Last October, Iceland’s financial system collapsed. The broader economy went bust as a result. Infrequent riots began occurring in November and soon became a weekly event in Reykjavik’s main square, in front of parliament. Last week, the riots became daily, with police using force to break them up. Late last Friday, Iceland’s prime minister, Geir Haarde, called for elections. This morning Haarde resigned as prime minister, effectively ending the Independence party’s long-time control of the government. Parliamentary elections had been scheduled for 2011, but Haarde could no longer hold together the governing coalition. The new elections will likely be held in May and Haarde will not be standing for office. On Sunday, Iceland’s minister for Business Affairs, Bjorgvin Sigurdsson, resigned, as did the director of the government’s Financial Supervisory Authority (the FME) and the entire FME board. The riots continued even after Haarde announced the elections and said that he would be leaving government. And David Oddsson, the bumbling head of the central bank who was once the most popular prime minister in the history of Iceland, remains at his post, to the consternation of many Icelanders. It’s unclear who will run the government in the interim between now and the elections. Current polling suggests that the country’s Left-Green movement would run away with the elections if they were held today. The Progressive party has seen its support shoot up from 4.9 percent to 17.2 percent. As the Financial Times notes, “A shift to the left could undermine already extremely fragile confidence in Iceland’s currency and trigger massive capital flight as investors bail out. The central bank estimates international investors own up to [400 billion krona] of Icelandic bonds that could be withdrawn once its currency is fully refloated.” The fragile krona has already taken a huge hit, falling some 43 percent against the euro since Friday. Those interested should monitor Iceland Review, the best English-language news source from the island.
