Iceland’s government could be ousted from power this weekend, becoming Europe’s first to fall as a direct result of the global financial crisis.
Thousands of people gathered yesterday to protest against the government’shandling of the economy outside the parliament building in Reykjavik as prime minister Geir Haarde’s Independence Party held crisis talks with coalition partner the Social Democratic Alliance.
The alliance may seek to oust Mr Haarde and form a minority government with opposition parties until May elections, the prime minister’s spokesman, Kristjan Kristjansson, said.
The alliance did not directly comment but a spokeswoman, Kristrum Heimisdottir, said: “There has to be a functioning government in this country, we see it as our primary duty to ensure that ... We are not ruling anything out.”
Banging frying pans, biscuit tin lids and drums, demonstrators called on the governing coalition to quit immediately and demanded changes in the leadership of the central bank and financial regulators.
Organisers said their 16th consecutive demonstration held yesterday was the largest since the collapse of the North Atlantic island nation’s economy.Similar protests were taking place across the nation of 320,000 people.
“People have lost trust and lost faith in the political parties and the party system,” said Ari Trausti Gudmundsson, a 60-year-old geoscientist.
Mr Haarde proposed an early election on May 9th following daily protests against his government’s handling of an economic crisis triggered by the collapse of the country’s banks under the weight of huge debts amassed during years of rapid expansion.
Inflation and unemployment have soared, and the krona currency has plummeted. Mr Haarde’s government has nationalised banks and negotiated about €8 billion in loans from the IMF and individual countries. But the country faces a bill likely to run to billions to repay thousands of Europeans who held accounts with subsidiaries of collapsed Icelandic banks.
Mr Haarde said on Friday he would not lead the Independence Party into the new elections because doctors had found a malignant tumour in his throat. He said yesterday he would travel to The Netherlands soon for treatment.
Education minister Thorgerdur Katrin Gunnarsdottir will serve as prime minister in his absence.
Minister of commerce Bjorgvin Sigurdsson resigned today.
AP