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Iceland voters oust leftist government

Anger at austerity measures helps center-right opposition return to power

AFP-JIJI

Iceland’s center-right opposition declared victory early Sunday in parliamentary elections as voters punished the leftist government for harsh austerity measures during its four years at the helm.

It marked a return to power for the rightwing Independence Party and the centrist-agrarian Progressive Party, which both want to end the nation’s European Union accession talks.

“The Independence Party is called to duty again,” party leader Bjarni Benediktsson, 43, told supporters, saying he was ready to negotiate a coalition that would lead the country.

“The situation now calls for change,” he said after a count of 45 percent of the votes suggested his party would get 21 seats in Parliament, up from 16.

The two parties have staged a remarkable comeback since they were ousted in a 2009 election after presiding over the worst financial crisis to ever hit the small nation of 320,000 people.

Before the crisis, the mortgages offered by Icelandic banks were linked to inflation, resulting in spiraling borrowing costs for homeowners when the krona collapsed against other currencies.

After four years of tax hikes and austerity designed to meet international lenders’ demands, the Independence Party has offered debt-laden voters tax credits.

The Independents’ historic coalition partner, the Progressive Party, which is set to double its number of seats to 18, has vowed to go even further by asking banks to write off some of the debt.

“We will change Iceland for the better, very fast, in the coming months and years,” said the party’s leader, 38-year-old Sigmundur David Gunnlaugsson.

The biggest party traditionally picks the prime minister, and polls in the final weeks of campaigning had put the two parties neck and neck.

The incumbent social democratic Alliance Party was looking at a drop in parliamentary seats from 19 to 10. The party leader, Prime Minister Johanna Sigurdardottir, who is 70, said prior to the poll she was retiring.

The opposition victory could spell the end of EU membership negotiations, as both the Progressives and the Independents are in favor of putting a halt to Iceland’s bid.

But the issue has taken a back seat to Icelanders’ falling spending power and sliding living standards. “I think there is a broader lesson from Iceland in that if the goal is to preserve living standards, reduce unemployment and so on, then following a policy of strict austerity is not the way to go,” said Kolbein Stefansson, a sociology lecturer at the University of Iceland.

The social democratic-led government had been “quite successful in restoring the economy,” but failed to make that point to the electorate, he argued. “I think a lot of people feel that the government has been representing the system more than the interests of the families and people in Iceland,” he said.