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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"I won't do this forever": meet Alternative leader, Uffe Elbæk – Denmark's Jeremy Corbyn

The Alternative party leader speaks frankly about his party's journey from being seen as a comedy sideshow to taking nine seats in the Danish elections.

In Britain, popular anti-politics sentiment has engulfed the Labour party, through Jeremy Corbyn. In Denmark's splintered, assorted political landscape, it has created a party called the Alternative. The barely two-year-old party was depicted as a comedic sideshow before June's elections. But with nine of 179 seats, they embarrassed all electoral predictions, including their own. Their rise owes to a growing European gripe with politics as usual, as well as to growing chasms within Danish politics.

"I don't want to do this forever. I want to be a pensioner, lay on a beach somewhere, write books and make money from speeches." Embracing his maverick figure, the 61-year-old witty, self-deprecating leader, Uffe Elbæk, has become one of the most resonant voices in Danish politics. As an ex-culture minister he was tarred by conflict of interest accusations leading to him to voluntarily step down as minister in 2012. He was later cleared of wrongdoing but the ridicule in the media stuck. His re-emergence in Danish politics is no longer trivial. His party has struck a match on a sentiment he claims is not European but international.

"What we see across Europe is a growing divide between politicians and their electorate. We are trying to bridge that divide and move from a representative democracy to a far more involving democracy. You see the same in the Scottish Referendum, in Syriza, in Podemos, in a way in Bernie Sanders and, of course, in Jeremy Corbyn".

In tandem with the rise of populist parties in Europe, they've capitalised on a discontent with mainstream politics, perceived spin and sound bite. In the last elections, the Alternative refused to directly persuade the electorate to vote for them, instead encouraging them to vote on their convictions.

“We are critical of the neoliberal doctrine from Thatcher and Reagan and growing inequality," explains Elbæk. "But I believe deeply in human potential and creating a more entrepreneurial, creative society based on progressive values".

The party decides its policies in what they call "political laboratories" where members and non-members are invited to share, hone, and develop policy ideas. The party is in many respects what it says on the tin. Despite flinching away from left and right political categories, they are staunchly pro-environment and pro-immigration.

"A lot of progressives do a lot of good things in the grassroots, but the reality is that few want to go into the big party machines." The Alternative has been a huge grassroots built campaign, attracting exactly those types of voters. It has gained over 6,000 members in its first two years, a remarkable feat as membership across Danish political parties steadily declines.

The party appeals to a desire, more prominent on the left of the Danish electorate, for a straight-talking, green party not overtly party political but reminiscent of conventionally Scandinavian values of tolerance and consensus. It is hawkish about whether socialist-inspired thinking is condusive to modern challenges, but similarly it believes in harnessing public support directly. They are a growing albeit slightly hippy and unconventional vehicle for political expression.

The migrant crisis has exposed chasms in Danish politics. Controversial proposals to advertise anti-refugee adverts, by integration minister Inger Støjberg, have sparked widespread concern. From across politics and from business, there has been a steady reel of expressed concern that Denmark risks creating a perception of intolerance to foreigners.

A private Danish group called People Reaching Out, published adverts in the same four Lebanese newspapers that ran the anti-refugee ads. Crowdfunding over £16,000, they replicated the original ads writing, "sorry for the hostility towards refugees expressed here. From people's to people's we wish to express our compassion and sympathy to anyone fleeing war and despair".

Michala Bendixen, who heads the campaign group, Refugee's Welcome, wrote an op-ed in The Daily Star, one of the Lebanese papers which carried the ad. She stated that, "the adverts give a completely distorted picture of the situation", clarifying that the Danish asylum process was amongst the fastest in Europe.

Støjberg's reforms to immigration and almost 50 per cent cuts to refugee benefits have made her a controversial figure but despite much criticism, topped a recent poll of ministers in the current government that voters felt were doing well. Largely on the back of a hardline position on immigration, the Danish People's Party won 21 per cent of the popular vote in this year's elections. Similarly to many countries across Europe, the migrant crisis has been emotive and polarising. On that divide, the Alternative has been categorical.

"In Denmark there is one thing happening in politics and another in the streets," says Elbæk. "There is a disgraceful lack of empathy from politicians but the reaction from the Danish people has been really touching. Suddenly we were seeing hundreds of refugees on our motorways, and it came as a reality shock to the Danish people. But they responded to it by offering shelter, food, water, and blankets."

Denmark's new government is hardening its position on immigrants and refugees. The split reaction reflects a more polarised terrain. There is a debate about what Denmark's values really are, and whether the migrant crisis betrays or protects them. Within it, the Alternative, partly motley, but with a non-trivial and rising electoral appeal, are an increasingly influential voice.