VZCZCXYZ0012
RR RUEHWEB

DE RUEHRK #0061/01 0841654
ZNR UUUUU ZZH
R 251654Z MAR 09
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC 4032
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEAIIA/CIA WASHDC

UNCLAS REYKJAVIK 000061 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/NB, INR-Bio 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PINR IC
SUBJECT:  ICELAND: THE PROGRESSIVE PARTY -- AN OVERVIEW 
 
¶1.  (U) Summary:  The traditionally agrarian Progressive Party is 
looking to the 2009 elections as a chance to reclaim lost glory and 
its historical role as the deciding factor in governing coalitions 
on both ends of the political spectrum.  The party -- Iceland's 
second-largest for most of the last century -- suffered mightily at 
the polls in 2006 and 2007 from perceptions of cronyism and 
corruption. Support has decreased still further since then despite 
attempts to modernize the party, which seem to have widened internal 
disputes rather than overcome them. Four chairmen in three years 
have not managed to bring the disagreements to a close, but many are 
hopeful that a new young chairman can finally unify the party. The 
party is pro-NATO and until recently was against, or at best 
ambivalent towards, the EU, but has shifted more to a pro-EU 
platform in the last few months. The PP is currently defending the 
Social Democratic Alliance/Left-Green Movement minority coalition 
and claims to prefer a leftist government after the upcoming 
parliamentary elections. End Summary. 
 
¶2.  (SBU) The Progressive Party (PP) was established in 1916. For 
most of the twentieth century it was the second largest party in 
Iceland, but its poll numbers have slipped in recent years. The 
constituency is largely rural and agrarian, closely connected with 
the cooperative movement in Iceland. The PP has frequently played a 
kingmaker role, given the inability of any one party to win an 
outright majority on its own. Icelanders describe the party as "open 
at both ends" because of its ability to form coalitions on both the 
left and right of the political spectrum. 
 
¶3.  (SBU) Former party leader Halldor Asgrimsson (1994-2006), who 
was Prime Minister in the IP-PP coalition from 2004-2006, attempted 
to modernize the party and increase its appeal to urban voters, but 
he proved mostly unsuccessful in this endeavor. Asgrimsson stepped 
down as chairman of the party after the municipal elections in May 
2006 when the PP suffered its second-worst electoral outcome ever. 
The party was also embroiled in discord between the rural and 
agrarian component of the party -- led by Deputy Chair Gudni 
Agustsson -- and the urban faction associated with Asgrimsson. 
Asgrimsson bypassed Agustsson when he handpicked technocrat Jon 
Sigurdsson for the chairman position. This only further complicated 
intra-party arbitration, and Sigurdsson did not succeed in settling 
the disagreements in the party. Sigurdsson led the PP through the 
2007 parliamentary elections where it suffered its worst outcome in 
any parliamentary elections, receiving only 11.7 percent of the 
national vote. 
 
¶4.  (SBU) In the 2007 campaign, the Progressives were hamstrung by 
the public's perception that the party was rife with cronyism that 
was just shy of outright corruption.  In what became an emblematic 
case, about a month before the election the Althingi granted 
Icelandic citizenship to the soon-to-be daughter-in-law of Minister 
of Health Jonina Bjartmarz under circumstances in which political 
connections seemed to many to be the deciding factor.  Given its 
command of the Ministry of Industry and Commerce, the party also 
took the brunt of controversy over expansion in the aluminum sector 
and resulting environmental concerns.  Many Progressives complained 
that somehow their coalition partner, the Independence Party, reaped 
all the credit for Iceland's booming economy while the PP was left 
to take the blame for unpopular side effects of the expansion.  The 
party was hammered on Election Day, dropping from 12 Althingi seats 
to seven and failing to win a single seat in the Reykjavik district. 
 Though the IP-PP coalition still held a one-seat majority, IP Chair 
Geir Haarde chose instead to build a larger majority with the Social 
Democratic Alliance, leaving the Progressives out in the cold. 
 
