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Iceland's leftist coalition wins general election

Iceland's leftist coalition won the country's general election, according to final results on Sunday — a blow for the pro-business Independence Party that many blamed for the collapse of the country's banking system.

Iceland's leftist coalition won the country's general election, according to final results on Sunday — a blow for the pro-business Independence Party that many blamed for the collapse of the country's banking system.

Results showed that a left-wing coalition made up of the Social Democratic Alliance and the Left Green Movement won 34 out of the 63 seats in parliament.

All five constituencies completed the count with 97.9 per cent of the votes tallied. The Social Democrats won 30.5 per cent of the vote, or 20 parliamentary seats, while the Left-Green Movement won 21.5 per cent, or 14 seats. Both parties have long said they will form a coalition government.

The two parties are part of a caretaker government that took office in February after public protests about Iceland's economic collapse toppled the previous conservative administration. The left-wing coalition is led by interim Prime Minister Johanna Sigurdardottir.

Voter turnout was slightly more than 85 per cent — slightly higher than in the 2007 elections.

The results were an overwhelming rejection of the conservative Independence Party, which has held a parliamentary majority for 70 years.

Although the Independence Party won 23.7 per cent of the vote — 16 seats — many have blamed its leaders for the country's economic troubles.

Debt soars, currency sinks

The global financial crisis washed up hard on the shores of the volcanic island of 320,000 people. After racking up massive debts during years of laissez-faire economic regulation and rapid expansion, Iceland's three main banks collapsed within the space of a week in October.

The government has sought a $10-billion International Monetary Fund-led bailout but the country's currency, the krona, has plummeted.

Unemployment and inflation have spiralled and the IMF has predicted that the economy will shrink by about 10 per cent in 2009, which would be Iceland's biggest slump since it won full independence from Denmark in 1944.

"The nation is settling the score with the neoliberalism, with the Independence Party, who have been in power for much too long," Sigurdardottir told supporters late Saturday. "The people are calling for a change of ethics. That is why they have voted for us."

Although most parties have offered various short-term strategies to tackle Iceland's financial woes — encouraging more investment and streamlining government operations — one of the biggest issues in the election has been whether Iceland should join the European Union.

The results represented a strong victory for Iceland's pro-European Social Democratic Alliance.

The Social Democrats, the Progressive Party and the Citizen's Movement want Iceland to apply for EU membership, which would eventually allow the country to adopt the euro.

Although the Social Democrats say they will honour the coalition with the Left Green Movement — traditionally it has been opposed to closer ties with the European Union and wanted a referendum before applying for EU membership — the win gives the Social Democrats more power to push through a pro-EU agenda and puts more pressure on the Left Green Movement to conform.

The Progressive Party won 14 per cent of the vote, or nine seats, while the Citizens' Movement won 7.2 per cent, or four seats.

The results give the Social Democrats "a strong position and [put] pressure on the Left Green Movement," said political analyst Egill Helgason.