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### Viewing cable 09REYKJAVIK73, ICELAND: THE SOCIAL DEMOCRATIC ALLIANCE -- AN OVERVIEW

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
09REYKJAVIK73 | 2009-04-17 16:04 | 2011-01-13 05:05 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Reykjavik

`

    VZCZCXRO2953
    RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
    RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
    DE RUEHRK #0073/01 1071626
    ZNR UUUUU ZZH
    R 171626Z APR 09
    FM AMEMBASSY REYKJAVIK
    TO RUEHC/SECSTATE WASHDC 4047
    INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
    RUEAIIA/CIA WASHDC

` `

    UNCLAS SECTION 01 OF 02 REYKJAVIK 000073

    SIPDIS

    SENSITIVE

    STATE FOR EUR/NB

    E.O. 12958: N/A
    TAGS: PGOV PREL PINR IC
    SUBJECT:  ICELAND: THE SOCIAL DEMOCRATIC ALLIANCE -- AN OVERVIEW

    ¶1.  (U) Summary:  Prime Minister Sigurdardottir's Social Democratic
    Alliance is riding high in the polls ahead of Iceland's April 25
    parliamentary election, and is on the verge of becoming the
    country's leading political party.  An April victory would fulfill
    the party's raison d'etre of forming a credible counterweight to the
    conservative Independence Party's dominance of Icelandic politics,
    and would put to rest the question of whether the Icelandic left can
    ever truly be united.  If Sigurdardottir stays on as PM, it will
    also help resolve the party's turmoil following the sudden illness
    and retirement from politics of previous SDA Chair Ingibjorg Solrun
    Gisladottir.  Though conflicted on defense and security issues, the
    SDA is avowedly pro-EU, and will without doubt work to bring the EU
    membership question to the fore should it stay in power after the
    election.  End Summary.

    ¶2.  (U) The Social Democratic Alliance (SDA) was formally
    established as a political party in 2000.  Four traditional leftist
    parties merged to form the SDA: The Social Democratic Party (SDP),
    The People's Alliance (PA), The Women's List (WL), and a split-off
    party from the SDP, the National Awakening, established by current
    PM Johanna Sigurdardottir.  The SDA wanted to challenge the
    dominance of the Independence Party by creating a large, unified
    social democratic party akin to those in the other Nordic countries.
     This effort was initially stymied by the establishment of a new
    splinter left party, the Left-Green Movement.  The Alliance won only
    27 percent of the 1999 vote, but made strong gains in 2003 with 31
    percent of the vote.  In the 2007 elections support dwindled again
    to 27 percent, but the SDA's credibility rebounded after Ingibjorg
    Solrun Gisladottir brought them into government with the
    Independence Party.  Thanks in large part to the economic collapse
    in 2008 and the fact that public discontent has focused on the IP
    rather than the Social Dems, current polls show the SDA set to
    finally cement a place as a credible counterweight to the
    long-dominant IP.

    ¶3.  (U) The SDA has had trouble articulating a coherent foreign
    policy as the views of the three traditional leftist parties that
    formed the SDA do not readily converge.  The SDP was very supportive
    of NATO and the U.S. presence, while the PA long advocated
    withdrawing from NATO and ending the bilateral defense relationship.
     The WL advocated an essentially pacifist policy.  The SDP was the
    only Icelandic party in favor of EU membership, which both the PA
    and the WL strongly opposed.  Today the SDA champions EU membership
    for Iceland and the adoption of the euro as Iceland's currency.  The
    SDA favors defense ties with the US and is a supporter of NATO
    membership and the ongoing shaping of a security policy for Iceland
    in conjunction with NATO, the EU and the other Nordics.  That said,
    there are still some within the party that cling to the notion that
    Iceland does not need to spend any money on defense.  These voices
    have gained some following in the wake of the 2008 economic crisis.

