Coalition’s Strength to Be Tested by Vote of No Confidence

Inga Sæland, leader of the People's Party

Inga Sæland, leader of the People’s Party, will submit a motion of no confidence directed at the coalition government next week. The cabinet of the Independence Party, the Progressive Party, and the Left-Green Movement was reshuffled last week following Katrín Jakobsdóttir’s announcement that she would resign as prime minister and leader of the Left-Green Movement to run for president.

“We’re planning a motion of no confidence against the government as a whole,” Inga told Mbl.is. “There are three ministers in this cabinet who are particularly skilled at evading the law in this country.”

Motion against Svandís on hold

Inga has discussed the matter with the other opposition parties in Alþingi, Iceland’s Parliament. Following meetings of the parliamentary groups on Monday afternoon it should become clearer whether Inga’s motion will have broader support.

Inga had pledged to submit such a motion against Svandís Svavarsdóttir before a reshuffling of the cabinet last week that saw Svandís move from the ministry of food, agriculture and fisheries to the ministry of infrastructure. The Parliamentary Ombudsman had found that Svandís had not acted in accordance with law when she temporarily stopped the whaling season last summer. Inga said it was unclear if she could refile the motion with Svandís now at a different ministry.

Bjarni under fire

The other two ministers Inga mentioned are Bjarni Benediktsson, the new prime minister and leader of the Independence Party, and Guðmundur Ingi Guðbrandsson, minister of social affairs and labour and interim leader of the Left-Green Movement. The Parliamentary Ombudsman concluded last year that Bjarni had not confirmed to guidelines as minister of finance during the privatisation process of Íslandsbanki bank. Nearly 40,000 people have signed an online petition expressing their lack of support for Bjarni’s leadership of the coalition government.

In Inga’s opinion, Guðmundur Ingi has broken his promise of establishing an office of an ombudsman for the elderly. “No opposition MP I’ve talked to has confidence in this coalition government,” Inga added.

Iceland News Review: The Puffins Return, Trip Into a Volcano, and More

In this episode of Iceland News Review, we delve into Iceland’s new government; the return of Iceland’s iconic puffins; a new attraction that could show you the inside of an active volcano, and much more.

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Draft Bill for Íslandsbanki Stake Sale Published

Minister of Tourism, Industry, and Innovation Þórdís Kolbrún Reykfjörð Gylfadóttir

The Icelandic Ministry of Finance and Economic Affairs has published a draft bill for the sale of the state’s 42.5% stake in Íslandsbanki. The bill, necessitating parliamentary approval, aims to reduce the Treasury’s financial risk and debt ratio.

Íslandsbanki prohibited from direct participation

Yesterday, the Ministry of Finance and Economic Affairs published a draft bill regarding the disposition of the state’s share in the Íslandsbanki Bank through the government’s online consultation portal. The draft authorises the minister, with Parliament’s approval, to dispose of the state’s share in Íslandsbanki. The state owns a 42.5% stake in Íslandsbanki.

The disposal of the share is planned through one or more tranches in a marketed offering, allowing the general public to participate, with sales to individuals given priority. The draft notes that it is important to consider market conditions for timing the offerings. According to the bill, Íslandsbanki is prohibited from directly participating in the sale, in line with recommendations from the National Audit Office.

“During the sales process, care must be taken to adhere to the fundamental principles of equality, transparency, efficiency, and impartiality. This obligation is specifically imposed on the minister … to ensure transparency in connection with the disposal, among other things, by proactively publishing information,” the memorandum notes.

State Financial Investments not involved

The bill proposes eliminating the role of the State Financial Investments in the sale of the shares. The Ministry states in the bill’s explanatory memorandum that the preferred option is to authorise the sale of Íslandsbanki under the control of the Minister of Finance and Economic Affairs through specific legislation. It will be up to the Parliament to decide which sale methods are authorised.

“The sale of the equity stake is considered quite urgent in order to reduce the financial risk of the treasury and to contribute to the main objectives of the public finance policy regarding the reduction of the treasury’s debt ratio.”

