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.)
ONEN ZVULUN/AFP/Getty Image
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Shimon Peres dies: President Obama leads tributes to Israel's former president and Nobel Peace Prize winner

World leaders rushed to pay tribute to the former Israeli president and Nobel Peace Prize winner. 

Shimon Peres, the former Israeli prime minister, president and Nobel Prize winner has died aged 93.

Peres, who served as prime minister twice and later became Israel's ninth president, suffered a stroke two weeks ago and has been seriously ill at a hospital near Tel Aviv since. His condition had improved before a sudden deterioration on Tuesday led to his death.

He won the Nobel Peace Prize in 1994 for his role negotiating the Oslo Peace Accords a year earlier, which talked of an independent Palestinian state. 

His son Chemi led the tributes to his father — praising his seven decades of public service and describing him as "one of the founding fathers of the state of Israel" who "worked tirelessly" for it.

World leaders rushed to honour his memory with President Obama calling him "the essence of Israel itself".

"Perhaps because he had seen Israel surmount overwhelming odds, Shimon never gave up on the possibility of peace between Israelis, Palestinians and Israel's neighbours," Obama wrote.

Britain’s chief rabbi Rabbi Ephraim Mirvis bid farewell in an emotional statement: "There will be countless tributes to Shimon Peres over the coming days, but I fear that few, if any, will adequately capture the palpable sense of collective grief felt across the world, nor do justice to the memory of a true giant amongst men," he said.

"It is true that Shimon Peres was a great statesman. He was the noblest of soldiers, a born leader, a uniquely talented diplomat, an inspiring speaker and a relentless campaigner."

The former US president Bill Clinton called Peres a "genius with a big heart" and said he would never forget “how happy” Peres was in 1993 when the Oslo Accords were signed on the White House lawn. 

"The Middle East has lost a fervent advocate for peace and reconciliation and for a future where all the children of Abraham build a better tomorrow together," he said.

"And Hillary and I have lost a true and treasured friend.”

Peres’s former political opponent, Prime Minister Benjamin Netanyahu, said in his statement: “Along with all the citizens of Israel, the entire Jewish people and many others around the world, I bow my head in memory of our beloved Shimon Peres, who was treasured by the nation.”

UN Secretary-General Ban Ki-moon said that "even in the most difficult hours, he remained an optimist about the prospects for reconciliation and peace".

French president Francois Hollande said "Israel has lost one of its most illustrious statesmen, and peace has lost one of its most ardent defenders"

Canadian PM Justin Trudeau, Australian PM Malcolm Turnbull and Indian PM Narendra Modi have also paid tribute.

Among the world leaders expected to attend his funeral in Jerusalem on Friday are President Obama, Prince Charles and Pope Francis.