Iceland’s Prime Minister Geir H. Haarde announced approximately half an hour ago that the coalition between the Independence Party and the Social Democrats in Iceland’s government has been terminated.

Haarde told reporters that the Independence Party refused to comply with the proposition that the Social Democrats take over the position of prime minister, mbl.is reports.

Minister for Foreign Affairs Ingibjörg Sólrún Gísladóttir said in a press conference that she had proposed that Minister for Social Affairs Jóhanna Sigurdardóttir assume the post as prime minister, RÚV radio reports.

Prime Minister Geir H. Haarde of the Independence Party and Minister for Foreign Affairs Ingibjörg Sólrún Gísladóttir at a press conference in October 2008. Copyright: Icelandic Photo Agency.

Haarde will meet President of Iceland Ólafur Ragnar Grímsson today and formally resign as prime minister. The president will then meet with the chairmen of all political parties to discuss the formation of the government until the upcoming elections in spring.

Haarde said he believed that a national government would probably be the best solution and that it was natural for the largest political party—which is the Independence Party, according to the results of the 2007 elections—to lead in such a government.

The PM said he was dissatisfied with the termination of the Independence Party-Social Democrat coalition and that his fears that a cabinet crisis would be added to the economic and currency crisis had materialized.

Haarde criticized the Social Democrats, saying it was falling apart and that it had in fact become three political parties. He said the Social Democrats had lacked the strength to complete their coalition with the Independence Party in the conventional manner.

The primary issue now is for Icelanders not to lose their focus and further credibility abroad and that the country’s political parties reach an agreement on how the country be governed in a responsible manner until after the spring elections.

Haarde revealed that he had proposed resigning as prime minister—in case his presence was considered a problem—and having Minister of Education and vice-chairperson of the Independence Party, Thorgerdur Katrín Gunnarsdóttir, take over his post.

Haarde then thanked Minister for Foreign Affairs and chairwoman of the Social Democrats Ingibjörg Sólrún Gísladóttir for her cooperation in government, emphasizing that their cooperation had always been on good terms.

Haarde said he and Gísladóttir had terminated their cooperation in the same way that they had started it 18 months ago, with a kiss.

The leaders of the government discussed possible solutions to the cabinet crisis all day yesterday after Minister for Business Affairs Björgvin G. Sigurdsson made a surprise announcement of his resignation.

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