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Dossier : Islande : sortie de crise ?

Political turmoil in Iceland

Stefán Ólafsson
p. 29-42

Résumés

La crise financière de 2009 a complètement bouleversé la politique islandaise. La crise est le résultat d’expérimentations néolibérales, qui ont produit une bulle financière entre 2003 et 2008. La première réaction politique à ce choc est un virage important à gauche en 2009, à la suite de mouvements de protestation dans les rues de Reykjavík. En 2013, les électeurs ont manifesté leur déception à l’égard du gouvernement de gauche et porté au pouvoir le parti du centre en coalition avec les conservateurs (Parti de l’indépendance). Avec les élections anticipées d’octobre 2016, à la suite des révélations des « Panama Papers », on constate un mouvement centripète vers la droite et la gauche. Un nouveau parti de droite (Redressement), le Parti pirate et la Gauche Verte sont les principaux bénéficiaires. Les Pirates portent une ambition de réforme démocratique, de transparence, de lutte contre la corruption et les inégalités. À l’instar du parti libéral Redressement, c’est un mouvement qui se démarque clairement des partis populistes aujourd’hui en forte croissance dans le contexte d’une Europe marquée par les crises. Le changement politique se poursuit donc avec de grandes fluctuations et de nouveaux partis pour la troisième élection de suite.

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Texte intégral

  • 1 Gyfi Zoega, “Iceland’s Financial Crisis: An Economic Perspective”, in Iceland’s Financial Crisis. T (...)

1The financial collapse of 2008 has had considerable consequences for Iceland’s politics. The collapse has been described as a classical financial crisis (involving the collapse of all the major banks and the national currency), a crisis of public finances and a deep economic recession that followed. The crisis came in the wake of an excessive bubble economy, reigning in the period from about 2003 to 2008. When the bubble burst it became one of the costliest financial crises in history, in relation to the size of the national economy1.

  • 2 Jón Gunnar Bernburg, Economic Crisis and Mass Protest. The Pots and Pans Revolution in Iceland, Lon (...)

2But the crisis was not just financial and economic in nature. Of no less importance was the fact that the general public lost trust in politicians and political institutions, which were seen as having failed in the advent of the crisis. Hence the most prominent reactions to the crisis came from the general public, which in actual fact rose up to unusually widespread and intense protests in the streets of Reykjavík, in the winter of 2008-2009, in what has been called the “Pots and pans revolution”2. About a quarter of the electorate took some part in the protests, which did not stop until the government was ousted from power, as well as the reigning governors of the Central Bank and the Financial Surveillance Authority, who were also seen as failing.

3These widespread political protests were thus very consequential in the immediate situation, leading to an interrim government taking power in February 2009 and an early general election to parliament in April. The interrim government was a minority government, consisting of the Social Democratic Alliance and the Left-Green Party (formerly the Socialist Party). These two parties then won the election and gained a clear majority to form a new government. That was the first time that Iceland has had a two party left-wing government. That in itself was an unprecedented swing to the left, a truly historical event in a predominant environment of centre-right politics, that had prevailed for the most part since the founding of the Icelandic Republic in 1944.

Economy recovers – Politics remain sluggish

4What is particularly interesting at present is the fact that Iceland has in fact succeeded reasonably well in resurrecting the financial system and the economy. The economy is booming again, public and private debts have come down and unemployment is by now one of the very lowest in Europe, in the region of 3%. Real earnings of the households have also recovered to a significant extent.

5Yet Icelandic politics are still characterized by the loss of trust and considerable turmoil, that began at the start of the crisis. Trust in politicians and parliament.is still at a low and some of the traditional political parties have unusually low support. At the same time unusually many new parties emerged, both in the election of 2013 and at present. The most prominent is a Pirate Party, that in 2015 suddenly became the largest party in polls. This year it has generally polled similar or second to the right-of-centre Independence Party, with 20-25% support. The elections of October 29th confirmed yet another major change of the Icelandic political party system – the third time in a row. The final outcome deviated however significantly from the last polls, especially for the Pirates, who got a smaller share than predicted. Still they almost tripled their vote.

