Bloomberg News

Grimsson Secures Fifth Consecutive Term as Iceland President

July 01, 2012

Iceland’s President Olafur R. Grimsson secured a fifth consecutive term as leader of the north Atlantic island, after winning more than half of all votes cast today.

Grimsson, 69, took 52.8 percent of the 162,346 votes counted, final results showed. A total 235,284 people were eligible to vote and turnout was 69 percent, according to the electoral commission. Thora Arnorsdottir, a 37-year-old journalist and television presenter, had 33.2 percent, while each of the four other candidates got less than 10 percent.

Grimsson, first elected in 1996, announced in January that he would not seek re-election for a fifth term. He unexpectedly declared in March he would run, responding to a petition signed by almost 10 percent of Iceland’s 320,000 people. The political science professor, former party leader and finance minister is the only top official to keep his position after a 2008 banking collapse triggered the worst recession in six decades.

“The figures give a certain indication and that indication is that I will be appointed to continue to serve my nation,” Grimsson said on RUV state television after the tally showed him with a majority of counted votes. Grimsson will be the island’s first president to serve five consecutive four-year terms. He told reporters in Reykjavik last night that he wouldn’t run for a sixth.

‘Significant Matters’

“Under normal circumstances I would have come to a different conclusion, but more than 30,000 Icelanders, which is a significant part of all the voters in Iceland, requested that I continue,” Grimsson said in a June 21 interview in Selfoss, southern Iceland. “Many significant matters that are likely to lead to conflict and confrontations are going to be on the agenda in the coming years.”

The island’s three largest banks defaulted on $85 billion in 2008 after an expansion abroad, plunging Iceland’s $13 billion economy into its worst recession since gaining independence from Denmark in 1944. The government escaped bankruptcy by refusing to back the banks, which allowed it to speed up its recovery and emerge from a 33-month International Monetary Fund rescue program in August.

In a rare display of public outrage in the closely knit, homogenous nation, Icelanders amassed at parliament with rocks in 2009 to demand answers and accountability from the government. Protests escalated into rock throwing, forcing police to use teargas to disperse crowds at the legislature and the offices of Prime Minister Geir Haarde, who was forced to resign. A new coalition, led by Social Democrat Prime Minister Johanna Sigurdardottir, was voted into office in early 2009.

Veto Powers

Grimsson, who had promoted the Icelandic banks before the crash, also played an active role in its aftermath, tapping into public resentment by using the rarely activated veto powers of the largely ceremonial presidential post.

He twice blocked a parliamentary accord that sought to repay British and Dutch depositors who had so-called Icesave accounts with failed lender Landsbanki Islands hf. Voters then rejected the agreement in a referendum and Iceland is now being sued by the European Free Trade Association for failing to honor depositors’ guarantees.

Grimsson has said his pre-crisis support for the banks was based on assessments by Iceland’s Financial Supervisory Authority, an agency that was later criticized for its failure to supervise the industry.

`Moral Responsibility'

Iceland’s Special Investigative Commission, in a 3,000-page report on the crisis published in April 2010, said Grimsson bears “moral responsibility for the theatrical play.”

He “forcefully drew a beautified, arrogant and nationalistic picture of the superiority of Icelanders, based on old heritage,” according the report. “It’s noteworthy that some of the qualities that the President thought were admirable were exactly the characteristics that eventually led to their and the nation’s demise.”

Grimsson has overplayed the power of the presidency, according to his main opponent. Arnorsdottir, a mother of three young children who gave birth to her youngest daughter on May 18, said she was running to rein in the power of position.

My first “reaction is good,” Arnorsdottir said in an interview on RUV late yesterday. “Getting more than 30 percent of the vote in is an accomplishment and I’m quite happy.”

Stability Needed

While it’s true “that no one enters a fight without hoping to win,” she said, “challenging a person that has been president for 16 years is quite a task.”

Grimsson said he has responded to the call of the people to provide stability.

“Numerous polls have shown that over 90 percent of the Icelandic population doesn’t trust” parliament, he said. “Under those circumstances, voters have called for a president in Bessastadir who possesses both experience and is reliable.” Bessastadir is the formal residence of the president.

The four remaining candidates, Ari Trausti Gudmundsson, Herdis Thorgeirsdottir, Hannes Bjarnason and Andrea Johanna Olafsdottir had all received less than 10 percent of the vote according to the latest count.

The country is now in the midst of negotiating membership with the European Union, which is opposed by a majority, and is also struggling to unwind capital controls in place to protect the krona since 2008. At the same time, parliament is debating changes to the constitution that would increase the powers of the President and give voters greater opportunities to demand referendums on debated subject matters.

The country’s economy will expand 3 percent this year and 3.9 percent in 2013, according to Icelandic lender Arion Bank hf. The output of the 17 countries sharing the euro will contract 0.3 percent in 2012, before growing 1 percent in 2013, the European Commission said on May 11.

“Let’s not forget that there’s an economic crisis still engulfing some of the countries around us and there are turbulent times ahead in Icelandic politics,” Grimsson said. “Among them are the revision of the constitution of Iceland and the European Union membership.”

To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net.

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net


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