Cablegate: Iceland: Reykjavik City Council Plays Two Rounds Of

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E.O. 12958: N/A

Ref: 07 Reykjavik 114

1. (U) Summary: The majority coalition in the Reykjavik City
Council has broken down twice in the past three months, resulting in
three different mayors for the largest city in Iceland. The
coalition majority of the Independence Party (IP) and the
Progressive Party (PP) split up in October over a controversial
public-private merger of two energy investment companies. The PP's
lone councilman formed a shaky coalition with the minority parties.
This coalition terminated in January when the one of the minority
parties had a change of heart and left the coalition to join forces
with the IP. Reykjavik voters are outraged at the turmoil and the
rapid changes have hurt the credibility of the city council. The
newest mayor is pulling out all the stops to restore confidence.
While some predict that the unrest at City Hall will cause strains
in the national IP-Social Democrat governing coalition, no such
faults are evident so far. The tumult has, however, made it less
clear whether the Reykjavik mayorship will retain its traditional
role as a stepping stone to national office. End Summary.

First Ever Majority Coalition Split
2. (U) On October 11, 2007 the majority coalition of the
Independence Party and the Progressive Party in the Reykjavik City
Council suddenly collapsed. The coalition had a one seat majority
and Bjorn Ingi Hrafnsson, the sole PP city councilor, split off to
form a new majority with the opposition parties that have seats in
the city council: the Social Democratic Alliance (SDA), the Left
Green Movement (LG), and the Liberal Party-Independents (LP). This
was the first time in the history of Reykjavik that the coalition
majority split mid-term. The cause was reportedly a disagreement
between the IP and the PP over a public-private energy investment
merger gone awry. In early October 2007, Reykjavik Energy Invest,
the business development and investment arm of Reykjavik Energy
(Note: Reykjavik Energy is a publicly-owned geothermal energy
company, whose largest shareholder is the City of Reykjavik. End
Note.), and Geysir Green Energy, a private investment firm targeting
the geothermal energy sector, announced their agreement to merge.
The IP was quickly mired in an internal party feud over the merger
and the role of Mayor Vilhjalmur Vilhjalmsson, and as the negative
media attention increased, Progressive rep Hrafnsson broke ranks
with the coalition in a clear attempt to leave a sinking ship.

3. (U) The new majority consisted of the SDA, the LG, the PP, and
the LP, and Dagur Eggertsson (SDA) became mayor. Olafur Magnusson,
the sole LP city councilor, was considered the architect of the new
majority. He was on sick leave while being treated for depression
during most of 2007, and his alternate, Margret Sverrisdottir,
filled his seat in the meantime. Both Magnusson and Sverrisdottir
had left the Liberal Party in early 2007 due to disagreements with
the party leadership and joined a brand new political party called
the Iceland Movement (reftel); both remained on the city council
under the Liberal Party-Independent label. Public opinion was
divided on Progressive rep Hrafnsson's role in breaking up the IP-PP
majority coalition, but the IP city councilors, including former
Mayor Vilhjalmsson, were seen as bigger losers in the public-private
merger drama.

Majority Coalition Terminated...Again
4. (U) In a surprise move on January 21, City Councilor Magnusson
(LP) and former Mayor Vilhjalmsson (IP) announced they had reached
an agreement on forming a new majority coalition. Magnusson will be
mayor for the first half of the remaining electoral term and
Vilhjalmsson for the second half (Note: The current electoral term
ends in May 2010. End Note.). The decision caught everyone off
guard, including Magnusson's alternate, Sverrisdottir, who stated
that she would not support the new majority because Magnusson kept
her out of the loop. Pundits have been quick to note that her
ambivalence hobbles the coalition, because if Mayor Magnusson is
ever absent from city council meetings, Sverrisdottir can vote with
the minority.

5. (U) The outgoing coalition wasted no time in voicing their
complaints about the reshuffle, accusing the IP and Magnusson of
undermining city government and voters' trust in their elected
officials purely for selfish reasons. Outraged supporters of the
outgoing majority disrupted the City Council meeting on January 24,
forcing a delay of several hours in Magnusson's election as mayor.

6. (SBU) Meanwhile, on January 23, Hrafnsson (PP), who had split
the coalition in October, announced his immediate resignation from
the Reykjavik City Council. In the days preceding the decision a
former PP member of parliament accused Hrafnsson of trying to rise
in the ranks of the party at the expense of others, and for
purportedly using party funds to buy expensive clothes for use in
the election campaign for the 2006 local elections. (Comment: Once
Hrafnsson was no longer keeping his party in the majority in city
government, it seems the party leadership made it clear that the
clothing allegations were the proverbial straw that broke the

REYKJAVIK 00000011 002 OF 002

camel's back. His exit has for now quashed hopes of his potential
as a future leader of the PP.)

Snapshot of the New Mayor: Olafur F. Magnusson
--------------------------------------------- -
7. (U) Olafur F. Magnusson is a veteran at Reykjavik city politics.
Before he was elected to the City Council in the 2002 local
elections for the LP, he served as an alternate City Councilor for
the IP from 1990-1998 and as City Councilor for the same party from
1998-2001. Magnusson worked as a medical doctor in the 1970s and
1980s and was active in the grassroots politics of the IP. Magnusson
parted ways with the IP in 2001 because his environmental policy
views were at odds with the policy of the IP. Subsequently he joined
the Liberals and was elected to the Reykjavik City Council for the
party in 2002 and 2006. Magnusson now considers himself an
independent in the city council, but he is a registered member of
the Iceland Movement.

8. (SBU) Comment: Despite media speculation, the changes at City
Hall do not seem to have raised tension between the national
government's IP-SDA coalition. Prime Minister Haarde (IP) and
Foreign Minister (and former Reykjavik Mayor) Gisladottir (SDA) have
been careful in their public comments, though Gisladottir did allow
that the way the new majority came about was "an unfortunate step"
for both the people of Reykjavik and Icelandic politics in general.
More broadly, these two swift changes in coalition majorities may
herald a new era in Icelandic politics. This era may see
power-hungry politicians who are not afraid of splitting alliances
in exchange for greater professional glory. Additionally, neither
Magnusson nor his coalition partner Vilhjalmson of the IP claim
ambitions to national political office, which when added with a loss
of voter confidence could mean that fewer look at the Reykjavik
mayorship as a traditional stepping stone to higher office.

9. (SBU) Comment, cont'd: Olafur Magnusson (LP) and the IP city
councilors can for the moment be called the winners of the course of
events on January 21. However, the creation of the new majority
comes at the cost of voter confidence. A January 24 poll shows the
new majority enjoys the support of only one quarter of the
electorate, and just six percent support the new mayor. Many have
asked if Magnusson is capable of handling the mayoral position given
his medical problems in 2007, a line of questioning not usually seen
in Icelandic politics. Magnusson has gone on the offensive to
answer the questions, hitting all major media outlets over his first
weekend as mayor and asking to be judged "by my work, not by my
illness." However, with such a tenuous majority, the life of the
new coalition could easily be cut short. End Comment.


© Scoop Media

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