6So the financial and economic crisis is more or less behind us by now, but the political trust crisis lingers on. Why would that be? Given the relatively good performance of Iceland after the crisis hit, should voters not be grateful to their politicians for guiding the economy and society successfully out of the crisis? Both the left government of 2009-2013 and the present right-of-centre government have evidently done some good things, even though voters can have doubts about certain of their policy issues in some cases.

7In what follows we will reflect on this somewhat contradictory and transient situation in Icelandic politics, seek explanations and ponder the future prospects after the election of October 29th. We will also discuss the erosion of the traditional parties and the rise of new parties, including the Pirate Party and a new liberal party (Viðreisn) that did well in the 2016 election. We will ask if the apparently persistent turmoil in Icelandic politics reflects a fundamental revival of the political system or a gradual erosion of traditional representative politics as we have known them for most of the period of the Icelandic Republic.

The longer-term context

8Iceland enjoyed considerable stability of its political system following independence from Denmark in 1944. We had what has been called the “four-party system” (Fjórflokkurinn), which seemed to have a relatively firm hold on voters. The right-of-centre Independence Party (IP) generally polled the most, with about 35-40% support amongst voters. The second largest was the Progressive Party (PP - formerly the Farmers’ Party), often polling between 15% and 25%.

9On the far left was the Socialist Party (which in 1968 metamorphosed into the Peoples’ Alliance and into the Left-Greens in 1999 (LG). In between were the old Social Democrats, who were the smallest of Nordic social democratic parties, until they merged with the Women’s List and some of the Peoples’ Alliance supporters, along with some other factions, in 1999. Then the new Social Democratic Alliance (SDA) became the second largest party in Iceland and maintained that through four elections, until the election of 2013, when it lost more than a half of its support. They lost greatly this time again.

  • 3 Stefán Ólafsson, Íslenska leiðin (The Icelandic Model), Reykjavík, University Press and Social Secu (...)

10On the whole Icelandic politics can be characterized as a deviant form within the typical Nordic political landscape3. Iceland was hardly ever as social democratic as the other Scandinavian nations. Splits were more pronounced on the Icelandic left-wing and the right-of-centre IP held the position that the social democratic parties generally held in Scandinavia, as the “normal party of government”, leading most of the coalitions. The few left wing governments that emerged were generally led by the farmers’ Progressive Party, rather than the Social Democratic Party. And these governments tended to be short-lived as well.

11The emergence of the Social Democratic Alliance in 1999 represented the fulfillment of a decades long dream of the centre-left to unite and create a Scandinavian-type broad political movement, that could challenge the overwhelming power of the Independence Party and its associated powers of employers and business sections. So 1999 was a major turning point for the Icelandic political system, signalling a potentially stronger position for Icelandic social democrats. In the shorter term that seemed to negatively affect the following of the Progressive Party and the Left-Greens. That was however to change again later on.

12But there was another earlier and perhaps more fundamental change in the Icelandic landscape of political ideologies – the emergence of neoliberalism.

Emergence of neoliberalism

  • 4 Eiríkur Bergmann, Iceland and the International Financial Crisis. Boom, Bust and Recovery, New York (...)

13The gradual rise of neoliberal ideology, from the early 1980s onwards, was the biggest novelty in Icelandic politics of the post-war era. This was from the beginning tied to the right-of-centre Independence Party. Within that party, the long-term largest and most powerful of Icelandic political parties, there emerged a group of individuals in the late 1970s that started to promote neoliberalist ideology. The group was called the “Lokomotive Group” and their aim was to drive the IP further towards the right in the political spectrum, emphasizing in particular the benefits of unfettered markets and lamenting the role of government, which they associated with restraints, waste and inefficiency4. In particular they started to attack the welfare state with typical neoliberal criticisms of waste of money, lack of incentives to work and too high taxes.

