Iceland’s president has called on the centre-left Social Democratic Alliance (SDA), junior partner in the government that collapsed on Monday, to form a new minority administration with opposition parties.
President Olafur Ragnar Grimsson said yesterday he had asked SDA leader Ingibjorg Gisladottir, foreign minister under outgoing prime minister Geir Haarde, to put together an administration to keep the country running until early elections in May. The government fell after months of public protest over the country’s economic meltdown, sparked by the collapse of the debt-burdened banking system in October.
Mr Haarde’s Independence Party, in office since 1991, will be excluded from the new administration after refusing to back Ms Gisladottir as prime minister.
Considering the severity of the economic challenges Iceland faces, he favoured a minority government formed within a few days rather than a five-party national unity government formed after weeks of talks.
To prevent the country’s economic crisis turning into a political crisis, Ms Gisladottir vowed yesterday she would work quickly to form a minority coalition with the opposition Left-Green party. “We have taken the baton – the government should be operational before the weekend,” she said.
A former mayor of Reykjavik, Ms Gisladottir had just returned to work after treatment for a benign brain tumour and, on Monday, appeared to rule herself out for the top job when she said she was taking two months’ leave. Yesterday she proposed social affairs minister Johanna Sigurdardottir as a potential prime minister.
The Left-Green party – now the most popular party in Iceland, say polls – has been buoyed by an anti-capitalist feeling. The party has called for a renegotiation of the two-year $10 billion International Monetary Fund aid package.
But analysts suggest Left-Green leader Steingrimur Sigfusson is unlikely to challenge the IMF plan in office. “I think this government will be very careful not to rock the boat too much,” said Prof Gunnar Haraldsson, economist at the University of Iceland. “They will just be trying to calm the waters and prepare the elections rather than making any drastic policy moves. If they drop the IMF plan, it would be very difficult for Icelanders to adopt a new one.”