¶5.  (U) Sigurdsson resigned as chairman after the elections and was 
replaced by Deputy Chairman Gudni Agustsson. This opened a window of 
opportunity for Agustsson to guide the party back to its traditional 
roots to try to regain some of the recently lost support. Agustsson 
was ineffective at unifying the broken party and the PP did not 
bounce back in opinion polls. In November 2008, he resigned suddenly 
from the position of chairman after a bitter central committee 
meeting at which the party's youth wing made clear its unhappiness 
with his leadership. Deputy Chairman Valgerdur Sverrisdottir headed 
the party until the January 2009 party national congress where the 
party elected a new leadership.  Sverrisdottir herself did not seek 
election as chairman and when early elections were called for April 
2009 announced that she would be retiring from politics. 
 
¶6.  (U) The national congress was historic for two reasons. First, 
an outsider was elected chairman of the party for the first time, 
namely 34-year-old Sigmundur David Gunnlaugsson, who had joined the 
party only one month earlier.  Though Gunnlaugsson's father had 
represented the party in parliament in the 1990s, Gunnlaugsson had 
no prior political experience. Second, the PP resolved at the 
congress to support starting accession negotiations with the 
European Union (EU) given certain preconditions. 
 
¶7.  (SBU) During the January public demonstrations in Iceland when 
the majority coalition was teetering on the brink of collapse, the 
PP, under the leadership of new chairman Gunnlaugsson, informed the 
Social Democratic Alliance (SDA) and the Left-Green Movement (LGM) 
that if they were to form a minority coalition, then the PP would 
defend it. On February 1, the SDA and LGM did indeed form a minority 
coalition government and the PP pledged to defend it against 
no-confidence motions in the Althingi. For the first few weeks after 
the new chairman was elected, the party surged in the polls, at 
times measuring at over 20 percent. Support has started to dwindle 
since then as the party has struggled at finding the balance between 
defending the government -- and therefore bearing some of the cost 
of unpopular decisions -- and not having any direct influence over 
the SDA-LG coalition's policies. 
 
¶8.  (SBU) Gunnlaugsson's lack of experience in the political arena 
is also raising doubts. The new party chair has in recent statements 
all but excluded cooperation with the Independence Party after the 
elections, but then in mid-March has also harshly criticized the SDA 
for not being a "real" party and called the SDA's credibility into 
question.  At the same time, Gunnlaugsson's praise for the LGM has 
bordered on the saccharine, something of a break from tradition for 
the centrist Progressives. Some believe that although the party 
appears to be courting leftist elements, this could be a political 
ploy and the PP could go back to its kingmaker role again, joining 
either the center-right or the center-left forces in parliament. 
 
¶9.  (SBU) On foreign affairs the PP is pro-NATO, and took on a more 
modern view on western defense cooperation under Asgrimsson, with 
Icelandic participation in peacekeeping and post-conflict 
reconstruction efforts. The party had advocated U.S. withdrawal from 
Naval Air Station Keflavik in the (unspecified) long term, but 
Asgrimsson had personally favored a U.S. presence and expressed his 
personal feelings of betrayal in the harshest terms.  While the 
party had traditionally been anti-EU, Asgrimsson attempted to sway 
the party to a more EU-friendly position and had scandalized many in 
2006 with a prediction that Iceland would become a member by 2015. 
Subsequent chairmen have all been pro-EU with the exception of the 
traditionalist Agustsson. Their efforts to move the party in the 
direction of Europe eventually came to a head at the national 
congress in January where the party decided to drastically modify 
its position and stated its preference for starting negotiations 
with the EU. That said, Chairman Gunnlaugsson's position on the EU 
can best be described as "open" to EU membership rather than as 
advocacy.  He is otherwise something of a tabula rasa on foreign 
policy issues. 
 
VAN VOORST