Iceland’s Government Collapses

Iceland’s coalition government collapsed Monday, the latest fallout from a global financial crisis
By Judy Dempsey
New York Times

Iceland’s coalition government collapsed Monday, the latest fallout from a global financial crisis that has sparked angry demonstrations against governments across Europe.

Prime Minister Geir Haarde said he was unwilling to meet the demands of his coalition partners, the Social Democratic Alliance Party, which had insisted upon getting the post of prime minister to keep the coalition intact, The Associated Press reported from Reykjavik, the Icelandic capital.

Last week, Mr. Haarde called elections for May, bringing forward a vote originally scheduled for 2011, after weeks of protests by Icelanders angered by soaring unemployment and rising prices. But Mr. Haarde said he would not lead his Independence Party into the new elections because he needed treatment for cancer.

Iceland has been in crisis since the collapse of its banks because of massive debt in September and October, with its currency, the krona, plummeting. The country’s commerce minister, Bjorgvin Sigurdsson, quit Sunday, citing the pressures of the economic collapse, The A.P. reported.

The demonstrations in Iceland, which have also demanded the resignation of governor of the nation’s central bank, have been mirrored elsewhere in Europe.

The Latvian government, which this month pushed through wage and spending cuts but also tax hikes in order to cope with the banking crisis, faced demonstrations that turned into violent riots. Neighboring Lithuania also had to contend with protesters after the government introduced a package of austerity measures to protect the financial sector.

In southern Europe, tens of thousands turned out in the Spanish city of Zaragoza last week to press the local authorities to deal with soaring unemployment as the country’s construction and retailing industries are hit by the global downturn. And in Greece, the government is still coming to terms with widespread student protests against education reforms.

In all cases, the demonstrations have had a mix of sentiments — anti-globalization, anti-capitalist and anti-reform.

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