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Not a fairy tale. The Icelandic direct democracy Saga (Part 1)

Not a fairy tale. The Icelandic direct democracy Saga (Part 1)


The small Mediterrean island of Cyprus has made the headlines this spring. The crash of its banking sector, sending shockwaves across the Eurozone and beyond, was strongly reminiscent of another small island also on the periphery of Europe, but in quite a different climatic zone - Iceland. Five years of crisis management offer Cyprus - and other states - a series of tough lessons. And not just about the economy – but about people power.

Let’s zoom in to that remote place in the North Atlantic. Here, in the middle of nowhere between Europe and America, individuals still play an important role.  In a nation of just about 300,000 inhabitants in a country of more than 100,000 km², the citizens are still listed and known according to their first names. One of them is Johanna, the daughter of Sigurdur. Johanna has been around for more than seven decades. For half of this time she has been a member of the world’s oldest parliament, the Allthingi. So when Johanna Sigurdardottir said farewell as a Member of Parliament (since 1978) and Prime Minister (since 2009) in the early morning hours of Maundy Thursday this year, another chapter in the dramatic history of Iceland was closed.

Just minutes before Johanna took the floor at 1.37 a.m., the Allthingi had agreed on a constitutional amendment – namely to introduce a new way of changing the constitution (Art. 33/1944). If the next parliament confirms this decision – the general election will be held on April 27 - there will be (at least in the next four years) two different ways of reforming the basic laws. One - the standard way so far - by simple majorities of two consecutive parliaments; the other – and this is the innovation – by a two-thirds majority in the parliament and a popular vote with at least 40% of the total electorate approving the change. In reality, this means only one thing: that it will be extremely difficult to get a new constitution in the next four years.

For many Icelanders – Johanna Sigurdardottir included - this is a big disappointment; it feels like an anticlimax to four years of vibrant and also inspirational expressions of people power. For some people outside Iceland, too, this backlash may come as a surprise. In the eyes of many people Iceland has become the icon of a counter-movement to the laissez-faire economic policies of the 1990s and 2000s. Whilst being hailed as a “model of crisis management” by established media like The New York Times, social movements like Attac have praised the “direct democratic revolution” in the Arctic as a blueprint for change. But as Icelandic politics is really local, remote and hard to follow from abroad, factual information about what really happened - and continues to happen - in the aftermath of the big crisis has been quite selective, and often overlooks both the confrontational nature of party politics and the complexity of the democratisation process, which has now produced far less concrete outcomes than were desired – or feared.

“God Bless Iceland”

So it is worth recapitulating the main milestones of what one could call “The Icelandic Direct Democracy Saga, Part 1”. Like something out of Iceland’s volcanic history,  it all started with a boom followed by a crash. In autumn 2008 Iceland became one of the first countries to implode as a consequence of the global financial crisis. On October 6, then PM Geird Haarde announced the renationalization of the three main (private) banks, whose combined assets had exceeded the country’s GDP ten times over, declaring “God bless Iceland”. What then followed were draconic measures, including the devaluation of the Icelandic Krona and the introduction of capital controls which are still in force today. The devaluation of the currency contributed to an economic recovery in certain sectors like the fisheries and tourism. The capital controls, however, are about to create new problems such as asset bubbles from foreign holdings of Icelandic currency (approx EUR 3 billions).

The reaction of Icelandic society to the crisis was impressive as people first of all took to the streets in energetic protest – and were rewarded by early elections. These sent the conservative independence party (which had been in power since independence was granted in 1944) into opposition and – for the first time in the island’s history – put a social democratic-green coalition into government. Unfortunately, the freshness of the new parliament – which included many new MPs and even new parties – was quickly overshadowed by traditional confrontational and destructive behaviour within and beyond the coalition parties. Important decisions dealing with the rich natural resources of Iceland, the relationship to international bodies like the EU, and the long-awaited review of the national constitution (the current one goes back to Danish colonial rule in the mid-1800s) were always passed with minimal majorities and after hard to endure sessions of filibustering. Thus an evaluation of the work of the political parties and the parliament in the past four years shows few positive outcomes.

