May 13, 2007 / 3:09 AM / 12 years ago

Icelandic government keeps majority

REYKJAVIK (Reuters) - Iceland’s pro-industry government held onto its majority on Sunday in a tight election but a power shift looked likely with junior coalition partner the Progressive Party expected to leave after a dismal showing.

Iceland's Prime Minister Geir H. Haarde (L) of the Icelandic Independence Party casts his vote with his wife at a polling booth in Reykjavik May 12, 2007. REUTERS/Karl Petersson/IPA Images

This would force Prime Minister Geir Haarde’s Independence Party to seek a new alliance, with the opposition Social Democrats potentially joining the government.

“This is a disappointment,” Progressive Party leader Jon Sigurdsson, who failed to win his seat and saw his party lose significant ground, told Reuters.

“The result is a strong statement that we should step down. We will listen to the judgment of the voters that the leadership of Icelandic politics should change hands.”

The election race was dominated by a single issue — the tempo of big industrial development in Iceland.

The long-ruling Independence-Progressive Party coalition wants aluminum giants such as Alcoa to keep building smelters powered by Iceland’s geothermal and hydroelectric resources, a trend that has driven rapid economic growth in recent years.

But the Social Democrats and other main opposition party the Left Greens want development halted until the environmental and economic impact of the latest projects becomes clear.

Haarde has said his natural second choice as ruling partner is the Social Democrats, whose leader Ingibjorg Solrun Gisladottir had hoped to lead a government-toppling coalition and become Iceland’s first woman prime minister.

Gisladottir, who would like to see Iceland join the European Union, has also said she wants policies that give Iceland’s poorest a share in the recent economic bounty.

Haarde is a proponent of corporate tax cuts and a staunch opponent of EU membership who has said the most important goal for Iceland is to keep economic growth rolling.

CLIFF-HANGER ELECTION

The margins between the government and opposition were so tight throughout the election tally — narrowing to three votes at one point — that experts early on predicted Gisladottir and the opposition parties would win.

Final tallies from a count that swung back and forth through the night showed Independence with 25 seats, a gain of three, while the Progressives retained just seven of its current 12.

This gave the coalition the 32 seats it needed for a majority in the 63-seat parliament, against 31 for opposition parties the Social Democrats, the Left Greens and the Liberals.

University of Iceland political science professor Olafur Hardarson said on national radio the government’s victory, however slim, meant Independence and the Progressives could keep the status quo in place.

“However, it is highly unlikely that (they) will choose to do so because of the historic defeat of the Progressive Party,” he said, adding that intense coalition talks were likely over the next few days.

Hardarson said these would most likely yield a partnership between Independence and the Social Democrats. Iceland, with a population of 300,000, is always governed by a coalition.

Voter turnout at 82 percent of the 221,000 eligible voters was down from 87 percent in 2003 elections.

The Left Greens made the biggest advance in the election, from five seats to nine.

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