  • 5 Stefán Ólafsson, “Icelandic Capitalism – From Statism to Neoliberalism and Financial Collapse”, Com (...)

14The Lokomotive Group started to publish neoliberal books and journals and they imported some of the biggest international names from the hall of fame of neoliberal ideologists, including Friedrich von Hayek, Milton Friedman and James Buchanan, to name only a few. This group consisted of prominent new generation individuals within the IP and most of them became influential politicians or power brokers in the society during the 1980s and 1990s. Amongst the members were three future prime ministers of the IP, including Davíð Oddsson, who featured highly in Icelandic politics. He came to power as prime minister in 1991 and reigned until 2004, when he briefly became foreign minister and then from 2005 to 2009 he was the governor of the Central Bank of Iceland. Mr. Oddsson was a strong politician and had a leading role in promoting neoliberal ideas into Icelandic politics. From 1995 to the financial collapse of 2008 the neoliberal ideology was paramount in shaping the economy and politics. Neoliberalism can be said to have paved the way to the financial collapse5.

From neoliberalism to bubble economy and financial collapse

15From 1991 to 1995 the IP was in power with the old Social Democratic Party (SDP). At that time the government gradually moved towards neoliberal policy emphasis, starting some privatization programs and tax cuts for businesses. Iceland then joined the European Economic Area (EEA) in 1994 (effective from 1995), which opened the economy for the first time from the 1930s to free flow of capital, which later proved to be very consequential. From 1995 the IP ruled with the PP consecutively until 2007. These were the two main political parties that directly represented the main business interests in Iceland. Their rule was the period of high neoliberalism, with increasing financialization and growing laissez-faire policy orientation, along with growing privileges for businesses, tax cuts for financial earnings, deregulation, privatization and increased marketization. The financial liberalization and incentives for businesses and financiers gradually steamed the economy up, culminating in an excessive bubble economy from about 2003 to 2008.

  • 6 Cf. Eiríkur Bergmann, op. cit., and Stefán Ólafsson, “The Political Economy of Iceland’s Boom and B (...)

16Growth rates were high, profits soared and private debt levels began to grow at unprecedented speed, especially the debt levels of businesses and the recently privatized banks. The bubble economy was primarily a business speculation bubble, with a minor addition of a housing bubble as well. So it was speculation with borrowed money that became the order of the day, with owners and managers of most major firms taking part in the feast. Leveraged takeovers and mergers, both within Iceland and abroad became common (these were termed “the viking business raids” at the time). The Nordic Tiger of Iceland increasingly saw the Celtic Tiger of Ireland as its main competitor6.

17The new openness of financial globalization and the recently privatized public banks (fully privatized by beginning of year 2003) proved thus to be a toxic cocktail in the Icelandic context. Business speculators acquired the privatized banks and immediately turned them into agressive investment banks, with the owners often in leading roles in business ventures and speculation adventures. Debt levels rose astronimically and the economy became increasingly unsustainable with the speculation running out of hand. Governments, led by the IP, sat passively by and even cheered the business players on.

  • 7 Stefán Ólafsson, Arnaldur Sölvi Kristjánsson, “Income Inequality in Boom and Bust: A Tale from Icel (...)

18The top ten percent of households gained tremendously on the upswing, not least due to a massive growth of financial earnings and lower taxes on top incomes. Inequality of incomes increased faster than seen in any other Western country in the post-war period7. That was an increase from a position of one of the most equal income distributions and a highly unusual affair for a Nordic egalitarian society.

19So everything looked good on the upswing. Economic growth was good, business profits soared, especially those of the banks, and jobs were abundant and real earnings rose significantly. In late 2007 Arthur Laffer, the international doyen of neoliberal voodoo economics, was invited to Iceland to talk to business and financial elites, along with politicians on the right. His message was that Iceland had become a poster child of neoliberal freedoms, enjoying tremendous benefits. He saw no danger in the overheating of the economy, excessive (two digit) yearly trade deficits from 2004, excessive debts and the growing credit crunch in international financial markets. He in fact cheered Iceland on with its neoliberal experiment.

