Vol. 73/No. 5      February 9, 2009

Prime minister and leader of the Independence Party, Geir Haarde, handed in his resignation to President ólafur Ragnar Grímsson after negotiations to save the government failed. Commerce Minister Björgvin Sigurdsson of the SDA stepped down the previous day citing the pressures of the economic collapse, reported AP. The previous week, Haarde had called new elections for May but said he would not lead the Independence Party in them because he needed cancer treatment.

The next government will likely be led by outgoing Minister of Social Affairs Jóhanna Sigurdardóttir, who casts herself as a “welfare politician.”

Coalition governments in several countries in Europe face similar instability resulting from the worldwide contraction in capitalist production. Massive and angry protests have taken place in Greece, Bulgaria, Latvia, Lithuania, and other countries around Europe.

At the beginning of October the government took over Iceland’s three major banks. They had collapsed after an orgy of company takeovers across Europe, resulting in their debt growing to 10 times the size of the country’s gross domestic product. In November the government got a $5.1 billion “rescue” loan from the International Monetary Fund and several European governments. The IMF projects that the government’s debt will rise to 108.9 percent of GDP by the end of 2009.

Unemployment shot up from 1.3 percent in September 2008 to 4.8 percent in December, according to the Directorate of Labour. Most layoffs have been in construction, followed by retail and industry. By January 28, unemployment had reached 7.8 percent. The Finance Ministry projects the GDP will contract by 9.6 percent in 2009.

Since mid-October thousands have joined weekly demonstrations in downtown Reykjavík called by “Voices of the people.” They have been held in a nationalist and resentful framework, denouncing “corrupt and incompetent” officials and demanding the resignation of the government. Since January 20 there had been rallies with protesters banging pots outside parliament from midday into the night. Police have in some cases attacked demonstrators with clubs and pepper spray. On January 21 they used tear gas for the first time since 1971.

As the rulers attempt to cut the social wage, working people are starting to respond. In the town of Hafnarfjördur, near Reykjavík, the staff of St. Joseph’s hospital has led a campaign against plans to close it, collecting 14,000 signatures.
 
 
Related articles:
Joblessness climbs as capitalist crisis builds
U.S. firms announce 75,000 cuts in a day  
 
 
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