Government Approves Measures to Counteract Inflation, Overheating Economy

Minister of Finance Bjarni Benediktsson

In lieu of raising interest rates, the government will be implementing various measures intended to counteract inflation and an overheating economy as well as reducing the treasury deficit. Vísir reports that among the changes proposed by Minister of Finance Bjarni Benediktsson are a reduction to discounts on alcohol and tobacco products sold in airport Duty Free stores and the introduction of tariffs that will offset the current lack of revenue from vehicle and fuel taxation.

The scope of the proposed measures is roughly 0.7% of the GDP, or ISK 26 billion [$1.98 million; €1.88 million]. This amount should hopefully put the treasury in good stead to decrease the deficit without needing to increase interest rates. The proposals will be elaborated in full in the 2023 budget proposal.

Measures intended to increase the state’s revenue

One of the biggest changes is the introduction of tariffs that are meant to offset revenue that the government has lost from vehicle and fuel taxation. This drop in revenue is attributed in part to an increase in environmentally friendly cars. As more environmentally friendly cars become the norm, it is expected that the revenue streams that the government used to enjoy from gasoline and vehicle taxes will continue to decline. As such, a simpler and more efficient revenue collection system is being developed, which corresponds to the need for continued governmental expenditure on new construction, maintenance, and operation of Icelandic roadways.

Another major change will be a reduction in the tax discount on alcohol and tobacco products in Duty Free stores. Both are currently tax-free (in specific, limited quantities) when purchased, for instance, at the Keflavík airport upon entering or exiting the country. There will be a new diversion airport fee and the structure and scope of aquaculture-related VAT will be under review as well.

Measures intended to cut state costs

Current reductions of state-related travel expenses are to be made permanent. The leeway that exists for expenditures in the current budget will be suspended and leeway for general expenditures in policy-related areas will be almost cut in half. There will also be a reduction in contributions to political organizations.

Year in Review 2019: Politics

Prime Minister Katrín Jakobsdóttir meets with US Vice President Mike Pence.

The political scene in Iceland in 2019 was chaotic like it most often is. Even though the political scene isn’t large by any means, with 63 MPs in the Icelandic Parliament and 23 seats in the Reykjavík City Council, the close quarters lead to intense fighting. Often, the only saving grace for Icelandic politicians is the fact that Icelanders move on to the ‘next scandal’ extremely quickly. Yesterday’s news becomes yesterday’s news in a matter of days. That’s why we have a recap such as this one. From Eurovision scandals and Mike Pence’s controversial visit to nefarious Namibian dealings, and everything between. Step into the tumultuous political scene in Iceland with us.

Fallout from Klaustur

The year started with the fallout from the Klaustur Scandal, where six MPs made sexist, ableist, and homophobic remarks about their colleagues at the Klaustur bar in downtown Reykjavík. Even though the scandal took place in 2018, the case rattled Icelanders so that ripples were felt through the new year. The court case of whistle-blower Bára Halldórsdóttir came to an end as Miðflokkur (The Central Party) MPs had charged her for invasion of privacy. Bára was made to delete the recordings. Meanwhile, The Central Party became the second-largest party in Iceland, polling at 14.8% of voters in October.

Third Energy Package

The Third Energy Package sounds like something you would guzzle down while running a marathon, but it’s anything but. The matter split opinions at the beginning of the year as politicians and the public alike debated it hotly. The Third Energy Package was approved by the EU in 2009, and was to be adopted by EU and EEA member states. Ten years later, Iceland was the only country not to have approved the package. Many believed Iceland would give up a part of its sovereignty, and force Iceland to build up a power link to the EU. Eventually, the package was approved in September by a Parliamentary vote of 46 to 13.

Strikes, strikes, strikes

The gap between the lowest and highest earners of society has led to wage disputes and strikes. The spring of 2019 saw tourism industry workers strike for higher wages, with hotel staff striking and bus drivers following in their wake. Later in 2019, journalists striked to demand fair wages. That debate is currently still ongoing, but newspaper Morgunblaðið saw it fit to have part-time staff members violate the strike as well as laying off fifteen journalists.

