Why the conservatives have regained Iceland?

Much has been said in the media about the victory of the conservatives in the latest election in Iceland. However, while it is true that the leftist coalition has suffered a debacle, there are many more factors to consider in the equation.

For starters, as in Italy, Greece and Spain, many small parties have raised their percentage in votes. Some have been on the verge of parliamentary representation. Others, like the pirate party, are full on with strength.

Overall, the Parliamentary cake was previously divided between two or three forces. Nowadays a quarter of those votes have been grabbed by minority parties. However, half of them will have no parliamentary representation because they did not meet the minimum percentage required. That percentage has gone on to benefit other parties.

This fragmentation has hurt the left. But they also have been punished for the policies undertaken under their rule.

Despite being held up as examples to what the left should do in countries like Spain, Ireland or Italy, the reality is that the coalition has not deployed a policy different from that carried out in the German modeled EU.

Budget cuts, controlling the deficit and austerity measures have been the norm. This was completed with the insult that represented having to go to the EU for help, losing independence in the process.

The main winner of these elections, the ultranationalist party Progressive Party, has made a good use of the prospect of losing autonomy and is a strong anti-EU advocate.

Meanwhile, contrary to the general idea held outside Iceland that the country has been prosecuting its bankers, it is very little what really has been done about it. The people behind the credit crunch crisis in Iceland have been left mostly untouched, as in Spain, Italy, Greece or Ireland. In fact, Germany has opened more cases against bankers than Iceland.

The Icelandic popular revolution, once admired outside, had many people disappointed inside the country. Living standards, partly due to the devaluation of the Krona, were down at least 30%. To this we must add a high inflation (an increase of 75% since 2005) and the ruin of the housing market.

Although the houses were now worth between 30 and 40% less, many mortgages had been signed in Euros. This was a horrible combination. The houses were less valued, but the owners’ debts had increased. The gap was too big to overcome for many families.

The situation was so desperate that the coalition government wrote off any mortgage debt above 110%, but that still left a lot of people deeply in debt. Unable to afford their homes’ mortgages and with commodity prices skyrocketing, the situation was complicated.

One of the promises of the Progressive Party in this election has been to eliminate up to 20% of all the household debt. Looking at the results from the polls, the strategy worked. They have not won, and they are not likely to carry it forward, but they have increased in number of votes and seats in the Parliament.

In the end, what has made people decide to punish the left has been mostly disappointment. Many thought that a leftist government would end the austerity policies, imprison bankers and remain independent.

The reality is that despite their intentions, in the end the leftist coalition did not know or could not remain true to their ideals. The disenchantment among voters caused many to stay home and not go to vote.

That along with the reasons given above, explains the collapse of the revolution envisioned by many in Europe. A revolution that just maybe, it was just all façade and had no foundations.