As noted by RÚV, nearly eight months have passed since the release of the Financial Supervisory Authority’s critical report on the state treasury’s sale of shares in Íslandsbanki. There were several issues with the sale process, and Íslandsbanki received a hefty fine for its role in the sale. Bjarni Benediktsson stepped down as Minister of Finance and Economic Affairs after the Parliamentary Ombudsman’s opinion was published and switched ministerial roles with Þórdís Kolbrún Reykfjörð Gylfadóttir.

Bill on Detention Centres for Asylum Seekers Published

Guðrún hafsteinsdóttir

A draft bill proposed by Iceland’s Justice Minister would permit authorities to hold asylum seekers in detention centres, including families and children. Setting up such detention centres could cost between ISK 420 and 600 million [$3.1 million-4.4 million, €2.8 million-4 million]. Humanitarian organisations have harshly criticised the establishment of such centres in Iceland.

The bill, which comes from Minister of Justice Guðrún Hafsteinsdóttir, was published in the government’s consultation portal last week, where members of the public, organisations, and interested parties can comment on it.

According to the summary on the consultation portal, the bill proposes permitting authorities to keep “foreign citizens who have to or may have to leave the country” in “a closed residence” when they have received a deportation order or “when a case that may lead to such a decision is being processed by the government.” According to the bill, the measure would “only be used as a last resort, when an adequate assessment has been carried out and it is clear that milder measures will not be effective.”

Children detained for up to nine days

The bill would permit authorities to detain children in such centres, if they are accompanied by a parent or guardian, but would not permit the detention of unaccompanied children. The detention of children would have to conform to “stricter requirements” than that of adults.

The bill proposes permitting the detention of children in such facilities for up to three days at a time and up to nine days in total. Adults could be detained in the centres for up to eight weeks.

If the bill is approved, the legislation would take effect at the beginning of 2026.

Restricted press access and use of force

While the bill distinguishes detention centres for asylum seekers from prisons, many of the restrictions proposed for such centres resemble that of traditional prisons, including separation between the sexes, restrictions on visits, and room searches. Staff would be permitted to “use force in the performance of their duties if considered necessary,” including physical restraints or “the use of appropriate means of force.”

The bill stipulates that the National Police Commissioner would decide whether to allow detained individuals to give interviews to media and that interviews “would not be permitted if they are contrary to the public interest.”

Tightened legislation on asylum seekers

The detention centre bill is the latest of several measures Iceland’s current government has taken to tighten regulations on asylum seekers. Last year, dozens of asylum seekers who were unable to leave the country for personal or political reasons were stripped of housing and services after new legislation took effect. The legislation strips asylum seekers in the country of access to state housing, social support, and healthcare 30 days after their applications for asylum have been rejected. The bill was first introduced in 2018 and received strong pushback from human rights organisations in Iceland, including the Red Cross, UNICEF, and Amnesty International. It was revised several times and passed following its fourth introduction to Parliament.

The detractors of the detention centre draft bill assert that it violates the United Nations Convention on Refugees, the European Convention of Human Rights, as well as the Universal Declaration of Human Rights, to which Iceland is a party.

Gallup: Support for Independence Party Hits Historic Low

bjarni benediktsson finance minister

The Independence Party has hit a historic low in the Gallup National Pulse survey, polling at only 18%, Vísir reports. Despite minor fluctuations in support between polls, overall backing for the government has decreased slightly from 33% to 32%.

Social Democratic Alliance enjoying increased support

The Independence Party is currently polling at 18% support in the latest National Pulse (Þjóðarpúls) survey by Gallup. This marks the lowest level of support the party has ever recorded in the over three-decade history of the National Pulse, Vísir reports

The Social Democratic Alliance remains the largest party with 28% support, followed by the Independence Party with 18.1% support. The Centre Party is now the third largest party in Iceland, polling at 9.7%, slightly ahead of the Progressive Party at 9.4%. As noted by Vísir, there has been little change in respondents’ answers between polls, although support for the government continues to decline, dropping from 33% in November to 32% in December.