On a happier, yet still, somewhat grim, note – the youth in Iceland took part in the global youth climate strike movement led by Greta Thunberg. Minister of Environment Guðmundur Ingi Guðbrandsson met with protesters.

Flags and dishwashing brushes

Anti-capitalist, BDSM wearing, industrial techno band Hatari represented Iceland at the 2019 Eurovision Song Contest in Israel and managed to stir the pot. Band members held up banners bearing the Palestinian flag during the revelation of the votes, much to the displeasure of Israeli officials. Eventually, national broadcaster RÚV received a fine and the flag-scene was removed from the official Eurovision DV.

In June, a dishwashing brush and an airport wait strained the diplomatic relationship between Turkey and Iceland. A Belgian man stuck a dishwashing brush in star players’ Emre Belozoglu’s face like a microphone while he was being interviewed by reporters. This happened following an unusually long wait at the airport. The Turkish government issued a diplomatic note to Iceland denouncing what it is calling “disrespectful” and “violent” behaviour against the country’s men’s national football team. Iceland won 2-0, but Turkey has not lost a single match since then.

Bills, bills, bills.

Bills, bills, bills is not only a Destiny’s Child song but also what the Parliament started to approved in droves in the spring- and summertime. A new plan was approved to build up tourism infrastructure, while a plan to ban single-use plastics was approved, a widely supported move.

In May, the Government passed an abortion bill which legalises the termination of a pregnancy within the first 22 weeks regardless of circumstances. Abortion was previously legal within the same timeframe, however, a person’s decision to terminate a pregnancy after the 16th week required approval by a committee. That decision is now solely in the hands of the pregnant person.

This June, the Directorate of Health proposed a sugar tax on soft drinks and sweets to work towards long term goals in public health. The Icelandic Dentist’s Association has yet to release a statement on the matter. Later that summer, calls for stricter regulations on foreign land ownership started to rear their head. It’s an oft and long-discussed subject which appears to be stuck in political purgatory. But what should be done, and who’s land is it anyway?

USA – Iceland and Mike Pence

This summer, the Iceland – USA relationship was a hot talking point. US military presence is returning to Iceland, as the US Air Force and US Navy will construct facilities at Keflavík airport. The Air Force had facilities there from 1946 to 2006 and is going to spend ISK 7 billion ($56.2 million/€49.5 million) on military infrastructure. Meanwhile, Iceland increased its defence budget by 37%, due to “…increasing temporary presence of NATO forces at Keflavík Airport due to worsening security conditions in Europe, including in the North Atlantic.”

Vice President’s Mike Pence’s official visit to Iceland in August hit the news. Prime Minister Katrín Jakobsdóttir originally intended to miss the meeting due to commitments at the convention of Nordic trade unions. Eventually, Pence extended his stay to speak to Katrín about Arctic issues as well as defence matters. His visit was controversial and proved to somewhat unpopular with road closures, high cost and last but not least it was protested by numerous organizations due to his pro-war and anti-LGBTQ+ agenda.

Deportations debated

The public has called for the government to make major improvements to the handling of asylum seekers in Iceland. In August, authorities’ handling of two Afghan families seeking asylum in Iceland were heavily criticized. Later, in November, the Directorate of Immigration deported an asylum seeker who was just shy of 36 weeks pregnant. Both cases were met with outrage, as they were considered inhumane.

Move the clock – or not?

Few issues have garnered as much attention – and feedback – as the contentious suggestion to move the Icelandic clock back one hour to better align with solar time. Should Iceland move the clock?

Fishrot Files

Last but not least are the Fishrot Files. Icelandic fishing company Samherji is accused of tax evasion and bribery in Namibia to ensure access to fishing quotas in the country. Samherji is one of Iceland’s biggest companies and the fallout has been according to that. The government issued additional funding to investigate Samherji’s wrongdoings, and Icelandic tax authorities have opened an investigation into the case. Namibian ministers have resigned, as well as the CEO of Samherji. The case is still being resolved.

