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Cablegate: Iceland: Governing Coalition Needs an Election-Eve Miracle

VZCZCXRO2878
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHRK #0139/01 1311743
ZNR UUUUU ZZH
P 111743Z MAY 07
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC PRIORITY 3293
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 REYKJAVIK 000139

SIPDIS

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: PGOV IC
SUBJECT: ICELAND: GOVERNING COALITION NEEDS AN ELECTION-EVE MIRACLE
TO CONTINUE

Refs: A) Reykjavik 127

B) Reykjavik 125
C) Reykjavik 114

1. (U) Summary: In the final days before Iceland's May 12
parliamentary elections, highly volatile poll data has shown drastic
changes in party support. The Progressive Party is polling higher
than it has for months, while the Left Greens are losing the
momentum they had been gaining over the past year. The margins are
slim enough that the prospects for the current government's hold on
power vary from poll to poll. Prominent analysts have declared that
voters will essentially be putting the current government's economic
policies on trial. A plurality of voters would prefer to see the
same government on May 13, but popular distaste for the Progressives
stands a good chance of forcing PM Haarde's Independence Party into
coalition with the Social Democratic Alliance. End Summary.

2. (U) Gallup started releasing daily polling data on May 7 ahead
of the May 12 elections to the Althingi (parliament). The most
recent results (May 10) were as follows:

Percentage of voters expressing a preference (Gallup):

Independence (IP): 36
Social Democratic Alliance (SDA): 26
Left-Green (LG): 16
Progressive (PP): 14
Liberal (LP): 7
Iceland Movement (IM): 2

Undecided/no preference stated: 11 percent of respondents.

3. (U) Compared to Gallup and Frettabladid polling data two weeks
ago (Ref. A), the IP's support is dwindling somewhat, in keeping
with its history of scoring higher in the polls than on Election
Day. The PP is now rising faster than it has for months, polling at
14 percent, having gained about four percent in two weeks.
Historically, the PP, in contrast to the IP, always fares better in
elections than in opinion polls. Support for the Left-Greens, which
peaked several weeks ago, is now measuring 16 percent. This is
consistent with past pre-election indicators, where the LG tends to
steadily lose voter support shortly before elections. The SDA is
now winning back the support that it earlier lost to the Left
Greens, as more and more voters may be realizing that the Left
Greens would be an uneasy partner in a coalition government. In
contrast, voters may be catching on to the idea that the SDA's
center-left policy could be more amenable to the IP, were these two
parties to form a government.

4. (U) Both Independence and the Progressives are hoping that
voters' general happiness with their standard of living will
translate into support on election day. A May 7 Frettabladid poll
showed that more than one third of the electorate would like the
current coalition government to stay in power, which is an increase
of eight percent since late April. Other possible coalitions fared
considerably worse: twenty percent of voters prefer a
left-of-center government that would consist of the Social
Democratic Alliance and the Left Green Movement, while about 15
percent favor an IP-SDA government and approximately nine percent
fancy an IP-LG coalition.

5. (SBU) Comfort with the current coalition aside, two days away
from the elections, results differed from one poll to the next about
whether the current IP-PP government will lose or maintain its
majority. The most recent Gallup poll shows the current IP-PP
coalition with a slim one-seat majority, but polls by Frettabladid
and Bladid on May 10 and 11 both show the government losing its
majority. Prominent PP members, such as Foreign Minister Valgerdur
Sverrisdottir and Minister of Agriculture Gudni Agustsson, have said
that the party needs greater support in order to be able to stake a
claim to extend its partnership in the current coalition. Agustsson
stated that the party needs to get 17-20 percent for this to happen.
(Comment: This would be an amazing last-minute turnaround, even
for the Progressives.)

6. (U) As a result, a number of political observers and pundits now
predict an IP-SDA coalition. They think that in order for Icelandic
politics not to become stagnant a new coalition must take over the
reins. The PP's following has, moreover, dwindled to such an extent
that it would not have a legitimate place in government. The
observers also note that there are not as many ideological
differences between the IP and the SDA as there would be in an
Independence/Left-Greens coalition. An IP-SDA coalition would be a
robust one in parliament and reminiscent of the so-called
Resurrection Government (Vidreisnarstjorn)--that consisted of the IP
and the Social Democratic Party, one of the forerunners to the
SDA--and was in power from 1959-1971. The Resurrection Government
has, in fact, been called one of the two "islands of stability" in
Icelandic politics, the other one being the current IP-PP coalition
that has been in power since 1995.

REYKJAVIK 00000139 002 OF 002

7. (SBU) Comment: Voters are not awed by the ongoing election
campaign, which many characterize as lackluster. Environmental
protection has virtually disappeared from the campaign over the last
week continuing the trend since the March 31 Hafnarfjordur
referendum (Ref. A). A lack of disagreement on election issues in
general has enabled the IP and PP to champion the vibrant economy
and the high standard of living, which has been achieved under the
current coalition, without much resistance from the opposition. The
biggest problem for the Independence Party is that voters are tired
of the Progressives, who despite their late run but may not draw
enough support to keep the government in power. Absent a
Progressive miracle, Prime Minister Haarde (Independence) will be
searching for a new coalition partner come May 13. He may find that
the Social Democratic Alliance offers a smaller ideological gap to
bridge than his other potential partners. End Comment.

VAN VOORST

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