Icelanders May Look Beyond Scandal to Vote With Their Wallets

  • Party of outgoing prime minister tipped to remain biggest
  • Weak allies may deprive it of majority despite strong economy

Bjarni Benediktsson, speaks during a campaign meeting in Reykjavik on Oct. 24, 2017.

Photographer: Halldor Kolbeins/AFP/Getty Images

The economy may end up trumping political scandal in Iceland.

After trailing behind the opposition Left Green Movement for much of a very short election campaign, voters are again coming home to the ruling Independence Party ahead of Saturday’s vote. 

An economy expanding more than 5 percent, led by a booming tourism industry, soaring wages and improved financial stability following the end of capital controls have played a role in giving Prime Minister Bjarni Benediktsson an unexpected lifeline.

Voters’ loyalty (the Independents have emerged as the biggest party in all but one of the elections held since the country became a republic, in 1944), and an aversion to change, are the other explanations being put forward.

Lower taxes, tradition and an idea of stability: "It’s that simple," says Eirikur Bergmann, professor of political science at Bifrost University in Iceland, summing up the support for the center-right movement.

CLick here for a guide to Iceland’s political parties

Should the Independents emerge as the biggest party on Saturday, Benediktsson will have pulled off a remarkable comeback.

Resilient Party

Only a month ago, he was abandoned by his allies and forced to call a snap election after it emerged that his father had vouched for the character of a convicted child molester. While no law was broken, Benediktsson was accused of committing a “breach of trust” for failing to inform the cabinet about the matter.

Backing for the Independents promptly collapsed but has since picked up, according to a poll of polls.

The party’s resilience is all the more impressive given it was in charge during the collapse of the country’s banks, a decade ago. It was also in government when former Prime Minister Sigmundur David Gunnlaugsson was forced to resign in the face of yogurt-hurling protesters after being embroiled in the so-called Panama Papers scandal.

Stefania Oskarsdottir, an assistant professor in political science at the University of Iceland, says that the party can always count on a core following and that support has rarely dipped below 25 percent in recent years.

Benediktsson, who oversaw the dismantling of capital controls earlier this year, has been playing the continuity card, telling state broadcaster RUV: "It is fundamental that we continue to build up this country, that we preserve the successes we have achieved."

He’s also promised to "not raise taxes on the general public" or on companies and to invest the proceeds of the sale of the state’s holdings in the banks on infrastructure and to reduce debt.

Supporters are also unconcerned by the latest scandals.

"It’s ridiculous how they are using these matters right before the elections," said Hafdis Buadottir, a civil servant who described herself as politically conservative. "I don’t want a left-wing government. I want stability and for the work of the Independence Party to continue," she said while shopping at a mall in Reykjavik.

Coalition Building

Winning Saturday’s snap election won’t guarantee a place in government. The Left Greens are still polling close to their historical high while support for the Independence Party’s former ally, the Progressive Party, has plunged. Their former leader, the Panama Papers tainted Gunnlaugsson, has left to found the Center Party, further complicating the alliance game.

Oskarsdottir says the Independence Party needs good results from the Progressives and the Center Party (assuming the two can work together after the split), and may have to extend the coalition to minor parties such as Revival. She’s ruling out a German-style "grand coalition" with the Left Greens.

Gunnlaugsson, who made Benediktsson his finance minister when he was prime minister, has also talked about the need to reform the banking sector. Unlike the Independents, however,
he wants the state to reclaim Arion Bank that has partly been sold to hedge funds and retain full ownership of Landsbankinn HF.

Last time round, coalition talks lasted several months, with the government eventually managing the slimmest of majorities.

"We learned a lot from the last time round. It should be quicker this time," said Oskarsdottir

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