VZCZCXRO1713
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHRK #0012/01 0211722
ZNR UUUUU ZZH
P 211722Z JAN 09
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC PRIORITY 3951
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEKJCS/SECDEF WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 REYKJAVIK 000012 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR EUR/NB, INR-B 
OSLO FOR DATT 
DOD FOR OSD-P (FENTON) 
TREASURY FOR LAWRENCE NORTON AND ERIC MEYER 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON PINR ASEC IC
SUBJECT: ICELAND: RUMBLE IN REYKJAVIK SHAKES GOVERNMENT 
 
¶1. (SBU) Summary:  The Icelandic parliament's return after its 
holiday recess has been marred by the largest protests the country 
has experienced since the 1949 debate over NATO membership.   By 
some estimates, as many as 2,000 demonstrators caused enough noise 
to force a halt to the opening legislative session on the afternoon 
of January 20.  The Althingi reconvened later in the day, amidst 
protests so severe that members of the cabinet were unable to leave 
the building for several hours after the session finally concluded. 
The demonstrations have carried on into a second day, forcing 
another disruption in the legislative schedule and sparking a tense 
confrontation in front of the Prime Minister's Office.  Tension 
within the governing coalition is at an all-time high, and the 
government appears to be at a loss for ways to lower the 
temperature.  Early elections later this year now seem a 
near-certainty, with even the Deputy Chair of the junior coalition 
party openly calling for them.  End Summary. 
 
¶2. (U) On January 20, the Icelandic parliament -- the Althingi -- 
reconvened after a month-long holiday break.  During the holiday 
recess, the protest movements sparked by this fall's economic 
collapse continued to organize at least one demonstration weekly, 
generally in the square in front of the Althingi.  Though attendance 
and enthusiasm dipped over the holidays, many predicted that 
pressure would start to rise again in January, both as a result of 
the Althingi's return as well as the fact that the severance 
packages from many of the autumn layoffs would expire during the 
month.  (Unemployment has gone from 5.8 percent on Dec. 24 to 7.3 
percent on January 20.)  A foretaste came on Dec. 31, when 
protestors burst into a hotel on the square where a televised talk 
show with the country's political leaders was taking place.  They 
were removed by police using pepper spray, but not before they 
managed to halt the broadcast by setting fire to some of the 
transmission equipment. 
 
¶3.  (U) On January 20, as many as 2,000 protestors quickly 
surrounded the Althingi after it reconvened.  The atmosphere was 
tense as protestors generated thunderous noise, threw eggs, 
snowballs, and paint as they called for new elections while 
lawmakers tried to continue with their session. Some protestors 
banged on the windows of the parliament building and set off 
firecrackers.  Police used pepper spray repeatedly to control the 
crowd, which grew in size and intensity enough to force a delay in 
the Althingi session.   Inside the building, the opposition 
Left-Green Movement used question time and open debate to reiterate 
its support for the protesters, and several Left-Green MPs used the 
recess periods to go outside and join the protest.  Over 100 police 
officers were present and over 30 people were arrested, among them 
many teenagers.  As night fell, the demonstrators lit a bonfire 
outside the Althingi and added park benches as well as the Christmas 
tree given annually to the City of Reykjavik from Oslo.  Some MPs, 
including the Speaker of the Parliament, could not leave the 
building until late evening.   The protest ended shortly after 3 
a.m. following a series of violent confrontations between police and 
small groups of protestors.  Most observers report that the 
demonstrations were only equaled by the unforgettable 1949 protests 
against NATO accession. 
 
¶4. (U) The following day, as protestors gathered again outside the 
building, the Speaker of the Althingi cancelled the parliament's 
scheduled session and instead held a meeting with the chairmen of 
the political parties.  They decided that on January 22 the 
parliament will conduct a lengthy debate on economic issues, at 
which time PM Geir Haarde will present a report on the economic 
situation.  This did little to sate the assembled protestors, who 
later moved to the Prime Minister's Office and repeated the tactics 
of the previous day.  A tense confrontation ensued when PM Haarde 
attempted to leave the building, as protestors blocked his car from 
leaving and threw eggs and other projectiles at the vehicle.  They 
were finally removed by the PM's security detail. 
 
¶5. (SBU) Tensions are very high within the coalition government as 
well as outside government buildings.  Opposition parties have 
strengthened their call for early elections, with Left-Green Chair 
Steingrimur Sigfusson asking the government what other way it might 
have in mind to meet the demands of the nation.  The Social 
Democratic Alliance (SDA), the junior party in the coalition, has 
moved from quiet agitation to near-open rebellion, as the SDA Deputy 
Chair said in a media interview on Jan. 21 that early elections this 
spring are "unavoidable."  On January 21, the Reykjavik Chapter of 
the SDA, the party's largest, will be holding a meeting to discuss 
the coalition with the Independence Party (IP). Many SDA members 
believe that the meeting will pass a resolution calling for early 
elections.  Meanwhile, IP dissatisfaction with PM Haarde is also 
 
REYKJAVIK 00000012  002 OF 002 
 
 
growing, a week ahead of that party's national congress.  Emboffs 
have heard from two IP insiders in the last day that many fear the 
PM is "not doing anything" and that the situation will only get 
worse absent some dramatic action.  The only prominent IP comment in 
the last 24 hours has been the Justice Minister's statement that 
police are ready to deal more harshly with protestors should they 
continue to break the law. 
 
¶6. (SBU) Comment:  The January 21 demonstration may have been a 
turning point in the political situation here.  The raw emotion of 
the demonstrations has shocked and unsettled Icelanders unaccustomed 
to open civil strife.  The linkage to the 1949 NATO riots, which are 
seared into Iceland's collective memory, is telling.  The cabinet, 
especially the IP, appears confused as to how to contain the 
escalating disorders.  Coverage of the Prime Minister's embarrassing 
encounters with the protestors has not reassured the public 
regarding his leadership abilities.  Undoubtedly, the government's 
response has been hindered by the absence of Foreign Minister and 
SDA Chair Ingibjorg Solrun Gisladottir, who is in Sweden receiving 
(unexpectedly prolonged) treatment for a brain tumor diagnosed last 
fall.  Without Gisladottir's calm leadership, the SDA is having 
difficulty finding a coherent message.  As the country's new special 
prosecutor investigating last fall's economic collapse begins his 
work this month, reports of corruption in Icelandic business life 
will only fuel popular dissatisfaction.  Absent some bold and 
effective move to release public pressure, the assessment of early 
elections as "unavoidable" may prove to be right. 
 
VAN VOORST