Power, Politics, and Pirates: Inside the Struggle for Iceland’s Future
When Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson began his interview with a Swedish television station in March, he had no idea he would end it a viral celebrity.
During the interview, Gunnlaugsson was surprised with questions about Wintris, a British Virgin Islands-based company in which he once owned shares. He did not know that the recent Panama Papers leak had identified him on a long list of public officials worldwide with murky connections to tax havens.
Gunnlaugsson soon removed his microphone and stormed out of the interview.
Soon after the video’s release in early April, over 20,000 people – nearly one in fifteen Icelanders – were demonstrating in the square in front of the Alþingi, Iceland’s parliament, demanding Gunnlaugsson’s resignation. He was out of office in less than a week. His successor Sigurður Ingi Jóhannsson agreed to hold elections six months early, in October 2016.
Gunnlaugsson’s centrist Progressive Party took a predictable beating at the polls, falling from nineteen seats (out of sixty-three) to just eight. The day after the election, Jóhannsson announced he would step down as prime minister. But with the range of newly empowered parties – from the Progressives’ center-right coalition partner, the Independence Party, to the stridently anti-establishment Pirates – it is unclear who will run this country now.
Despite the Independence Party’s victory in the election with 29 percent of the vote and 21 seats, the incumbent two-party coalition lost its majority. This may come as a surprise given that Iceland — one of the countries worst hit by the 2008 financial crash — has enjoyed strong GDP growth, low unemployment, and low inflation in recent years.
Sigríður Benediktsdóttir GRD ’05, a Senior Fellow at the Yale Jackson Institute for Global Affairs and former Director of Financial Stability for Iceland’s central bank, described her country’s economic recovery in an interview with The Politic.
“Now things are going superbly well,” she said. “We’ve had growth over or about four percent per year the past two years. People’s real incomes increased over 10 percent last year. Tourism increased by 33 percent — that’s a two year doubling time for the number of tourists.”
Still, the decline in the current government’s popularity comes as no surprise to Benedikt Jóhannesson, who left the Independence Party two years ago to establish a new center-right outfit, the Reform Party. Speaking with The Politic before the election, Jóhannesson said of Iceland, “Economically, we’re doing quite well. However, we have a moral crisis.”
Jóhannesson made the case that the government had begun to lose Icelandic voters’ trust even before Gunnlaugsson was ousted.
“We have a number of systems here that people think are unfair,” he said, pointing to fishing and agricultural policies that he believes hurt consumers. However, he did not discount the impact of the Panama Papers, saying, “This was, I think, morally the most disturbing single occurrence in Icelandic politics.”
Benediktsdóttir explained to The Politic that through his holdings in Wintris, Gunnlaugsson had a stake in the assets of Icelandic banks that failed in 2008. During his time as prime minister, “he had been involved in negotiating an understanding between the government and old bank claim-holders to unwind these banks’ estates. And he was a claim-holder. So there was a little bit of a conflict of interest.”
“Maybe this wasn’t the worst thing in the world,” Benediktsdóttir continued. “Maybe it didn’t change anything. But at the same time, we would really like to see everybody holding themselves to higher standards, because now we’re just skeptics. And we always paint these incidents with the harshest colors, because of the [financial] crisis.”
Gunnlaugsson was not the only Icelandic politician tainted by the Panama Papers: Two other ministers, including Independence Party leader Bjarni Benediktsson, were also linked to questionable tax practices.
Ironically, Benediktsson’s political future — possibly as Iceland’s next prime minister — might now lie with the pro-transparency Reform Party, whose seven seats could place them in a much-coveted kingmaker position.
Reacting to the election results, Benediktsson suggested that the Independence Party’s first-place finish gave it a mandate to lead coalition talks. But on October 31, Jóhannesson told reporters that the Reform Party would not support a continuation of the outgoing Independence-Progressive coalition.
This makes it highly likely that Iceland’s next administration will be supported by at least one of the four opposition parties. And perhaps none of these parties attracted more international media attention during the campaign than the Pirates.
