When most people think of Iceland, they likely ponder the country’s spectacular scenery or their plucky, overachieving football team. Few pay attention to Icelandic politics, and fewer still think election outcomes in this tiny country matter. Most observers, therefore, will likely miss the import of the recent election. That is a grave error.
Iceland’s politics are, in fact, a microcosm of two of the movements that are shaking the globe: left-wing, anti-capitalist politics and anti-corruption populism. The 2008 collapse of Iceland’s banks, followed by a series of revelations implicating top leaders of centre-right parties in corrupt or self-dealing acts, have altered the island’s once-staid electoral landscape.
Iceland’s Political Tradition: Boring and Conservative
No one would have guessed this would happen ten years ago. The centre-right Independence Party had won every election since its formation in the late 1920s.1 It was in government for 51 of the 62 years between Iceland’s full independence from Denmark in 1946 and the onset of the financial crisis in 2008. Every Independence Party leader has eventually become Prime Minister.
The Icelandic left, moreover, has been historically weak. No left-wing or centre-left party received more than 30 percent of the vote until 2003, and left or centre-left parties only served in government in coalition with the Independence Party or its centrist, agrarian competitor, the Progressive Party. Especially in comparison with its Nordic and Scandinavian cousins, Iceland has been a bastion of the right.
The 2008 Banking Collapse Initially Empowered the Left
That all changed after the 2008 collapse. The Independence Party had been in government for twenty-five consecutive years, and its two most recent leaders had been prime minister during the period of privatization and tax-cutting that had fueled the bubble that led to the crash. And what a crash it was! Unemployment went from next to nothing to over 8 % between 2007 and 2009.2 The country’s GDP, which more than doubled between 2001 and 2007, dropped by 40 percent by 2009.3 Iceland’s banks, which had grown so large that their assets were 14 times the nation’s GDP,4 went bust, causing interest rates to rise to 18% and inflation to exceed 12%. Tens of thousands of Icelandic households went bankrupt or lost their savings – a huge number in a country of only 330,000 people.
Icelandic voters reacted by doing what voters worldwide do when they go through economic collapse; they voted in the opposition. The two left-wing parties, the Social Democratic Alliance and the Left-Green Movement, captured over 50% of the vote for the first time in the country’s history.5 The Social Democratic Alliance’s leader, Johanna Sigurdardottir, became the country’s first female leader and the first prime minister to govern solely from the left.
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SubscribeTest. I ‘successfully changed my name’ but nothing has actually changed.
Not here either.