Viewing cable 09REYKJAVIK219, ICESAVE BILL LINGERS AS DIVISIVE FORCE IN GOVERNMENT AND
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VZCZCXRO0653
PP RUEHIK
DE RUEHRK #0219/01 3421656
ZNR UUUUU ZZH
P 081656Z DEC 09
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC PRIORITY 4236
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
UNCLAS SECTION 01 OF 02 REYKJAVIK 000219
SENSITIVE
NSC FOR HOVENIER
TREASURY FOR NORTON
SIPDIS
E.O. 12958: N/A
TAGS: PGOV PREL ECON EFIN IC
SUBJECT: ICESAVE BILL LINGERS AS DIVISIVE FORCE IN GOVERNMENT AND
SOCIETY
REYKJAVIK 00000219 001.2 OF 002
¶1. (U) Summary. The coalition government recently reached a
negotiated settlement with the opposition that allows the Icesave
bill to move to the next stage of the parliamentary process. The
settlement was reached only after the opposition used filibustering
techniques to stall the bill in the second reading for more than one
month because they did not have the necessary votes to defeat the
measure. The compromise, which will send the bill back to the
budget committee on December 8 for further discussion on 16 key
points, allows parliament to move forward and focus on other
pressing matters such as the budget bill and proposed tax hikes. It
does not, however, resolve the Icesave issue which continues to
linger and generate animosity in Iceland. Expectations are that the
bill will not pass before year end. End summary.
Parliamentary Discussions Turn Ugly
------------------------------------
¶2. (U) The coalition government reached a settlement with the
opposition on December 4 that moves the Icesave bill out of second
reading and back to the budget committee for further discussion on
16 key points. This ends more than one month of stalling by the
opposition and is, technically, progress as it moves the bill closer
to an eventual vote. A parliamentary vote, however, is not imminent
and discussions during second reading were so contentious that they
opened wounds unlikely to heal quickly. There were several tense
exchanges between members of parliament that clearly exceeded the
standard level of parliamentary decorum.
¶3. (SBU) One notable exchange occurred when Birgitta Jonsdottir, an
MP in The Movement, scolded the president of the parliament by
yelling out "you are not my president" during the course of
discussion. The comment came after the president of the parliament,
Asta Ragnheidur Johannesdottir, tried to regain order and ensure
that parliamentary procedures were followed while Jonsdottir was
speaking. Such egregious behavior was not limited to the
discussions among parliamentarians. One member of parliament
confided to Emboff that she regularly receives hate mail regarding
the Icesave issue, including one email that she considered to be a
thinly veiled death threat if she voted in favor of the bill.
The Coalition's Perspective
----------------------------
¶4. (SBU) In private discussions with Emboffs, several members of the
coalition expressed frustration with the government's inability to
resolve the Icesave issue. The government has the necessary votes
to pass the bill and some members of the coalition would like to see
their side force a vote and put an end to the matter. Leadership
within the coalition, however, is wary of forcing the issue because
it does not want to incur the wrath of the public. If the coalition
moves too quickly, before all options are exhausted, it may be
viewed by the public as pandering to foreign entities and
sacrificing the future of Iceland. Some members of the coalition
also believe that it is important to let the dialogue run its course
so that the opposition can maintain its dignity and to keep open the
possibility of future political cooperation. They believe that the
opposition's assistance may be necessary when parliament tackles
other controversial matters that notably include the budget bill and
proposed tax hikes.
The Opposition's Perspective
-----------------------------
¶5. (SBU) The opposition, for its part, would like the Icesave
agreement to fail and for the issue to be decided in a court of law.
It is, however, vague regarding the mechanics of exactly how this
could occur. Without a clear alternative to offer, the opposition
seems content to let the issue linger as public resentment builds.
This strategy may be paying dividends as a November 30 Gallup poll
shows that the Independence Party is now the most popular party in
the country with 32 percent of the nation's support. The coalition
partners, the Social Democrats and Left Greens, are second and third
in the poll with 26 and 23 percent, respectively, of the nation's
support. Local elections next spring will give a better picture of
how much national support each party actually enjoys. One observer
told Emboffs that, if matters continue along their current course,
the Independence Party could do quite well in those elections.
¶6. (U) The opposition points to an anti-Icesave petition that has
garnered over 30,000 signatures in less than one week as proof that
they have the public's support. The petition calls on the President
to refuse to sign the Icesave bill should it eventually pass
parliament. Were the president to refuse to sign the bill the issue
would be put before the people in a national referendum. (Note: In
2004, President Grimsson refused to sign a contested bill on the
mass media. The bill did not go to a national referendum, however,
as parliament withdrew the bill before that could happen. This is
the only time an Icelandic President has refused to sign a bill into
law. End Note.) Although it is unlikely the president would
REYKJAVIK 00000219 002.2 OF 002
actually take this drastic step, the opposition would like to delay
passage of the bill to allow as many people as possible to sign this
petition.
Comment
--------
¶7. (SBU) The Icesave bill is still moving forward and will likely
pass eventually, as the coalition believes it has a majority of
votes. The bill's progression through the second stage of the
parliamentary process, however, has not gone as smoothly as
anticipated. The process has exacerbated tensions between the
governing coalition and the opposition that will likely hinder
cooperation on future legislative issues, notably the budget bill
and potential tax hikes. The issue has also revealed fissures
within the ranks of the coalition. While the coalition is expected
to remain in power for the foreseeable future, in seeking to reach
consensus with the opposition rather than pushing the matter through
Parliament, the coalition may very well have eroded its
effectiveness. Iceland, itself, will likely also remain incapable
of moving forward so long as the Icesave matter lingers as a
divisive force in society.
WATSON
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