As its name suggests, Iceland’s Pirate Party is not a traditional political force. Its origins lie in a global movement for copyright reform. Digital freedoms still occupy a prominent place in its platform — the party supports a right to internet privacy and favors granting Edward Snowden Icelandic citizenship.
From The Guardian to TIME, many media outlets have referred to the Pirates as “radical.” But in an interview with The Politic, the party’s unofficial leader Birgitta Jónsdóttir — who calls herself a “poetician” — begged to differ.
“I don’t see us as a very radical party,” Jónsdóttir said. “We’re pragmatic. We feel it is important to back the power of the ‘demo-’ in democracy. We want to take power from the powerful and bring it back to the people. We want to deal with corruption, which is the reason why we’re having these early elections. That’s how radical we are.”
Jónsdóttir went on to observe, “The term ‘radical’ always comes with this sense of danger. Maybe it is dangerous to separate the traditional banking system from the casino banking system. Maybe it is dangerous to say we should not socialize private debt. If it is so,” she said with a laugh, “then we are very radical.”
She did not, however, object to the characterization of her party as populist.
“I want to remind people that populist can mean an expression of the will of the general public,” she said. “It can mean that you are inspiring people to participate, you are inspiring people that there is hope for the future.”
Jónsdóttir also told The Politic that the Pirates’ structure inverts that of traditional parties, explaining that through community meetings and an online voting system, Pirate Party members can approve of policy proposals suggested by any Icelander. Under such a system, it is the responsibility of MPs — who might be the ones writing policies in other parties — to put accepted ideas from ordinary citizens to a parliamentary vote.
While it is difficult to pin down the Pirates’ ideology, they are undeniably anti-establishment, and, in the immediate aftermath of the Panama Papers scandal, polled as high as 43 percent. On election day, the party finished in third place with 14 percent of the vote, but nonetheless almost tripled both its share of the popular vote and its representation in the Alþingi. Jónsdóttir and other prominent Pirates appeared pleased with the gains and called for multi-party cooperation to unseat the incumbent administration.
Beating the Pirates for second place was the Left-Green Movement, a democratic socialist party whose 16 percent vote share and ten seats represented the second-best result in its nearly two-decade long history. Like Jónsdóttir, Left-Green leader Katrín Jakobsdóttir was proud of her party’s success and the possibility of a new government in Iceland.
The Left-Greens agree with the Pirates and two other center-left opposition parties — the social liberal Bright Future and the Social Democratic Alliance — on a number of issues, particularly the need for increased investment in healthcare. These four parties had expressed interest in governing together as a post-election coalition, but they won only twenty-seven seats (five short of a majority). Now, they may work with the Reform Party or the incumbent parties to produce a stable government.
Particularly if it includes the current opposition parties, Iceland’s next government could offer hope for supporters of the nation’s unique citizen-led constitutional reform process, which originated from the popular response to the financial crisis.
“We Icelanders realized that everything we had put our trust in had failed us,” said Jónsdóttir , noting that signs of trouble at Iceland’s major banks in the leadup to the 2008 collapse often went unaddressed. “That was not only the banking sector; it was the media, the academia, the politicians, the supervisory authorities. It was a massive wake-up call. People were in total shock. And they lost their trust in our system.”
Jónsdóttir told The Politic, “[In 2008] I was part of a think tank that asked: ‘What do we need to do to create a new Iceland?’ And eventually we reached the conclusion that we needed a new constitution.”
That cause was soon adopted by protesters angry with the government’s handling of the financial crash. Thousands of demonstrators repeatedly congregated in front of the Alþingi in late 2008 and early 2009, throwing skyr (yogurt) at the building and banging pots and pans in what came to be known as the Kitchenware Revolution.
As a result of these protests, early elections were held in April 2009. The center-left coalition that won the vote, comprising the Social Democratic Alliance and the Left-Green Movement, endorsed a plan for constitutional reform.
