July 1, 2012 11:55 am

Iceland president elected for fifth term

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Olafur Ragnar Grimsson has won a fifth term in office as Iceland’s president, with the voters looking for a safe pair of hands to guide the country through its tentative economic recovery and negotiations over entry into the European Union.

The 69-year-old former university professor, who has held the position largely unopposed since 1996, received 53 per cent of the vote, seeing off competition from five other candidates including Thora Arnorsdottir, a prominent local journalist.

Ms Arnorsdottir, who placed second with 33 per cent, drew international attention when she entered the race back in March seven months pregnant, taking a few weeks out of campaigning last month to give birth before getting back to work. She campaigned on the platform of making the office less political and more ceremonial.

The president has long had the power to veto legislation and force a referendum on a bill, but Mr Grimsson has drawn criticism for being the only president to have used this power.

Most notably Mr Grimsson vetoed two proposals by the Icelandic parliament to repay £3.1bn to Britain and the Netherlands for debts the government incurred after Icesave, the online banking arm of failed lender Landsbanki, collapsed during the financial crisis.

Mr Grimsson had previously been criticised for supporting the banking sector in its rapid expansion in the years before the crisis, but his use of the veto – which allowed the people to reject the deal – restored his popularity in the eyes of many.

The failure of Iceland’s three major banks – Kaupthing, Landsbanki and Glitnir – in 2008 led to the collapse of Iceland’s currency, the government and much of the economy. It caused a 10 per cent decline in gross domestic product and a sevenfold increase in unemployment.

The country is just now beginning to recover. It returned to growth last year after its debt was upgraded from “junk” to investment grade by Fitch in February. Iceland’s net debt stands at 65 per cent of GDP, according to the International Monetary Fund, far below the 100 per cent of Ireland.

This year in an attempt to salve the wounds still raw from the troubles, Iceland put its former prime minister Geir Haarde on trial and has also begun legal proceedings against a host of bankers in once senior positions.

One major issue for Iceland going forward is its possible entry into the EU. Negotiations are under way, but one sticking power is fishing quotas, with the EU opposed to Iceland’s whaling tradition and angry at Reykjavik’s decision to increase its mackerel quota.

Mr Grimsson had been intending to retire this year before he received a 30,000-signature petition from supporters asking him to run again. “Icelanders pleaded with me to carry on the watch in these uncertain times and ensure that in Bessastadir [the presidential residence] there would remain determination and experience,” he said to daily newspaper Morgunbladid.

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