VZCZCXRO3508
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHRK #0127/01 1221649
ZNR UUUUU ZZH
P 021649Z MAY 07
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC PRIORITY 3271
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 REYKJAVIK 000127 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV PREL SENV EIND IC
SUBJECT: Iceland: One third of voters still undecided two weeks 
before parliamentary elections 
 
Refs: A) Reykjavik 114 
 
 B) Reykjavik 125 
 
¶1. (U) Summary:  National opinion polls taken two weeks out show the 
current government coalition holding a slim lead ahead of Icelandic 
parliamentary elections on May 12.  The larger of the two parties in 
government, the Independence Party, has gained in strength enough to 
offset losses by its junior partner, the Progressive Party, 
according to current polls.  However, nearly a third of voters are 
undecided at this late stage.  This may be due to a popular sense 
that environmental issues have lost their "flavor of the month" 
status after a local referendum put the kibosh on aluminum smelter 
expansion plans in a suburb of Reykjavik.  As a result, no single 
issue is driving voter preferences.  This may play into the hands of 
the current government, or, as some pundits argue, could open the 
door for a (possibly unstable) three-party coalition to take the 
helm.  End summary. 
 
¶2.  (U) Gallup and daily newspaper Frettabladid each released their 
latest polling data on voter preferences over the weekend of April 
28-29, two weeks ahead of Icelandic elections to the Althingi 
(parliament).  The results were as follows: 
 
Percentage of voters expressing a preference (Gallup/Frettabladid): 
 
Independence (IP):    39/40 
Social Democratic Alliance (SDA): 21/23 
Left-Green (LG):    21/18 
Progressive (PP):    10/10 
Liberal (LP):     5/5 
Iceland Movement (IM):    2/3 
 
Undecided/no preference stated:  18 and 35 percent of respondents, 
respectively. 
 
¶3.  (U) The Gallup data shows a decline for the IP from previous 
polls, though the party has gained in comparison to its standing in 
previous Frettabladid polling (Ref A).  In all other respects, the 
two polls show roughly the same trends.  The PP's slide has stopped, 
though the party will lose roughly half its current seats in the 
Althingi.  Though the "right-green" Iceland Movement seems to have 
peaked in support, it still looks set to undermine the Left-Green 
party's dreams of riding a "green wave" to power as the larger 
member of a two-party leftist government.  That said, the Social 
Democratic Alliance would still be forced to deal with the LG as 
equals rather than a fringe party. 
 
¶4.  (SBU) Most significantly, the results show the current IP-PP 
coalition holding power, though only by a single seat once results 
are broken down by voting district.  Some here have fallen back on 
conventional wisdom dictating that the Independence Party always 
performs worse than the polls indicate, while the Progressives 
generally do better than expected.  (Note: A prominent 
counter-example to the latter was the Progressive's dismal 
performance in municipal elections across the country last year, 
forcing then-party leader and PM Halldor Asgrimsson to resign.  End 
note.)  If the PP fails to live up to its end of this "bargain," 
however, it would open the door to a center-left coalition of the 
SDA, Left-Greens, and Progressives.  One prominent former Prime 
Minister views this as the most likely outcome, and told Reykjavik's 
diplomatic corps at an off-record briefing that this would usher in 
a period of political instability given the strong differences on 
economic and industrial policy among these three parties. 
 
¶5.  (U) A large part of the instability reflected in these polls is 
the share of undecided voters (over a third in the Frettabladid 
poll, which featured a larger sample size) just two weeks prior to 
the election.  Observers point to the town of Hafnarfjordur's March 
31 referendum on expansion of the aluminum smelter there, which 
opposition parties hoped to use to build momentum heading into the 
Althingi elections (Ref B).  After the town voted to reject the 
expansion plans, environmental issues seem to have lost their 
salience for a large part of the electorate.  The Frettabladid poll 
indicated that among the same respondents environmental issues have 
slipped to fifth (previously first) on the list of key election 
matters, behind social welfare, education, the economy, and taxes. 
Pundits argue that the Hafnarfjordur vote served as a catharsis for 
voters outside the town, who now feel free to vote their preference 
without having to use their vote on a purely environmental message. 
 
¶6.  (SBU) Comment:  As the opposition parties appear to be searching 
for a new key issue now that environmental protection has lost some 
of its resonance, the government parties continue to hope that they 
will enjoy the advantage of incumbency and Iceland's recent economic 
prosperity.  If predictions of a three-party center-left coalition 
are to be believed, a poor showing by the Progressives may indeed 
put them in a stronger "kingmaker" position than they would be by 
throwing their lot in with the Independence Party.  IP stalwarts 
have told Post that a continued IP-PP coalition would reflect the 
PP's diminished share more so than the current government, in which 
 
REYKJAVIK 00000127  002 OF 002 
 
 
the Progressives hold fully half the cabinet seats.  The 
Progressives may feel they would have more leverage in an SDA-LG-PP 
coalition to get the ministries they want, though it is hard to 
imagine what policies and programs such a government could agree 
on. 
 
VAN VOORST