The collapse and political revolt – a major shift to the left

20Then came the financial collapse, usually associated with the fall of the banks in September-October of 2008. The stock market index had however started to fall by late summer 2007; the currency began to fall by end of 2007 and fell deeply from Easter 2008 and onwards. The collapse thus started well before the three main banks collapsed in September-October that year. But the main shock came with the fall of the banks. From then on it was evident that the economy and the financial system had been running out of control for a while. Devastating consequences were seen to be emerging.

  • 8 Valur Ingimundarson, “The Politics of Transition, Memory, and Justice. Assigning Blame for the Cris (...)

21It was at that point that the main political reaction started, with the “Pots and pans revolt” in the streets of central Reykjavík. As we have already indicated that swiftly led to a major change in Icelandic politics. The Independence Party, the main carrier of neoliberalism, was seen by the majority as the main culprit in opening the Pandora’s Box of unrestrained markets and laissez-faire politics8. They led the govenments up to the crisis, they were seen as closely connected to the business speculation interests that had run amok in their greed, and they also had appointed the governor of the Central Bank (Davíð Oddsson, the neoliberal leader himself). Hence the quest for the “defunct government” to be ousted, by the revolting public in the streets.

22In the election of April 2009 the Independence Party lost massively, getting its lowest following ever (23.7%). The Left-Green gained equally massively on the left and the SDA got almost 30%, becoming the largest party. They led the interim government (February to April) and the new majority government after the April election. That was the unprecedented historical swing to the left. These parties were seen as having the “cleanest” hands as regards connections to business powers, least corrupted by speculation. That applied though more to the Left-Greens than to the SDA, which had been in government with the IP from 2007. The left government promised to tackle the crisis in line with Nordic welfare politics and shelter the most vulnerable in the society against the biggest consequences of the crisis, as far as possible. That was a gigantic task, since governmental finances were in ruins and there was also a priority need to resurrect the economy and the financial system and getting unemployment down again. The government also promised to deliver a new constitution and reform the market-based fishing quota-system and to apply for membership of the EU. These promises were in line with the frequent call for a resurrection of a “new Iceland”, different from the neoliberal model that collapsed.

23After the left government came to power the crowds in the street calmed down for a while and the government got on with the massive task of resurrection. The crowds were however tense and sensitive, easily aroused to new protests, such as with requests for easing debt burdens, which were heavy. The public felt that the government was not doing enough to lighten their burdens.

  • 9 Stefán Ólafsson, “The Strategy of Redistribution: Iceland’s Way Out of the Crisis”, in Iceland’s Fi (...)

24The government actually did quite well in restarting the society and economy, in an exceptionally tight situation. By late 2010 economic growth had started again, wages began rising, debt relief programs were working (although seen as inadequate by many) and unemployment started to come down. By 2011 the IMF, which had supervised the program of financial resurrection, was praising the Icelandic way out of the crisis as a poster child of well designed policies that were already delivering good results, with promising further prospects. Redistribution of limited public expenditures, including welfare expenditures, were cleverly worked out so as to get the most out of the social protection system to shelter the more vulnerable groups9.

  • 10 Stefán Ólafsson, Arnaldur Sölvi Kristjánsson, Inequality in Iceland [a book on the long-term develo (...)

25Income distribution, which had been rapidly becoming much more unequal on the upswing towards the collapse, got much more equal again, after it. That was both due to a great fall in financial earnings and stronger redistributive tax and benefit policies of the left government. Iceland re-entered the group of societies with the most equal income distribution. That has however been shifting gradually towards more inequality again, from 2012 to 2015, albeit only gradually10.

  • 11 Helga Kristín Hallgrímsdóttir, Emmanuel Brunet-Jailly, “Contentious Politics, Political Expediance, (...)

