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Iceland’s Pirate Party stands to gain from Panama Papers mess

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Birgitta Jonsdottir is the leader of the Pirate Party, which now leads polls in Iceland. (Facebook)
Birgitta Jónsdóttir is the leader of the Pirate Party, which now leads polls in Iceland. (Facebook)

In a normal environment, elections would be due in Iceland only in April 2017.Iceland Flag Icon

But after its prime minster, Sigmundur Davíð Gunnlaugsson, suddenly resigned on Tuesday the small Nordic country could be headed to snap elections. If so, the beneficiary is likely to be the new Píratar (the Pirate Party), a protest movement rooted in the values of direct democracy and transparency, that would, if elected, grant Edward Snowden Icelandic citizenship.

It’s a relatively new party formed in 2012 by Birgitta Jónsdóttir, a former Wikileaks official and social activist first elected as an MP in 2009 from the Citizen’s Movement that emerged out of the ashes of Iceland’s banking crisis and reelected as one of three Pirate MPs in 2013. The party is a motley protest group of hacktivists, anarchists and other outsiders. Staunchly in favor of greater privacy for individuals and more transparency in government, the Pirates want to reduce the working week to 35 hours and liberalize drug legislation.

The weekend’s ‘Panama Papers’ leak revealed that the Icelandic prime minister and his wife owned an offshore company, Wintris, with over $4 million in assets. More damning, the company is a creditor to all three Icelandic banks that collapsed in 2008 and 2009. Previously undisclosed, the company’s existence (and its stake in Iceland’s failed banks) amounts to an unpardonable conflict of interest, given the role that Gunnlaugsson’s government has played in sorting out the post-collapse claims from remaining creditors against those three banks. Gunnlaugsson, who took steps to transfer the interest in the offshore company to his wife, never publicly acknowledged that Wintris was, in fact, one of those creditors, even as he campaigned on negotiating a hard line against those creditors.

Gunnlaugsson came to power after the April 2013 elections, in which his economically liberal Framsóknarflokkurinn (Progressive Party) narrowly trailed the more established, center-right Sjálfstæðisflokkurinn (Independence Party), ushering out a left-wing government elected in the aftermath of Iceland’s banking collapse. Continue reading Iceland’s Pirate Party stands to gain from Panama Papers mess →

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Final Icelandic election results

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althingiJust a quick post to note the final results of Saturday’s Icelandic parliamentary elections.Iceland Flag Icon

As expected, the center-right will return to power, with the top two parties, the Framsóknarflokkurinn (Progressive Party) and the Sjálfstæðisflokkurinn (Independence Party) widely expected to form a governing coalition, thereby returning to power in as wide a swing in Saturday’s election as the swing against them in the April 2009 elections.

Although both parties will hold 19 seats each in the 63-member Alþingi, Iceland’s parliament, the Independence Party’s leader Bjarni Benediktsson will likely become prime minister instead of the Progressive Party’s Sigmundur Davíð Gunnlaugsson, though that’s far from clear, even today, with both leaders discussing options to form a government with Iceland’s president.

Until last week, Gunnlaugsson seemed very likely to become prime minister, riding a wave of popularity over his party’s stance in opposition to reimbursing the British, Dutch and other governments that, in turn, reimbursed non-Icelandic citizens who lost their savings when IceSave collapsed along with Iceland’s entire banking system.  Only a couple of weeks ago, Benediktsson was facing a coup attempt within the Independence Party over his own leadership.  As the campaign closed, however, the Independence Party made up much of its lost ground, though they have finished just 3% higher than their historical low of 23.7% in the 2009 election and the Progressives jumped 9.6% from the previous election:

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The Independence Party, in particular, has long dominated Icelandic politics since independence from Denmark in 1944, and it was in charge of running the country in the decades leading up to the 2008 banking crisis — its leaders at the time, prime minister Geir Haarde and former prime minister and Icelandic central bank president Davíð Oddsson were widely blamed at the time for the collapse and for establishing the conditions that led to the collapse.

The government which followed, led by Jóhanna Sigurðardóttir and the Samfylkingin (Social Democratic Alliance), in alliance with the Vinstrihreyfingin – grænt framboð (Left-Green Movement), represented the first government since the 1950s not dominated by the Independence Party.  While it leaves office with, I think, a fairly strong record of having strengthened women’s right, returned Iceland’s economy to GDP growth and massively lowered unemployment to under 5%, Icelandic voters remain relatively strained, even five years after the crisis.  GDP growth has returned thanks only to capital controls and the massive devaluation of the krónur, inflation has erased much of those gains for typical Icelandic households, many of which struggle under debt loads denominated in foreign currencies.

Sigurðardóttir’s government also probably suffered considerably for spending too much time on a push for a new Icelandic (‘crowd-sourced’) constitution and on bringing Iceland into the European Union, a project that is now likely to fall apart.  On Saturday, the Social Democratic Alliance lost 16.9% and the Left-Green Movement lost 10.8% from their 2009 result — it means that the Left-Green lost 50% of its 2009 support and the Social Democrats lost about 57% of its 2009 support.

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Center-right parties poised to return to power in Iceland

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Kim Jong-un, at age 30, is the world’s youngest leader, and there are only a handful of thirtysomething world leaders.Iceland Flag Icon

But if polls are correct, Sigmundur Davíð Gunnlaugsson (pictured above) may lead Iceland’s Framsóknarflokkurinn (Progressive Party) to victory in April 27’s parliamentary elections, giving the Progressives their best victory since 1931 and, perhaps, in its history.  That would make Gunnlaugsson, at age 37, the country’s youngest prime minister since its 1944 independence.

