How effectively does Iceland’s government develop strategic policy solutions and foster dialogue in the process?
The Management Index assesses a country’s capacity for reform. Three categories examine the ability to plan and implement policies. Accountability assesses the extent to which non-executive actors are included in the political process.
There is little substantial research on the influence of strategic planning on government decision-making in Iceland. However, researchers more or less agree that long-term strategic planning in Iceland is often vague and lacks plans for execution, supervision and revision. When specific objectives are laid down through planning, there will typically be no guarantees ensuring that they will be met. As a result, the government often has a certain degree of flexibility to stall or change strategic planning. A clear example of this is that every fourth year the parliament approves a strategic plan on regional policy for the following four years (the Stefnumótandi byggðaáætlun). This strategic plan lacks the status of a law and is only a resolution. This means that the government has no binding obligation to implement this plan. Over the years, only some elements of these four-year plans have been implemented, while others have gone unaddressed.
The nine-volume, 2,400-page report from the parliament‘s Special Investigation Commission (SIC) delivered a devastatingly critical account of incompetence and lack of coordination among ministries, the Central Bank and the Financial Supervisory Authority (FME) before the financial crash of 2008. The SIC singled out three ministers and four public officials who showed neglect in the exercise of their duties, opening the possibility that some or all of the seven might be prosecuted.
Special Investigation Commission (SIC) (2010), “Report of the Special Investigation Commission (SIC) ,” report delivered to Althingi, the Icelandic Parliament, on 12 April.
The government only occasionally consults academic experts. These are primarily lawyers involved in preparing laws or participating in various fields of public administration, although they are also occasionally economic or engineering experts. Thus, nongovernmental academic experts cannot be considered as having a strong influence on decision-making. Experts consulted have often been affiliated with the political parties of the ministers seeking their advice. Independent experts sometimes feel their views are not taken seriously into account in policy-making. However, the 2008 economic collapse may have changed this pattern. The need for scholarly advice on judicial, financial and economic issues as well as questions of public administration has increased markedly. This was particularly the case in connection with the preparation of the parliament’s Special Investigation Commission report (SIC, Rannsóknarnefnd Alþingis) in April 2010, which investigated the causes of the economic collapse. A number of experts in various fields – law, economics, banking, finance, mass media, psychology and philosophy – contributed to the report, which may turn out to have significant influence on Icelandic society and the reconstruction of the economy and the political system.
The expert staff of the Prime Minister’s Office consists of two lawyers, one consultant on foreign policy and two other persons labeled as experts. This office has the smallest number of staff members of all the ministries in the Icelandic government, but has been considered to have the expertise it needs to evaluate ministerial draft bills thoroughly. At the time of writing, the current coalition government of the Social Democratic Alliance and the Left Green Movement had plans to merge ministries, reducing their number from 12 to nine. One of the main arguments for this plan was that some ministries lacked broad-based expertise, and merging them would render this expertise better accessible to them all.
The Prime Minister’s Office (PMO) has no formal authority to return items envisaged for cabinet meetings, but it can do so in principle. The working rule is that items can be approved in cabinet meetings only through the consensus of all the ministers. The prime minister can return items, even if this authority is not granted by law.
Due to a long and strong tradition of ministerial power and independence, line ministries do have considerable flexibility in drafting their own policy proposals without consulting the Prime Minister’s Office. If a line minister belongs to the same party as the prime minister, there is usually some PMO involvement, but little or no such involvement takes place if the line minister is a member of a different party. After the publication of the parliament’s Special Investigation Commission (SIC) report, a committee was set up to evaluate and suggest necessary steps to improve the state administration. One of the committee’s critical suggestions was to improve the overall work routines and conditions of the executive branch’s political head. The leading role of the prime minister should be given clearer status in law, even in the constitution, the committee proposed (Skýrsla starfshóps forsætisráðuneytisins, 2010).
There are very few cabinet committees that prepare cabinet meetings. For some issues, the prime minister or the government as a whole can establish ministerial committees. A Budget Committee and some ad hoc committees do prepare items for cabinet meetings, but the majority of items on cabinet meeting agendas are prepared by ministers. Often, two or more ministers coordinate and consult with one another in the course of their preparations for cabinet meetings. The aftermath of the 2008 economic collapse led to more and broader cooperation between ministers, particularly between the prime minister, the minister of finance and the minister of commerce. However, this was a temporary arrangement intended to coordinate the cabinet’s immediate reactions to the economic crisis. In early 2010, four different ministerial committees were established aimed at coordinating issues that overlapped between two or more ministries’ policy areas. It has been suggested that clearer rules and laws be enacted in this area, especially concerning the formal status of the meetings and their proceedings. The report of the Special Investigation Commission (SIC) exposed a remarkable lack of coordination within the government before the crisis, including the discovery of meetings at which no minutes were taken, leaving the participants and ultimately the public in doubt as to what was said and decided at those meetings.
Special Investigation Commission (SIC) (2010),“Report of the Special Investigation Commission (SIC) ,” report delivered to Althingi, the Icelandic Parliament, on 12 April.
