NEW ICELANDIC PM PLEDGES SUPPORT FOR IMF PROGRAM

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TAGS: PREL OPDC PGOV ECON NATO SENV IC
SUBJECT: NEW ICELANDIC PM PLEDGES SUPPORT FOR IMF PROGRAM

Refs: A) State 10452
B) Reykjavik 25


1. (SBU) Summary: In a February 5 courtesy call, new Icelandic
Prime Minister Johanna Sigurdardottir told Ambassador her government
is committed to implementing the IMF's recovery program for Iceland.
The first task is to rebuild the banking system, including the
regulatory structure, while also helping Icelandic households
survive the economic downturn. The government will need to work
"24-7" to accomplish its goals in the roughly 80 days it has before
parliamentary elections. The PM said she plans to attend the NATO
Summit in April and hopes to meet President Obama and Secretary
Clinton there. On whaling, Sigurdardottir said the government is
reviewing the previous Fisheries Minister's decision to expand the
quota for hunting fin whales, and that she has asked the new
Fisheries Minister to examine the mechanics of how it might be
overturned. End Summary.


2. (U) Ambassador called on Iceland's new Prime Minister Johanna
Sigurdardottir on February 5 to deliver a congratulatory letter from
U.S. President Obama (Ref A). Expressing warm thanks and deep
admiration for President Obama and "what he stands for,"
Sigurdardottir said she looks forward to the possibility of meeting
the President as well as Secretary Clinton at the NATO Summit to be
held in Strasbourg this April. Sigurdardottir drew parallels
between Obama's campaign for change and the changes represented by
her own government, the first in Icelandic history to be headed by a
woman and to have an equal gender balance in the cabinet.
Sigurdardottir claimed the new government is only the third in the
world to have an equal allocation of cabinet posts between men and
women.


3. (SBU) Sigurdardottir said her government -- which will be in
office for roughly 80 days before early parliamentary elections this
spring -- realizes it will need to work "24-7" to accomplish its
ambitious agenda. The first priority is to reconstruct and
reorganize the banking sector, with particular attention to
regulatory bodies such as the Central Bank and the Financial
Supervisory Authority. This must be done in order to rebuild
international trust in Iceland, which has been greatly weakened as a
result of the crisis. At the same time, said this former Social
Affairs Minister, the government will work to mitigate the impact of
the economic contraction on Icelandic households.


4. (SBU) The PM pledged that her government will fully implement
the plan worked out with the International Monetary Fund (IMF) last
fall, which will be the key to Iceland's economic recovery. She
added that the government intends to stand by all international
commitments that Iceland has made in connection with the economic
crisis.


5. (SBU) Ambassador raised the topic of bilateral security
cooperation and the work done by both governments to develop a new
defense relationship after the withdrawal of U.S. forces in 2006.
The Ambassador expressed gratitude for the work done by previous
Foreign Minister (and Chair of Sigurdardottir's Social Democratic
Alliance party) Ingibjorg Solrun Gisladottir and said she hoped our
strong bilateral cooperation could continue. The PM said she agreed
that U.S.-Iceland defense ties have been strong and that continued
joint efforts would be beneficial.


6. (SBU) On whaling, Ambassador noted the decision by the outgoing
Minister of Fisheries in his final days in office to dramatically
increase the quota for commercial hunting of fin and minke whales
(ref B). PM Sigurdardottir said her government had strongly
criticized the manner in which this was done, in which a minister in
caretaker status made such a dramatic change to government policy.
The PM has asked the new Minister of Finance, Fisheries and
Agriculture to review the legal basis for the quota increase and
examine how it might be rescinded. She noted that there may be some
liability concerns for the government arising from companies that
already hold whaling quotas and could sue for damages. The PM
further noted that her government has received a large number of
letters and email messages protesting the decision, many of them
from the U.S.


7. (SBU) Comment and bio note: Sigurdardottir appears to have
brought the same intensity and seriousness of purpose to her new job
that she exhibited in her previous stints as Minister of Social
Welfare -- the very qualities that have made her the most popular
politician in Iceland. She is focused on domestic issues first and
foremost, but also showed on the IMF package and whaling that she

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understands the outside world cannot be ignored while Iceland looks
inward. Of note, although Sigurdardottir is fluent in English, she
chose to speak in Icelandic and use an interpreter.

VAN VOORST