Working Group Assessing Feasibility of Westman Islands Tunnel

Sigurður Ingi Jóhannsson

A working group, appointed by Minister of Infrastructure Sigurður Ingi Jóhannsson, has been tasked with assessing the feasibility of a tunnel between Iceland’s mainland and the Westman Islands. The group, which began its work recently, will deliver findings, cost estimates, and recommendations by July 31st, 2024.

Presenting scenarios regarding different implementations

As noted in a press release from the government’s website today, the feasibility of constructing a tunnel between the mainland of Iceland and the Westman Islands is being assessed. Sigurður Ingi Jóhannsson, the Minister of Infrastructure, has appointed a working group for this task. The group’s mandate starts from September 15th and they are expected to deliver their findings no later than July 31st, 2024.

“The working group’s role is to present scenarios regarding different implementations, and the pros and cons of each. Additionally, the group is to provide a cost estimate for the necessary research and analysis, so a final assessment of the feasibility of a tunnel to the Westman Islands can be made. The working group will submit a report to the Minister of the Interior detailing the group’s findings, options, cost-benefit analysis, and recommendations for the next steps, based on current scientific data and the latest information,” a statement on the government’s website about the group’s role reads.

The members of the working group:
Kristín Jónsdóttir, Chair, without a specific nomination
Freysteinn Sigmundsson, without a specific nomination
Freyr Pálsson, nominated by the Road Administration
Anton Kári Halldórsson, nominated by the Rangárþing Eystra municipality
Gylfi Sigfússon, nominated by Vestmannaeyjar Municipality

Björn Ágúst Björnsson, an engineer and expert in profitability analysis, will work alongside the group.

Opposition Leaders Question Government Mandate

Alþingi parliament of Iceland

In an interview with RÚV yesterday, the leaders of the opposition reacted to Finance Minister Bjarni Benediktsson’s decision to resign. The Chair of the Pirate Party’s Parliamentary Group held that the government’s mandate was “completely compromised” while the Chairs of the Social Democratic Alliance and the Reform Party questioned the coalition’s ability to address the most pressing issues facing Icelanders. The Chair of the People’s Party hoped that Bjarni’s resignation would set a new precedent in Icelandic politics while speculating that Bjarni might switch roles within the government.

“Completely compromised”

Following the resignation of Finance Minister Bjarni Benediktsson yesterday, RÚV solicited reactions from leaders of the opposition parties. The Party Group Chair of the Pirate Party stated that the mandate of the government was completely compromised.

“It’s important to note that the mandate of this government is completely compromised, especially since the Prime Minister and other leaders within the government have fully supported the Finance Minister’s governance up to this point,” Þórhildur Sunna Ævarsdóttir, the parliamentary group leader of the Pirate Party, told RÚV yesterday.

“They should, therefore, see every reason to seriously reconsider their position in light of the ombudsman’s conclusion. And this, of course, applies to Bjarni as well.”

An unexpected decision – but the right one

Kristrún Frostadóttir, Chair of the Social Democratic Alliance, admitted that the resignation had been unexpected: “In some ways, this is an unexpected decision, but it’s the right one. He is taking responsibility, and I agree with him to the extent that as a minister, he could no longer fulfil his duties.”

Kristrún also contemplated the future of the government: “I believe the entire government needs to address whether it can truly handle the tasks at hand that matter most to the people. I’m thinking about economic issues and major welfare matters.”

Government mandate weakened

Þorgerður Katrín Gunnarsdóttir, Chair of the Reform Party, echoed Kristrún’s sentiments.

“It’s clear that when the leader of the largest party in the government steps down from a crucial ministry like the Ministry of Finance, it weakens the government. We repeatedly see this government expend their energy on internal disputes rather than focusing on what matters most to households and businesses in the country, namely inflation and the battle against interest rates.

A precedent is set

Inga Sæland, Chair of the People’s Party, told RÚV that Bjarni’s resignation had marked a turning point in Icelandic politics, as he had taken political responsibility, hopefully setting a precedent for the future: “We’re not used to seeing a minister step down like this without being pressured out of office with significant hullabaloo.”

