Iceland parliamentary election

[politicus]

Status after all the party leaders visited President Grimsson yesterday:

- IP recommends an IP + PP government (no surprise there)
- Pirates don't want to join a government
- No one else has declined to govern or said which combinations they prefer (at least not officially)

- LG, SDA, PP and BF recommends that SDG gets to be the investigator with the right to seek out government possibilities, Benediktsson recommended himself as the leader of the biggest party.

Grimsson has stated that he wants a government with broad support in the population, hinting that he doesn't like PP + IP with only a little over 50% support among voters.

SDG has said that their plan for lowering household debt is non-negotiable, and this is going to be the big hurdle since none of the other party's like it. The second hurdle is who is going to be Prime Minister. Benediktsson is toast if he doesn't get it, since all IP leaders before him have been PMs, but its not likely that SDG will accept this. A halfway shift after two years is possible, but given that SDG has other options he may not accept this.

The interesting thing now is if the left will cave in more than Benediktsson is willing to do. At least SDG will be 100% certain to be PM if he goes left.

Arnason has refused to step down as SDA leader after fierce internal criticism for not delivering on any of the party's three big election promises from 2009: Finishing the EU negotiations, a new, just fishing quota system and a new constitution. He is also getting a lot of flack for not using Johanna Sigurdardottir in the campaign - which probably also was a mistake, thousands of people came to bid her farewell and covered the square before her office in red roses, so she is still highly popular.
He may be tempted to join a PP led government to silence his critics, even if the prize is going to be very high.
 

[politicus]

Grimsson has made SDG the investigator, as expected. SDG has decided to talk to all the parties  instead of focusing on IP.

A small disclaimer to my prediction about the new party structure. Dawn and the Households Party got over 2,5% of the votes, so they qualify for public party financing. Its not big money, around 150.000 US dollars over 4 years, but it increases the chance of them hanging in there and getting on the ballot next time. But I still think they are doomed.
Democracy Watch missed the cut by a razor thin margin getting 2,46%, so maybe that will increase the likelyhood of a Dawn/DW fusion, but I doubt it, too much bad blood between them.

EDIT: Since the object is to build a majority coalition between parties with very different agendas and goals the Icelandic government formation process often takes a long time. Before 1991 it was not uncommon to use a couple of months, but nowadays its generally done within a forthnight.

[ERvND]

It was far from back to normal.
...

Ok, I stand corrected on many issues, but I think it's still obvious that Iceland is no fertile ground for leftist parties. So, it's indeed "back to normal" with regard to Iceland not having a left-wing government.

[Filuwaúrdjan]

You do have to wonder what hopes the new conservative government (whatever it looks like) would have of re-election itself; this may just be the appearance of normality(ish) rather than an actual return to it.

[politicus]

Well, first of all it is still far from certain that Iceland will get a "Conservative" government. A Social Liberal-Social Democratic coalition is still a possibility. It would in many ways make a lot more sense.

But if Iceland do get a Conservative-Social Liberal government I think its pretty certain that an IP-PP coalition will not get reelected.

They have made numerous promises they cant deliver on. A well-known political journalist in Iceland gave them 100 days before the crowds will start to demonstrate outside the Althing (as they did after the crash) and demand their resignation. Dunno if that's an exaggeration, but its not totally unlikely.

Primary campaign promises:
 
IP: Better welfare with lower taxes - because lower taxes will create a much wealthier society, so the government will be able to make everything so much better = classic populism with very high BS factor.

PP: Saving homeowners by cutting their mortgages by 20% paid for by forcing foreign creditors to fork out the cash if they don't want their assets in Iceland de facto confiscated by heavy taxation.
Economists doubt this plan will generate the necessary money, or that the creditors will accept the blackmail. Furthermore they say it will create massive inflation.

So big disappointment either way, and also big disappointment if the two parties decide to drop both plans because they each hate each others "magic recipe".

Besides IP is in no fit state to govern. Its a house divided with a manipulative former PM still called "chairman" by the party right wing and controlling one of the country's biggest media who is trying to rule the party by proxy. Add an extremely weak leader with a deputy that's much more popular, but cant decide whether she wants to topple him and a europhile moderate wing that would rather work with the SDA than engage in all this populist nonsense, a spoonfull of crazy libertarians and Christian Right types and a plethora of clientilistic networks all wanting to get a piece of the action they have been denied for four years. Then you got a recipe for disaster.  

