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Video by James CREEDON , Hélène PAPPER

Latest update : 2009-02-01

Two of Iceland's leftist parties will form a government on Sunday with Johanna Sigurdardottir (pictured) the likely new prime minister. The previous administration resigned Jan. 26 after months of protests over its handling of the financial crisis.

AFP - Two left-wing parties in crisis-hit Iceland agreed Saturday to form an interim coalition to replace the country's recently resigned government, the leader of one of the parties said.

"I believe we're now in the clear and open. By this time tomorrow (Sunday) we should have a new government," head of the Left Green party Steingrimur Sigfusson told reporters in Reykjavik.
The announcement came after five days of negotiations between the Left Greens and the Social Democrats to create a minority government to replace outgoing Prime Minister Geir Haarde's right-left coalition that was forced to resign on January 26 over Iceland's deep economic crisis.



Many Icelanders, thousands of whom have lost their savings and jobs since the country's once booming financial sector crumbled in October, hold Haarde responsible for the crisis that forced Reiykjavik to take control of the major banks as the currency nosedived.
The new government talks had stumbled Friday after the centrist Progressive Party, which had pledged its informal backing to the new coalition in parliament, appeared to backtrack, reportedly charging key policy proposals were too vague and demanding more influence.
Progressive Party leader Sigmundur Gunnlaugsson however told reporters late Saturday his party had agreed to offer the needed parliamentary support to the new coalition.
"The Progressive members of parliament have reached the conclusion that we will defend the government from a vote of no confidence," he said, stressing however that his party would not commit to voting with the coalition on every issue.
The new government is expected to be presented around midday (1200 GMT) on Sunday after it has been approved by the two parties' parliamentarians, and should receive the blessing of President Olafur Ragnar Grimsson later in the afternoon, Sigfusson said.
Social Democrat Johanna Sigurdardottir, 66, is expected to be named head of the coalition, thus becoming Iceland's first woman prime minister and the modern world's first openly gay head of government.
The new government is unlikely to remain in place for long however, since Haarde before his resignation called snap elections for May 9.
Both the Social Democrats and the Left Greens have however decided to propose holding them earlier, on April 25, Sigfusson said.
He did not say if the Social Democrats' request to couple the general vote with a referendum on European Union membership had been discussed or decided on.


Date created : 2009-01-30