VZCZCXRO4439
OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHRK #0142 1341425
ZNR UUUUU ZZH
O 141425Z MAY 07
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3300
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS REYKJAVIK 000142 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV IC
SUBJECT: ICELAND ELECTIONS: GOVERNMENT CLINGS TO MAJORITY, BUT 
COALITION TALKS ON AWKWARD FOOTING 
 
Refs: A) Evans-State Ops Phone calls 5/13 and 5/14 
 
 B) Reykjavik 139 and previous 
 
¶1. (U) Summary:  Iceland's governing coalition hung on to a one-seat 
parliamentary majority in national elections on May 12.  However, 
the junior partner in the coalition is sufficiently weakened -- with 
its chairman and another sitting minister failing to get elected -- 
that the coalition's survival is by no means a sure thing.  While 
talks continue, Prime Minister Haarde's Independence Party is 
putting out feelers to other possible partners.  End Summary. 
 
¶2.  (U) The final results from Iceland's nationwide Althingi 
(parliament) elections on May 12 are as follows: 
 
Party   Percent of votes Seats (change) 
 
Independence (IP):   36.6 25 (+3) 
Social Dem. Alliance (SDA): 26.8 18 (-2) 
Left-Green (LG):   14.3  9 (+4) 
Progressive (PP):   11.7  7 (-5) 
Liberal (LP):    7.3  4 (0) 
Iceland Movement (IM):   3.3  0 
 
Thirty-two seats are required to hold a majority in the 63-seat 
Althingi.  The new Iceland Movement failed to win a seat as it did 
not cross the five percent threshold.  Turnout was 83.6 percent, 
down from 87 percent in the last Althingi elections in 2003. 
 
¶3.  (U) With these results, the governing Independence-Progressive 
coalition holds a one-seat majority in the Althingi despite coming 
out with less than 50 percent of the national vote.  The IP made 
significant gains and added three seats to its tally, helping to 
offset the Progressives' losses.  The results were extremely tight 
throughout the night of May 12-13, with initial reports indicating 
that the government had lost its majority only to have that trend 
reversed as the night wore on.  (Indeed, daily newspaper 
Frettabladid wound up with a "Dewey Defeats Truman" moment as its 
first printing ran with the headline of "Government Falls After 
Progressives' Collapse.")  The fate of individual members of 
parliament was also very much in question, as it only became clear 
when the final vote tally was announced mid-morning on May 13 that 
Progressive Chairman and Minister of Industry Jon Sigurdsson had not 
been elected to a seat in the Althingi.  Two other Progressive 
ministers were also in jeopardy, with the Minister of Environment 
failing to retain her seat and the Minister of Health squeaking in 
at the last minute. 
 
¶4.  (SBU) Prime Minister Geir Haarde (IP) was initially optimistic 
about continuing the coalition, stating that he "saw no need for 
immediate changes" to IP-PP cooperation.  As May 13 wore on, 
however, it became evident that the Progressives were unsure about 
continuing as the ever-more-junior partner in the government. 
Sigurdsson was noncommittal in a television appearance with other 
party leaders on the evening of May 13, only allowing that 
"discussions are taking place" with the IP and that the two parties 
will keep talking.  In the meantime, IP doubts have apparently grown 
about the reliability of the Progressives as part of a one-seat 
majority -- an IP insider noted to PolOff that one newly-elected PP 
Althingi member had "said things that [PP Chair Sigurdsson] should 
have told us himself in private" on a post-election talk show, 
raising questions about the stability of a continued IP-PP 
partnership. 
 
¶5.  (SBU) While failing to defeat the governing coalition directly, 
the left-leaning SDA and Left-Green parties are simultaneously 
courting the Progressives (in the hopes of a three-member 
center-left coalition) and the Independence Party.  The odds of a 
center-left government look slim given that the SDA and LG both made 
industrial/environmental policy their centerpiece issues, attacking 
the Progressives directly.  Both leftist parties seem to believe 
that their chances of getting into power lie more with the 
Independence Party, and their party leaders have been careful to 
keep all options open in their public statements.  That said, 
leading newspaper Morgunbladid (traditionally close to the IP) 
reported on May 14 that SDA leader Ingibjorg Solrun Gisladottir had 
shown a fair degree of arrogance in her contacts with the IP thus 
far, which if true would do little to soften the personal aversion 
that many in the IP have towards her. 
 
¶6.  (SBU) Comment:  By virtue of its strong performance in the 
elections and the public's overwhelming confidence in PM Haarde, 
Independence is largely in the driver's seat.  The challenge for 
Haarde will lie in finding a coalition partner that will not overly 
disrupt the IP's agenda while at the same time giving the coalition 
the strength it needs to survive.  With an already-weakened 
Progressive Party doing little to strengthen IP confidence in the 
idea of a one-seat majority, prospects for an IP pairing with the 
Social Democrats or Left-Greens are on the rise. 
 
VAN VOORST