However, Inga speculated that Bjarni might not be leaving politics altogether. “I wouldn’t be surprised if he switches to another ministry. There are only two possibilities: he either moves to another ministry or resigns from parliament, and I’m not sure if that’s good for his party as a whole.”

Nonetheless, Inga believes that Bjarni’s resignation did not mark a turning point for the coalition government. “It will try to endure despite everything.”

September Sees Slight Uptick in Unemployment Rate

building construction cranes Garðabær

Iceland’s unemployment rate rose from 2.9% in August to 3% in September, according to a new report from the Directorate of Labour. Foreign citizens compose 51% of the unemployed population.

Slight increase from August

In a recent report by the Directorate of Labour, Iceland’s unemployment rate for September was recorded at 3%. This marks an increase from 2.9% in August but is consistent with the figures from May of the same year. For comparison, the rate was slightly higher at 3.2% in September of 2022. The Directorate anticipates that the unemployment rate for October will hover between 2.9% and 3.2%.

The report further details that an average of 5,734 individuals were registered as unemployed in September, comprising 3,175 men and 2,559 women. By the month’s end, the total number of unemployed individuals rose to 6,035.

Unemployment rate highest in Southern Peninsula

Last month, Suðurnes, located on the southernmost side of the Reykjanes peninsula, recorded the highest unemployment rate at 4.2%. This marked an increase from 3.9% in August. Conversely, the Northwestern region of Iceland had the lowest unemployment rate at 0.6%. East Iceland reported an unemployment rate of 1.3%, while West Iceland’s rate stood at 1.7%. In the capital region, the unemployment rate remained steady at 3.3%, unchanged from the previous month.

Over 1,000 out of work for more than a year

As noted by, by the end of September 2023, 1,159 individuals had been unemployed for over 12 months. This figure represents a decrease of 67 from August. For context, in September 2022, the count stood at 2,046, indicating a year-over-year reduction of 887. Additionally, 1,469 individuals had been unemployed for a duration of 6-12 months in September 2023, a slight drop from 1,566 in September 2022.

The report highlights that the tourism sector experienced the most pronounced increase in unemployment compared to the previous month.

Foreign citizens overrepresented

The report also finds that there were 3,056 foreign citizens who were unemployed at the end of September, which is an increase of 160 from August. The proportion of foreign nationals on the unemployment register was about 51% by the end of September.

An assistant professor of economics at Reykjavík University recently maintained that the overrepresentation of foreign citizens in unemployment figures suggested that foreign citizens in Iceland faced additional obstacles when it came to finding work.

New Ministerial Role for Bjarni a Possibility, According to PM

Yesterday, Bjarni Benediktsson announced his resignation from his ministerial post following a formal opinion by the Parliamentary Ombudsman regarding the sale of Íslandsbanki. In an interview with Vísir yesterday, PM Katrín Jakobsdóttir stated that she supported his decision, emphasised the coalition government’s stability, and dismissed rumours of early elections.

Decision was entirely Bjarni’s

In an interview with Vísir yesterday, PM Katrín Jakobsdóttir stated that Bjarni Benediktsson’s decision to resign from his ministerial post had been commendable and appropriate, stressing that the decision had been entirely his.

Katrín affirmed the coalition’s stability and refuted suggestions of imminent elections. There is speculation that Benediktsson may take on a different ministerial role. “This is, of course, a significant decision that the Minister of Finance and Economic Affairs has made, and he thoroughly discussed it at (yesterday morning’s) press conference,” Katrín Jakobsdóttir noted.

A snap press conference

During a press conference yesterday, Bjarni Benediktsson cited the Parliamentary Ombudsman’s critique on the Íslandsbanki sale as his reason for resigning. The Ombudsman highlighted a potential conflict of interest, noting Bjarni’s father was among the buyers when Bjarni approved the sale through the Icelandic State Financial Investments (ISFI). While Bjarni expressed disagreement with the Ombudsman’s view, he chose to respect it and subsequently announced his resignation.

