VZCZCXRO2830
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHRK #0013/01 0221831
ZNR UUUUU ZZH
P 221831Z JAN 09
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC PRIORITY 3953
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEKJCS/SECDEF WASHDC
RUEATRS/DEPT OF TREASURY WASH DC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 REYKJAVIK 000013 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR EUR/NB, INR-B 
OSLO FOR DATT 
DOD FOR OSD-P (FENTON) 
TREASURY FOR LAWRENCE NORTON AND ERIC MEYER 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON PINR ASEC IC
SUBJECT: ICELAND: PROTESTS CONTINUE; WILL SOCIAL DEMOCRATS STAY IN 
GOVERNMENT? 
 
Ref:  Reykjavik 012 
 
¶1. (SBU) Summary:  Anti-government protests in Reykjavik continued 
on the evening of January 21 and again on January 22, including a 
violent encounter that left one police officer hospitalized and many 
Icelanders profoundly shocked.  There were no surprises in the 
Althingi's day-long debate January 22 on the economic situation, but 
jockeying within and between the coalition parties is intense.  Most 
eyes are on the Foreign Minister's Social Democratic Alliance, where 
calls to get out of the government as soon as possible are 
increasing.  Despite the Prime Minister's claims to the media that 
FM Gisladottir is still pledging her support for the coalition, many 
expect a statement from Gisladottir on January 22 to clarify her 
party's position and possibly signal an exit.  Should the government 
collapse, the public's anti-incumbent mood does not offer many clues 
as to what type of government might result from early elections. 
End summary. 
 
¶2.  (U) The anti-government protests of January 21 (reftel) 
continued well into the night in Reykjavik, with protestors moving 
between the Althingi (parliament) building, the Prime Minister's 
Office, and the National Theater (where the Social Democratic 
Alliance's Reykjavik Chapter was meeting) at various points 
throughout the night.  After bursting into the SDA meeting, 
departing, and cheering the chapter's adoption of a resolution 
calling for new parliamentary elections immediately, the 
demonstrators moved to the Prime Minister's Office.  At some point, 
paving stones were thrown at police.  One officer required 
hospitalization for head injuries, while six others had to seek 
medical attention but were released.  No arrests were made, though 
police used tear gas and succeeded in clearing the square in the 
early hours of the morning. 
 
¶3.  (U) The public was shocked by the assault on police, and some 
leaders of the protest movement have joined in condemning such 
actions.  Of note, an interest group on the social networking 
website Facebook (NOTE: By some estimates nearly 50 percent of 
Iceland's population uses the service.  END NOTE.) condemning 
violent political protests in Iceland has grown to nearly 10,000 
members in the last two days, larger than several of the Icelandic 
protest groups listed on the service.  While protests continued 
outside the Althingi on January 22, they were peaceful, considerably 
smaller in number, and marked in some cases by demonstrators 
offering police hot chocolate and flowers. 
 
¶4.  (U) After the sudden cancellation the day before, the Althingi 
resumed its session on January 22, devoting the full day to 
discussion of the economic situation.  Prime Minister Haarde 
(Independence Party) opened with a report on government actions 
taken to date and planned for the near future, highlighting 
assistance to consumers faced with credit problems, plans to 
increase transparency and regulatory control in the finance sector, 
and efforts to cushion the blow to consumers of the expected 10 
percent contraction in GDP this year.  Opposition leaders were 
predictably critical, with Left-Green Leader Steingrimur Sigfusson 
calling government measures inadequate and describing the corrosive 
effects mass unemployment will bring to Icelandic society.  He 
renewed his party's call for immediate elections. 
 
¶5.  (SBU) The real political action, however, has been outside the 
Althingi, as the Independence Party (IP) and Social Democratic 
Alliance (SDA) wrestle internally and with each other over the fate 
of their coalition.  PM Haarde reported to the media on the evening 
of January 21 that he had called SDA Chair and Foreign Minister 
Ingibjorg Solrun Gisladottir at her hospital room in Sweden, and 
claimed that she pledged to continue her party's support for the 
coalition.  However, there are a number of indications that Haarde 
may have overstated Gisladottir's level of support.  SDA contacts at 
all levels tell Emboffs that the party's rank and file and most of 
its members of parliament want out of the coalition as soon as 
possible.  One prominent SDA mayor in northern Iceland, a longtime 
ally of Gisladottir, went so far as to send the FM a cell phone text 
message -- inadvertently sent to the wrong number and leaked to the 
media -- urging her to speak for herself and look at breaking with 
the IP. 
 
¶6.  (SBU) Gisladottir is expected to issue a statement on January 22 
to clarify her stance and that of her party.  Few of post's SDA 
contacts claim to know what she will say, despite their hopes that 
she will announce an end to the coalition and either explore a 
minority government with the Left-Greens or call for new elections. 
Gisladottir is expected to return from medical treatment in Sweden 
 
REYKJAVIK 00000013  002 OF 002 
 
 
on January 23, but will again be admitted to hospital upon arrival 
in Iceland.  Her public role (and presumably her ability to direct 
her party's moves) will be limited for some time.  In any event, the 
rest of the SDA leadership is positioning themselves for bigger 
changes, calling for a party board meeting on February 14 to pave 
the way for a subsequent national party congress.  Such a congress 
could then set the platform for parliamentary elections, elect new 
leadership should Gisladottir's health prevent her from continuing 
as chair, or endorse other moves by the party depending on events in 
the next few weeks. 
 
¶7.  (SBU) COMMENT:  The political situation is opaque and few here 
claim to have a handle on what is in train.  For all their noise, 
the demonstrators have not coalesced around any policy prescriptions 
or a clear party preference.  The only common message is one of 
"throw the bums out."  In terms of the immediate survival of the 
coalition government, much depends on SDA Chair Gisladottir.  With 
the Prime Minister apparently determined to hang on at least until 
his party's national congress at the end of the month, Gisladottir 
is in position to make or break the government.  If she can exercise 
her power, that is.  Whether her health will allow her to play a 
real role over the coming days is perhaps the central question in 
Icelandic politics. 
 
VAN VOORST