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DE RUEHRK #0073/01 1071626
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R 171626Z APR 09
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC 4047
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 REYKJAVIK 000073 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/NB 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PINR IC
SUBJECT:  ICELAND: THE SOCIAL DEMOCRATIC ALLIANCE -- AN OVERVIEW 
 
¶1.  (U) Summary:  Prime Minister Sigurdardottir's Social Democratic 
Alliance is riding high in the polls ahead of Iceland's April 25 
parliamentary election, and is on the verge of becoming the 
country's leading political party.  An April victory would fulfill 
the party's raison d'etre of forming a credible counterweight to the 
conservative Independence Party's dominance of Icelandic politics, 
and would put to rest the question of whether the Icelandic left can 
ever truly be united.  If Sigurdardottir stays on as PM, it will 
also help resolve the party's turmoil following the sudden illness 
and retirement from politics of previous SDA Chair Ingibjorg Solrun 
Gisladottir.  Though conflicted on defense and security issues, the 
SDA is avowedly pro-EU, and will without doubt work to bring the EU 
membership question to the fore should it stay in power after the 
election.  End Summary. 
 
¶2.  (U) The Social Democratic Alliance (SDA) was formally 
established as a political party in 2000.  Four traditional leftist 
parties merged to form the SDA: The Social Democratic Party (SDP), 
The People's Alliance (PA), The Women's List (WL), and a split-off 
party from the SDP, the National Awakening, established by current 
PM Johanna Sigurdardottir.  The SDA wanted to challenge the 
dominance of the Independence Party by creating a large, unified 
social democratic party akin to those in the other Nordic countries. 
 This effort was initially stymied by the establishment of a new 
splinter left party, the Left-Green Movement.  The Alliance won only 
27 percent of the 1999 vote, but made strong gains in 2003 with 31 
percent of the vote.  In the 2007 elections support dwindled again 
to 27 percent, but the SDA's credibility rebounded after Ingibjorg 
Solrun Gisladottir brought them into government with the 
Independence Party.  Thanks in large part to the economic collapse 
in 2008 and the fact that public discontent has focused on the IP 
rather than the Social Dems, current polls show the SDA set to 
finally cement a place as a credible counterweight to the 
long-dominant IP. 
 
¶3.  (U) The SDA has had trouble articulating a coherent foreign 
policy as the views of the three traditional leftist parties that 
formed the SDA do not readily converge.  The SDP was very supportive 
of NATO and the U.S. presence, while the PA long advocated 
withdrawing from NATO and ending the bilateral defense relationship. 
 The WL advocated an essentially pacifist policy.  The SDP was the 
only Icelandic party in favor of EU membership, which both the PA 
and the WL strongly opposed.  Today the SDA champions EU membership 
for Iceland and the adoption of the euro as Iceland's currency.  The 
SDA favors defense ties with the US and is a supporter of NATO 
membership and the ongoing shaping of a security policy for Iceland 
in conjunction with NATO, the EU and the other Nordics.  That said, 
there are still some within the party that cling to the notion that 
Iceland does not need to spend any money on defense.  These voices 
have gained some following in the wake of the 2008 economic crisis. 
 
¶4.  (SBU) Ingibjorg Solrun Gisladottir succeeded Ossur 
Skarphedinsson as SDA Chair to much fanfare in 2005, but her efforts 
to unify the party did not immediately translate into better 
standing with the public.  In the run-up to the 2007 parliamentary 
elections, the party did not seem to have a coherent policy on the 
most important issues to voters.  Party members made contradictory 
remarks in the media on SDA voters' core issues, including the 
environment and further build-up of heavy industry.  Voters sensed 
this, and polls showed party support going down to only 20 percent. 
It is possible that voters were suffering from what some termed 
"Ingibjorg Solrun fatigue," as she had been prominent in Icelandic 
politics for a long time as Reykjavik Mayor and then a member of 
parliament.  However, the SDA was able to rally from this low point, 
capitalizing on doubts about the radical Left-Green Movement's 
credibility, and emerged as the second-largest party in the 
Althingi. 
 
¶5.  (U) The SDA formed a majority coalition with the IP after the 
elections that pledged to be a "liberal reforming government" for a 
dynamic economy, a robust welfare system, improved household 
finances, and greater business competitiveness.  The coalition was 
popular from the outset, but as dark economic clouds started 
gathering on the horizon in early 2008, public support began to 
dwindle.  The highly leveraged financial system collapsed as lending 
lines closed internationally in September, and the government took 
over Iceland's three largest banks.  Public demonstrations that 
started in October and culminated in January channeled anger and 
frustration at the IP-SDA majority coalition and such institutions 
as the Central Bank and Financial Supervisory Authority. At the end 
of January, the coalition broke down under the pressure. 
 
¶6.  (SBU) Gisladottir was diagnosed with a brain tumor after 
becoming ill when attending the UN General Assembly in September 
¶2008.  As a result,during the most hectic moments of the crisis shewas out on medical leave and unable to resume a ful schedule.  Her 
absence was a double-edged swor for the party.  Many observers note 
that with Gisladottir out, Prime Minister and IP Chair Geir Haade 
 
REYKJAVIK 00000073  002 OF 002 
 
 
became the sole public face of the cabinet during the crisis, 
leading many to associate the government's poor handling of affairs 
with the IP and Haarde alone.  The SDA was thus spared the full 
brunt of popular anger over the collapse.  On the other hand, 
Gisladottir's absence was also apparent in the increasingly open 
tension between the coalition partners and disagreements between SDA 
ministers.  After the IP-SDA coalition broke up, several IP insiders 
vented their frustration with the SDA, which they viewed as 
"ungovernable" without Gisladottir's steady hand. 
 
¶7.  (SBU) Gisladottir returned briefly to the fray as the coalition 
unwound in January, but then chose to step down as Foreign Minister 
and did not take a seat in the new SDA-Left Green minority coalition 
headed by Johanna Sigurdardottir as Prime Minister.  A break from 
political work in February proved insufficient for Gisladottir to 
fully recover her health, and in early March she announced her 
departure from politics for an unspecified time.  All eyes turned to 
Sigurdardottir, who received tremendous support in the SDA's 
Reykjavik primary and came under massive pressure to declare her 
candidacy in the election for SDA Chair at the SDA national 
convention in late March.  After giving it some thought, 
Sigurdardottir ran unopposed and received 98 percent of the total 
vote at the national convention. 
 
¶8.  (SBU) The SDA primaries produced some regeneration of party 
lineups in all six constituencies.  Half of the candidates are 
incumbent MPs while the other half is either absolute newcomers or 
have previous ties to the SDA.  The party leadership says that the 
most important tasks at hand for the next government will be to 
ensure the increased creation of wealth, employment, and welfare. 
In this regard, the SDA wants to reestablish the Icelandic financial 
system and re-instill faith in the Icelandic economy.  The SDA 
believes it is necessary to follow through with the plan agreed on 
with the IMF and that it is vitally important to initiate EU 
accession talks as soon as possible.  Although the SDA has stated 
its preference to continue working with the Left-Green Movement in a 
coalition government, it has not ruled out other coalition options. 
Some believe this is a tactic to force the LG to the table on the EU 
question, as the Left-Greens are still reluctant to move closer to 
Brussels.  Given the strength of SDA conviction on the EU question, 
however, there is little doubt that a continued government under 
Prime Minister Sigurdardottir's leadership will move to address the 
issue sooner rather than later. 
 
VAN VOORST