    ¶4.  (SBU) Ingibjorg Solrun Gisladottir succeeded Ossur
    Skarphedinsson as SDA Chair to much fanfare in 2005, but her efforts
    to unify the party did not immediately translate into better
    standing with the public.  In the run-up to the 2007 parliamentary
    elections, the party did not seem to have a coherent policy on the
    most important issues to voters.  Party members made contradictory
    remarks in the media on SDA voters' core issues, including the
    environment and further build-up of heavy industry.  Voters sensed
    this, and polls showed party support going down to only 20 percent.
    It is possible that voters were suffering from what some termed
    "Ingibjorg Solrun fatigue," as she had been prominent in Icelandic
    politics for a long time as Reykjavik Mayor and then a member of
    parliament.  However, the SDA was able to rally from this low point,
    capitalizing on doubts about the radical Left-Green Movement's
    credibility, and emerged as the second-largest party in the
    Althingi.

    ¶5.  (U) The SDA formed a majority coalition with the IP after the
    elections that pledged to be a "liberal reforming government" for a
    dynamic economy, a robust welfare system, improved household
    finances, and greater business competitiveness.  The coalition was
    popular from the outset, but as dark economic clouds started
    gathering on the horizon in early 2008, public support began to
    dwindle.  The highly leveraged financial system collapsed as lending
    lines closed internationally in September, and the government took
    over Iceland's three largest banks.  Public demonstrations that
    started in October and culminated in January channeled anger and
    frustration at the IP-SDA majority coalition and such institutions
    as the Central Bank and Financial Supervisory Authority. At the end
    of January, the coalition broke down under the pressure.

    ¶6.  (SBU) Gisladottir was diagnosed with a brain tumor after
    becoming ill when attending the UN General Assembly in September
    ¶2008.  As a result,during the most hectic moments of the crisis shewas out on medical leave and unable to resume a ful schedule.  Her
    absence was a double-edged swor for the party.  Many observers note
    that with Gisladottir out, Prime Minister and IP Chair Geir Haade

    REYKJAVIK 00000073  002 OF 002

    became the sole public face of the cabinet during the crisis,
    leading many to associate the government's poor handling of affairs
    with the IP and Haarde alone.  The SDA was thus spared the full
    brunt of popular anger over the collapse.  On the other hand,
    Gisladottir's absence was also apparent in the increasingly open
    tension between the coalition partners and disagreements between SDA
    ministers.  After the IP-SDA coalition broke up, several IP insiders
    vented their frustration with the SDA, which they viewed as
    "ungovernable" without Gisladottir's steady hand.

    ¶7.  (SBU) Gisladottir returned briefly to the fray as the coalition
    unwound in January, but then chose to step down as Foreign Minister
    and did not take a seat in the new SDA-Left Green minority coalition
    headed by Johanna Sigurdardottir as Prime Minister.  A break from
    political work in February proved insufficient for Gisladottir to
    fully recover her health, and in early March she announced her
    departure from politics for an unspecified time.  All eyes turned to
    Sigurdardottir, who received tremendous support in the SDA's
    Reykjavik primary and came under massive pressure to declare her
    candidacy in the election for SDA Chair at the SDA national
    convention in late March.  After giving it some thought,
    Sigurdardottir ran unopposed and received 98 percent of the total
    vote at the national convention.

    ¶8.  (SBU) The SDA primaries produced some regeneration of party
    lineups in all six constituencies.  Half of the candidates are
    incumbent MPs while the other half is either absolute newcomers or
    have previous ties to the SDA.  The party leadership says that the
    most important tasks at hand for the next government will be to
    ensure the increased creation of wealth, employment, and welfare.
    In this regard, the SDA wants to reestablish the Icelandic financial
    system and re-instill faith in the Icelandic economy.  The SDA
    believes it is necessary to follow through with the plan agreed on
    with the IMF and that it is vitally important to initiate EU
    accession talks as soon as possible.  Although the SDA has stated
    its preference to continue working with the Left-Green Movement in a
    coalition government, it has not ruled out other coalition options.
    Some believe this is a tactic to force the LG to the table on the EU
    question, as the Left-Greens are still reluctant to move closer to
    Brussels.  Given the strength of SDA conviction on the EU question,
    however, there is little doubt that a continued government under
    Prime Minister Sigurdardottir's leadership will move to address the
    issue sooner rather than later.

    VAN VOORST

`