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.)
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The case against TTIP

Let’s not weep for a US trade deal.

It was the sentence, we were assured, that torpedoed the referendum debate. Asked about Britain’s chances of securing a unilateral trade deal with the United States after leaving the EU, Barack Obama declared: “The UK is going to be in the back of the queue.”

The comment was catnip to the Remain side: the Brexiters have long conjured up the image of a newly divorced Britain taking her rightful place in the “Anglosphere” without the rest of the EU dragging us down. Instead, the US president was telling us, we would be left out in the cold.

But here’s a question for you: what’s so great about a US trade deal, anyway? For the past three years, the acronym “TTIP” has been floating across my vision. I’ve always had the sense it was a Bad Thing, without ever really understanding why. So what is the Transatlantic Trade and Investment Partnership, and should we be against it?

My first port of call is my nerdiest friend. “The first rule of TTIP is, anyone who thinks TTIP matters is a douche,” he tells me briskly. It’s safe to say that’s very much not the opinion of Mark Dearn, a senior trade campaigner at War on Want, who gives me a quick run-through of why the agreement has attracted such widespread protests, including a march by 150,000 people in Berlin last October.

“It’s the biggest trade deal in the history of the world,” he says. “It’s negotiated in secret: all the EU currently publishes is its offers. They don’t publish the US offers and they don’t publish the consolidated text – the legally binding documents.”

Such secrecy – which is, to be fair, not unusual in delicate negotiations – does make TTIP look sinister. Very few people are allowed to see the full set of documents, and they must do so in special reading rooms, after signing a non-disclosure agreement and handing over their electronic devices.

There are two areas that particularly alarm campaigners: food and health care. Last year, Alan Beattie of the FT summarised the objections as fears that TTIP will “gut public health-care systems and force American Frankenfoods down European gullets”.

War on Want’s Mark Dearn echoes this, and suggests that removing barriers to trade – the stated aim of TTIP – will lead to Europe lowering its food hygiene and additive standards to match those of the US.

“Eighty per cent of US beef is full of growth hormones or antibiotics that are banned in the EU,” Dearn says. “Forty per cent of US grain uses banned pesticides.” The US also permits “acid washing” of meat to remove contamination. “The EU views that as a form of moral hazard; it makes you think it doesn’t matter what you do [in the factory] up to that point, because you’re killing microbes at the end.”

Many campaigners also want the NHS exempted from TTIP. They worry its provisions on “indirect expropriation” will encourage private companies to sue governments for restricting their ability to do business. That could penalise any state that nationalised a failing industry or cancelled a planned project. Or, perhaps, ran a public health service.

The National Health Action Party has warned that TTIP could deliver a “fatal blow to the NHS”. I ask the party’s campaign manager, Deborah Harrington, what changes patients will experience if TTIP is implemented. “Nothing,” she answers, to my surprise. “But people don’t notice what’s different now, because it’s all behind the NHS logo. It will take people time to realise how the private sector has reshaped the NHS. There’s no big bang.”

Finally, I call the Adam Smith Institute, the country’s best-known libertarian think tank, reasoning that if they’re for it, then I’m probably against it. The ASI’s executive director, Sam Bowman, confirms that he backs TTIP in principle, “although it’s hard trying to predict what’s in an agreement we haven’t seen”. He tells me that the picture of the US as a food hygiene Wild West is not completely accurate: American producers can’t label beef from cows fed antibiotics as organic, for example, but Europeans can. He also doesn’t find the acid-washing of meat as alarming as it sounds. “It sounds gross – basically you’re dipping a chicken in swimming- pool water – but it’s done to comply with antimicrobial laws. And in the US, people find the idea of unpasteurised cheese horrifying.”

Bowman believes that TTIP, like the European single market, will increase GDP by increasing trade. He points out that the UK parliament will get a veto on the final text, and worries that campaigners “are taking the lack of transparency as an excuse to promote a conspiracy theory – that EU governments are colluding to deregulate”. He laughs. “As a libertarian, I wish that were true.”

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 28 April 2016 issue of the New Statesman, The new fascism