by: Peter Walker, The Guardian UK
Iceland’s prime minister today announced the immediate resignation of his government because of the country’s severe financial crisis, which saw the collapse of the currency and banking system.
Geir Haarde announced as recently as Friday that his coalition administration would remain in office until early elections called for May 9 after violent protests at its handling of the economic situation. Today he said his Independence party and its Social Democrat partners were quitting immediately after a disagreement over whether he should step down as prime minister.
“I really regret that we could not continue with this coalition. I believe that that would have been the best result,” he told reporters at parliament. “We couldn’t accept the Social Democratic demand that they would lead the government. That is not something we agreed on in 2007.”
Haarde said he would speak to Iceland’s president, Olafur Ragnar Grimsson, to arrange the formal dissolution of the coalition, which has ruled since May 2007. Haarde himself has been in office since mid-2006.
The 57-year-old becomes the first world leader to leave office as a direct result of the financial crisis. Announcing the election date last week, Haarde revealed he had been diagnosed with throat cancer and would not be seeking re-election anyway.
The prime minister’s previous national popularity was obliterated in October when the global credit crisis ravaged Iceland’s hugely indebted economy, leading to a collapse in the country’s currency, the crown, and forcing the government to take control of its three major banks.
The population of 320,000 – who had enjoyed years of rising incomes and high growth rates, thanks in no small part to an economy burdened with a foreign debt that peaked at 10 times the annual national GDP – now face a potential economic contraction of up to 10% this year, with unemployment rising rapidly.
After months of rallies outside the parliament building, last week protesters pelted Haarde’s car with eggs while riot police using teargas for the first time in the country since 1949.
The protests continued at the weekend despite Haarde’s announcement of the early election. Yesterday the country’s commerce minister, Bjorgvin Gudni Sigurdsson, resigned, apologising for the collapse.
“I accept my part of responsibility in the collapse of the banking sector even if numerous other people have their share of responsibility,” Sigurdsson, a Social Democrat, told a press conference.
Who will take over from Haarde is unclear. The leader of the Social Democrats, Ingibjorg Solrun Gisladottir, currently Iceland’s foreign minister, immediately ruled herself out. She has only just returned to Reykjavik after undergoing treatment for a brain tumour in Sweden.
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