Many popular votes

Fortunately, another centre of influence has been building up in Iceland since Geir Haarde’s dramatic TV appeal to God. It’s not the church and not even the quite active president, Olafur Ragnar Grimsson. It is the people. In a courageous move Icelanders managed to transform their protest energy into seeds of reform – by very concrete direct democratic practice. This remarkable development included both the clear referendum votes saying “no” to accepting responsibility for the damage caused by the private banks (the “Icesave” referendums) and the pro-active participation in a unique constitution-making process – which reached a preliminary climax on October 20, 2012, when more than two thirds of the participating voters approved the introduction of a national initiative and referendum process – by popular vote.

What was and still is lacking is a convergence of these various efforts. There has been a lot action on different levels and in different directions, but only a little common deliberation on it all. This is typical of a small country whose destiny is closely linked to natural resources and catastrophes, but it is also a big weakness when it comes to the sustainability of reforms and progress. After the upcoming election it will therefore be essential to cool the rhetoric down somewhat and start to agree more comprehensively (including government, opposition and civil society) about some next steps on the way to stronger (direct) democracy. For these purposes it will also be important to enable participatory practices at the municipal level and to heavily invest in education and training. The implementation of a recent proposal to transform the old Reykjavik prison into a “House of Democracy” would be a highly symbolic but very timely first step.

What has happened in Iceland since 2008 is that modern people power has finally entered the framework of representative democracy in order to balance the downsides of a transnational, globalised economy. Part 1 of the latest Icelandic Saga has put direct democracy onto the agenda. The work of the Constitutional Council and the October 20, 2012 referendum has made a difference for the future. But Icelanders are by nature impatient people with a preference for action. Now they have to learn to move from agenda-setting to decision-making, by patiently agreeing on the common ground on which Part 2 of a fascinating saga can be written.

Text by Bruno Kaufmann, Reykjavik

Bruno Kaufmann is Northern European Correspondent for the Swiss National Radio and Television. He chairs the Initiative and Referendum Institute Europe and has advised the Constitutional Council and Parliament since 2008.

TIMELINE: Icelandic People Ballot Power Milestones (2009-13)

January 26, 2009: After months of street protests conservative Prime Minister Geir Haarde offers his resignation.

April 25, 2009: At early elections the Social-Democratic Party and the Left-Greens together win a majority of seats and establish a government.

July 16, 2009: The Icelandic Parliament decides to apply for EU membership; negotiations are launched in January 2010 and are ongoing.

March 6, 2010: In a national referendum vote triggered by a signature-gathering campaign and the subsequent presidential veto, more than 98% of the participating citizens vote “no“ to a law on “Icelandic loan guarantees”.

November 27, 2010: 25 Icelandic citizens (out of 522 candidates) are elected (in a direct popular election) to the Constitutional Assembly. The Supreme Court invalidates the vote and the government subsequently appoints the same 25 people to a Constitutional Council.

April 9, 2011: In yet another popular referendum vote almost 60% of the participating citizens are against another version of the “Icesave” legislation. Once again a signature collection motivated the president to refer the law to the electorate.

July 29, 2011: The Constitutional Council presents its first draft of a new Icelandic constitution to the Parliament. It includes the protection of natural resources and the introduction of direct democratic tools such as the Initiative, Referendum and Counter-Proposal (Art. 65-67)

October 20, 2012: In a nationwide popular vote (“constitutional referendum”) more than two-thirds of  the participating citizens approve, among other things, the draft constitution as “the basis of a new constitution” and the introduction of a popular initiative right .

March 28, 2013: In the final session of the old parliament 25 MPs approve a new constitutional amendment article, 2 MPs vote ‘no’, there are 21 abstentions, and 15 members of the Allthingi are absent.

April 27, 2013: The Icelanders elect a new parliament.

LINKS: The Icelandic Constitution-Making Process

Constitutional Referendum Website at

Ballot Paper for the October 20, 2012 referendum at

The Constitutional Council Website at

A “new” way for constitutional change at

“You have to trust the democratic process” at


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