Iceland: End of the Constitutional Saga?

In late 2008 and early 2009, thousands of Icelanders took to the streets in response to the largest banking collapse in history. What followed was a constitution-making process unprecedented in its transparency and level of public participation. The basics of a citizen-drafted document were presented to the public last fall, and received overwhelming support in a referendum. Things were looking up, until the constitutional bill went to parliament. This past week, the parliament declined to pass most of the elements of the constitution, only approving changes to the amendment threshold. The long saga of constitutional reform in Iceland may have entered its final chapter. The current constitution, which dates from 1944, remains in place.

Before dissecting the lessons of this likely failure of the citizens' constitution, it's worth recalling the novelty of the process. A groundswell of support for constitutional change led to the overwhelming passage of a parliamentary statute to guide the process. Next was the convening of a randomly drawn group of 950 citizens to generate ideas for constitutional reform. Then, in the fall of 2010, twenty-five ordinary Icelanders were elected from a field of over 500 to serve on a constitutional council that would formulate a new constitution. The councilors sought wide participation, and Icelanders were able to follow the council's decisions and contribute suggestions through the internet using a Facebook page. There was an iterated process of drafts and comments, which led to some changes in the proposed draft. It's unlikely the general public has ever had such direct involvement in constitution-making.

The final draft produced by the commission greatly expanded direct democracy, allowing the public to be involved in ongoing governance. It included affirmation of the one-person, one-vote principle, with a complicated electoral system. The draft also, controversially, provided that the country's natural resources are the property of the state, available for short-term license but not sale to private parties. This provision sought to effectively reverse the country's privatization of fishing licenses in the early 1990s, a process that some said had restored the vigor of the fishing industry but also contributed to growing disparities in wealth.

The draft was the basis of a referendum in October 2012 that was supportive of the proposed changes. Under the current constitution, amendment requires a vote in two successive parliaments, so the public's views were merely advisory. But the momentum suggested that a rare example of successful bottom-up demands for constitutional change might be at hand.

The action then shifted to the parliament to develop a final bill. That's where things got tricky. The opposition Progressive and Independence Parties began to attack the proposals with vigor; the Council of Europe's Venice Commission issued a report that identified a number of concerns in the draft; and the parliament began tinkering with the Bill. This week the parliament passed a bill without the key provisions from the citizen's draft, while raising the threshold for constitutional changes in the next parliament to 2/3 of parliament plus 40 percent of the popular vote. This was done in the shadow of upcoming elections that many expect the opposition is expected to win.

Why the sudden shift in opinion? It is actually not so clear that the public is very engaged on the issue. While many like the one-line slogans associated with the new constitution are popular, people seem more apathetic when it comes to making demands of parliament. One important factor here was that Iceland was allowed to have a "soft landing" after the banking bust. The IMF allowed it to impose capital controls, which is not the usual austerity remedy. This meant that the sense of crisis quickly faded. Furthermore, at the end of the day, regardless of whether the proposal succeeded, Iceland was going to remain a relatively rich Nordic democracy. Unlike the Arab Spring, little was at stake in terms of people's daily experiences. In short, diffuse support for the changes was fairly soft, while concentrated interests had much to lose, particularly from the natural resource provisions. In such situations, as the iron law of collective action suggests, bet on the concentrated interests every time.

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