Filibuster to Cost Parliament ISK 40 Million

Alþingi staff worked 3,000 hours of overtime due to the debate over the EU’s Third Energy Package, RÚV reports. The bill’s debate lasted a record 150 hours, mostly due to filibusters led by the Centre Party (seen above). Parliament is now requesting an additional ISK 40 million ($320,000/€290,000) in funding to deal with the associated labour costs.

Parliament was busier than expected this past spring, mostly due to extended debates on the Third Energy Package, but also due to “extensive and heavy issues which needed addressing in committee,” according to a spending bill distributed to parliamentarians last weekend. The bill is being put forth as Parliament has no reserve fund to deal with the additional labour costs accrued during the period.

The former Secretary General of the Alþingi described the filibuster as “oppressive” to Parliamentary staff.

Parliament Passes Third Energy Package

Alþingi Icelandic parliament

The Icelandic parliament has just passed legislation adopting the EU’s Third Energy Package, RÚV reports. The legislation has seen 150 hours of debate in the chamber, a record for the Icelandic parliament. The bill was passed with 46 votes for and 13 against.

Perhaps unsurprisingly, all nine Centre Party MPs, which had led several filibusters on the topic, voted against the bill. The 13 opponents also included Independence Party MP Ásmundur Friðriksson and Pirate Party MP Jón Þór Ólafsson.

Read More: Third Energy Package

Prime Minister Katrík Jakobsdóttir expressed her support for the legislation, saying the matter was well-researched by the government. Addressing the bill’s opponents, she suggested they concern themselves with the new constitution, which outlines clearly that Iceland’s resources are owned by the nation.

As the legislation was passed, police expelled one protester from the chamber gallery who was causing a disturbance. A small group of protesters was present outside the parliament building while the debate stood.

Parliament to Vote on Third Energy Package on Monday

iceland parliament

The final parliamentary meeting on the Third Energy Package finally concluded at 9.00pm on Thursday evening after beginning at 11.30 that morning. Vísir reports that voting on the package will take place on Monday.

Thursday’s debate was slightly more moderate in tone than it had been even the day before, Centre Party MP Ólafur Ísleifsson told reporters. The meeting was the last in a special late summer session to allow parliament to conclude debate and vote on the issue, which has been delayed multiple times throughout the spring term and the subject of multiple Centre Party-led filibusters, some of which have run for as long as 134 hours.

Read More: Third Energy Package

The main goal of the European Union’s Third Energy Package is to strengthen the internal energy market for gas and electricity in the EU in order to decrease the cost of energy. The European Union’s First Energy Package and Second Energy Package have already been agreed upon and adopted by members of the EU and EEA, including Iceland. The Third Energy Package was passed within the EU in 2009.

A decade later, Iceland is the only country that has not agreed to the package. Adopting it has proved controversial among Icelanders, some of whom believe it constituted handing over control of Iceland’s energy to European authorities. However, Iceland is not connected to Europe’s energy network and specialists in European law agree that it would not jeopardise the country’s sovereignty over publicly owned energy resources.  Refusing to sign the agreement would be unprecedented and likely jeopardise Iceland’s membership in the European Economic Area.

Based on their speeches, it’s expected that MPs in the Centre and People’s Parties will vote against implementing the Third Energy Package. In addition, Pirate Party MP Jón Þór Ólafsson has also previously stated that he will not vote in favour of the initiative.

Third Energy Package Debate Postponed Indefinitely

Steingrímur J. Sigfússon

A 134-hour filibuster on the Third Energy Package has finally come to an end, though it may be temporary, RÚV reports. Debate on the topic, which was scheduled to continue in Parliament at 10.40am this morning, has been postponed indefinitely. Centre Party MPs have filibustered on the package for over a week, forcing parliament to set aside all other matters, including dozens of bills, parliamentary resolutions, and pending questions scheduled to be dealt with before June 5, the end of spring term.

