Identifier
Created
Classification
Origin
09REYKJAVIK73
2009-04-17 16:26:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Reykjavik
Cable title:  

ICELAND: THE SOCIAL DEMOCRATIC ALLIANCE -- AN OVERVIEW

Tags:  PGOV PREL PINR IC 
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UNCLAS SECTION 01 OF 02 REYKJAVIK 000073 

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TAGS: PGOV PREL PINR IC
SUBJECT: ICELAND: THE SOCIAL DEMOCRATIC ALLIANCE -- AN OVERVIEW

UNCLAS SECTION 01 OF 02 REYKJAVIK 000073

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E.O. 12958: N/A
TAGS: PGOV PREL PINR IC
SUBJECT: ICELAND: THE SOCIAL DEMOCRATIC ALLIANCE -- AN OVERVIEW


1. (U) Summary: Prime Minister Sigurdardottir's Social Democratic
Alliance is riding high in the polls ahead of Iceland's April 25
parliamentary election, and is on the verge of becoming the
country's leading political party. An April victory would fulfill
the party's raison d'etre of forming a credible counterweight to the
conservative Independence Party's dominance of Icelandic politics,
and would put to rest the question of whether the Icelandic left can
ever truly be united. If Sigurdardottir stays on as PM, it will
also help resolve the party's turmoil following the sudden illness
and retirement from politics of previous SDA Chair Ingibjorg Solrun
Gisladottir. Though conflicted on defense and security issues, the
SDA is avowedly pro-EU, and will without doubt work to bring the EU
membership question to the fore should it stay in power after the
election. End Summary.


2. (U) The Social Democratic Alliance (SDA) was formally
established as a political party in 2000. Four traditional leftist
parties merged to form the SDA: The Social Democratic Party (SDP),
The People's Alliance (PA),The Women's List (WL),and a split-off
party from the SDP, the National Awakening, established by current
PM Johanna Sigurdardottir. The SDA wanted to challenge the
dominance of the Independence Party by creating a large, unified
social democratic party akin to those in the other Nordic countries.
This effort was initially stymied by the establishment of a new
splinter left party, the Left-Green Movement. The Alliance won only
27 percent of the 1999 vote, but made strong gains in 2003 with 31
percent of the vote. In the 2007 elections support dwindled again
to 27 percent, but the SDA's credibility rebounded after Ingibjorg
Solrun Gisladottir brought them into government with the
Independence Party. Thanks in large part to the economic collapse
in 2008 and the fact that public discontent has focused on the IP
rather than the Social Dems, current polls show the SDA set to
finally cement a place as a credible counterweight to the
long-dominant IP.


3. (U) The SDA has had trouble articulating a coherent foreign
policy as the views of the three traditional leftist parties that
formed the SDA do not readily converge. The SDP was very supportive
of NATO and the U.S. presence, while the PA long advocated

withdrawing from NATO and ending the bilateral defense relationship.
The WL advocated an essentially pacifist policy. The SDP was the
only Icelandic party in favor of EU membership, which both the PA
and the WL strongly opposed. Today the SDA champions EU membership
for Iceland and the adoption of the euro as Iceland's currency. The
SDA favors defense ties with the US and is a supporter of NATO
membership and the ongoing shaping of a security policy for Iceland
in conjunction with NATO, the EU and the other Nordics. That said,
there are still some within the party that cling to the notion that
Iceland does not need to spend any money on defense. These voices
have gained some following in the wake of the 2008 economic crisis.


4. (SBU) Ingibjorg Solrun Gisladottir succeeded Ossur
Skarphedinsson as SDA Chair to much fanfare in 2005, but her efforts
to unify the party did not immediately translate into better
standing with the public. In the run-up to the 2007 parliamentary
elections, the party did not seem to have a coherent policy on the
most important issues to voters. Party members made contradictory
remarks in the media on SDA voters' core issues, including the
environment and further build-up of heavy industry. Voters sensed
this, and polls showed party support going down to only 20 percent.
It is possible that voters were suffering from what some termed
"Ingibjorg Solrun fatigue," as she had been prominent in Icelandic
politics for a long time as Reykjavik Mayor and then a member of
parliament. However, the SDA was able to rally from this low point,
capitalizing on doubts about the radical Left-Green Movement's
credibility, and emerged as the second-largest party in the
Althingi.


5. (U) The SDA formed a majority coalition with the IP after the
elections that pledged to be a "liberal reforming government" for a
dynamic economy, a robust welfare system, improved household
finances, and greater business competitiveness. The coalition was
popular from the outset, but as dark economic clouds started
gathering on the horizon in early 2008, public support began to
dwindle. The highly leveraged financial system collapsed as lending
lines closed internationally in September, and the government took
over Iceland's three largest banks. Public demonstrations that
started in October and culminated in January channeled anger and
frustration at the IP-SDA majority coalition and such institutions
as the Central Bank and Financial Supervisory Authority. At the end
of January, the coalition broke down under the pressure.


6. (SBU) Gisladottir was diagnosed with a brain tumor after
becoming ill when attending the UN General Assembly in September

2008. As a result,during the most hectic moments of the crisis shewas out on medical leave and unable to resume a ful schedule. Her
absence was a double-edged swor for the party. Many observers note
that with Gisladottir out, Prime Minister and IP Chair Geir Haade

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became the sole public face of the cabinet during the crisis,
leading many to associate the government's poor handling of affairs
with the IP and Haarde alone. The SDA was thus spared the full
brunt of popular anger over the collapse. On the other hand,
Gisladottir's absence was also apparent in the increasingly open
tension between the coalition partners and disagreements between SDA
ministers. After the IP-SDA coalition broke up, several IP insiders
vented their frustration with the SDA, which they viewed as
"ungovernable" without Gisladottir's steady hand.


7. (SBU) Gisladottir returned briefly to the fray as the coalition
unwound in January, but then chose to step down as Foreign Minister
and did not take a seat in the new SDA-Left Green minority coalition
headed by Johanna Sigurdardottir as Prime Minister. A break from
political work in February proved insufficient for Gisladottir to
fully recover her health, and in early March she announced her
departure from politics for an unspecified time. All eyes turned to
Sigurdardottir, who received tremendous support in the SDA's
Reykjavik primary and came under massive pressure to declare her
candidacy in the election for SDA Chair at the SDA national
convention in late March. After giving it some thought,
Sigurdardottir ran unopposed and received 98 percent of the total
vote at the national convention.


8. (SBU) The SDA primaries produced some regeneration of party
lineups in all six constituencies. Half of the candidates are
incumbent MPs while the other half is either absolute newcomers or
have previous ties to the SDA. The party leadership says that the
most important tasks at hand for the next government will be to
ensure the increased creation of wealth, employment, and welfare.
In this regard, the SDA wants to reestablish the Icelandic financial
system and re-instill faith in the Icelandic economy. The SDA
believes it is necessary to follow through with the plan agreed on
with the IMF and that it is vitally important to initiate EU
accession talks as soon as possible. Although the SDA has stated
its preference to continue working with the Left-Green Movement in a
coalition government, it has not ruled out other coalition options.
Some believe this is a tactic to force the LG to the table on the EU
question, as the Left-Greens are still reluctant to move closer to
Brussels. Given the strength of SDA conviction on the EU question,
however, there is little doubt that a continued government under
Prime Minister Sigurdardottir's leadership will move to address the
issue sooner rather than later.

VAN VOORST