Tuesday, January 27, 2009

Norden til venstre: Icelandic government falls, left ahead in Norway

Icelanders protesting outside parliament
in Reykjavik

After weeks of regular protests outside the Icelandic parliament in Reykjavik, the government has finally collapsed with the social-democratic Alliance unwilling to continue in their coalition with the conservative Independence Party. Many Icelanders have meanwhile thrown their support behind the socialist Left Greens with them expected to become the largest party in any future election according to the polls. A government which refused to accept any responsibility for what had happened and for the misery which many ordinary families have been subjected to, has finally given in to the demands of its angry citizens, or at least the social-democrats have realised that staying in a coalition with the Independence Party any longer will do them more harm than good.

If the Left Greens become the largest party and if the Alliance have enough seats to allow both parties to form a coalition then Iceland will undoubtedly have the most radical government of any western country. Their ability to act will of course in many ways be reduced due to the serious situation the country finds itself in, with the economy expected to shrink by 10% this year, unemployment approaching a record high and inflation making basic items hard for many Icelanders to afford. But with the right policies the poor and the jobless need not be hit as hard as they might otherwise have been. A left-wing government would, I expect, return to a more progressive tax system, do what it can to stop people losing their homes and redistribute whatever resources are available to those who need them the most. Perhaps most importantly they would lay the foundations of a new economy based not around banking but on developing the nation’s vast natural resources in a way which is largely at harmony with nature.

The political situation right now seems a little unclear with the outgoing Prime Minister Geir Haarde calling for a national government while some in the Alliance, Left Greens and agrarian Progressive Party have called for the three parties to form a temporary coalition until the elections, already expected to take place in May after an earlier announcements from Mr Haarde shortly after he was diagnosed with cancer. It’s difficult to say what the political impact of either option would be for the parties involved but the Left Greens are the one party which has consistently offered a real alternative to the free market economic policies Icelanders are now blaming for what’s happening so I expect they’re likely to remain strong over the next few months.

In Norway meanwhile the last three or four polls have all been predicting a parliamentary majority for the centre-left which is significant as ever since their election in 2005 most polls have been predicting a clear victory for the opposition. Before these latest polls the left hadn’t been ahead once since 2007. Fortunately the financial crisis has helped turn things around around as the government appears to be seen doing things, putting forward a number ‘crisis packages’ to help Norwegian businesses, banks and municipalities. Yesterday a further 20 billion kroner was announced and if it proves not to be enough the government can quite easily dip into the oil fund. Nevertheless predictions are that over 100,000 jobs could be lost over the next few years so they’ll be hoping as few as possible go before the election in September.

The left has also been strengthened from an ideological perspective with Prime Minister Jens Stoltenberg arguing that the crisis proves the superiority of the Norwegian model over the free market American one, given that Norway has been far less affected by most other countries and that it was unregulated capitalism which was undeniably responsible in the first place. The right-wing Progress Party (Frp), which recently showed its true colours by calling for uncritical support to Israel during their war against the people of Gaza, has only one answer: yet more tax cuts and deregulation together with the reckless use of oil revenues. Perhaps as a result of the voters are abandoning them in droves with the Frp down to below 20% in the most recent poll, the lowest they've had for years.

The election is of course over 8 months away and a lot will happen before then. Personally I think it could go either way - although even if the four opposition parties do get a majority the composition of the future government is far from certain as both the Liberals and Christian People’s Party have suggested they’d be unwilling to join a government which includes the Progress Party. What’s clear though is that the left’s now in a better position to hold on to power, due largely to the crisis, and hopefully the opposition will be weakened further as they come under greater scrutiny in the run-up to the election.

By the way if you want to keep up to date with what's happening in Iceland these are all good sources: