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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Hate Brexit Britain? 7 of the best places for political progressives to emigrate to

If you don't think you're going to get your country back, time to find another. 

Never mind the European Union, the UK is so over. Scotland's drifting off one way, Northern Ireland another and middle England is busy setting the clocks back to 1973. 

If this is what you're thinking as you absentmindedly down the last of your cheap, import-free red wine, then maybe it's time to move abroad. 

There are wonderful Himalayan mountain kingdoms like Bhutan, but unfortunately foreigners have to pay $250 a day. And there are great post-colonial states like India and South Africa, but there are also some post-colonial problems as well. So bearing things like needing a job in mind, it might be better to consider these options instead: 

1. Canada

If you’re sick of Little England, why not move to Canada? It's the world's second-biggest country with half the UK's population, and immigrants are welcomed as ‘new Canadians’. Oh, and a hot, feminist Prime Minister.

Justin Trudeau's Cabinet has equal numbers of men and women, and includes a former Afghan refugee. He's also personally greeted Syrian refugees to the country. 

2. New Zealand 

With its practice of diverting asylum seekers to poor, inhospitable islands, Australia may be a Brexiteer's dream. But not far away is kindly New Zealand, with a moderate multi-party government and lots of Greens. It was also the first country to have an openly transexual mayor. 

Same-sex marriage has been legal in New Zealand since 2013, and sexual discrimination is illegal. But more importantly, you can live out your own Lord of the Rings movie again and again. As they say, one referendum to rule them all and in the darkness bind them...

3. Scandinavia

The Scandinavian countries regularly top the world’s quality of life indices. They’re also known for progressive policies, like equal parental leave for mothers and fathers. 

Norway ranks no. 2 of all the OECD countries for jobs and life satisfaction, Finland’s no.1 for education, Sweden stands out for health care and Denmark’s no. 1 for work-life balance. And the crime dramas are great.

Until 24 June, as an EU citizen, you could have moved there at the drop of a hat. Now you'll need to keep an eye on the negotiations. 

4. Scotland

Scottish voters bucked the trend and voted overwhelmingly to stay in the European Union. Not only is the First Minister of the Scottish Parliament a woman, but 35% of MSPs are women, compared to 29% of MPs.

If you're attached to this rainy isle but you don't want to give up the European dream, catch a train north. Just be prepared to stomach yet another referendum before you claw back that EU passport. 

5. Germany

The real giant of Europe, Germany is home to avant-garde artists, refugee activists and also has a lot of jobs (time to get that GCSE German textbook out again). And its leader is the most powerful woman in the world, Angela Merkel. 

Greeks may hate her, but Merkel has undoubtedly been a crusader for moderate politics in the face of populist right movements. 

6. Ireland

It's English speaking, has a history of revolutionary politics and there's always a Ryanair flight. Progressives though may want to think twice before boarding though. Despite legalising same-sex marriage, Catholic Ireland has some of the strictest abortion laws of the western world. 

A happier solution may be to find out if you have any Irish grandparents (you might be surprised) and apply for an Irish passport. At least then you have an escape route.

7. Vermont, USA

Let's be clear, anywhere that is considering a President Trump is not a progressive country. But under the Obama administration, it has made great strides in healthcare, gay marriage and more. If you felt the Bern, why not head off to Bernie Sanders' home state of Vermont?

And thanks to the US political system, you can still legally smoke cannabis (for medicinal reasons, of course) in states like Colorado.