Icelanders vote for ruling centre-right party as Pirates fall short

Iceland’s incumbent Independence party was in pole position to try to form a new government after voters chose stability in Saturday’s election and support for the anti-establishment Pirate party fell short of expectations.

With voters still angered by the 2008 financial crisis and the naming of several government figures in an offshore tax haven scandal, Icelanders looked to oust the centre-right coalition in its current form.

The biggest group, the Progressive Party, lost more than half its share of the vote in Saturday's election after Prime Minister Sigmundur David Gunnlaugsson resigned following revelations in the "Panama Papers" scandal.

But the Pirate Party, founded by a group of internet activists, failed to perform as well as opinion polls had indicated. While its share of the vote tripled from the last election in 2013, it came in only third with 15%.

Instead, voters appeared to have recognized efforts to stabilize the economy after its 2008 collapse. The centre-right Independence Party, which shared power in the outgoing government, won the largest share of the vote with 29%, significantly more than the opinion polls had predicted, capturing a total of 29 seats with its coalition partner of the past three years, the Progressive party, whose share of the vote more than halved.

No party has won an outright majority and President Gudni Johannesson has yet to hand the mandate to the party that will be tasked with forming the next government.

Poet Birgitta Jonsdottir, who leads the Pirate Party, told Reuters she was happy with the result. "Our internal predictions showed 10 to 15 percent, so this is at the top of the range. We knew that we would never get 30 percent," she said.

In a campaign dominated in its early stages by public fury at Iceland’s traditional elites and a strong desire for political change, voters appear to have been persuaded by the Independence party’s promises to lower taxes and keep Iceland’s economic recovery on track.

“I cannot deny that if the results stay this way … it would be natural that we are a leading party in the next government,” said the party’s leader, Bjarni Benediktsson, one of the its 21 MPs. “We are gaining new seats in parliament, so we are very happy.”

The final shape of the government remains unclear, with multiple permutations possible. But the results mean the seven MPs from the newly established, liberal and pro-European Viðreisn, or Regeneration, party, which split from Independence this year over the question of Iceland’s eventual EU membership, could well be kingmakers – making already delicate coalition negotiations even more difficult than usual.

With 30 female MPs, Iceland has also leapfrogged Finland and Sweden to become the parliament with the highest proportion of female parliamentarians – more than 47% – in Europe.

The Pirates, riding a wave of public anger at what many voters saw as endemic political corruption laid bare by the 2008 financial crash and April’s Panama Papers scandal, had been predicted to win up to 20% of the vote and even become Iceland’s largest party.

The Pirates campaigned for government transparency, individual freedoms and the fight against corruption, and advocated an “unlimited right” for citizens to be involved in political decision-making by both proposing new legislation and deciding on it in national referendums.