“It started off with two meetings where around 1,000 people, most of them randomly selected from the national registry, were invited to come and talk about what they felt needed to be in our collective social agreement,” Jónsdóttir recalled.
“There was then a process where anybody could run to be a member of a Constitutional Assembly,” she said. Over 500 Icelanders applied, and in November 2010, voters elected twenty-five of them to serve in the assembly.
“In four months, [these twenty-five individuals] drafted a new constitution,” Jónsdóttir said. “Of course, these people were different from one another. They did not all share the same values. But they tried to remain loyal to the spirit of what had come out of the earlier meetings. And every time they wrote an article, they put it on Facebook, they made it accessible on the web, so that anybody could bring forward an opinion on it, offer an amendment, or offer opposition to it.”
Speaking with admiration for this semi-crowdsourced constitution-writing process, Jónsdóttir explained that “people could come and meet these representatives, call them, email them. They were extremely accessible, and all of their meetings were open, and streamed.”
Despite winning the public’s approval in a non-binding 2012 referendum, the draft constitution was not enacted by the Alþingi.
“That complete failure of the traditional parties [to implement the new constitution]…I can’t even describe my disappointment,” Jónsdóttir told The Politic.
After Iceland’s 2013 parliamentary election, which brought the current Independence-Progressive coalition to power, the new constitution slipped off the list of the government’s priorities. But the same election also marked the debut of the Pirate Party, which has continuously advocated for the new constitution over the past three years.
By the time of the 2016 election, all of the opposition parties included in their platforms calls to implement the draft constitution. Speaking ahead of the Saturday, October 29 vote, Jónsdóttir said of the Pirates’ success in pushing the issue of constitutional reform, “We are the party that currently only makes up five percent of the parliament. It just goes to show that with the right planning, the right intuition, and a strategy, you can inspire a lot of action.”
For all of the media excitement about the Pirates and their supposedly radical ideas, it remains to be seen whether they will make it into Iceland’s next government. But there does seem to be a general consensus that Icelandic politics needs to fundamentally change.
“There was a lot of loss of trust [after the financial crash], and the trust has not been regained at all,” said Benediktsdóttir. “In many ways, the fact that our prime minister showed up in the Panama Papers just increased the mistrust. We were healing, maybe, but it opened up a wound.”
Prior to the election, Jóhannesson had not indicated whether he would collaborate with the Pirates or other current opposition parties. But in his interview with The Politic, he did acknowledge Icelanders’ desire for solutions to what he had previously termed the country’s “moral crisis.”
“There’s a call for new politics,” he said. “It’s a call for more of a conversation between the people and the politicians, a conversation between the different political parties. Not the politics of the ruling party trying to ram everything down the other people’s throats.”
If anyone, it was Jónsdóttir who expressed confidence that meaningful change, however slight, had occurred in Iceland over the past eight years. “Things have not changed as quickly as many of us would like,” she admitted, “but there has been an absolute shift in awareness.”
Jónsdóttir explained, “We actually had two ministers resign during this term. Before [the financial crisis], nobody ever resigned. There are just greater demands for accountability.”
And as a longtime digital activist who in 2010 helped publish the material from U.S. solider Chelsea Manning that made WikiLeaks famous, Jónsdóttir told The Politic that whistleblowers had played a crucial role in holding powers that be to account, both in Iceland and elsewhere.
When the Panama Papers were leaked, their revelations led to an election campaign that Icelandic media has described as “colorful, and certainly memorable.” In some ways, history has already been made: With 30 women among its 63 members, the new Alþingi will be the closest Europe has come to a gender-equal parliament.
As of this writing, Icelandic President Guðni Th. Jóhannesson has presented Bjarni Benediktsson, leader of the Independence Party, with a formal mandate to initiate coalition formation talks. Additionally, the Reform Party and one of the opposition parties, Bright Future, announced that they would work together during coalition negotiations.
Still, Iceland’s 330,000 citizens might have to wait for weeks of talks before they know whether or not a change of government is coming to their divided island.