Then there is the problem that the two partys have an equal number of seats in parliament, so who gets to be top dog?
PP sees their electoral victory as the big chance to become the dominant party in Iceland and wants to head the government, while IP thinks its their God given right to rule Iceland and wont accept that their leader plays second fiddle, even if its a guy like Benediktsson that nobody really respects.
 
So no matter who gets to be Prime Minister the other party will try to undermine him almost from day one.

I think its a safe bet that such a government wont get reelected, but I also think the PP leadership knows this and may hesitate to chose this combination if they can get the centrist parties to compromise on EU and go along with the "extortion scheme", perhas in a watered down version. And an SDA leadership under severe pressure from internal critics may just be desperate enough to do this.

[politicus]

The latest development is that prominent IPers have been suggesting the party start talks with SDA and BF to "rid the nation of the debt reduction botched Progressive Party" as one of them put it.

IP considers SDGs decision to talk to the parties in alphabetical order a grave insult (IP has D, so they are only third - after SDA and the Pirates) and apparantly the talks today went badly.

This may all be tactical stuff, but if both the big centre-right parties start courting SDA, this might but them in a strong position and end in a more leftist government program than expected.

Still IP would have to drop their flat tax and accept finishing the EU talks to have any chance with SDA and their right wing would hate that.

EDIT: Birgitta Jonsdottir from the Pirates has said that she thinks its going to be a minority government with PP and possibly "some minor parties" (PP - BF?) and that this would "be good for parliamentary cooperation" marking a clear break with "the old Iceland".

A PP minority government supported by the centre-left would be a sensible option given how hard it will be to form a functioning coalition.

EDIT:EDIT: Apparently Jonsdottir wants the minority government to be temporary while SDG tries to execute his "extortion-scheme" against the foreign creditors. Afterwards there should be a new government formation.

[politicus]

My dream coalition in Iceland would be PP-Left Green-Bright Future with outside support from Pirates.

This 32 seat coalition is actually the hottest rumour among Icelandic journalists and, apparently, nervous IP insiders.

SDG has met twice with Katrin Jakobsdottir and his long negotiations with her has made IP nervous.

So Rod I am curious about why you thought about this particular combo?

Its unusual in that it combines two green parties with development friendly PP and two liberal/centrist with the left wing, also two euro-sceptic with the most EU-friendly party. But its on the table because LG and BF (and Pirates) are the parties willing to try to put pressure on the creditors. SDA has apparently turned this down.

But then again it may just be a tool to pressure IP, but I just remembered your post and wanted to ask you why you thought about it.

EDIT: SDG has said on facebook that "formal government negotiations" are likely to start this week-end, but he wont reveal which parties are involved.

[politicus]

SDG has decided to form a government with IP, since they have agreed on a plan for relieving household debt. So either he just used the negotiations with the left to put pressure on IP, or he couldn't agree with Katrin Jakobsdottir on the environmental policy after all. Probably a little of both.

Negotiations about details and portfolios to start today.

Still, the whole process has left a lot of bitterness in IP and this government will likely not be very stable. I predict lots of infighting and quarrel.

It will be interesting to see exactly how they are going to treat the foreign creditors and what is going to happen with the constitutional process (its likely dead, but who knows).

The Icelandic EU application obviously goes in the dustbin now.

One of the things IP has critized PP for is their lack of experience, with only one MP having been in parliament for more than 4,5 years (their deputy who got in parliament 2007), but this is actually what I like about them. No one is left from the 1995-2007 era and, as far as I can tell, no one in the new PP group has been involved in any "affairs".

Unfortunately you cant say the same about the IP group and PP will be under a lot of pressure in this government.

[Zanas]

So IP, who got more votes, will accept to sit in a government topped by PP, who got less, while they hate each other ? This is gonna be fun watching...

On the other hand, it's a disaster for absolutely nothing at all will be done by this particular government to change anything in Icelandic society, political landscape, or anything.

[politicus]

So IP, who got more votes, will accept to sit in a government topped by PP, who got less, while they hate each other ? This is gonna be fun watching...

On the other hand, it's a disaster for absolutely nothing at all will be done by this particular government to change anything in Icelandic society, political landscape, or anything.