Icelandic voters go to the polls Saturday after a fairly tumultuous time over the past five years following the 2008 collapse of its banking sector, a massive depreciation and the introduction of capital controls on Iceland’s currency, the krónur, despite a return to tepid GDP growth after a 6.5% contraction in 2009 and an unemployment rate that’s now below 5%.

I’ll sideswipe the long debate among American economists over whether Iceland’s economic policy was smarter than that in Ireland or the Baltic states.  If you want an in-depth take from an Icelandic observer, read this instead.  I’ll add that Iceland’s ability to set its own monetary policy certainly helped it bounce back in terms of GDP growth, but it also glided the path for a massive krónur depreciation and inflation that’s eroded those gains that Iceland has made in the past five years.  Much of Iceland’s household debt, before 2008, was denominated in non-krónur currencies, and debt today is otherwise linked to currency or inflation indices.  That has made debt repayment, especially for home mortgages, a grueling nightmare in post-boom Iceland.

So the economic situation is Iceland is complicated, and though there’s a lot of evidence to suggest that Iceland’s economy might even be worse if it were part of the eurozone, that doesn’t mean that the everyday Icelandic voter feels like things are quite back to normal.

But politics, however, do seem set to return to the pre-boom ‘normal,’ given that the Progressives were a longtime ally of the dominant party in Iceland’s history since independence, the Sjálfstæðisflokkurinn (Independence Party), which was formed precisely — as you may have guessed — to enact Icelandic independence from Denmark.

The two parties are now fighting for first place in the April 27 parliamentary elections, and it’s virtually certain that they’ll form the coalition that constitutes Iceland’s next government.  No party in Iceland’s post-independence history has even won an absolute majority in the 63-member Alþingi, Iceland’s parliament.

Polls have shown the Progressive Party with a growing lead throughout 2013, stemming largely from their insistence that Iceland should not reimburse the U.K. and other governments for the Icesave debacle — non-Icelandic savers who had deposited their money in Icesave were wiped out in late 2008, and though their own government have largely made them whole, they have turned to Iceland for repayment with interest.  Although most Icelandic parties agree that Iceland should make the payment, the matter’s been tangled up in both domestic and international litigation, and the repayments are very, very unpopular among the Icelandic electorate.

But the Independence Party seems to be catching up once again, and the two parties are now essentially tied for the lead, meaning that either party could win the greatest number of seats in the Alþingi.  If the Independence Party does edge out the Progressives, Iceland’s new prime minister could be the Independence Party leader, Bjarni Benediktsson (pictured below), who only narrowly survived a leadership challenge a couple of weeks ago, when the party’s polling numbers were more depressed.

bjarni Continue reading Center-right parties poised to return to power in Iceland →

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Iceland continues to crowd source constitutional reform with six-question referendum

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Iceland is a tiny country of just barely more than 300,000 people, but it took a famously outsized role in the earliest stages of the 2008 financial crisis when all three of its private banks failed in rapid succession. 

Now, Icelandic voters will go to the polls this Saturday for a six-question referendum to determine whether to reform the country’s constitution and, if so, how.

In contrast to Ireland, where the government nationalized and assumed the debts of its failing banks, Iceland simply allowed its banks to fail.  Although growth has resumed in Iceland (3% in 2011) and unemployment is now falling (hovering at around 6.7%), the Icelandic economy remains quite subdued in contrast from the heady days when Reykjavík was angling to become one of Europe’s investment banking capitals.

In the wake of that crisis, Icelanders have weighed many different reforms, ranging from joining the European Union to joining the eurozone to adopting Canada’s dollar as its currency.  The former prime minister, Geir Haarde, faced charges in front of a special session of the Alþingi (Iceland’s parliament and, given its formation in AD 930, the oldest parliament in world history), and was convicted on one minor charge, although he has faced no formal punishment, aside from widespread disapproval from Iceland’s citizens.

In the same manner, the constitutional reform process, which culminates in the October 20 referendum, also emerged from the crisis.  Reform was one of the key promises made by the broadly leftist coalition under prime minister Jóhanna Sigurðardóttir that took power in 2009 — the coalition includes the Social Democratic Alliance (Samfylkingin), the Left-Green Movement (Vinstrihreyfingin – grænt framboð), the Progressive Party (Framsóknarflokkurinn) and other small parties.  The 2009 election, which followed riots in the typically tranquil island nation, saw the once-dominant Independence Party (Sjálfstæðisflokkurinn) kicked out of power after 18 years in government.

As such, a Constitutional Council of 25 Icelandic citizens has been working on proposals for constitutional reform — including by soliciting input on social media — and it presented a draft constitution to the Alþingi in 2011, which voted to refer the draft constitution to the advisory referendum to be held Saturday.  The constitution would replace the version adopted in 1944 when the country voted to become independent from Denmark.  It would essentially perpetuate the current government structure that includes a largely ceremonial president, a prime minster who heads the government and a president of the Alþingi, but enact other reforms.

Several of the key issues include the removal of the Lutheran Church as the ‘state church’ of Iceland, the addition of more direct democracy rights, the addition of more information rights for citizens, and the inclusion of a provision that would strengthen state control over natural resources not currently under private ownership.

The new constitution is not without controversy — Iceland’s Supreme Court initially invalidated the election of the 25 individuals who form the Constitutional Council, although the Alþingi ultimately upheld their election.  Furthermore, the opposition center-right Independence Party voted against the draft constitution when presented to the Alþingi, and the newly reelected president, Ólafur Ragnar Grímsson, who has served as president since 1996, opposes the constitutional changes because he says they do not garner support from across the political spectrum.  Continue reading Iceland continues to crowd source constitutional reform with six-question referendum →