Support for individual parties (with 2021 election results in brackets) is as follows:

  • Social Democratic Alliance: 28.4% (9.9%)
  • Independence Party: 18.1% (24.4%)
  • Centre Party: 9.7% (5.5%)
  • Progressive Party: 9.4% (17.3%)
  • Pirate Party: 9.1% (8.6%)
  • Reform Party: 8.8% (8.3%)
  • People’s Party: 6.8% (8.9%)
  • Left-Green Movement: 6.0% (12.6%)
  • Socialist Party: 3.6% (4.1%)

Disappointed in Icelandic Government’s Response to Gaza

Icelandic government Palestine protest

Locals in Iceland have held regular protests outside the Icelandic government’s cabinet meetings since the most recent conflict between Israel and Hamas began on October 7. Protesters are calling on the government to condemn Israeli authorities for their actions and use its influence to call for a ceasefire in the conflict. Iceland abstained from voting on a ceasefire in an emergency meeting of the UN last month.

Call on government to condemn Israel’s actions

“We are here to tell the government of Iceland that it has not done its job in these matters, because it has only condemned Hamas. It has not yet gotten around to condemning Israel and the atrocities that are currently being committed. And the performance at the UN is of course shameful,” Hjálmtýr Heiðdal, chairman of the Iceland-Palestine Association, told RÚV reporters at this morning’s protest. A sizeable group gathered to wave flags, chant in support of Palestine, and express their disappointment towards cabinet ministers.

Iceland was the first Western country to officially recognise Palestine’s independence and support for the Palestinian cause is fairly strong among the Icelandic public. The Iceland-Palestine Association chaired by Hjálmtýr was founded in 1987.

Minister for Foreign Affairs Bjarni Benediktsson, who recently took on the position after resigning as Minister of Finance stated that he was not consulted on the UN General Assembly ceasefire vote. In a recent press conference, he refused to call Israel’s bombing of refugee camp Jabalia as an “attack on a refugee camp,” insisting it was “a matter of how you approach it.”

Minister Advocates for Fiscal Restraint in Iceland’s New Budget

Prime Minister Bjarni Benediktsson

In a budget briefing yesterday, the Finance Minister highlighted increased government earnings while advocating for fiscal restraint to counter inflation. He revealed a multifaceted approach for the upcoming year, which included streamlining state institutions for targeted savings of ISK 17 billion [$129 million / €119 million], revising road taxes to account for the surge in electric vehicles, and adjusting income tax brackets, all against a backdrop of a projected state treasury deficit and rising healthcare costs.

Cautious optimism tempered by financial and demographic challenges

During yesterday’s press conference on the state budget, Finance Minister Bjarni Benediktsson underscored the significance of acknowledging a marked increase in government revenue, which had surpassed earlier projections. He advocated for continued fiscal discipline to mitigate rising inflationary pressures. The goal was to prioritise investments in infrastructure and basic services like the National Hospital and housing. He also revisited plans to streamline state-run institutions, targeting savings of ISK 17 billion [$129 million / €119 million] for next year.

On transportation, Bjarni stressed that the rise in electric vehicles, facilitated by government incentives, had negatively impacted fuel tax revenues. He announced plans for a “new, simpler, fairer, and more transparent system” based on road usage. “It’s time for electric vehicles to participate in maintaining the road network,” he added.

As noted by RÚV, the draft budget reveals a projected state treasury deficit of ISK 46 billion [$344 million / €320 million], primarily due to interest expenses outpacing interest income. However, core operational revenues anticipate a surplus of ISK 28 billion [$209 million / €195 million]. Self-sustaining state entities project a modest surplus in core operations but face a deficit once interest is considered.

Healthcare spending is set to increase significantly, up by ISK 88 billion [$658 million / €612 million] since 2017 and ISK 14 billion [$105 million / €97 million] compared to last year. Factors like tourism, population growth, and an ageing population are cited as key drivers.