At least one thing will change. This government means full speed ahead for using Icelands natural energy resources without caring too much about nature and wilderness areas. This will accelerate the industrialization of Iceland. They will build a big aluminum smelter at Heluvik and more geothermic areas will be used for industries with high power demand.

Economic growth will be their no. 1 priority and what might save this coalition is that the business community has a huge interest in keeping it alive and will put pressure on especially IP to keep it going.

Still I think IP cant stay 100% loyal. Strategically Benediktsson is in a difficult position. If he doesn't become Prime Minister next time he is finished in politics. So he needs the government to become a success while getting most of the glory for its successes and preferably discredit PP, so IP becomes far bigger than PP in 2017.

His only alternative is to challenge his own right wing and moderate IP enough to work with SDA after the next election, and he is too weak to do that.

Rumour has it that HBK despite her lack of national and international experience is going to be neutralized as foreign minister, so she will be abroad much of the time and that will make it a bit easier for him.

Still, I think that Benediktsson is in a pretty hopeless situation.

[politicus]

Pirate captain Birgitta Jónsdóttir sums up the faith of the Icelandic left wing in the New Statesman:

"They clean up the vomit after the cocaine party of the neocons, who go into rehab and then come back to reap the benefits."

http://www.newstatesman.com/austerity-and-its-discontents/2013/05/why-has-iceland-returned-politicians-who-caused-their-crisis

The rehab image is fitting for PP, but I am less sure IP has been properly treated.

[politicus]

Nearly a month after the election Iceland finally gets a new government, which will take office tomorrow at 15 after being presented to the President.

IP and PP have agreed to:

- Ax the planned hotel VAT increase from 7 to 14%.
- Stop the EU-membership talks and don't open them again unless a majority of voters approve of this in a referendum. (which observers doubt they will hold)
- Cut the catch tax and ax it from 2014.

More unspecified tax cuts to follow.
They haven't agreed to cut mortgages, this will only be decided after negotiations with the foreign creditors.
No decision regarding the aluminum smelter in Heluvik (which is a big surprise).
They will negotiate a solution about the constitution with the opposition and put a stop to "trench war politics".

So basically they haven't agreed on any of the hard stuff!!

Prime minister Sigmundur Davíð Gunnlaugsson
Minister of finance Bjarni Benediktsson

IP gets to nominate the Speaker in the Althing and 5 ministers, PP gets 4 ministers initially, but 1 more down the road (strange compromise).

IP gets Minister of the Interior, Culture & Education, Healthcare, Industry and Commerce.

PP gets Foreign Affairs, Social Works and Fishing and Agriculture (incl. the Environment). They don't ax the Environmental Ministry, but the fact that it doesn't get it own minister, but is placed under agriculture and fishing speaks volume.

The Welfare Department is still one unit, but gets two ministers for Health and Social Work respectively and since they are from different parties this spells trouble IMO. 

So no Foreign Ministry to HBK. Will be interesting to see her new portfolio. Too bad for BB that he couldnt send her abroad.

[politicus]

New government. Six men and three women. None of them have been ministers before, which is the first time that ever happens in Iceland. HBK haven't even been MP before, but her background as former Reykjavik mayor fits well with being Minister of the Interior.

Prime Minister: Sigmundur Davíð Gunnlaugsson (38), PP

Minister of Foreign Affairs: Gunnar Bragi Sveinsson (44), PP


Fishing, agriculture and environment: Sigurður Ingi Jóhannsson (51), PP


Social Minister: Eygló Harðardóttir (40), PP


Minister of Finance: Bjarni Benediktsson (43), IP

Interior: Hanna Birna Kristjánsdóttir (46), IP

Culture and Education: Illugi Gunnarsson (45), IP


Industry and trade: Ragnheiður Elín Árnadóttir (45), IP


Health: Kristján Þór Júlíusson (55), IP


Speaker Einar K. Guðfinnsson (57), IP


As far as I know none of them have been involved in corruption. But I will try to check that when I get the time.

Árnadóttir is a right winger and will put pressure on getting the big infrastructure projects through even if its not actually agreed yet. industry and trade is a relatively "heavy" post to her.

There is no specific department for relations to the creditors and the fiscal markets as was expected, so it will be the the foreign ministry that gets those negotiations.