THE BLOG
05/26/2009 05:12 am ET Updated Dec 06, 2017

Iceland Elections: The Revolution Is In (The House)

For a party that has no money and has existed as a political force for less than two months, the outcome of the Icelandic election is nothing less than miraculous: Four of the Icelandic parliament's 63 seats went to the Citizens' Movement, created following January's uprising - the Pot and Pan Revolution - that resulted in the fall of Iceland's conservative government.

"It is great that we who stood out in the cold banging outside the doors and windows of Alþingi, now we're in," the party's brand new MP Þór Saari said. "The 'not-nation' ('ekki-þjóðin,' referring to a former minister who famously, or perhaps infamously, told protesters, "you are not the nation!") and the 'mob' are now members of Parliament, and we won't be leaving anytime soon." As of this writing, 85% of the vote had been counted, and Saari said they were holding out hope for a fifth seat.

The voters of Iceland decisively repudiated the 18-year rule of the conservative Independence Party, and affirmed the interim alliance of the Social Democrat and Left-Green parties that has ruled Iceland since the fall of the government earlier this year.

"This shift to the left means that the public has drawn its conclusions from the financial collapse and is turning away from radical libertarianism towards more Scandinavian political and social values," observed Stefán Ólafsson, sociology professor at the University of Iceland and director of the university's Social Science Research Institute. "For Iceland this is a new experience and means that Iceland can for the first time be ruled in the same way as the Scandinavian neighbors, by a social democratic majority."

The preliminary results indicate that the Social Democrats received 30.8% of the vote (which translated to 20 seats in the Althingi--Iceland's parliament), and the Left-Greens 21.7% (14 seats), giving them a clear majority in the 63-seat Althing. The previously-dominant Independence Party garnered only 23.6% (15 seats, a net loss of 9 seats). The Progressive Party had a surprisingly strong showing with 14.6% (10 seats). The Citizens' Movement, running on a platform of a thorough clean-up of Iceland's corrupt backroom politics and constitutional reform, received 7.2% (4 seats) in its first election.

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Disappointment, suspense: Prime Minister and leader of Social-Democratic Party Jóhanna Sigurðardóttir (L) and Left Green Party Education Minister Katrín Jakobsdóttir follow the election results in Reykjavík . Photo credit: (AFP/Olivier Morin)

The popularity of the Social Democrats is due in large part to its leader, Jóhanna Sigurðardóttir, Iceland's first female Prime Minister, and the world's first openly gay leader. Jóhanna, nicknamed St. Jóhanna by many Icelanders, has emerged as the sole experienced politician untouched by the corruption and incompetence that led to Iceland's catastrophic economic collapse.

While leading the interim government over the past three months, Jóhanna has brought in renowned international corruption fighter Eva Joly investigate the causes of the collapse of Iceland's banks, ousted former Independence Party prime minister Davíð Oddsson from his position as head of Iceland's Central Bank and replaced him with Norwegian banking official Svein Harald Øygard, and worked with the International Monetary Fund (IMF) to stabilize the economy.

The challenges facing Iceland are profound. The IMF has only slowed, but not reversed, the rate of collapse. Unemployment has soared from under 2% to well over 8%. Inflation continues to rage in the 15-20% range. The currency controls imposed by the IMF due to the collapse of the Icelandic krona have essentially prevented Icelandic businesses from doing business abroad, and there is talk of major companies relocating their headquarters to America and Europe.

The partially completed shells of apartment buildings litter the landscape, and riot police were called in last week to remove squatters from abandoned downtown properties. Three companies go bankrupt every day.

Foreign workers who had come to Iceland during the good times have left, and many native Icelanders have dispersed to Europe and Canada in search of jobs. The country's unemployment compensation fund is expected to be depleted by November. The upcoming graduations will flood the job market with hundreds more applicants. Sigmundur Davíð Gunnlaugsson, leader of the Progressive Party, has recently alluded to a secret report from an outside accounting firm predicting a second collapse based on its assessment of the nationalized banks.

The first order of business for the new government will be to get the banks refinanced and thereby start to tackle the ailing businesses and the mounting unemployment position, according to Professor Ólafsson. "The government will probably have to implement an extra crisis budget in the summer, cutting public expenditures and raising some taxes, due to an excessive public deficit."

The ongoing investigation of the banks, which is widely expected to implicate many politicians, will also take much of the Alþingi's time, with a parliamentary report expected by the end of the year. There are reports of thousands of secret bank accounts in Tortola and elsewhere containing funds looted from the banks in the days immediately preceding their collapse. Any prosecutions or attempts to claw back those funds will surely prove to be contentious.

The Social Democrats view expedited membership in the European Union as the solution for these problems. A stable currency, they argue, is a necessary component of any recovery.

Necessary, perhaps, but not sufficient, argue the Left-Green and Independence Parties. EU membership has not saved Ireland, Spain, or Hungary from severe recession, and would almost certainly require concession of Iceland's most valuable resource--its fisheries.

Iceland has been through tough times before, but it has never had to deal with great financial success until now. We failed miserably in our attempt to build a temple to materialism and now must steel ourselves for the long, hard process of rebuilding our society. These elections are just the first step in what will surely prove to be a long and lonely journey back from the edge of ruination.

But at least we're finally moving back up.