26The left government faced not just a difficult situation to deal with the excessive problems. It was also massively criticised by the opposition and by business interests, who complained about higher taxes on businesses and on higher incomes, as well as about the implementation of a new wealth tax on larger assets and on the fishing rights of the owners of fishing vessels, who were prominent within the business elite. On top of the massive criticism the government had also to suffer some internal splits (especially within the Left Greens), which also eroded trust in the government. Due to weaker position in parliament as the term approached end, the government had problems with delivering some of the programs for restructuring towards a “new Iceland”, including a new constitution and a new fishing quota-system. They were also seen by many as failing to put up a strong enough fight against foreign capital owners, including on the Icesave issue11.

27By the time that the election came in 2013 the government was already having great problems with trust amongst the electorate.

Collapse of the left and a shift to the centre-right in 2013

28So the left parties came to the election of 2013 in a weak position. They were in effect exhausted by their tasks and internal divisions and felt they had done all that could be done to alleviate the crisis consequences for the households. They basically promised a responsible financial management, increased stability and the social democrats of SDA promoted Iceland’s membership of the EU as a major goal, which was totally unsellable given the conditions in Europe at the time (the Eurocrisis and the Greek problem).

29The opposition however promised to do a lot more for the households, including an overall cut of household debts by some 20%. That sounded like a good offer to the voters, not least middle class voters, who felt that they had been left behind by the government policies, that were primarily designed for the more vulnerable in society. In addition the opposition promised to let the claimants of the fallen banks pay for this debt relief  which sounded good.

30The main victor of the election of 2013 was the Progressive Party (PP) who framed these debt relief programs most directly and aggressively. They had also put up a strong profile in dealing with foreign capital owners and in rejecting any Icelandic responsibility in the controversial Icesave issue (which was mainly fought against the governments of UK and Holland). The eventual ruling of the EFTA Court on that issue in early 2013 was in their favour – and particularly bad for the governmental parties which had tried to negotiate a solution to that issue (due to pressure from IMF, the EU and other Nordic governments).

31Given this context it did not come as a great surprise that the PP became the main winner of the election of 2013. They went from just under 15% up to almost 25%, while the IP only increased their support from 23.7% to 26.7%. The left governmental parties lost more than a half of their voters, a devastating outcome for them.

32The IP got its second lowest score, after the outcome in 2009. Hence the outcome cannot be interpreted as a major shift to the right. A major shift to the centre is more to the point. The PP got the chance to form a government and eventually led the new IP+PP government, that took power in June 2013. The leading parties of the bubble economy period were back in power, only one term after the collapse.

33The new centre-right government had a comfortable majority in parliement, not least because many new parties emerged in 2013. Many of these did not pass the 5% minimum voter support threshold to get a seat in parliament, so a considerable number of votes were lost in that sense – increasing the majority of the larger parties.

34The government presided over an economy that was already on a good upswing and the public budget deficit had almost been cleared up. The most difficult part of the resurrection was already achieved. A boom in tourism from 2010 was a major stimulus for the economy and helped improve the job situation and increased public revenues.

35The government however delivered reasonably well on its promise of debt relief and managed to squeeze considerable funds out of the foreign claimants of the fallen banks. This involved a transfer of ownership of one of the resurrected banks to the state. So the government has done quite well on many issues, but has been criticised for favouring the wealthy too much in its taxation policies. The economy is now in a good shape and governmental finances provide significant opportunities for implementing progress and welfare reforms.

Then came the Panama Papers

36In the early spring of 2016 the government seemed to be in a good position to prepare for the forthcoming election in the spring of 2017. But then came the Panama Papers, with revelations which had major consequences for the Icelandic political context. The Icelandic business community appeared to have an unusually high proportion of ownership of firms and accounts in Tax Havens, such as in Tortola of the Virgin Islands, through at least one intermediary in Panama (many other intermediaries were of course also being used). This was one of the consequences of the neoliberal laissez-faire atmosphere of the bubble economy years.

