Iceland's new slimmed-down and EU-critical government

Four ministers had to go - two of them were unelected Minister of Economic Affairs Gylfi Magnússon and Minister of Justice Ragna Árnadóttir. Ministers from each coalition party were also swapped for colleagues in the parliament - the Allting; Minister of Communication Kristján Möller from the social democratic Samfylkingin party and Minister of Health Álfheiður Ingadóttir from the Left-Green Movement.

Eiríkur Bergmann, a professor in political science and director of Centre for European Studies at the Bifrost University in Iceland, says the government regained some trust - as expected - by taking in academic experts like Mr Magnússon and Mrs Árnadóttir. It was a necessary and wise move when the nation blamed the banking crisis on the traditional politicians.

"The problem is that trust will disappear when they step down," says Mr Bergmann.

Mr Magnússon and Mrs Árnadóttir took up two of the most respected ministerial posts. Some trust in Mr Magnússon was lost, however, when it transpired that his department as early as last year had received legal advice that securing loans in foreign currencies (so-called 'korglån') was illegal. According to coalition parliamentarians they were not prepared to take that battle when the Allting started its new period.

Controversial 'korglån'

The 'korglån' - loans and mortgages not tied to inflation but to foreign currencies - have since been made illegal by Iceland's supreme court. Icelandic banks have for nine years illegally lent people money to buy cars and property while the authorities said nothing. Many see this as another example of the lack of control over the finance sector. 

The people who replaced Mr Magnússon and Mr Árnason indicate perhaps even more than their departure a change of government polity.

In from the cold came Ögmundur Jónasson from the Left-Green Movement. He became Minister of Justice and Communication. He left the government one year ago in protest against the Icesave dispute with the Netherlands and the UK. He is considered to represent the rebellious part of his party, alongside the Minister for the Environment and party colleague Jón Bjarnason.

"You could say the government now consists of three political parties," says Mr Bergmann.

EU critics gain influence

With the new government EU critics have been given a greater say. For Prime Minister Jóhanna Sigurðardóttir it means her Social Democratic Alliance (Samfylkingin) will find it hard also in future to arrive at compromises in many crucial questions. 

She can even end up not being able to carry out further government re-shuffles.

Guðbjartur Hannesson is a new government minister and the Prime Minister's party colleague. He must fight unemployment, an issue which will be key in the coming months and years. Iceland's youth unemployment must come down.

The government also has to develop a new and sustainable energy policy, streamline the civil service, make changes to the fisheries quotas, ease restraints on the currency markets, develop a new programme dealing with violence against women, increase democracy and transparency, protect the environment and reduce greenhouse gas emissions.