Why has Iceland returned to the politicians who caused their crisis?

The centre-right's victory masks growing disaffection with politics.

As Iceland re-elects the parties that led it into the financial crisis and Italy forms its broadest coalition since 1946 to the sound of gunfire, something strange is afoot in European politics. As the economic crisis rumbles on past the five-year mark, traditional party systems across the continent are under strain and contorting themselves into ever-more unusual arrangements to meet the challenge posed by the plunging living standards of their electorates.

In retrospect Britain, which elected its first coalition since World War II in 2010, now looks like a trend-setter. Everywhere one looks across the continent, the financial crisis has upended the old patterns of politics. The "grand coalition" of left and right in Italy is only the latest example of political parties closing ranks against threats to their traditional position – in this case, economic woe and a surge by the anti-establishment Five Star Movement, which may be led by a comedian but proved it was no joke by garnering over 25 per cent of the vote in February’s election.

Meanwhile in Iceland, voters have just returned the centre right to power in the form of the Progressive Party and the Independence Party. These are the parties many blame for getting them into a financial mess in the first place. It was Independence Party Prime Minister David Oddsson who gave Iceland its version of the City’s "big bang" and was central bank governor when the financial crisis struck. That voters would turn back to these old hands – much less in the biggest electoral swing in Iceland’s independent history – is, to put it mildly, a sign of some desperation.

The head of Iceland's Pirate Party – another anti-establishment force which just won its first seats in a national legislature, becoming the first Pirate Party to do so – was rueful about the return of the centre right. "It is the problem of the leftwing," said Birgitta Jonsdottir, a Pirate Party MP. "They clean up the vomit after the cocaine party of the neocons, who go into rehab and then come back to reap the benefits." But the very success of her own movement is a sign of something else – outsiders are increasingly crashing the party.

Europe's national governments all share a basic impotence in the face of the economic crisis and the austerity consensus imposed from Brussels, Berlin and the bond markets. Even Iceland, which has its own currency, is not fully ruler in its own house – and the outgoing government had received many plaudits from outsiders like the IMF. The exact party configurations ruling in each capital are, to an extent, besides the point in the face of this external pressure. Witness how France’s first Socialist government in twenty years is now planning to slash capital gains tax to attract businesses.

This impotence is leading to a general decline of established party systems across Europe. Voters are realising that none of the traditional parties can fundamentally challenge the austerity consensus, and are turning to outsiders who might. Italy's Five Star Movement is one example. Greece's Coalition of the Radical Left (Syriza), which is now the second-biggest party in the country’s legislature, is another. Even UKIP is capitalising on the mess on the continent and economic fears here at home to shake up the British political scene.

As austerity passes into its second half-decade – and as forecasts for when it will come to an end are pushed further into the future – the strain on Europe’s traditional parties will increasingly show.  If Italy’s broadest coalition since World War II and Iceland’s establishment parties cannot deliver economic security to their voters – and there seems little reason to think they can – then what happens next will be unpredictable.  Voters are running out of options near the traditional centres of their politics.

All of this poses the greatest long-term threat to the austerity consensus across Europe, as perhaps leading figures in Brussels and Berlin are starting to realise as they rhetorically distance themselves from austerity and start to talk about how, as Jose Manuel Barroso said recently, the policy has reached the limits of its popular support. But the pull of the consensus – tied up as it is with continued euro membership and the European project as a whole – remains strong.

If European governments of the traditional left and right don’t find a way to keep public confidence in both themselves and the European project alive, then we will see outsiders keep rising and rising until one day they rise all the way into power. Even more worrying is what happens when despair at the political centre becomes despair over the political system as a whole, and starts to find expression in movements like Greece's Golden Dawn or in senseless acts of violence like the shooting of two police officers in Rome. They too are warning signs on the road to an austere future.

Birgitta Jonsdottir, leader of Iceland's anti-establishment Pirate Party. (Photo: Getty.)
Photo: Getty
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Saudi Arabia is a brutal and extremist dictatorship – so why are we selling it arms?