Sitting party chairmen met this morning to discuss Alþingi’s progress. At that meeting it was decided that party leaders would meet at 11.00am to try to find ways to break the stalemate in the parliament that the Centre Party filibuster had caused. Due to this decision, the Third Energy Package was taken off the schedule, and MPs began debating a parliamentary resolution on health policy instead. The heavy mood of recent days lifted from the chamber and some laughter was heard among the MPs.

Read More: Third Energy Package

The main goal of the European Union’s Third Energy Package is to strengthen the internal energy market for gas and electricity in the EU in order to decrease the cost of energy. The Package was passed within the EU in 2009.  A decade later, Iceland is the only country that has not agreed to the package. Though the package enjoys majority support in Parliament, the Centre Party filibuster has delayed voting on the topic.

Second-longest debate

At 134 hours and eight minutes, the debate on the Third Energy Package is the second-longest in Parliament since 1991. It is just one hour shorter than the Icesave debate and one and a half days longer than the debate on the EEA Agreement.

Speaker of Alþingi Urges Centre Party to End Week-Long Filibuster

Alþingi Speaker Steingrímur J. Sigfússon called a close to Friday’s parliamentary session amid the ongoing Centre Party filibuster, asking MPs to limit or reconsider any further speeches so that other parliamentary business can be attended to before the end of the spring session. RÚV reports that the 17-hour parliamentary session, which came to a close at 9.04am after starting on Thursday at 4.00pm, had been entirely dedicated to Centre Party MPs’ speeches on the Third Energy Package. Centre Party MPs have filibustered all week long to prevent voting on this issue; a parliamentary session that began at 1.30pm on Wednesday, for instance, didn’t end for over 19 hours, with Centre Party MPs having exclusively held the podium from around 3.00pm.

Read More: Third Energy Package

The main goal of the European Union’s Third Energy Package is to strengthen the internal energy market for gas and electricity in the EU in order to decrease the cost of energy. The First Energy Package and Second Energy Package have already been agreed upon and adopted by members of the EU and EEA, including Iceland. The Third Energy Package correlates directly with Europe 2020, a strategy proposed by the European Commission intended to promote “smart, sustainable, inclusive growth” in the European Union. The strategy aims to ensure renewable energy sources supply 20% of all energy in Europe by 2020, and the release of greenhouse gases should decrease by 20%. The Third Energy Package was passed within the EU in 2009.  A decade later, Iceland is the only country that has not agreed to the package.

Centre Party MPs have monopolised the podium throughout the week in order to delay votes on the initiative, which enjoys majority support in Parliament. The first filibuster took place earlier in the month, however, on May 15, when parliament convened from 3.48pm to 6.18am the next morning, with Centre Party MPs prominent in the debate.

Testing patience

This week’s filibuster has been such that Centre Party MPs have often found themselves addressing their comments to an empty parliament in the middle of the night. It has, not unexpectedly, tried the patience of MPs from other parties across the political spectrum. Saying that Centre Party members have used their time “to congratulate each other and ask questions that they then answer in the same words,” Independence Party chair Birgir Ármannsson said that any substantive discussion of the issue ended before the filibuster began and acceded that “it isn’t very exciting to take part in this kind of debate.”

Responses from other MPs has been more pointed. Bjarkey Olsen Gunnarsdóttir, chair of the Left-Greens has urged for a change to parliamentary procedures and rules, while Þorgerður Katrín Gunnarsdóttir, the chair of the Reform Party has said that the filibuster is damaging Alþingi’s public image. Guðmundur Andri Thorsson, the alternate chair of the Social Democratic Alliance, called the filibuster an “artificial debate” and while Helgi Hrafn Gunnarsson, MP for the Pirate Party admitted that while filibusters can be fun, this one is not at all.

Although he has characterized the current debate as “unusual,” noting that it has consisted of the “…MPs of one party discussing the issue, only to then rebut themselves and doing this for around 18 hours,” Steingrímur has been explicit that he does not want to prevent Centre Party MPs from exercising their right to filibuster. Indeed, in order to protect this right, he has twice rescheduled the parliamentary schedule, delaying, for instance, committee meetings that were supposed to take place on Thursday and Friday.

