UNCLAS REYKJAVIK 000210

SIPDIS

SENSITIVE, SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL MARR IC
SUBJECT: Iceland Appoints First Female Foreign Minister;
Incoming PM Geir Haarde Will Continue to Lead Defense Talks

REF: Reykjavik 196


1. (U) Summary: Outgoing PM Asgrimsson and incoming PM
Haarde announced 6/10 results of their talks regarding a new
Icelandic cabinet to take office 6/15: current Minister of
Industry and Commerce Valgerdur Sverrisdottir, an
international relations neophyte, will become Foreign
Minister. Haarde will, however, continue as Iceland's
highest official conducting defense negotiations with the
U.S. Both Haarde and Sverrisdottir will meet with the NATO
Secretary General during the latter's planned 6/15 visit to

SIPDIS
Iceland. End summary.

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We have the envelope...
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2. (U) The leaders of Iceland's Independence Party (IP) and
Progressive Party (PP) coalition government announced June
10 their decisions regarding a cabinet reshuffle. Prime
Minister Halldor Asgrimsson's and Foreign Minister Geir
Haarde joint statement culminated a week of intense intra-
governmental lobbying and media and civil service
speculation about potential fall-out from Asgrimsson's June
5 resignation announcement (reftel). On June 15 FM Haarde
will become the new Prime Minister, while Valgerdur
Sverrisdottir (PP) will become the Republic's first female
Minister for Foreign Affairs. The IP gives up one
ministerial seat -- the Ministry for the Environment -- to
the PP, thus reverting to the original coalition agreement
forged after 2003 parliamentary elections regarding equal
division of ministries between the two parties.

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And the winners are...
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3. (U) As of June 15 the Icelandic Ministerial line-up will
be as follows:

Prime Minister--Geir H. Haarde (IP)
Foreign Minister-- Valgerdur Sverrisdottir (PP)
Minister of Finance--Arni M. Mathiesen (IP)
Minister of Justice--Bjorn Bjarnason (IP)
Minister of Agriculture--Gudni Agustsson (PP)
Minister of Communications--Sturla Bodvarsson (IP)
Minister of Fisheries--Einar Kristinn Gudfinnson (IP)
Minister for the Environment and Nordic Cooperation-Jonina
Bjartmarz (PP and first-time minister)

Minister of Industry and Commerce--Jon Sigurdsson (PP and
first-time minister)
Minister of Health and Social Security--Siv Fridleifsdottir
(PP)
Minister of Social Affairs--Magnus Stefansson (PP and first-
time minister)
Minister of Education, Science and Culture--Thorgerdur
Katrin Gunnarsdottir (IP)


4. (SBU) Sverrisdottir has been a member of parliament since
1987 (and alternate member 1984-1987); and Minister of
Industry and Commerce since 1999, as well as Minister for
Nordic Co-operation 2004-2005. As Minister she has been a
tireless advocate for Iceland's increased industrialization.
Among government bureaucrats she has established a solid
reputation for being serious, hardworking, competent, and
committed to the government's highly successful economic
liberalization process.


5. (U) In the face of vocal opposition from
environmentalists Sverrisdottir has strongly backed efforts
by Alcoa and Century Aluminum of the U.S. to establish and
expand their production facilities in Iceland. Her strong
advocacy for the aluminum projects has slowly eroded her
popularity, and in a recent Gallup poll she ranked only
seventh of the 12 ministers in popularity. Protesters at a
march organized by environmentalists for municipal election
day, May 27, carried signs that read, "Drown Valgerdur - Not
the Highlands." Sverrisdottir later filed a police
complaint alleging that the slogans amounted to an
incitement of violence against herself and her three
daughters.


6. (SBU) As Minister of Industry and Commerce Sverrisdottir
dabbled little in foreign affairs - and aside from language
studies she has no relevant academic background for the job.
She speaks halting, though passable, English. Perhaps
because she lacks confidence as a diplomat, or perhaps as
part of an inter-party deal that won her the prestigious
post, Sverrisdottir announced June 11 that she would leave
defense negotiations to Haarde. She also disavowed any
interest in the PP chairmanship.

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NATO SYG Visit
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7. (SBU) NATO Secretary General Jaap de Hoop Scheffer is
scheduled to meet June 15 with high-level Icelandic
officials, to include Sverrisdottir and Haarde. While
Sverrisdottir will presumably have her hands full just
coming to grips with an unfamiliar portfolio, Haarde will
doubtless use the meeting to press for Alliance support for
a "robust and visible" defense for Iceland.


8. (SBU) Comment: The choice of Sverrisdottir, while
unforeseen by pundits (who favored IP stalwarts more
experienced in foreign affairs), is win-win-win for the
Progressives:

-- They will control the country's second most powerful
ministry and the patronage that comes with it (not
insignificant for a party struggling to hold on to
membership).

-- By making the argument that continuity is important, they
leave the loser (as it now appears from a GOI perspective)
defense portfolio to Haarde and the IP.

-- After an era in which Asgrimsson was seen as promoting
loyal young men over more qualified women, the PP will now
get the credit for finally breaking through the socially
conservative MFA's glass ceiling.

In terms of U.S. interests, this appointment is also a boon,
as in her performance at Commerce and Industry Sverrisdottir
has demonstrated sympathy for U.S.-Icelandic business
interests and vision in advancing them. End comment.

van Voorst