves. It became clear, however, that this idea wouldn’t work when it came to light that the Social Democrats had told the Conservatives that they wanted Jóhanna
Sigurðardóttir to be the new PM. Outgoing PM Geir H. Haarde argued that the party which should hold the prime ministership should be the largest one; which would be the Conservatives. This led to talks moving in a new direction, which went on through the evening.
The Left-Greens have proposed a number of changes, including internal investigations within the banking system, a refurbishing of the supervisory financial authorities, organizational changes at the Central Bank – which would probably lead to Chairman Davíð Oddsson being relieved of his duties – as well as the resignation of the ministerial director of the Ministry of Finance, Baldur Guðlaugsson. In addition, the Left-Greens would like to see the number of ministries reduced, the ministers’ pension law repealed, and research into organizational changes within the health care system. The party would also like to see talks commence with the International Monetary Fund with the goal of reducing the interest rate on Iceland’s loan faster than was originally planned.
A final decision with regards to what form the new government will actually take is expected today. Stay tuned for further updates.

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