What impact will the Panama Papers have on Iceland?By Benjamin Leruth on 5 April 2016
Almost eight years after the global financial crisis hit the country, Iceland is once again mentioned in the media all around the world. The Panama Papers showed that several Icelandic politicians, former bankers and government advisors have had links to anonymous offshore companies. Three members of the Icelandic government are directly involved: the Prime Minister, Sigmundur Davíð Gunnlaugsson, Finance Minister Bjarni Benediktsson, and Minister of the Interior Ólöf Nordal.
Yesterday, around 20,000 people (6 per cent of the total population of Iceland) demonstrated on Austurvöllur, the main square facing the Icelandic Parliament in Reykjavik, and called for the government to resign. Even though Gunnlaugsson said he does not intend to step down, this new political scandal triggered a second political revolution in Iceland, eight years after the so-called ‘pots and pans revolution’ which drastically changed the political landscape.
The Icelandic Party System
Until the late 2000s, the Icelandic party system was composed of four well-established political parties. To the left are the Social Democratic Alliance and the Left-Green Movement, which formed the first left-wing government in the history of Iceland in 2009. To the right are the Independence Party, which co-operates with the British Conservative Party as part of the transnational Alliance for European Conservatives and Reformists, and the agrarian Progressive Party, led by current Prime Minister Gunnlaugsson. However, since 2009, a series of new political movements emerged and took part to parliamentary elections. The Citizen’s Movement (later renamed “The Movement”), which emerged from the 2008 protests, was the first of its kind to win seats in the Icelandic Parliament in following the 2009 elections. In 2010, the surrealist and initially satiric Best Party, led by the charismatic comedian Jón Gnarr, won the Reykjavik mayoral elections. Eight new political parties took part to the 2013 parliamentary elections. Two of them gained seats: the social liberal Bright Future, co-founded by the former Best Party deputy leader Heiða Kristin Helgadóttir and also composed of Social Democratic and Progressive defectors; and the Pirate Party, co-founded by political activists and including former Citizen’s Movement MP Birgitta Jónsdóttir. The latter party has been topping national polls since early 2015. As the Gunnlaugsson government became increasingly unpopular, the popularity of the Pirate Party reached an all-time high in the most recent opinion poll published before the release of the Panama Papers: the party would get 36.1 per cent of the votes if an election were called. This represents more than the coalition’s Progressive and Independence parties combined.
Is the government about to collapse?
As a consensual democracy where trust between elites and the people is one of the key pillars of Iceland’s society, it would be unconceivable for the Prime Minister to stay in power. Following the 2008-2009 protests, Prime Minister Geir Haarde was forced to step down and the government, consisting of a coalition between the Independence Party and Social Democratic Alliance, subsequently collapsed. What happened yesterday is quite similar to the first ‘pots and pans revolution’. The four parties in opposition (the Social Democratic Alliance, the Left-Green Movement, Bright Future and the Pirate Party) have prepared a motion of no confidence, which is likely to be discussed in parliament this week. The Independence Party, which still polls as the second largest political formation behind the Pirate Party, is now considering stepping down from the government and some members of the Progressive Party voiced concerns over their leader’s actions. This would trigger early elections that could take place before the summer.
If, as expected, early elections are held, the most likely scenario would be to see the victory of the Pirate Party and other left-wing parties would also make significant gains. Following yesterday’s protest, the Pirate Party held a meeting in order to discuss about their strategy in the case of an early election. In addition, MP Birgitta Jónsdóttir said her party is ready to form part of part of the government. Potential coalition partners would include all opposition parties i.e. Bright Future, the Social Democratic Alliance and the Left-Wing Movement, with the first one probably being the Pirate Party’s best ally. It will then be up to the Pirates to convince the population that they are a viable ruling party.
What does the likely success of the Pirate Party mean for the rest of Europe?
While the success of the Icelandic Pirate Party could appear surprising to many, it is mostly due to growing public discontent that built up over the past eight years. Much like other new political parties across Europe (such as Podemos), the party offers an alternative to the public. While the Pirate movement was initially perceived as a single-issue party defending net neutrality and digital rights, the Icelandic Pirate Party was successful in establishing itself as a viable protest party campaigning on the grounds of direct democracy, transparency and freedom of expression. The party also pledged to reactivate the constitutional debate in Iceland, which was frozen by the current government. This proves to be extremely popular among voters.
While the electoral success of European Pirate parties has been limited to Iceland and, to a lesser extent, Germany and Sweden, the likely success of the Pirate Party in Iceland could inspire other Pirate parties across Europe as it will increase the visibility of Pirate politics. The main challenge for other European Pirate parties will be to overcome structural challenges in order to be perceived as a viable alternative offering new models of governance, and thus to follow the example of their Icelandic counterpart.
UPDATE: This afternoon, the Prime Minister asked the President to dissolve the Parliament, which the President refused. This damages even more the reputation of the Prime Minister. It is now down to the Independence Party to decide over the fate of the government. The most likely scenario is that the Party decides to leave the government, which would trigger early elections to be held within 45 days
Benjamin Leruth is a Research Associate in the School of Policy, Sociology and Social Research at the University of Kent. He tweets @BenLeruth.
Image: Stortinget CC BY-NC-ND