With conflict in Yemen continuing, it’s clear that we’re failing to moderate the actions of “our despots”.

This year, during Pride week, I noticed something curious on top of the Ministry of Defence just off Whitehall. At the tip of the building’s flagpole hung the rainbow flag – a symbol of liberation for LGBTIQ people and, traditionally, a sign of defiance, too.

I was delighted to see it, and yet it also struck me as surprising that the governmental headquarters of our military would fly such a flag. Not only because of the forces’ history of homophobia, but more strikingly to me because of the closeness of our military establishment to regimes such as Saudi Arabia, where homosexuality is a sin punishable by jail, lashing and even death

That relationship has been under the spotlight recently. Ministers writhed and squirmed to avoid making public a report that’s widely expected to reveal that funding for extremism in Britain has come from Saudi Arabia. The pressure peaked last week, after a series of parliamentary questions I tabled, when survivors of 9/11 wrote to Theresa May asking her to make the report public. At the final PMQs of the parliamentary term last week, I again pressed May on the issue, but like so many prime ministers before her, she brushed aside my questioning on the link between British arms sales and the refusal to expose information that might embarrass the Riyadh regime. 

The British government’s cosy relationship with Riyadh and our habit of selling weapons to authoritarian regimes is “justified" in a number of ways. Firstly, ministers like to repeat familiar lines about protecting British industry, suggesting that the military industrial complex is central to our country’s economic success.

It is true to say that we make a lot of money from selling weapons to Saudi Arabia – indeed figures released over the weekend by the Campaign Against Arms Trade revealed that the government authorised exports including £263m-worth of combat aircraft components to the Saudi air force, and £4m of bombs and missiles in the six months from October 2016.

Though those numbers are high, arms exports is not a jobs-rich industry and only 0.2 per cent of the British workforce is actually employed in the sector. And let’s just be clear – there simply is no moral justification for employing people to build bombs which are likely to be used to slaughter civilians. 

Ministers also justify friendship and arms sales to dictators as part of a foreign policy strategy. They may be despots, but they are “our despots”. The truth, however, is that such deals simply aren’t necessary for a relationship of equals. As my colleague Baroness Jones said recently in the House of Lords:

"As a politician, I understand that we sometimes have to work with some very unpleasant people and we have to sit down with them and negotiate with them. We might loathe them, but we have to keep a dialogue going. However, we do not have to sell them arms. Saudi Arabia is a brutal dictatorship. It is one of the world’s worst Governments in terms of human rights abuses. We should not be selling it arms.”

With Saudi Arabia’s offensive against targets in Yemen continuing, and with UN experts saying the attacks are breaching international law, it’s clear that we’re failing to moderate the actions of "our despots".

The government’s intransigence on this issue – despite the overwhelming moral argument – is astonishing. But it appears that the tide may be turning. In a recent survey, a significant majority of the public backed a ban on arms sales to Saudi Arabia and just this weekend the Mayor of London denounced the arms fair planned in the capital later this year. When the government refused to make the terror funding report public, there was near-universal condemnation from the opposition parties. On this issue, like so many others, the Tories are increasingly isolated and potentially weak.

Read more: How did the High Court decide weapon sales to Saudi Arabia are lawful?

The arms industry exists at the nexus between our country’s industrial and foreign policies. To change course we need to accept a different direction in both policy areas. That’s why I believe that we should accompany the end of arms exports to repressive regimes with a 21st century industrial policy which turns jobs in the industry into employment for the future. Imagine if the expertise of those currently building components for Saudi weaponry was turned towards finding solutions for the greatest foreign policy challenge we face: climate change. 

The future of the British military industrial establishment’s iron grip over government is now in question, and the answers we find will define this country for a generation. Do we stamp our influence on the world by putting our arm around the head-choppers of Riyadh and elsewhere, or do we forge a genuinely independent foreign policy that projects peace around the world – and puts the safety of British people at its core?

Caroline Lucas is the MP for Brighton Pavilion.