Iceland's Ruling Coalition Dissolves

The political situation in Iceland deteriorated further today when Prime Minister Geir Haarde announced the immediate dissolution of the Independence Party's ruling coalition with the Social Democratic Alliance (SDA). On Saturday, Haarde announced that he was suffering from malignant esophageal cancer, and called for new elections on May 9th.

After a series of formal and informal meetings over the weekend, he and SDA leader, Foreign Minister Ingibjorg Solrun Gisladottir, were unable reach and agree as to how to proceed until then. However, according to Mr. Haarde, the SDA had dissolved into three separate parties, and was no longer able to finish this term in a responsible manner.

These events represent the culmination of a week that saw thousands of demonstrators descend upon Iceland's parliament, the Althingi, in protest of the government's handling of the financial and currency crises that have hit this small island nation over the past four months. Since October 8, 2008, the country's three largest banks failed and were nationalized by the government, with debts of 7-10 times the country's gross national product. The Icelandic krona has plummeted in value, and unemployment has skyrocketed.

On Saturday, the largest protest yet was held before the Althingi, with nearly 2% of the nation's population present. Commerce Minister Bjorgvin Sigurdsson announced that we was resigning, and stated that, although he was at fault for his role in these events, many others in the government also had a hand in them, and he called for them to publicly accept responsibility. Noisy demonstrations also were held outside the Hotel Hilton Nordica, where Iceland's Central Bank was holding its annual celebration.

Mr. Haarde proposed the creation of a national government to rule until new elections could be held, with participation from the other major political parties. He emphasized the importance of maintaining a reasonable tempo to ensure that government services be provided and that commercial activities continue.

Ms. Gisladottir, who returned from Sweden this weekend after undergoing treatment for a brain tumor, said her party demanded "a government with strong leadership that the nation can trust in and a credible and reliable leader to head it. We just need to find the right person." She said she did not consider herself that individual, considering her personal situation.

Although the dissolution of the ruling coalition and call for new elections is long overdue, it is more important than ever that the government treat the Icelandic people like adults and tell us exactly what has happened to our country, and who made the decisions that resulted in this mess. Most fingers seem to point at David Oddsson, currently head of the Central Bank, and Prime Minister during the period when the deregulation of the banks took place, but, as Sigurdsson indicated, there is plenty of blame to spread around.

More than ever, the first task of the new government should be to hold hearings to investigate these matters. We have lost faith in our government, and must see where we've been before we can see where we're going. Prime Minister Geir H. Haarde and Foreign Minister Ingibjorg Solrun Gisladottir Photo credit: