During the crisis Iceland was held up as one of the best examples of what was so wrong with the bubble that was created and sold to any and all. The party in power during this debacle was summarily dismissed by the people. However, a mere few years later, and given the apparent abhorrence with all things European, the Icelandic people have just ousted the incumbent pro-Europe party in favor of the Independence and Progressive parties that governed during the crisis. As the WSJ reports [5], the Social Democratic Alliance, which had overseen economic recovery and pushed for European Union membership, saw support tumble as the electorate's concern about personal finances overshadowed the ruling coalition's ability to stabilize the economy. Couple this with the promises of the two parties to cut taxes and the sweell of nationalist sentiment and the Social Democrats were summarily crushed. The leader of the Progressive party perhaps summed up the poeple's views best: "deeper integration with a Europe in "historic decline" isn't necessarily the best for Iceland," and that "economic crisis in Iceland and Europe has taught us the importance of being able to control your own destiny." Of course, as with any election, lots of promises are made; "they have really been promising the moon, people might get dissatisfied when they see that not everything can be realized."
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Via WSJ [5],
Icelanders voted to bring back leaders who had ruled the remote island nation as it sank into economic collapse, signaling a more isolated future for a country that in recent years had appeared set to solidify ties with Europe.
The Independence and Progressive parties - which had governed the small Nordic state in 2008 as a thinly regulated banking sector accumulated assets that dwarfed the country's economic output - snagged more than half the votes in Saturday's elections, according to final results published by national broadcaster RUV on Sunday.
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The Social Democratic Alliance, which had overseen economic recovery and pushed for European Union membership, saw support tumble as the electorate's concern about personal finances overshadowed the ruling coalition's ability to stabilize the economy.
Sigmundur David Gunnlaugsson, head of the Progressive Party, said in an interview this month that deeper integration with a Europe in "historic decline" isn't necessarily the best for Iceland, and that "economic crisis in Iceland and Europe has taught us the importance of being able to control your own destiny."
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If the two parties form a coalition, they will take control of a nation that remains solidly dependent on a few industries, such as fishing and tourism. But opening the economy to outside investors could remain a challenge because of the capital controls, and lowering taxes may not be as easy as promised.
"It will be difficult to lower taxes in the current economic situation," Mr. Helgason said. "And it's doubtful whether any foreign investor is interested in putting large sums of money into Iceland now that we have strict capital controls and Europe is in a crisis as well."
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"They have really been promising the moon," Egill Helgason, a political commentator in Iceland, said on Sunday. "People might get dissatisfied when they see that not everything can be realized."
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In the wake of the crisis, Iceland put in place capital controls that made it impossible for some foreigners to get their money out of the country. While designed to be temporary, those capital controls remain and are among the biggest hurdles for regaining international interest in the Icelandic economy.