LAST MONDAY, on the eve of the second anniversary of the 2008 economic collapse, up to 7,000 angry protesters filled the Austurvöllur parliament square in the heart of the Icelandic capital.
Police scaled up security efforts following heated protests on Friday, sealing off the parliament with riot fencing, while the leaders of an unpopular political class offered few if any solutions to the country’s predicament.
Prime Minister Jóhanna Sigurðardóttir said she would step down if necessary, as the bullet-proof windows behind her vibrated in a blizzard of eggs. Yesterday, however, she rejected the idea of inviting the opposition to join her in a government of national unity.
The tension that found expression on Monday night had been growing for some time.
Ms Sigurðardóttir’s government, in office since January 2009, is still struggling to revive the economy after the banking meltdown a year earlier sent the Icelandic currency down as much as 80 per cent against the euro. The island has since relied on a $4.6 billion International Monetary Fund-led loan to stay afloat.
The average Icelander experienced decline of more than one-fifth in disposable income last year and house prices in Reykjavik have fallen by more than one-third since their peak in October 2007.
With thousands of families about to lose their homes to foreclosure, the protesters decided it was time to send the left-of-centre government a strong signal: the poor and the soon-to-be homeless were not giving up without a fight.
News about wealthy clients being offered generous debt cancellations by the banks while the middle class is shown little mercy has fuelled popular anger and contributed to fresh demands for a new social contract.
Never before has the egalitarian nature of the Nordic society been questioned to this extent.
The vast majority of the thousands who attended the protest demonstrated peacefully. Some threw eggs and tomatoes at the parliament amid sound waves from oil barrels turned into drums, other makeshift instruments, and the odd firework.
Time is no longer on the government’s side.The main theme of the “saucepan revolution”, as the protests that brought the current government to power were labelled, was the need to restore justice and fairness in society following Iceland’s banking crisis. The new government was supposed to work towards economic recovery and a new social contract.
The governing coalition made up of the Social Democratic Alliance and the Left Green Movement has been only modestly successful on all fronts.
None of the perceived main culprits of the financial meltdown within the banking sector have yet been brought to court.
Claims that tens of millions – perhaps billions – of euro were transferred to tax havens prior to the crisis remain to be proven, although indications thereof emerged earlier this week.
The upcoming trial of former prime minister Geir H Haarde, a conservative, on charges of grave misconduct and negligence during the build-up to the collapse, has left the government divided.
While the Left Greens were united in wanting their former political adversary brought before the court, the Social Democrats disagreed. The latter voted against prosecuting two of their own former ministers, leading MPs for Hreyfingin, an offspring of the saucepan revolution, to argue that fresh elections should be called to teach a corrupt political class another lesson.
It is uncertain if the government will survive until Christmas. Lilja Mósesdóttir, an economist and MP for the Left Greens, has threatened to leave the government if proposed budget cuts are not scaled back. Similarly, Sigmundur Ernir Rúnarsson, a Social Democrat MP, has given the Left Greens a few weeks to compromise on their hard stance against heavy industry, arguing the policy has prevented the creation of jobs.
Unemployment, standing at 7.3 per cent in August, is expected to rise and would be higher if thousands of Icelanders had not emigrated for jobs elsewhere. This hurts in a nation of 317,000 people.
Add to this the vehement opposition of the Left Green membership towards EU accession and the result is a mixture of rifts that have exposed deep-seated cracks within the coalition.
While the Social Democratic leadership argues for the necessity of EU membership and the adoption of the euro, Ögmundur Jónasson, the Left Green minister of justice and human rights, is calling for a referendum to leave Nato.
Fisheries and agriculture minister Jón Bjarnason has expressed deep dissatisfaction with the EU accession process as it relates to his portfolio.
The perceived meltdown in Dublin and Athens has also given EU sceptics much-needed ammunition, as they argue that the euro is preventing Ireland and Greece from devaluating to stimulate exports.
Should elections be called, the Best Party, a party led by a comedian currently governing Reykjavik with the Social Democrats, could fill the vacuum and become a power broker in the country’s fourth government in as many years.