According to the survey, taken between 30th September and 27th October, 30 percent of survey participants support the government – but last month this figure was 40 percent.

The survey identifies that both the Icelandic government parties, the Social Democrats (Samfylkingin) and Left-Green Movement (Vinstrihreyfingin – grænt framboð), have lost a large consignment. Both political parties now have the support of 18 percent of respondents, respectively. The Icelandic Social Democrats has not received such a low percentage since November 2001.

Furthermore, 8 percent of survey participants say they’ll vote for The Movement (Hreyfingin), which is more than double compared to last month. Additionally, 36 percent say they intend to vote for The Independence Party (Sjálfstæðisflokkurinn) and 12 percent to vote for The Progressive Party (Framsóknarflokkurinn).

The Capacent Gallup survey involved nearly 4,600 people with 67 percent of them responding.

A representative of Financial Dynamics told Visir.is that Icelandic ministers seem more willing than in other countries to answer media questions.

Financial Dynamics has been working in recent weeks to present the Icelandic government viewpoint with regard to Icesave and the Icelandic economy as a whole. The Icelandic government has previously been accused of not taking foreign media coverage seriously enough.

Andrew Walton from Financial Dynamics said yesterday that the company is working closely with the Finance Ministry and also with the Ministry of Economic Affairs and both ministers therein: Steingrimur J. Sigfusson and Gylfi Magnusson. Walton added that he has worked closely with many different governments, but seldom found ministers so keen to answer questions from foreign media.

The freezing order on the deposit insurance fund which is supposed to cover Icesave runs out on 23 October.

Visir.is reports that it is not possible to extent the freezing order and if the Icesave issue is not concluded to the satisfaction of all three countries by the 23 October, it is clear that the fund will not be able to cover its obligation. The insurance fund reportedly contains ISK 17 billion; but the amount it would theoretically have to pay out is closer to ISK 800 billion.

According to a joint report by the Central Bank of Iceland and the Ministry of Economic Affairs created for the Prime Minister’s office, the insurance fund’s potential bankruptcy would have serious implications. The fund could expect lawsuits to be filed against it and also against the Icelandic state for having discriminated against depositors based on their geographical location.

The British and Dutch could, in other words, effectively subpoena the Icelandic state over its emergency finance laws. Such a lawsuit could, according to the report’s authors, result in Iceland’s investment rating being reduced to junk.

According to the report, the government now has 12 days in which to conclude the Icesave deal and head off potential lawsuits. It will take Althingi (the national parliament) at least three to five days to pass the bill, which means the bill would have to be prepared and submitted no later than next Monday.

The Prime Minister reportedly wishes to close the matter before the freezing order expires, although some other MPs still want to take the whole Icesave issue to court to establish what Iceland’s legal obligations are toward the Netherlands and the UK.

(IceNews note: although this story appears to be quite significant, at the time of writing Visir.is was the only major news website covering it.)

Agreement has now been concluded on a Stability Pact which forms a cornerstone in the government’s plans for economic reconstruction. Leaders of central and local government, employers’ and employees’ associations signed the agreement in the Cultural House today. The Stability Pact covers many of the principal factors concerning which uncertainty has been high in recent months and will serve as one of the main pillars to support further rebuilding of the economy.

“It is an extremely important step, and a crucial premise for the reconstruction work in coming quarters,” said Prime Minister Jóhanna Sigurðardóttir. “Now we have a map showing the route that employers and workers in both the private and public sector, together with the state and municipalities, have agreed we should follow. I am very pleased that this agreement has been reached and thank everyone who has been involved for their unceasing efforts and unselfish contribution.”

The aim of the Stability Pact is to promote economic recovery. Upon commencing the negotiations, the contracting parties agreed on specific benchmarks: by the end of 2010 inflation will not be higher than 2.5%, the deficit in public finances will not exceed 10.5% of GDP, the exchange rate will have stabilised and the ISK strengthened to move closer to the real equilibrium exchange rate. The difference between domestic and Eurozone interest rates will be less than 4 percentage points. This will create the conditions for increased investment by both domestic and foreign parties, stronger growth, boosting employment and laying the foundation for improved living standards in the future. In tandem with the conclusion of this pact, the social partners have joined forces to remove labour market uncertainty, by concluding collective bargaining agreements valid until the end of November 2010, which emphasise improving the situation of lowest income groups.

