Iceland: Government collapses

 Angry demonstrators bring down the Haarde government

Biggest protests in Iceland's historyFOLLOWING ANGRY daily street protests (above and below), Iceland’s right wing coalition government, led by prime minister Geir Haarde, resigned on 26 January, paving the way for new elections on 25 April. An interim government of the Social Democratic Alliance and the Left-Green Movement has taken office until then. In the following article Per-Åke Westerlund, (Rättvisepartiet Socialisterna – CWI, Sweden) examines Iceland’s economic and political crisis.

MASS PROTESTS in, to date, the worst hit country in the global economic crisis, have been referred to as a ‘fleece’ or ‘saucepan’ revolution. Among those who have come onto the streets, there are discussions about the need for a new political force.

In a few months Iceland went from being the fifth richest country in the world – based on GDP per capita – to experiencing the worst crisis of all countries, so far. The super-indebted Icelandic banks were nationalised in an attempt to limit the crisis.

Today, 70% of all companies and 40% of households are technically bankrupt. Output (GDP) is expected to drop 10% this year. Unemployment increased from 6% to 9% in December alone, inflation is close to 20%, while interest rates are at 18%. The currency, the Icelandic krona, is hardly exchangeable.

Widespread hatred

There is a widespread hatred against the bankers who orchestrated the crisis and their friends, the politicians. From 20 January, when parliament restarted after the holidays, daily protests were organised.

The main slogan was “incompetent government” and the demand was for new elections. Most people brought cooking pans and other improvised objects to drum on.

In protests late at night on 22 January, stones were thrown at the police, with two policemen injured. The police used teargas and pepper spray and 20 people were arrested in the first major attack on a demonstration since 1949, when Icelanders demonstrated against Nato membership.

One of the protesters said: “No one has resigned and no one has been fired. They are hard at work at getting what little is left here back into the hands of those who crashed our economy to begin with.”

Demonstrators demanded that money promised from the IMF and governments should not be paid out to the present government. In total, $10 billion has been promised in ‘rescue packages’. The IMF deal includes severe demands for budget cuts and high interest rates, both measures that will deepen the crisis.

New elections

On Friday 23 January, Haarde suddenly declared new elections for 9 May [now 25 April]. At the same press conference, he announced his resignation as leader of the Independence Party, and revealed that he has cancer. The following day, Minister of Commerce, Bjorgvin Sigurdsson, resigned at the same time as sacking the boss of the state authority responsible for financial supervision.

These announcements, however, did not break the momentum of the protests. On Saturday, 8,000 people gathered, demanding the government resign immediately.

In opinion polls the opposition Left-Green Party has doubled its support since the last election two years ago, to 32.6%. The two governing parties have lost a combined 22%. The Independence Party’s ratings have fallen to 22.1% and the Social Democratic Alliance to 19.2 %.

This is a clear indication that people are looking for a more radical alternative. The Left-Green Party is seen as the most anti-capitalist party, previously profiling themselves mostly on environmental issues.

The Left-Greens also stand for renegotiations on the International Monetary Fund (IMF) deal and for Iceland to leave Nato. Opinion in favour of joining the European Union, which surged when the currency collapsed last year, has already started to dwindle. Today, 38% want to join, compared to over 50% in October. Many understand that foreign aid will not come without strings.


The mass demonstrations in Iceland, like recent protests in other European countries, show the willingness of people to try and take control over their own lives. They no longer trust politicians or capitalists. This has given rise to a lot of discussion about whether what is happening is a revolution.

“The word ‘revolution’ might sound a bit of an overstatement, but given the calm temperament that usually prevails in Icelandic politics, the unfolding events represent, at the very least, a revolution in political activism”, Icelander Eirkur Bergmann wrote in The Guardian.

The lesson from mass movements in other countries in recent years is that unpopular regimes can be overthrown. But to alter the economic and political conditions in society the working class and its allies need their own party with a programme for socialist change.

In Iceland there will be a concerted campaign from national and global capital to submit to the IMF conditions. Any government that is not prepared to challenge the capitalists who have caused the crisis will come under enormous pressure to make huge cuts in living standards for working people. This is the case even if a Left-Green government is established, or a government of ‘experts’, as some of the protesters have proposed.

Workers and youth in Iceland have already drawn important conclusions. New experiences will force them to look hard for alternatives. Transforming the situation in Iceland would need a fully socialist programme of nationalisation of all major parts of the economy, under democratic workers’ control and management.

The beginnings of a movement against capitalism in Iceland must be welcomed and encouraged by workers and activists internationally. This is just the first indication of what is to come as more and more countries fall into recession and mass revolt begins to develop.


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