37And it was not just business people that were in the Panama Papers, but the Prime Minister - through his wife - also held assets with a sizable sum in offshore accounts. So were also the leader of the IP, the Minister of Finance, as well as the deputy leader of the IP, the Minister of the Interior. The latter two had however a significantly smaller level of activity in the Panama Papers than the PM. When these revelations had been fully uncovered the grass root protests erupted again, at an even higher level of intensity than before. That sparked a real political crisis last spring. Notions of greed, corruption and tax evasion from the bubble economy period were once again voiced publicly.

38Eventually the Prime Minister stepped down and his deputy took over. The government continued with a minor reshuffle. But the government leaders also promised the electorate an early election, i.e. in October of this year. They did not have to do that, but the fact that they did reflects how scared they were of the grass root protests. They also feared what further revelations there might be in the Panama Papers.

The October election and future prospects

39At the time of writing (just after the election) it is evident that Iceland is experiencing a new chapter in the political turmoil that started with the collapse of 2008. The centre-right government lost its majority, due to a massive loss of the Prime Minister’s party (PP), even though the IP increased its support by some 2 %-points. Figure 1 shows the swing in support for those parties that got members elected to the parliament.

40These are major swings by Icelandic standards – and probably also by international standards. The biggest winner is the new party on the right-wing, Resurrection (Viðreisn), which is partly a split of Europeanists from the Independence Party (they call themselves liberal-centrist, but their profile is very much to the traditional right). They went from non existent to 10.5%. In that sense there is a swing to the two parties on the right of some 12.3 %-points in the election outcome.

41But there is also a significant swing to the left, with the Pirates gaining 9.4%-points and the Left Greens gaining 5 %-points, becoming the second largest party after the IP, with 15.9% in overall support. The IP has 29%. But against this swing to the left the Social Democratic Alliance collapsed, losing 7.2 %-points, from an all time low of 12.9%. That is a devastating outcome for them, leaving Iceland without a classical Nordic social democratic party of any significance. The net swing to the left is just above 7 %-points, smaller that the swing to the right.

42Against these swings to the right and to the left stands a major loss of the centrist Progressive Party, the party of the Prime Minister that featured in the Panama Papers. The centrist Bright Future also lost, but only about one %-point.

Figure 1: Change of support for the parliamentary parties in the October election of 2016 (in %-points).

Figure 1: Change of support for the parliamentary parties in the October election of 2016 (in %-points).

43So a major swing within the political party system for the third elections in a row is manifest. The Pirates were before the election set to become the second largest party, according to all polls, but they fell short of this goal. The fate of the Pirates had on the whole been downwards for much of this year, from a height of over 40% in the wake of the Panama Papers.

44So the “revolution” promoted by the Pirates partly fails, even though they almost triple their support. The main reason is probably that their policy is vague and so is their leadership. They did not run an effective campaign for the election either. Their call for a system change (new constitution, reform of democracy and combatting corruption and inequality) however resonates with the demands of many voters, particularly the young, who have turned away from traditional parties in significant numbers.

45The collapse of the Social Democrats Alliance (SDA) is perhaps the most dramatic development of the last two elections. From their emergence in 1999 they were the second largest party after the IP in four elections, leading the first two-party left government of 2009-2013. Even though they did well in many respects they were also seen as failing on some points and their great emphasis on Iceland joining the European Union has worked against them amongst traditional social democratic voters. Some of the middle-class Europeanists probably went over to the new Resurrection (Viðreisn) party.

46The future for classical Social Democracy is indeed very fragile in Iceland now. Even though the Left-Greens (formerly the Socialist Party) gained in these elections they are at only half the level that the Social Democratic Alliance had in its glory days (around 30% support). The Pirate Party, Left-Greens, Bright Future and even the liberal Resurrection are now promoting some of the classical policy issues of the SDA. Resurrecting the SDA thus appears as a distant goal at present. But given the major swings in the last three elections one can also say that anything can happen next time around!