The highlights of the pact are as follows: .

* Collective bargaining agreements in the private sector will be extended until the end of November 2010. Collective bargaining agreements will be concluded with public sector employees in a similar vein as soon as possible.
* The planned fiscal measures action plan until 2013 was presented and a joint understanding reached on its objectives for the period 2009-2011.
* Tax increases will not comprise more than 45% of the extra amount needed to ensure a balanced state budget.
* Major emphasis will be placed on ensuring improvement to the position of debtors and indebted households. The government will review and revise the remedies available and make proposals for improvements as necessary.
* Measures to encourage increased employment place emphasis on facilitating major projects and enlisting the co-operation of pension funds in participating in financing projects.
* Plans put forward with fixed dates for reconstruction of the banking system and the state’s ownership policy; non-Icelandic parties will be able to acquire holdings in Icelandic financial undertakings, in part to facilitate access to credit. Restructuring of bank ownership to be completed by 1 November 2009.
* Joint benchmarks set for recovery in business and industry and the involvement of public parties in industrial operations and ownership of commercial enterprises.
* A fixed schedule for exchange rate measures, including providing a schedule by 1 August for the removal of currency controls. The objective is to ensure ISK stability.
* Efforts will be made to remove restrictions on new investment by 1 November 2009.
* The social partners have stated that interest rates must decrease and have reached the single-digit range by 1 November.
* Joint actions in local government affairs concerning co-operation in economic issues and harmonisation of information and actions in public administration.
* A future vision for pension fund matters will be examined and all decisions on cutbacks to pension entitlement and financing postponed while this examination is underway.
* Active co-operation on workplace surveillance and the introduction of workplace identification to ensure workers their full rights and combat illegal employment and abuse of unemployment benefits.
* Implementation of the government’s statement of 17 February 2008 concerning the rights of workers to an Employment Retraining Fund, Illness and Education Funds and Adult Education.

The marches around the world on the 1st May are a reminder to businesses and governments not to forget the welfare and development of ordinary citizens. It was, therefore, no surprise that this year’s turnout was high.

Meanwhile the widely anticipated Mayday Government of the left-wing failed to materialise. Spokespeople for the Social Democrats and the Left Green Movement maintain that talks are going very well and that Iceland can expect a new government to be announced around the end of next week.

The 1st May was celebrated as a public holiday in Iceland, as in many other countries.

At a meeting held on 3 February, the Government of Iceland approved a proposal from the Prime Minister to conclude a contract with the international corporate advisory firm Hawkpoint to work under the supervision of Icelandic authorities on reaching a settlement between the old and new banks.

The task involves, firstly, advising on agreements which must be concluded between the state, on behalf of the new banks, and creditors of the old banks in connection with final settlement of their claims. Secondly, Hawkpoint will provide expertise on arrangements and possible solutions concerning this settlement, as various options are possible in this regard.

The government had previously invited four foreign consultancy firms to tender for the project, in order that an assessment could be made as to who was best suited to undertake this project. Two of the firms withdrew, but representatives of Hawkpoint and the investment bank Houlihan Lokey met with Icelandic authorities to present their ideas.

Hawkpoint is an independent corporate finance advisory firm which advises corporates, financial institutions, private equity houses, governments and quasi-governmental bodies and is active throughout Europe. Their advisory services cover Mergers & Acquisitions, Capital Markets, Debt, Restructuring and strategic advice. Operating from offices in London and Paris, they mainly clients from the UK, France and Germany.

He pointed out that until money transfers to and from Iceland are normally re-started; no foreign investors will be able to start businesses in the country. “With that goes the necessity to adopt the euro; and that should be done within the second half of this year while Sweden holds the EU presidency.”

The professor said there are two future possibilities: “Either Icelandic trade reopens and banks regain their credibility and status, or this island closes into itself even more. The current situation cannot last long. I would, of course, prefer the first possibility.”

“The current government is too much domestically orientated, rather than internationally. If they do not offer the right conditions for foreign investors, they will lose the possibility to bring investments here and enhance the local economy.”

