Iceland Voters Oust Government

Election officials announced Sunday afternoon that with all the votes counted from Saturday’s election, the two largest center-right parties — the Independence Party and the Progressive Party — had won at least 38 of the 63 seats in Parliament, enough to form a coalition government with a comfortable majority. Together, they won just over half the votes cast.

The two parties capitalized on unhappiness with crippling levels of personal debt that have left many homeowners owing more on their mortgages than they originally borrowed. The parties promised to forgive or renegotiate such loans and to put an end to four years of austerity by lowering taxes, ending capital controls and stimulating foreign investment.

“We are offering a different road, a road to growth, protecting social security, better welfare and job creation,” Bjarni Benediktsson, the leader of the Independence Party, said after the vote.

The Independence Party, which was the dominant force in Icelandic politics for decades, performed worse than usual in the election, but the Progressives made extensive gains, especially among voters in rural areas. Even so, the Independence Party is likely to lead a new center-right government.

Voters turned against a coalition, led by the Social Democrats, that has governed the country for the last four years, even though, in a world of troubled economies, Iceland stands out as a relative success story. Its economy grew last year, unemployment is now below 5 percent — down from a high of 10 percent during the crisis — and inflation, which peaked at about 17 percent, is now closer to 4 percent a year.

But the ruling coalition cut spending and raised taxes, and although it tried to tackle the personal debt problem, it did not do enough to reassure Icelanders who disastrously took out loans in foreign currencies or that were indexed to inflation, said Silja Omarsdottir, a professor of political science at the University of Iceland. Professor Omarsdottir said in an interview that the government’s two big initiatives — rewriting Iceland’s Constitution and applying to join the European Union — failed to seize the popular imagination.

“They completely lost control of the discourse,” she said. “They were not getting their message across. People said: ‘You’re not doing enough. You’ve put all this effort into the Constitution, which we don’t care about, and spent so much money on the E.U. application, which we don’t care about.’ ”

The center-right parties have questioned whether Iceland ought to go ahead with the application to the European Union. The prospect of membership seemed more attractive when Europe looked stable, but the Continent is now mired in its own crisis. The Progressives and Independents have said the negotiations should wait until the country holds a referendum on whether the talks should continue.

Article source: http://www.nytimes.com/2013/04/29/world/europe/iceland-voters-oust-government.html?partner=rss&emc=rss