ICELAND: THE PROGRESSIVE PARTY -- AN OVERVIEW

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SUBJECT: ICELAND: THE PROGRESSIVE PARTY -- AN OVERVIEW


1. (U) Summary: The traditionally agrarian Progressive Party is
looking to the 2009 elections as a chance to reclaim lost glory and
its historical role as the deciding factor in governing coalitions
on both ends of the political spectrum. The party -- Iceland's
second-largest for most of the last century -- suffered mightily at
the polls in 2006 and 2007 from perceptions of cronyism and
corruption. Support has decreased still further since then despite
attempts to modernize the party, which seem to have widened internal
disputes rather than overcome them. Four chairmen in three years
have not managed to bring the disagreements to a close, but many are
hopeful that a new young chairman can finally unify the party. The
party is pro-NATO and until recently was against, or at best
ambivalent towards, the EU, but has shifted more to a pro-EU
platform in the last few months. The PP is currently defending the
Social Democratic Alliance/Left-Green Movement minority coalition
and claims to prefer a leftist government after the upcoming
parliamentary elections. End Summary.


2. (SBU) The Progressive Party (PP) was established in 1916. For
most of the twentieth century it was the second largest party in
Iceland, but its poll numbers have slipped in recent years. The
constituency is largely rural and agrarian, closely connected with
the cooperative movement in Iceland. The PP has frequently played a
kingmaker role, given the inability of any one party to win an
outright majority on its own. Icelanders describe the party as "open
at both ends" because of its ability to form coalitions on both the
left and right of the political spectrum.


3. (SBU) Former party leader Halldor Asgrimsson (1994-2006),who
was Prime Minister in the IP-PP coalition from 2004-2006, attempted
to modernize the party and increase its appeal to urban voters, but
he proved mostly unsuccessful in this endeavor. Asgrimsson stepped
down as chairman of the party after the municipal elections in May
2006 when the PP suffered its second-worst electoral outcome ever.
The party was also embroiled in discord between the rural and
agrarian component of the party -- led by Deputy Chair Gudni
Agustsson -- and the urban faction associated with Asgrimsson.
Asgrimsson bypassed Agustsson when he handpicked technocrat Jon
Sigurdsson for the chairman position. This only further complicated
intra-party arbitration, and Sigurdsson did not succeed in settling
the disagreements in the party. Sigurdsson led the PP through the
2007 parliamentary elections where it suffered its worst outcome in
any parliamentary elections, receiving only 11.7 percent of the
national vote.


4. (SBU) In the 2007 campaign, the Progressives were hamstrung by
the public's perception that the party was rife with cronyism that
was just shy of outright corruption. In what became an emblematic
case, about a month before the election the Althingi granted
Icelandic citizenship to the soon-to-be daughter-in-law of Minister
of Health Jonina Bjartmarz under circumstances in which political
connections seemed to many to be the deciding factor. Given its
command of the Ministry of Industry and Commerce, the party also
took the brunt of controversy over expansion in the aluminum sector
and resulting environmental concerns. Many Progressives complained
that somehow their coalition partner, the Independence Party, reaped
all the credit for Iceland's booming economy while the PP was left
to take the blame for unpopular side effects of the expansion. The
party was hammered on Election Day, dropping from 12 Althingi seats
to seven and failing to win a single seat in the Reykjavik district.
Though the IP-PP coalition still held a one-seat majority, IP Chair
Geir Haarde chose instead to build a larger majority with the Social
Democratic Alliance, leaving the Progressives out in the cold.


5. (U) Sigurdsson resigned as chairman after the elections and was
replaced by Deputy Chairman Gudni Agustsson. This opened a window of
opportunity for Agustsson to guide the party back to its traditional
roots to try to regain some of the recently lost support. Agustsson
was ineffective at unifying the broken party and the PP did not
bounce back in opinion polls. In November 2008, he resigned suddenly
from the position of chairman after a bitter central committee
meeting at which the party's youth wing made clear its unhappiness
with his leadership. Deputy Chairman Valgerdur Sverrisdottir headed
the party until the January 2009 party national congress where the
party elected a new leadership. Sverrisdottir herself did not seek
election as chairman and when early elections were called for April
2009 announced that she would be retiring from politics.


6. (U) The national congress was historic for two reasons. First,
an outsider was elected chairman of the party for the first time,
namely 34-year-old Sigmundur David Gunnlaugsson, who had joined the
party only one month earlier. Though Gunnlaugsson's father had
represented the party in parliament in the 1990s, Gunnlaugsson had
no prior political experience. Second, the PP resolved at the
congress to support starting accession negotiations with the
European Union (EU) given certain preconditions.


7. (SBU) During the January public demonstrations in Iceland when
the majority coalition was teetering on the brink of collapse, the
PP, under the leadership of new chairman Gunnlaugsson, informed the
Social Democratic Alliance (SDA) and the Left-Green Movement (LGM)
that if they were to form a minority coalition, then the PP would
defend it. On February 1, the SDA and LGM did indeed form a minority
coalition government and the PP pledged to defend it against
no-confidence motions in the Althingi. For the first few weeks after
the new chairman was elected, the party surged in the polls, at
times measuring at over 20 percent. Support has started to dwindle
since then as the party has struggled at finding the balance between
defending the government -- and therefore bearing some of the cost
of unpopular decisions -- and not having any direct influence over
the SDA-LG coalition's policies.


8. (SBU) Gunnlaugsson's lack of experience in the political arena
is also raising doubts. The new party chair has in recent statements
all but excluded cooperation with the Independence Party after the
elections, but then in mid-March has also harshly criticized the SDA
for not being a "real" party and called the SDA's credibility into
question. At the same time, Gunnlaugsson's praise for the LGM has
bordered on the saccharine, something of a break from tradition for
the centrist Progressives. Some believe that although the party
appears to be courting leftist elements, this could be a political
ploy and the PP could go back to its kingmaker role again, joining
either the center-right or the center-left forces in parliament.


9. (SBU) On foreign affairs the PP is pro-NATO, and took on a more
modern view on western defense cooperation under Asgrimsson, with
Icelandic participation in peacekeeping and post-conflict
reconstruction efforts. The party had advocated U.S. withdrawal from
Naval Air Station Keflavik in the (unspecified) long term, but
Asgrimsson had personally favored a U.S. presence and expressed his
personal feelings of betrayal in the harshest terms. While the
party had traditionally been anti-EU, Asgrimsson attempted to sway
the party to a more EU-friendly position and had scandalized many in
2006 with a prediction that Iceland would become a member by 2015.
Subsequent chairmen have all been pro-EU with the exception of the
traditionalist Agustsson. Their efforts to move the party in the
direction of Europe eventually came to a head at the national
congress in January where the party decided to drastically modify
its position and stated its preference for starting negotiations
with the EU. That said, Chairman Gunnlaugsson's position on the EU
can best be described as "open" to EU membership rather than as
advocacy. He is otherwise something of a tabula rasa on foreign
policy issues.

VAN VOORST