Iceland

Contemporary politics in Iceland are still fundamentally marked by the financial crisis of 2008. The collapse of the financial system, the deepest and most rapid financial crisis of a country recorded in peacetime, shook the very foundation of a hitherto stable political system. While the economy has since recovered, following IMF intervention, political trust remains at moderate levels (though above the OECD average). Additionally, the stable four-party system that was characteristic of Icelandic politics since virtually its independence is now much more turbulent. Such turbulence has extended to a re-structuring of the Icelandic political map, as some of its most dominant political forces, such as the conservative-liberal Independence Party, today may claim only a portion of the support they enjoyed pre-crisis. In the 2021 general elections, which experienced procedural irregularities that led to a recount, the incumbent government coalition, comprising the Left-Greens, the pro-business Independence Party, and the center-Right Progressive Party, maintained its majority. Despite the coalition’s ideological differences, it marked the first time since the financial crisis that a government completed a full term. 

As an island country, largely marked by a lack of cultural diversity, its main divisions are along class, urban-rural, and economic left-right divides. Ideological cleavages – including along environmentalist and multicultural vs. socially-conservative lines – have, however, also come to increasingly structure national political competition. This has meant that issue voting and election-specific factors have become more important in driving Icelandic politics – as illustrated by the volatile impact of some political scandals on national power distribution. Beyond those noted, such issues have further extended to the healthcare system, the environment, climate change, social welfare, refugee admission, and living standards.  

Iceland, traditionally homogenous, has experienced increased immigration over the past decade. Currently, approximately 13.9 per cent of the population is foreign-born. The largest immigrant group are Poles. Iceland is recognized for its advanced gender equality, with women occupying 47.6 per cent of parliamentary seats and in numerous managerial and executive roles. Companies with more than 25 employees must demonstrate gender pay equality, and nearly 90 per cent of working-age women are employed, largely owing to favourable parental leave policies. However, unequal division of unpaid work, a pay gap, and violence against women persist. In 2023, tens of thousands of Icelandic women, including the country’s female prime minister Katrín Jakobsdottir, went on a 24-hour strike in October 2023 to protest gender inequality.  

Although Iceland is a relatively young country, having only gained independence from Denmark in 1944, its democratic process is entrenched. Going forward, in light of evaluations that point to excessive intermingling of private interests with the management of public affairs, it is important to monitor the Rule of Law. Measures such as the new conflict-of-interest legislation for ministers may offer some ground for change. Given the electoral irregularities associated with the 2021 elections, it is also crucial to watch Representation (Credible Elections).