Iceland. The year began with loud demands for the
government's departure. The popular protests that followed
the banking crisis in the fall before increased in strength
in January. Unemployment rose rapidly and many Icelanders
were unable to pay their home loans. Under intense pressure
from violent demonstrations in Reykjavík, Prime Minister
Geir Haarde decided to announce new elections. Subsequently,
the coalition split between the Independence Party and the
Social Democratic Alliance, and Geir Haarde filed the
government's resignation application at the end of January.
The Social Democrats and the Left - The Greens decided to
form a minority coalition, which was negotiated shortly.
countryaah, the new government was presented in early February with
Social Democrat Jóhanna Sigurđardóttir as prime minister and
the Left – Green Party leader Steingrímur Sigfússon as
finance minister. The bourgeois Progress Party supported the
Parliament. The Governor of the Central Bank and former
Prime Minister Davíđ Oddsson were identified as responsible
for much of the deep economic crisis. The government
demanded his resignation but only after a period of power
struggle with Prime Minister Jóhanna Sigurđardóttir did he
leave his post.
At the change of government, leadership changes in the
two largest parties also followed. The Social Democratic
Alliance elected Jóhanna Sigurđardóttir as new leader and
the Independence Party appointed Bjarni Benediktsson as new
party leader after Geir Haarde. The new left government won
the new election in April and gained its own majority in the
Allting with 34 of the 63 seats. The Social Democrats took
29.8 percent of the vote and the Left – Green 21.7 percent.
The Independence Party lost a third of its voters and made
its worst choice so far with 23.7 percent. The progress
party gained 14.8 percent and the new party the Citizens'
Movement 7.2 percent.
Jóhanna Sigurđardóttir was thus able to form a new left
government with her own majority. However, it immediately
got into trouble with the EU issue, where the Social
Democrats wanted to apply for Icelandic membership as soon
as possible while the Left – Greens were opponents. In July,
however, a majority in the Swedish Parliament decided on an
Icelandic membership application to the EU. Several of the
Left – Green members voted against. The application to the
EU was submitted promptly.
But the government was already in feud with EU members
Britain and the Netherlands demanding that Iceland pay
compensation promised to British and Dutch bank customers,
who lost savings in the Icelandic Internet bank Icesaver's
bankruptcy in 2008. The government's proposal for a
so-called Icesave law was met by protests outside
Everything, where thousands of people demonstrated in a
similar way to the old government.
The Icesave law would entail costs equivalent to SEK 40
billion, which would increase the state's heavy debt burden
and the already difficult financial situation for taxpayers.
But the Netherlands threatened to block Iceland's EU
application and the International Monetary Fund (IMF)
declared that loan disbursements to Iceland could be stopped
unless Icesave was approved.
At the end of August, the law was voted on in Alltinget
but with several conditions. The government received harsh
criticism from the opposition, and within the Left – the
Greens there were also critics. The Minister of Health
resigned in protest of the law. Public opposition showed
that the previously positive attitude towards the EU was
changed to a majority against Icelandic EU membership. The
conflict surrounding the Icesave law led to a revised
proposal from the government.
At the end of December, it was approved by the Almighty
with almost a majority. But the president hesitated to sign
the law when close to a quarter of Icelanders called for him
to veto and call for a referendum on the issue.