An 8.5% adjustment in income tax brackets by year’s end is expected to reduce the average income tax by about ISK 7,000 [$52 / €49]. Bjarni also noted the reimplementation of the overnight stay tax in 2024 – revoked in 2020 due to the pandemic – extending it to cruise ships.

Total state expenditure for the next year is estimated at ISK 1,480 billion [$11 billion / €10.3 billion]. The budget draft shows a 22.3% increase in financial costs and a 14.8% rise in hospital services. Funding for innovation has decreased the most, by 9.7%, followed by a similar reduction in foreign affairs.

Overall, the budget suggests a cautious optimism tempered by financial and demographic challenges.

Briefly on the budget: According to constitutional provisions, disbursements from the state treasury can only be made if authorised in the annual budget or a supplementary spending bill. The budget undergoes a rigorous legislative process: the Minister of Finance introduces the draft budget to Parliament during its first autumn session, typically held on the second Tuesday in September. Following this, the draft undergoes three rounds of parliamentary debates before it is usually finalized and approved in December.

Vesturport to Produce TV Show on President Vigdís Finnbogadóttir

Vigdís FInnbogadóttir's first inauguration as president

The government has approved an ISK 5 million [$36,000 / €34,000] grant for the production of a TV show revolving around the life of former President Vigdís Finnbogadóttir. The show will comprise four episodes and will be aired on RÚV.

Nína Dögg to play Vigdís

At a meeting yesterday morning, the government approved the proposal of Prime Minister Katrín Jakobsdóttir and Minister of Culture and Business Affairs Lilja Alfreðsdóttir to greenlight a grant of ISK 5 million [$36,000 / €34,000] to the theatre group Vesturport for the production of a television show about former President Vigdís Finnbogadóttir.

The show, which will comprise four episodes, will cover Vigdís’ life from her teenage years until she became the first female democratically elected head of state. According to an announcement on the government’s website, Nína Dögg Filippusdóttir will play the role of Vigdís in the series, which will be directed by Björn Hlynur Haraldsson and Tinna Hrafnsdóttir. The show will be aired on RÚV and other Nordic national television stations.

Vesturport produced the acclaimed Blackport series, which aired on RÚV in 2021.

Support for Government Never Lower

Guðrún Hafsteinsdóttir

Iceland’s current government has never had less support among the public since it took office in November 2021, according to a new poll conducted by Gallup. The Social-Democratic Alliance, currently in the opposition, remains the strongest party in the country. RÚV reported first.

About 35% of those who took a stance stated that they support the government, which is 2.6% less support than in the last survey. This is the lowest level of support ever recorded for Katrín Jakobsdóttir’s government — and the lowest level of support recorded for a sitting government since July 2017. That government collapsed a month and a half later.

Only 6% would vote for Prime Minister’s party

Support for the two most popular parties, the Social-Democratic Alliance and the Independence Party, remains almost unchanged between months. Of those respondents who took a stance, 28.4% stated they would vote for the Social-Democratic Alliance if an election were held today, while 20.8% stated they would vote for the Independence Party. The Pirate Party followed in third place, with support around 10%.

The Progressive Party (one of three parties in the governing coalition along with the Independence Party and the Left-Green Movement) lost the most support since the previous poll, clocking in at just under 9%. The Reform Party and the Centre Party both measured around 8% support.

Only 6% of respondents stated they would vote for the Left-Green Movement, Prime Minister Katrín Jakobsdóttir’s party and the current coalition leader. The Socialist Party trailed behind with around 5% support. Around 10% of respondents stated they would submit a blank vote or would not vote at all.

Stormy times for government

Since the last such poll was conducted by Gallup, the government switched out the Minister of Justice, and implemented a controversial temporary whaling ban, both of which may have made an impact on the public’s support. The whaling ban in particular brought to light disagreements between the parties in the governing coalition, leading to speculation that the coalition would disband. Parliament is currently on summer recess so it is unlikely any such disbanding will occur in the near future. The Central Bank’s damning report on the sale of state-owned Íslandsbanki has also been published in this period and may have had a marked impact on the public perception of the government.

