New government in Iceland

The Progressive Party (Framsóknarflokkurinn) and the centre-right Independence Party (Sjálfstæðisflokkurinn) have formed a coalition government in Iceland. The Progressive Party leader Sigmundur Davíð Gunnlaugsson is Iceland’s new Prime Minister. 

The country has broken off EU membership negotiations. The government will evaluate the negotiations which have taken place so far as well as recent developments within the EU. The evaluation will be presented to parliament and the Icelandic people. Negotiations will continue only if the Icelandic people back a membership application in a referendum.

Prime Minister Sigmundur Davíð Gunnlaugsson says the opposition to the EU is not surprising to anyone who is familiar with Icelandic politics. He says opposition has increased lately within both the coalition parties. 

“The parties have agreed to hold a referendum on the EU membership negotiations within the next four years,” says Prime Minister Sigmundur Davíð Gunnlaugsson.

“We have yet to decided the exact date,” he says.

The new government promises to improve the economic situation for Iceland’s families. Mortgages are index-linked and interests rose sharply with inflation between 2007 and 2010. As a result living standards fell for many families. The government now wants to address that problem, mainly by reducing the amount people are allowed to borrow and by lowering income and business taxes. 

The government is also promising to use the opportunities created by the closure of the proof of claim proceedings after the bankruptcy of Iceland’s private banks, to improve the economy of families. The Króna remains Iceland’s currency. 

Iceland’s government uses Norway as a model. Iceland is establishing a state owned oil company to extract any oil or gas found within Iceland’s borders. Prime Minister Sigmundur Davíð Gunnlaugsson says they are following the Norwegian model.

“We would like to learn from Norway,” says Sigmundur Davíð Gunnlaugsson. 

Iceland will also establish an information centre for fisheries according to a Norwegian model, to promote fisheries and fish as a food source. Iceland’s new fishing tax will be revised. 

The government wants Iceland to play a leading role in the North Atlantic region, and lead the western Nordic cooperation.