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### Viewing cable 09REYKJAVIK219, ICESAVE BILL LINGERS AS DIVISIVE FORCE IN GOVERNMENT AND

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09REYKJAVIK219 | 2009-12-08 16:04 | 2011-01-13 05:05 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Reykjavik

`

    VZCZCXRO0653
    PP RUEHIK
    DE RUEHRK #0219/01 3421656
    ZNR UUUUU ZZH
    P 081656Z DEC 09
    FM AMEMBASSY REYKJAVIK
    TO RUEHC/SECSTATE WASHDC PRIORITY 4236
    RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
    RHEHNSC/NSC WASHDC PRIORITY
    INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

` `

    UNCLAS SECTION 01 OF 02 REYKJAVIK 000219

    SENSITIVE

    NSC FOR HOVENIER
    TREASURY FOR NORTON

    SIPDIS
    E.O. 12958: N/A
    TAGS: PGOV PREL ECON EFIN IC
    SUBJECT:  ICESAVE BILL LINGERS AS DIVISIVE FORCE IN GOVERNMENT AND
    SOCIETY

    REYKJAVIK 00000219  001.2 OF 002

    ¶1. (U) Summary.  The coalition government recently reached a
    negotiated settlement with the opposition that allows the Icesave
    bill to move to the next stage of the parliamentary process.  The
    settlement was reached only after the opposition used filibustering
    techniques to stall the bill in the second reading for more than one
    month because they did not have the necessary votes to defeat the
    measure.  The compromise, which will send the bill back to the
    budget committee on December 8 for further discussion on 16 key
    points, allows parliament to move forward and focus on other
    pressing matters such as the budget bill and proposed tax hikes.  It
    does not, however, resolve the Icesave issue which continues to
    linger and generate animosity in Iceland.  Expectations are that the
    bill will not pass before year end. End summary.

    Parliamentary Discussions Turn Ugly
    ------------------------------------
    ¶2. (U) The coalition government reached a settlement with the
    opposition on December 4 that moves the Icesave bill out of second
    reading and back to the budget committee for further discussion on
    16 key points. This ends more than one month of stalling by the
    opposition and is, technically, progress as it moves the bill closer
    to an eventual vote.  A parliamentary vote, however, is not imminent
    and discussions during second reading were so contentious that they
    opened wounds unlikely to heal quickly.  There were several tense
    exchanges between members of parliament that clearly exceeded the
    standard level of parliamentary decorum.

    ¶3. (SBU) One notable exchange occurred when Birgitta Jonsdottir, an
    MP in The Movement, scolded the president of the parliament by
    yelling out "you are not my president" during the course of
    discussion.  The comment came after the president of the parliament,
    Asta Ragnheidur Johannesdottir, tried to regain order and ensure
    that parliamentary procedures were followed while Jonsdottir was
    speaking.  Such egregious behavior was not limited to the
    discussions among parliamentarians.  One member of parliament
    confided to Emboff that she regularly receives hate mail regarding
    the Icesave issue, including one email that she considered to be a
    thinly veiled death threat if she voted in favor of the bill.

    The Coalition's Perspective
    ----------------------------
    ¶4. (SBU) In private discussions with Emboffs, several members of the
    coalition expressed frustration with the government's inability to
    resolve the Icesave issue.  The government has the necessary votes
    to pass the bill and some members of the coalition would like to see
    their side force a vote and put an end to the matter.  Leadership
    within the coalition, however, is wary of forcing the issue because
    it does not want to incur the wrath of the public.  If the coalition
    moves too quickly, before all options are exhausted, it may be
    viewed by the public as pandering to foreign entities and
    sacrificing the future of Iceland.  Some members of the coalition
    also believe that it is important to let the dialogue run its course
    so that the opposition can maintain its dignity and to keep open the
    possibility of future political cooperation.  They believe that the
    opposition's assistance may be necessary when parliament tackles
    other controversial matters that notably include the budget bill and
    proposed tax hikes.

    The Opposition's Perspective
    -----------------------------
    ¶5. (SBU) The opposition, for its part, would like the Icesave
    agreement to fail and for the issue to be decided in a court of law.
     It is, however, vague regarding the mechanics of exactly how this
    could occur.  Without a clear alternative to offer, the opposition
    seems content to let the issue linger as public resentment builds.
    This strategy may be paying dividends as a November 30 Gallup poll
    shows that the Independence Party is now the most popular party in
    the country with 32 percent of the nation's support.  The coalition
    partners, the Social Democrats and Left Greens, are second and third
    in the poll with 26 and 23 percent, respectively, of the nation's
    support.  Local elections next spring will give a better picture of
    how much national support each party actually  enjoys. One observer
    told Emboffs that, if matters continue along their current course,
    the Independence Party could do quite well in those elections.

    ¶6. (U) The opposition points to an anti-Icesave petition that has
    garnered over 30,000 signatures in less than one week as proof that
    they have the public's support.  The petition calls on the President
    to refuse to sign the Icesave bill should it eventually pass
    parliament.  Were the president to refuse to sign the bill the issue
    would be put before the people in a national referendum.  (Note: In
    2004, President Grimsson refused to sign a contested bill on the
    mass media.  The bill did not go to a national referendum, however,
    as parliament withdrew the bill before that could happen.  This is
    the only time an Icelandic President has refused to sign a bill into
    law. End Note.)  Although it is unlikely the president would

    REYKJAVIK 00000219  002.2 OF 002

    actually take this drastic step, the opposition would like to delay
    passage of the bill to allow as many people as possible to sign this
    petition.

    Comment
    --------
    ¶7. (SBU) The Icesave bill is still moving forward and will likely
    pass eventually, as the coalition believes it has a majority of
    votes.  The bill's progression through the second stage of the
    parliamentary process, however, has not gone as smoothly as
    anticipated.  The process has exacerbated tensions between the
    governing coalition and the opposition that will likely hinder
    cooperation on future legislative issues, notably the budget bill
    and potential tax hikes.  The issue has also revealed fissures
    within the ranks of the coalition.  While the coalition is expected
    to remain in power for the foreseeable future, in seeking to reach
    consensus with the opposition rather than pushing the matter through
    Parliament, the coalition may very well have eroded its
    effectiveness.  Iceland, itself, will likely also remain incapable
    of moving forward so long as the Icesave matter lingers as a
    divisive force in society.
    WATSON

`