VZCZCXRO2878
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHRK #0139/01 1311743
ZNR UUUUU ZZH
P 111743Z MAY 07
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC PRIORITY 3293
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 REYKJAVIK 000139 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV IC
SUBJECT: ICELAND: GOVERNING COALITION NEEDS AN ELECTION-EVE MIRACLE 
TO CONTINUE 
 
Refs: A) Reykjavik 127 
 
 B) Reykjavik 125 
 C) Reykjavik 114 
 
¶1. (U) Summary:  In the final days before Iceland's May 12 
parliamentary elections, highly volatile poll data has shown drastic 
changes in party support.  The Progressive Party is polling higher 
than it has for months, while the Left Greens are losing the 
momentum they had been gaining over the past year.  The margins are 
slim enough that the prospects for the current government's hold on 
power vary from poll to poll.  Prominent analysts have declared that 
voters will essentially be putting the current government's economic 
policies on trial.  A plurality of voters would prefer to see the 
same government on May 13, but popular distaste for the Progressives 
stands a good chance of forcing PM Haarde's Independence Party into 
coalition with the Social Democratic Alliance.  End Summary. 
 
¶2.  (U) Gallup started releasing daily polling data on May 7 ahead 
of the May 12 elections to the Althingi (parliament).  The most 
recent results (May 10) were as follows: 
 
Percentage of voters expressing a preference (Gallup): 
 
Independence (IP):    36 
Social Democratic Alliance (SDA): 26 
Left-Green (LG):    16 
Progressive (PP):    14 
Liberal (LP):     7 
Iceland Movement (IM):    2 
 
Undecided/no preference stated:  11 percent of respondents. 
 
¶3.  (U) Compared to Gallup and Frettabladid polling data two weeks 
ago (Ref. A), the IP's support is dwindling somewhat, in keeping 
with its history of scoring higher in the polls than on Election 
Day.  The PP is now rising faster than it has for months, polling at 
14 percent, having gained about four percent in two weeks. 
Historically, the PP, in contrast to the IP, always fares better in 
elections than in opinion polls.  Support for the Left-Greens, which 
peaked several weeks ago, is now measuring 16 percent.  This is 
consistent with past pre-election indicators, where the LG tends to 
steadily lose voter support shortly before elections.  The SDA is 
now winning back the support that it earlier lost to the Left 
Greens, as more and more voters may be realizing that the Left 
Greens would be an uneasy partner in a coalition government.  In 
contrast, voters may be catching on to the idea that the SDA's 
center-left policy could be more amenable to the IP, were these two 
parties to form a government. 
 
¶4.  (U) Both Independence and the Progressives are hoping that 
voters' general happiness with their standard of living will 
translate into support on election day.  A May 7 Frettabladid poll 
showed that more than one third of the electorate would like the 
current coalition government to stay in power, which is an increase 
of eight percent since late April.  Other possible coalitions fared 
considerably worse:  twenty percent of voters prefer a 
left-of-center government that would consist of the Social 
Democratic Alliance and the Left Green Movement, while about 15 
percent favor an IP-SDA government and approximately nine percent 
fancy an IP-LG coalition. 
 
¶5.  (SBU) Comfort with the current coalition aside, two days away 
from the elections, results differed from one poll to the next about 
whether the current IP-PP government will lose or maintain its 
majority.  The most recent Gallup poll shows the current IP-PP 
coalition with a slim one-seat majority, but polls by Frettabladid 
and Bladid on May 10 and 11 both show the government losing its 
majority.  Prominent PP members, such as Foreign Minister Valgerdur 
Sverrisdottir and Minister of Agriculture Gudni Agustsson, have said 
that the party needs greater support in order to be able to stake a 
claim to extend its partnership in the current coalition.  Agustsson 
stated that the party needs to get 17-20 percent for this to happen. 
 (Comment:  This would be an amazing last-minute turnaround, even 
for the Progressives.) 
 
¶6.  (U) As a result, a number of political observers and pundits now 
predict an IP-SDA coalition.  They think that in order for Icelandic 
politics not to become stagnant a new coalition must take over the 
reins.  The PP's following has, moreover, dwindled to such an extent 
that it would not have a legitimate place in government.  The 
observers also note that there are not as many ideological 
differences between the IP and the SDA as there would be in an 
Independence/Left-Greens coalition.  An IP-SDA coalition would be a 
robust one in parliament and reminiscent of the so-called 
Resurrection Government (Vidreisnarstjorn)--that consisted of the IP 
and the Social Democratic Party, one of the forerunners to the 
SDA--and was in power from 1959-1971.  The Resurrection Government 
has, in fact, been called one of the two "islands of stability" in 
Icelandic politics, the other one being the current IP-PP coalition 
that has been in power since 1995. 
 
REYKJAVIK 00000139  002 OF 002 
 
 
 
¶7.  (SBU) Comment:  Voters are not awed by the ongoing election 
campaign, which many characterize as lackluster.  Environmental 
protection has virtually disappeared from the campaign over the last 
week continuing the trend since the March 31 Hafnarfjordur 
referendum (Ref. A).  A lack of disagreement on election issues in 
general has enabled the IP and PP to champion the vibrant economy 
and the high standard of living, which has been achieved under the 
current coalition, without much resistance from the opposition.  The 
biggest problem for the Independence Party is that voters are tired 
of the Progressives, who despite their late run but may not draw 
enough support to keep the government in power.  Absent a 
Progressive miracle, Prime Minister Haarde (Independence) will be 
searching for a new coalition partner come May 13.  He may find that 
the Social Democratic Alliance offers a smaller ideological gap to 
bridge than his other potential partners.  End Comment. 
 
VAN VOORST