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| Iceland votes in centre-right party that presided over financial crash | |
| (about 1 hour later) | |
| Icelandic voters have dumped the Social Democrats from power, returning a centre-right government that ruled over the country's disastrous financial collapse just five years ago. | Icelandic voters have dumped the Social Democrats from power, returning a centre-right government that ruled over the country's disastrous financial collapse just five years ago. |
| Once a European financial hub, the north Atlantic island has been limping along for years after the crash that brought it to its knees in just a matter of days. | |
| "We are offering a different road, a road to growth, protecting social security, better welfare and job creation," said Bjarni Benediktsson, the favourite to become the next prime minister after his Independence party took first place in the vote, as the results were coming in. | "We are offering a different road, a road to growth, protecting social security, better welfare and job creation," said Bjarni Benediktsson, the favourite to become the next prime minister after his Independence party took first place in the vote, as the results were coming in. |
| "What we won't compromise about is cutting taxes and lifting the living standards of people," said Benediktsson, 43, a former professional footballer. | "What we won't compromise about is cutting taxes and lifting the living standards of people," said Benediktsson, 43, a former professional footballer. |
| The victory caps a remarkable comeback for Benediktsson. Just two weeks ago he considered resigning after record low poll ratings prompted calls for him to hand over his party's leadership to his deputy. | The victory caps a remarkable comeback for Benediktsson. Just two weeks ago he considered resigning after record low poll ratings prompted calls for him to hand over his party's leadership to his deputy. |
| Hailing from a wealthy family with extensive business interests, Benediktsson, an avid trout and salmon fisher, was considered out of touch and tainted by the financial collapse. | Hailing from a wealthy family with extensive business interests, Benediktsson, an avid trout and salmon fisher, was considered out of touch and tainted by the financial collapse. |
| Instead of stepping aside, he fought back with a rare personal television interview, giving voters a glimpse of his human side and propping up his party's ratings. | Instead of stepping aside, he fought back with a rare personal television interview, giving voters a glimpse of his human side and propping up his party's ratings. |
| His Independence party took 26.5% of the vote, giving it 19 seats in the 63-seat parliament. The Progressive party collected 22%, winning 18 seats, while the ruling Social Democrats got 13.5% and nine seats, according to results with over two-thirds of the vote counted. | His Independence party took 26.5% of the vote, giving it 19 seats in the 63-seat parliament. The Progressive party collected 22%, winning 18 seats, while the ruling Social Democrats got 13.5% and nine seats, according to results with over two-thirds of the vote counted. |
| Benediktsson's first task will be to form a coalition, although a tie-up with Sigmundur Gunnlaugsson's Progressive party, an ally in several governments over the past three decades, is a widely expected outcome. | Benediktsson's first task will be to form a coalition, although a tie-up with Sigmundur Gunnlaugsson's Progressive party, an ally in several governments over the past three decades, is a widely expected outcome. |
| In a country where Nordic civility prevails, the president walks about without security and members of parliament are listed in the telephone directory, coalitions are usually formed in just days. | In a country where Nordic civility prevails, the president walks about without security and members of parliament are listed in the telephone directory, coalitions are usually formed in just days. |
| "Historically two-party coalitions are the strongest and … if you look at the [results board] the choice seems to be clear," Benediktsson said. "We'll go into coalition with whomever we can govern with." | |
| The Independence party has been part of every government between 1980 and 2009, presiding over the privatisation of the banks, the financial sector's liberalisation and its eventual demise. | The Independence party has been part of every government between 1980 and 2009, presiding over the privatisation of the banks, the financial sector's liberalisation and its eventual demise. |
| Campaigning on a platform of tax cuts, it promised relief to households whose inflation-indexed mortgages have kept growing, despite several writeoffs since the crash. | Campaigning on a platform of tax cuts, it promised relief to households whose inflation-indexed mortgages have kept growing, despite several writeoffs since the crash. |
| It also argued that foreign creditors of its failed banks, now locked into the country because of capital controls, will have to accept a massive writeoff, perhaps as much as 75%, before they would be let out. | It also argued that foreign creditors of its failed banks, now locked into the country because of capital controls, will have to accept a massive writeoff, perhaps as much as 75%, before they would be let out. |
| The writeoff and the refinancing of other corporate debt, for example to Landsbanki and Reykjavik Energy, could let Iceland ease capital controls within 12 to 18 months, Benediktsson predicted. | The writeoff and the refinancing of other corporate debt, for example to Landsbanki and Reykjavik Energy, could let Iceland ease capital controls within 12 to 18 months, Benediktsson predicted. |
| Still, Gunnlaugsson was not yet ready to concede the premiership: "Sometimes the biggest party delegates the prime minister, sometimes not. We've seen all sorts of governments." | Still, Gunnlaugsson was not yet ready to concede the premiership: "Sometimes the biggest party delegates the prime minister, sometimes not. We've seen all sorts of governments." |
| The vote was also a de facto rejection of EU membership as staunchly independent-minded voters rejected the Social Democrats' argument that joining the bloc was the only way for long-term security. | The vote was also a de facto rejection of EU membership as staunchly independent-minded voters rejected the Social Democrats' argument that joining the bloc was the only way for long-term security. |
| With a population of just 320,000, Iceland became a European financial centre 10 years ago when its liberalised banks borrowed heavily on ultra cheap overseas markets and lured British and Dutch savers with high returns. | With a population of just 320,000, Iceland became a European financial centre 10 years ago when its liberalised banks borrowed heavily on ultra cheap overseas markets and lured British and Dutch savers with high returns. |
| Amassing assets worth more than 10 times Iceland's GDP, Landsbanki, Kaupthing and Glitnir collapsed in quick succession, dragging the entire country into a financial abyss in October 2008. | Amassing assets worth more than 10 times Iceland's GDP, Landsbanki, Kaupthing and Glitnir collapsed in quick succession, dragging the entire country into a financial abyss in October 2008. |
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