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Sigmundur David Gunnlaugsson of the Progressive Party (left) and Bjarni Benediktsson of the Independence Party pose for pictures after the result AP Photo/Brynjar Gauti
Plus ça change

Back again: Iceland re-elects the parties blamed for causing financial meltdown

Iceland’s voters flocked back to the two parties ousted in 2009 after presiding over the worst financial crisis ever to hit the country.

ICELAND’S VOTERS HAVE returned to office a centre-right coalition once blamed for the worst financial meltdown in the nation’s history –  but a new online activist movement could bring change, according to final poll figures.

The North Atlantic nation, fatigued after four years of austerity measures under a leftist government, threw its lot behind the right-wing Independence Party and the centrist-agrarian Progressive Party.

“The Independence Party is called to duty again,” said Bjarni Benediktsson, the party’s 43-year-old leader, adding he was ready to negotiate a coalition that would lead the country. “The situation now calls for change.”

A final count of nearly 194,000 valid votes showed the Independence Party ahead in the popular vote with 26.7 per cent, giving it 19 seats in parliament.

Benediktsson was expected to seek a government with the support of the Progressive Party, which got 24.4 per cent of the vote and also 19 legislative seats.

The two parties have staged a remarkable comeback since they were ousted in a 2009 election after presiding over the worst financial crisis to ever hit the small nation of 320,000 people.

Progressive Party chief Sigmundur David Gunnlaugsson hugs a supporter (AP Photo/Brynjar Gauti)

Before the crisis, the mortgages offered by Icelandic banks were linked to inflation, resulting in spiralling borrowing costs for homeowners when the krona collapsed against other currencies.

After four years of tax hikes and austerity designed to meet international lenders’ demands, the Independence Party has offered debt-laden voters tax credits.

The Independents’ historic coalition partner, the Progressive Party, has vowed to go even further by asking banks to write off some of the debt.

“We will change Iceland for the better very fast in the coming months and years,” said the party’s leader, 38-year-old Sigmundur David Gunnlaugsson.

The government in power since 2009 was defeated in the election, with the social democratic Alliance Party getting 12.9 per cent of the vote and nine seats in parliament.

Its ally, the Left-Green Movement, ended up with 10.9 per cent of the vote and seven seats.

“If you look closely at the results it’s a rebellion of the rural areas against these people in Reykjavik who wanted to tax them and who were supported by left-wing intellectuals,” said Hannes Holmsteinn Gissurarsson, a political scientist from the University of Iceland.

Voter discontent brings change

The opposition victory could spell the end of EU membership negotiations, as both the Progressives and the Independents are in favour of putting a halt to Iceland’s bid.

But the issue has taken a backseat to Icelanders’ falling spending power and sliding living standards.

Voter discontent has spawned an unprecedented number of political parties, and two new parties entered parliament, including the Pirate Party, an online activist group advocating file sharing.

With 5.1 per cent of the vote and three seats, it has become the first party of its kind to enter a national parliament, a “historic” result, according to co-founder Birgitta Jonsdottir.

“We’re not vying to get a seat in the government. But we’re ready to work with any party that will be interested in the issues we’ve been raising,” Jonsdottir told AFP.

Those issues included “21st century laws” on online privacy, freedom of information and government transparency, she said.

“Many people see Iceland as a kind of laboratory for democracy. We have to live up to this reputation,” she said.

The other newcomer was the pro-EU Bright Future party, which won 8.2 per cent of the vote and six seats.

Despite widespread signs of popular frustration with politics, voter turn-out was 83.3 per cent, down only slightly from 85.1 per cent four years ago.

Stefania Oskarsdottir, a social scientist from the University of Iceland, noted the turnout was high compared with other Western countries.

“It means that people still believe in representative democracy, despite all the talk in recent years in Iceland about direct democracy,” she said.

But they are very wary of politicians. Those who were elected need to be careful about that now. They need to deliver, after the previous government failed to do so.

- © AFP, 2013

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