Iceland’s Election: A Week is a Long Time in Politics

IP photo
Campaign poster for Prime Minister Bjarni Benediktsson in central Reykjavík. (Photo by Mingming Shi)

Iceland will be going back to the polls in three weeks, and after a slow start to the campaign, updated polls, issues and party platforms have begun to make an appearance. A survey [in Icelandic] taken by the news services Fréttablaðið, Stöð 2 and Vísir on 4 October suggested the Left-Greens (VG) remained the most popular option for voters, holding 29 percent, with the Independence Party (IP) in second position with 22 percent and the Social-Democratic Alliance and the Pirates tied for third with approximately eleven percent each. This means that an election held on that day could have resulted in a centre-left coalition of the VG, Alliance and Pirates.

The left-leaning parties have also, so far, benefitted from the troubles facing the more centrist and centre-right parties on Iceland’s political spectrum. The centrist Bright Future and Regeneration (Reform) parties are still polling at less than five percent, which would mean that they would not attain any seats in the next Parliament. The new Centre Party (Miðflokkurinn) led by Sigmundur Davíð Gunnlaugsson polled at nine percent, three more percentage points than his old party, the Progressives.

This week, the Centre Party unveiled its new logo, a rearing white horse backlit by green and purple aurora, to mixed reviews on social media. Despite a promising start for the new party, Gunnlaugsson continued to tangle with the country’s news outlets over reporting of previous revelations about his establishing an overseas firm in the British Virgin Islands. These concerns produced a public backlash resulting in his stepping down in April 2016 as Iceland’s prime minister after his name was mentioned in the Panama Papers affair.

This week also saw a potential political bombshell dropped on the current government, as reporting by the Guardian in partnership with the Icelandic news services of Stundin and Reykjavík Media revealed that Prime Minister  of the IP sold assets, valued at several million Icelandic króna, in the now-dissolved bank Glitnir in 2008 when he was an MP. The sales took place very shortly before the country’s banks were subject to an emergency law placing Iceland’s three main banks, (Glitnir along with Kaupþing and Landsbanki) under direct government oversight in the wake of the financial crisis in Iceland which began that year.

Although there was no illegal activity revealed, the story was another reminder of public discomfort with the close relationship between the IP, which was the largest party in government in 2008, with party leader Geir Haarde as prime minister, and the country’s banking sector. Mr Benediktsson denied any wrongdoing and offered a lengthy rebuttal of the news reporting.

Once the campaigns start to gain momentum, it is likely that the economy will be high on the list of debate topics. Inflation has begun to ease in the country, and this week saw the Icelandic central bank cut its key interest rate for the fifth time in about a year, in order to address softening economic growth. Although tourism remains a major component of the Iceland economy, with a report recently released by Statistics Iceland suggesting that the tourism sector represented 8.6% of the country’s GDP in 2016, (up from less than four percent in 2010), tourist numbers were expected to ease this year.

It was also reported this week that the country was in considerable need of upgrades and repairs to key infrastructure, including roads, ports, utilities and airports, according to the Federation of Icelandic Industries and the Association of Consultant Engineers (Félag ráðgjafarverkfræðinga). That statement [pdf, In Icelandic] suggested that these upgrades would require approximately ISK 372 billion (US$3.5 billion) to complete.