“I find this decision to be very commendable. I believe that the Minister of Finance, at every stage of this matter, even though he has been criticised, has sought to take responsibility for this action. Perhaps one can say that this responsibility became final today, with this decision,” Katrín observed.

When asked if she felt it was right for Bjarni to resign in this situation, Katrín stated that the decision was entirely Bjarni’s to make. “But I have a deep understanding of this decision and respect it. We, of course, discussed this beforehand, and there were various aspects to consider. But I believe he did the right thing,” Katrín stated, adding that she neither demanded nor wished for Bjarni to step down.

Big tasks ahead

As noted by Vísir, the leaders of the governing parties discussed Bjarni’s resignation at a cabinet meeting yesterday. When asked about their discussions, Katrín replied that the three leaders had simply reviewed the situation. “Given the nature of the matter, it affects the collaboration of these parties when the leader of one party decides to step down from his position.” The government is now facing major tasks, especially in economic matters.

A significant political decision

Katrín told Vísir that she and Bjarni had not discussed his possible resignation in the event that the Ombudsman deemed that the latter had been unqualified to handle the sale: “The Minister of Finance briefed me on the Ombudsman’s stance beforehand. We deliberated on it collegially, examining various angles. Ultimately, the decision was his, and it holds substantial political implications.”

Katrín further emphasised the coalition government’s resilience, asserting that its leadership structure would remain intact despite Benediktsson’s departure. The upcoming days would be spent assessing the current economic landscape. A subsequent cabinet meeting would be held to formalise Bjarni’s resignation.

Responding to queries about a potential government breakdown following Benediktsson’s decision, Jakobsdóttir stated, “No. I’m confident we’re united in our commitment to address these pressing challenges.”

Bjarni to move ministries?

At yesterday’s press conference, Bjarni Benediktsson expressed uncertainty about his future role, whether as a minister, the leader of the Independence Party, or a parliament member. Addressing questions about Bjarni potentially heading another ministry, Katrín Jakobsdóttir emphasized the current focus on the Ministry of Finance.

“Our primary concern is to ensure the Minister of Finance can work effectively and be accountable for the Íslandsbanki sale. While the possibility of Bjarni leading another ministry exists, it hasn’t been a topic of discussion,” Jakobsdóttir clarified.

Vísir postulated that Benediktsson might transition to the Ministry of Foreign Affairs, with Þórdís Kolbrún Reykfjörð Gylfadóttir potentially taking over Finance. Ólafur Þ. Harðarson, an emeritus professor at the University of Iceland, conveyed to RÚV that such speculations might have merit.

Ministry of Finance up for grabs

Vísir noted that Bjarni Benediktsson isn’t the sole minister under the Ombudsman’s scrutiny. The Ombudsman is currently investigating whether Svandís Svavarsdóttir breached administrative laws by introducing a whaling ban earlier this summer.

When questioned about potential repercussions if the Ombudsman identifies similar lapses in Svavarsdóttir’s actions, Katrín admitted to having heard speculations although no such thing had been discussed at the moment.

“I’ve heard speculations about this today. Of course, the Ombudsman often investigates many ministers and our official transfers. I believe it’s premature to comment on such matters in any related context. These issues can be inherently different, so we should just wait and see.”

Will the Left-Green Movement want the Ministry of Finance?

When asked if Katrín’s party, the Left-Green Movement, was interested in the Ministry of Finance, Katrín replied thusly: “We haven’t discussed the matter based on these premises. In our meeting today with the three [leaders of the governing parties], we primarily discussed the bigger picture, the tasks, and how we can ensure that we come out of this stronger than when we entered,” Katrín observed.

She doesn’t expect elections to be called earlier than scheduled. As noted by Vísir, based on a full electoral term, the next parliamentary elections are set for the fall of 2025. “Nothing has happened that warrants it, at least for now,” Katrín concluded by saying.