The financial crisis has claimed its first victim. On Saturday Iceland’s government resigned and called elections for May 9, two years early. Protesters, who have been in the street since October 2008, began large rallies at the Parliament on Tuesday, demanding the resignation of the coalition government. On Saturday, Prime Minister Geir Haarde announced they were giving in to public opinion.
Large demonstration began the week when Parliament resumed from a long break. Commentators said they were the largest protests in the country since 1949, when people objected to the government’s decision to join NATO. Women shouted and banged on pans. Eggs, paint, firecrackers and yoghurt were thrown at the Parliament building. A large bond fire was set in front of the door of Parliament. When the prime minister exiting the building, his car was surrounded, rocked and covered with paint. The police replied with pepper spray and batons.
In this small country of 320,000, thousands turned out for demonstrations during the week. They carried signs proclaiming “Yes We Can!” Banners stated: “USA is getting rid of Bush – We want to get rid of you!”
Financial deregulation
Following the policies of Tony Blair’s government in the UK and Bill Clinton’s in the United States, the government of Iceland deregulated the financial industry. This was part of a general move to embrace free market economics. The three major banks in Iceland put a high priority on expanding abroad, going deeply into the shaky derivatives market.
The bubble collapsed in October, with foreign debts rising astronomically to almost ten times Iceland’s gross domestic product. Following the pattern set by Labour Prime Minister George Brown in the UK, and the George Bush-Democratic Congress in the United States, the banks were bailed out by the government and the taxpayers.
Icelanders went to the banks to withdraw their money, and the banks said no. They went to the store to buy groceries and found that the shelves were bare. No one would ship anything to Iceland without being paid cash up front. Like a poor Third World country, the government went to the International Monetary Fund and begged for a bailout. It was granted with the usual free market free trade conditions.
Iceland’s coalition government
Since the election of 2007, Iceland has been ruled by a “grand coalition” government of the right wing Independence Party and the centre-left Social Democratic Alliance. In a public opinion poll taken on Saturday, support for the Independence Party has dropped from 37% to 22%. Support for their coalition partner, the Social Democratic Alliance, has fallen from 27% to 19%.
The surprise has been the growth of the Left-Green Movement, which received 14% in the 2007 election but is now at 33% in the polls. The party has announced that it is willing to lead a coalition government after the May 2009 election. They are the only party which wants to renegotiate the agreement with the International Monetary Fund.
Rise of the Left-Green Movement
Political parties were re-aligned in Iceland in 1999. The Social Democratic Alliance was formed when the Social Democratic Party merged with parts of three smaller parties. They are described as a “centre-left” party and follow the general policy position of the Tony Blair/Gordon Brown “New Democrats” in Great Britain.
Because of their ideological support for the social democratic version of neoliberalism (well known in Saskatchewan), supporters from the Women’s Alliance and the National Movement broke with the new party. They joined with the Left Green Alliance to form the new Left-Green Movement.
The Left-Green Movement is a Green socialist party, with a strong feminist orientation. They are affiliated with the Nordic Green Left Alliance of similar parties. Their four basic principles are:
(1) Conservation and protection of the environment.
(2) Equality and social justice.
(3) Commitment to promoting labour and the labour movement.
(4) An independent foreign policy, with no military alliances.
Their general policy position is similar to that of the New Green Alliance, the original Green Party in Saskatchewan.
This week the European Union warned governments that popular opposition to existing governments over the financial collapse and the onset of the deep recession is rising and there will be more social unrest and radical political activity. Mass protests are now taking place in Latvia, Lithuania, Hungary, Bulgaria and Greece.
Photos: http://www.dailymail.co.uk/news/worldnews/article-1126682/Icelands-senior-minister-resigns-government-global-political-casualty-credit-crunch.html
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