Troubled Icelandic government faces no confidence vote

Reuters News
Posted: Mar 11, 2013 8:08 AM
Troubled Icelandic government faces no confidence vote

REYKJAVIK (Reuters) - Iceland's center-left government faces a no-confidence vote in parliament on Monday which is largely symbolic given there are elections next month, but underlines the weakness of a coalition which was meant to drag the island out of a bank collapse.

The recovery of the small North Atlantic island has faltered since the massive collapse in 2008 and voter disappointment has left the government trailing in opinion polls, behind a center-right party largely blamed for causing the crisis.

If successful, the no confidence motion could lead to the formation of a national unity government of all parties in parliament, but its actions would be limited as parliament ends its current term this week ahead of the April 27 election.

The vote was called by an opposition member, Thor Saari, who is angry that the Social Democrat and Left-Green government postponed discussing constitutional reform, even though a referendum backed constitutional changes last year.

"It is more of a symbolic issue but it is a very, very important symbolic issue," Saari told Reuters, referring to the fact that an election was due anyway soon.

The government said it thought it would survive the vote, expected around 10.00 a.m. EDT.

"You can never be 100 percent sure but we are hopeful of winning the vote," Magnus Orri Schram, deputy head of the Social Democratic group in parliament, told Reuters.

To succeed, the motion needs a simple majority in favor. Schram said the coalition could count on 31 seats in the 63-seat parliament, but that several independent members would either back the government or abstain, meaning a vote in favor of the motion would only garner 28 votes.

Iceland is still dealing with the legacy of the crisis, such as heavy household debt and capital controls to support the crown currency that are dampening investment and could lead to writedowns for creditors of the old banks.

(Reporting by Robert Robertson, additional reporting and writing by Patrick Lannin in Stockholm; Editing by Jon Hemming)