The poll was conducted between June 1 and July 2, the total sample was over 11,300 people of which almost half responded.

Whaling Suspension Inauspicious for Coalition Partnership

Prime Minister Bjarni Benediktsson

In a panel discussion on Vísir yesterday, Finance Minister Bjarni Benediktsson stated that the temporary ban on whaling was inauspicious for the partnership between the coalition parties. A legal opinion commissioned by Fisheries Iceland has concluded that the decision to temporarily halt whaling goes against the law.

“A huge political decision”

Yesterday morning, the leaders of the three governing parties were invited to a panel discussion on Vísir. The leaders discussed the recently released report on the sale of Íslandsbanki; the Minister of Food, Agriculture, and Fisheries’ decision to stop whaling; and immigration affairs.

Regarding the suspension of whaling, Bjarni Benediktsson stated that the decision had surprised him: “We’ve been clear in our conviction that the decision should be reconsidered.”

Bjarni emphasised that the issue did not simply revolve around economic or animal welfare issues; there was a tradition of whaling in Iceland and putting an end to it amounted to “a huge political decision.” Bjarni noted that the decision, as a political issue, should have gone before the parliament. “I think it’s a very strange turn of events that it happens like this a day before whaling was supposed to start.”

Bjarni also noted that, during the formation of the coalition government, the three parties had discussed whether an agreement could be reached on putting an end to whaling – but no such agreement was reached. “When whaling is stopped in this manner, I am alarmed; I am not satisfied.”

A difference of opinion

Bjarni further noted that the position of the Left-Green Movement was that whales should not be hunted; the Left-Green Movement believed that it was inhumane to kill whales so it was not exactly the methodology that was at issue. “I have a feeling it’s not just about the whaling methods; I have a feeling it’s about whaling itself.”

“How are you going to consider the welfare of a whale you’re going to kill?” Bjarni asked.

Finally, the Finance Minister did not rule out the possibility that the whaling issue would affect the partnership of the coalition parties. When the panel’s moderator, Heimir Már Pétursson, asked if the issue would affect the continuation of the government cooperation, Bjarni refused to say. “But I don’t think this is particularly auspicious for our partnership in governance.”

Stands with Svandís’s decision

Prime Minister Katrín Jakobsdóttir responded to Bjarni’s comments by saying that she stood by Svandís’ decision. “First of all, these three parties have different views on whaling. Regardless, the minister received a formal opinion from a professional council on animal welfare. Having received this opinion, it would have been almost impossible for the minister not to act.”

Legal opinion finds the ban “unconstitutional”

In an interview with RÚV yesterday, Heiðrún Lind Marteinsdóttir, CEO of Fisheries Iceland (SFS), discussed a legal opinion that SFS recently commissioned from the law firm LEX.

Heiðrún stated that the legal opinion had found that Svandís Svavarsdóttir’s decision to temporarily stop whaling was unlawful. Heiðrún called for further justification from the Minister.

“We have said from the beginning that this unceremonious and unprecedented decision by the minister goes against the law, and now there is a legal opinion that substantiates our claim,” Heiðrún told RÚV.

“The legal opinion confirmed that the minister went against the freedom of employment and property rights provisions of the constitution; went against proportionality; went against the so-called code of governance; and, during the conduct of the council of specialists, the provisions of the administrative law were not followed.”

When asked if SFS intended to take the case further, Heiðrún replied that she hoped that the opinion would lead to the minister providing a more thorough explanation of her legal rationale. Over a week ago, SFS requested documents detailing the basis of the decision.

“We still haven’t received any word on these documents. As a result, I’m concerned that the preparation of this decision was poor and reprehensible, which is why it’s imperative for a well-reasoned legal opinion to be published in support of the minister’s far-reaching decision.”