47Lastly we look at the overall position of the traditional four party system. Figure 2 shows the erosion of the support for the four-party system and the rising share of votes going to newer parties (the broken line).

Figure 2: Erosion of the four-party system in Icelandic politics? Votes for the traditional four parties and others, in elections from 1963 to 2016.

Figure 2: Erosion of the four-party system in Icelandic politics? Votes for the traditional four parties and others, in elections from 1963 to 2016.

Source: Statistics Iceland.

48For most of the post-war period the four traditional parties jointly got above 90% of the vote and fluctuations and swings mostly involved a rearranging of balances between the right, the centre and the left. Significant drops in the black unbroken line in 1971 and 1987 are associated with the emergence of new parties, who generally had only a temporary success. But from 2013 and now in the last election the path is continuously downwards with the traditional parties jointly gaining only about 62% of the overall vote now, an all time low.

49Along with larger swings than before - to and from the right, left and centre - the erosion of support for the traditional political parties may indicate a fundamental loss of trust in traditional politics. The unprecedented rise of the new Pirate party, and also the Resurrection party, play to that tune. There has indeed been a fairly strong call for fundamental change in Iceandic politics since 2008 and the traditional parties are taking a beating with that. The Progressive Party and the Social Democrats are now getting their lowest ever support and the largest Independence Party is still only gaining its fourth lowest support in history.

50We now have 7 parties in parliament where there were only 5 parties in 2009 and 6 in 2013. But even though the traditional parties are as a whole losing votes the Left-Greens gained significantly this time – yet they are closer to a traditional party in the Icelandic system! The swings of 2009 and even more so of 2013 also indicate that the traditional parties can have a great comeback, as did the centrist PP in 2013. So one should not write the traditional parties wholly out of the picture yet. The Pirates may for example disappear again as quickly as they emerged. The more people saw of them and their policies the less became their support in this last election.

51The turmoil prevails and the future is thus quite undetermined for Icelandic democracy.

Conclusion

52On the whole we are witnessing another major swing in the political landscape in Iceland, this time with a bipolar swing to the right and the left – but away from the center. The overall swing to the right is somewhat larger than the swing to the left now. Two new parties, the centre-leftist Pirates and the liberal Resurrection (Viðreisn) on the right-wing are the two biggest gainers this time. Two of the traditional parties got an all time low in their support, the centrist Progressive Party and the Social Democratic Alliance. The still largest Independence Party is however only getting its fourth lowest support ever.

53The financial collapse of 2008 immediately produced a major swing to the left; then the left collapsed badly in 2013 when the swing was to the centre-right again. And now we are getting a bipolar swing to the right and the left at the same time, at the cost of the traditional center. So both large swings and emergence of new parties have characterized Icelandic politics since the onset of the financial crisis.

54This considerable turmoil is associated with the unprecedented rise of grassroot protests. The financial crisis signalled a major failure of the Icelandic business community and the political party system, to a large part of the electorate. The demand for a new societal base, with a new constitution and reforms that may tame the unrestrained market and its tendency towards increased inequality and corruption feature largely as causes of political fluctuations and turmoil.

55The revelations from the Panama Papers early this year showed that the public is quite sensitive and speaks out forcefully when it is offended. The grassroots quickly react and can threaten any government, with peaceful protests. That may be a sign of healthy democracy. But it is also associated with increased turmoil – at least until the political party system better responds to the basic demands of the general public.

56The practice of democracy is however not easy and may involve disappointments. Thus the swings of the last three elections were all temporary. When disappointments spread the political winds will change. Being a politician is very hard in such an environment. Even though electors accept that the last two governments have done some good things, Iceland is after all doing quite well economically now, they punish their governments quite harshly for the things they do not like (such as the revelations from the Panama Papers). Voters have thus become more demanding than before, it seems. They are also searching for new alternatives and ready to try some new things – to some extent at least.

57In the meantime, it seems likely that it may be difficult to form a new viable government after the October election. The prevailing situation with new parties and big swings seem to indicate that Iceland has not yet found a new base for its political party system. So the turmoil may continue for some time into the future.