Unfinished business

“Despite another long session about this issue, it doesn’t look like the discussion will end with this session, much to the disappointment of the Speaker,” remarked Steingrímur at the close of Friday’s session. There were still six Centre Party MPs on the list of scheduled speakers, three of whom—Centre Party chair Sigmundur Davíð Gunnlaugsson, Þorsteinn Sæmundsson, and alternate MP Jón Þór Þorvaldsson—have held the podium 24 different times to discuss the Third Energy Package.

Steingrímur noted that debate on the Third Energy Package has been ongoing for over 70 hours, with MPs from the Centre Party speaking for over 60 of those hours. And because so much time has been given over to this issue, Alþingi has not been able to address any other matters all week.

The rights of the few

“The Speaker has a duty to many things, among them to protect MP rights, to see that these aren’t broken in any way,” said Steingrímur. He expressed concern, however, at his ability to do this with fairness, given the current standstill. Steingrímur continued that MPs’ rights and freedom is important, but that the freedom of some MPs could not be asserted at the cost of of all others’. He reminded the assembly of the sheer number of bills still waiting to be addressed before the end of Alþingi’s spring term, which is scheduled to end on June 5. Namely, 71 bills await their first reading in the chamber, and ten await their second. Another 105 bills are in the committee stage. In addition to these bills, 113 parliamentary resolutions await parliamentary vote, and ministers have 142 pending questions from MPs to address. Not having enough time to discuss and address these pending matters would do a great deal of damage, Steingrímur said.

Steingrímur urged the Centre Party MPs to carefully consider how they will proceed, and requested that they keep any future speeches on the Third Energy Package brief so that the discussion can finally be brought to a close.

Centre Party Delays Vote on Third Energy Package

Gunnar Bragi and Sigmundur Davíð

Centre Party MPs filibustered through the night to delay Parliament voting on the Third Energy Package, Vísir reports. A parliamentary session that began at 1.30pm yesterday was finally ended at 8.40am this morning, over 19 hours later, Centre Party MPs having exclusively held the podium from around 3.00pm. Parliament resumes session at 3.00pm today.

The main goal of the European Union’s Third Energy Package is to strengthen the internal energy market for gas and electricity in the EU in order to decrease the cost of energy. This is the second time Centre Party MPs monopolise the podium to delay votes on the Third Energy Package, which enjoys majority support in Parliament. On May 15, parliament convened from 3.48pm to 6.18am the next morning, with Centre Party MPs prominent in the debate.

Read More: Third Energy Package

Only five sessions are left in the spring term, which is scheduled to end on June 5. Meanwhile, seventy-one bills await their first reading in the chamber, and ten await their second. Another 105 bills are in the committee stage. In addition to these bills, 113 parliamentary resolutions await parliamentary vote, and ministers have 142 pending questions from MPs to address.

A controversial package

The European Union’s First Energy Package and Second Energy Package have already been agreed upon and adopted by members of the EU and EEA, including Iceland. The Third Energy Package was passed within the EU in 2009.  A decade later, Iceland is the only country that has not agreed to the package. Adopting it has proved controversial among Icelanders, some of whom believe it constituted handing over control of Iceland’s energy to European authorities. However, Iceland is not connected to Europe’s energy network and specialists in European law agree that it would not jeopardise the country’s sovereignty over publicly owned energy resources.  Refusing to sign the agreement would be unprecedented and likely jeopardise Iceland’s membership in the European Economic Area.

Some 300 individuals under 40 were featured in an ad in Fréttablaðið this week in support of the Third Energy Package. Its slogan reads: “Don’t play with our future. We support Iceland’s continued membership in the EEA Agreement. We want a free, open, and international society and stand together against isolationism.” The ad supporters span across the political spectrum.

In Focus: Third Energy Package

This February, the Icelandic parliament will vote on whether to agree on the European Union’s Third Energy Package. The matter has caused much debate among politicians as the package plays an important role in Iceland’s relationship with the rest of Europe and its membership in the European Economic Area (EEA). Some believe agreeing to the […]

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