Mr Zoega stated that Iceland needs a leader able to handle this situation, but that it would be almost impossible to find such a person domestically. “I do see a possibility of some foreign politician coming in. The current Icelandic politicians behave as if someone put them in a freezer forty years ago. Besides that, they are not really educated to have the post they hold. There is no educated economist for instance.”

“One of the other issues is communication. The past and present governments completely lack internal and external communication. There are negotiations going on, but no outcome is known.”

“Iceland is a very stubborn and patriotic country – just remember how they are pictured in the book Independent People by Halldor Laxness. But people here must understand that it is important to mingle up and accept other nationalities and that having a non-Icelandic politician would not be a shame.”

When questioned whether Mr Zoega would be interested in joining the political scene, he answered “No, that is not my intention. I am more interested in the papers.”

Nearly half of those asked are very trusting of Gylfi Magnusson, the new Minister of Trade, who is not an MP. And roughly 40 percent of respondents greatly trust Katrin Jakobsdottir, Minister of Culture and Education and Ragna Arnadottir, Minister for Justice and Ecclesiastical Affairs.

In the conclusion of the report it says that both Johanna Sigurdardottir and Steingrimur J. Sigfusson, the leaders of the two coalition parties, enjoy considerable support from voters of the other party. On the other hand, leaders of the old coalition government, Geir H. Haarde and Ingibjorg Solrun Gisladottir enjoy little support from anyone outside of their own parties.

Poll participants came from a so-called quota sample, meaning the survey was completed by people who have agreed to participate in regular online polls.

In total, 971 people took part.

Keynote speakers are economist Haraldur L. Haraldsson, psychiatrist Andres Magnusson and Adalheidur Asmundsdottir, law student. The newly installed centre left government has been invited to partake in the subsequent panel discussion. After the keynote talks, questions for the panel will be taken from the audience.

The meeting will focus on the current situation and progress made since October, when what The Economist has described as “the biggest banking failure in history relative to the size of an economy” occurred in Iceland. People are concerned whether the response so far by the government has proven sufficient to meet the scale of the problems facing the country.

The Organisation for Civic Action is a community based voluntary organisation that came into being with the intent of hosting civic meetings where those in power were held accountable for their actions, or lack thereof, and a forum was created wherein citizens could voice their concerns directly to their representatives, among others.

These meetings have been ongoing since October 27th, and include a civic meeting on November 24th which the group hosted in Reykjavík’s largest theater and invited the government which, having declined to attend previous meetings, attended and took questions from an audience of two thousand people. The event was broadcast live on television and can be seen as a watershed moment in terms of civic responses to the present crisis.

The event will take place in Haskolabio (University Theater), Hagatorg, 107 Reykjavík at 20.00. For more information visit the website: http://www.borgarafundur.org/

The Coordination Committee which has the overall responsibility of developing, implementing and communicating a comprehensive strategy for bank restructuring published its first report today at a press seminar. Mats Josefsson, the Swedish expert hired to assist the government in addressing the banking problems, is chairing the Coordination Committee, The Committee consists of representatives from all relevant parties involved in dealing with banking issues.

The Key issues to be addressed by the government has been identified in a Strategy Note supported by all members of the Coordination Committee. The Note states that the problems that materialized in the banking sector in early October 2008 have affected every sector of the economy and that the problems will continue to affect the economy. On specific issues the following recommendations were made:

* that operating banks have to be operationally and financially restructured by the government
* supporting the corporate sector by establishing an Asset Management Company, in charge of restructuring larger companies of strategic importance to the Icelandic economy
* that the government takes on its role as the owner of banks and let the banks know it is no longer business as usual
* that banks should recognize the new environment and contribute and support the government in implementing its policy for economic recovery
* the set up of the legal and procedural framework for the resolution of the old banks
* to distribute the proceeds from the asset sales to the creditors in a fair, equitable and transparent manner
* to consider the set up of an independent holding company to manage the shares held by the government in financial institutions
* to develop a policy on future ownership of financial institutions, including a possible divestment of shares
* to have a regulatory and supervisory framework in line with best international practice