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Notes

1 Gyfi Zoega, “Iceland’s Financial Crisis: An Economic Perspective”, in Iceland’s Financial Crisis. The Politics of Blame, Protest, and Reconstruction, V. Ingimundarson, P. Urfalino and I. Erlingsdóttir (eds.), London, Routledge, 2016. See also Stefán Ólafsson, “The Political Economy of Iceland’s Boom and Bust”, in ibid.

2 Jón Gunnar Bernburg, Economic Crisis and Mass Protest. The Pots and Pans Revolution in Iceland, London, Routledge, 2016

3 Stefán Ólafsson, Íslenska leiðin (The Icelandic Model), Reykjavík, University Press and Social Security Administration, 1999.

4 Eiríkur Bergmann, Iceland and the International Financial Crisis. Boom, Bust and Recovery, New York, Palgrave Macmillan, 2014.

5 Stefán Ólafsson, “Icelandic Capitalism – From Statism to Neoliberalism and Financial Collapse”, Comparative Social Research [Emerald], special edition, Nordic Varieties of Capitalism, Lars Mjöset (ed.), vol. 28, 2011, p. 1-52.

6 Cf. Eiríkur Bergmann, op. cit., and Stefán Ólafsson, “The Political Economy of Iceland’s Boom and Bust”, op. cit.

7 Stefán Ólafsson, Arnaldur Sölvi Kristjánsson, “Income Inequality in Boom and Bust: A Tale from Iceland’s Bubble economy”, in Income Inequality. Economic Disparities and the Middle Class in Affluent Countries, J. C. Gornick and M. Jäntti (eds.), Palo Alto, Stanford Univerity Press, 2013.

8 Valur Ingimundarson, “The Politics of Transition, Memory, and Justice. Assigning Blame for the Crisis”, in Iceland’s Financial Crisis. The Politics of Blame, Protest, and Reconstruction, op. cit.

9 Stefán Ólafsson, “The Strategy of Redistribution: Iceland’s Way Out of the Crisis”, in Iceland’s Financial Crisis. The Politics of Blame, Protest, and Reconstruction, op. cit.

10 Stefán Ólafsson, Arnaldur Sölvi Kristjánsson, Inequality in Iceland [a book on the long-term development of income and wealth inequality in Iceland, in an international comparative perspective], Reykjavík, University of Iceland Press, 2017 [forthcoming].

11 Helga Kristín Hallgrímsdóttir, Emmanuel Brunet-Jailly, “Contentious Politics, Political Expediance, and the Real Cost of the Icesave Debt”, in Iceland’s Financial Crisis. The Politics of Blame, Protest, and Reconstruction, op. cit.

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Table des illustrations

Titre Figure 1: Change of support for the parliamentary parties in the October election of 2016 (in %-points).
URL http://journals.openedition.org/nordiques/docannexe/image/3601/img-1.png
Fichier image/png, 46k
Titre Figure 2: Erosion of the four-party system in Icelandic politics? Votes for the traditional four parties and others, in elections from 1963 to 2016.
Crédits Source: Statistics Iceland.
URL http://journals.openedition.org/nordiques/docannexe/image/3601/img-2.png
Fichier image/png, 33k
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Stefán Ólafsson, « Political turmoil in Iceland »Nordiques, 32 | 2016, 29-42.

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Stefán Ólafsson, « Political turmoil in Iceland »Nordiques [En ligne], 32 | 2016, mis en ligne le 04 février 2022, consulté le 11 mai 2026. URL : http://journals.openedition.org/nordiques/3601 ; DOI : https://doi.org/10.4000/nordiques.3601

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Auteur

Stefán Ólafsson

Stefán Ólafsson is a professor of sociology at the University of Iceland.

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Le texte et les autres éléments (illustrations, fichiers annexes importés), sont « Tous droits réservés », sauf mention contraire.

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