Almost all preparation of cabinet meetings is done by the ministers, in cooperation with senior officials of each ministry. However, there is a tradition for senior officials within the ministries to assume that role alone. Ministers also consult with one another before cabinet meetings.
Senior ministry officials play an important role in preparing cabinet meetings. According to the 1969 law on the Icelandic state administration, no cooperation between ministries is presumed in cases when the ministers themselves are not involved. With new plans to merge and streamline ministries, a closer cooperation has been suggested (Skýrsla starfshóps forsætisráðuneytisins, 2010). The involvement of too many ministries and ministers has in some cases been found to be a barrier to progress in policy-making, a consequence of strong ministerial powers and independence. Today, coordination between line ministries does not take place on a regular basis, occurring essentially randomly in those instances when it does take place. The report of the parliament’s Special Investigation Commission (SIC) stressed the need for change in these areas, as have other reports, but as of the time of writing, such recommendations had not yet been implemented.
Skýrsla starfshóps forsætisráðuneytisins (2010): Viðbrögð stjórnsýslunnar við skýrslu Rannsóknarnefndar Alþingis. Reykjavík (The reaction of the civil service to the report of the SIC), Forsætisráðuneytið (Prime Minister’s Office).
Lög um StjórnarráðÍslands nr. 73/1969.
Looking at evidence of the recent past, there seems to have been growing levels of informal cooperation between groups of ministers outside cabinet meetings. There are examples of “super-ministerial groups,” as they are called in the parliament’s Special Investigation Commission (SIC) report. The SIC points out that examples of such cooperation dating from the time immediately after the collapse show there is a need for clear rules on reporting what is discussed and decided in such informal meetings. The SIC report also points out that there has been a tendency to move big decisions and important cooperative discussions into informal meetings between the chairmen of each coalition government party. A prime example is the case of the two ministers who decided essentially on their own to commit Iceland to participation in the war in Iraq in 2003.
Aðdragandi og orsakir falls Íslensku bankanna 2008 og tengdir atburðir (7). Reykjavík. Rannsóknarnefnd Alþingis).
Iceland has a long tradition of formal and informal consultation between the government and labor market associations. Despite some open conflicts with groups such as the Organization of Disabled and the Union of Professors at State Universities, in which disputes have been referred to a court, the collapse in 2008 led in general to closer cooperation than before. In February 2009, the government, the municipalities and the major labor-market actors signed the so-called Stability Pact (Stöðugleikasáttmáli). The pact was presented as a declaration from the state, the municipalities and the labor-market organizations on how the country’s economy could be revived. The main goal of this pact was to restructure the economy in such a way that by the end of 2010: (1) the inflation rate would not be more than 2.5%, the Central Bank’s official inflation target, (2) the government’s budget deficit would not be more than 10% of GDP and (3) the Icelandic króna was to have appreciated. However, open conflicts concerning aspects of this pact quickly emerged, especially between the government and labor-market organizations arguing that not enough had been done to create jobs. In general, cooperation with civil society continues to strike many observers as selective and biased. For example, the Association of Households (Hagsmunasamtök heimilanna), established after the crash to look after the interests of households whose mortgage payments climbed steeply at the same time the value of their homes collapsed, claims that the government is more willing to consult with the banks than with representatives of the association on issues concerning the large number of families on the verge of losing their homes.
The government generally speaks with one voice. However, in the so-called West Nordic administrative tradition, in which every minister is responsible for the state institutions subordinate to his or her ministry, every minister has the power to make decisions without consulting other ministers. Nonetheless, ministers do not often contradict each other, and try to reach decisions by consensus. The grand coalition government in power during the 2007 – 2009 period appeared to be particularly harmonious, even after the collapse in the autumn of 2008, until the Social Democrats finally withdrew in early 2009. The new coalition government, in office since 2009, has also seemed to maintain an environment in which every minister’s independence and authority to make decisions in his or her area is respected. Nevertheless, some members of the Left Green Movement parliamentary group have frequently opposed measures brought by the government to parliament, essentially depriving the government of its parliamentary majority and turning it into a minority government forced to negotiate with members of the opposition.
Because of the strong position of the executive branch with respect to the legislative branch, bills envisaged or proposed by the government in parliament rarely fail to be approved. Thus, the government has substantial influence, and achieves almost all of its policy objectives. However, one recent, prominent example of government failure is represented by the bill on Icelandic state guarantees for the so-called Icesave debt to Great Britain and Netherlands, which was debated in the summer and autumn of 2009 and 2010. After serious difficulties winning Left Green Movement support for the bill, the government finally managed to get the bill approved in parliament by a slender margin. However, the constitution grants the president of Iceland the right to refuse to sign laws, thereby referring them to a national referendum. For only the second time in the history of the republic, the president did so in this case, claiming that the people had the right to settle the matter. In a referendum in March 2010, the Icesave debt law was overwhelmingly rejected, partly because a new deal more favorable to Iceland was already on the table, thus rendering obsolete the agreement that the electorate was being asked to accept or reject. About 60% of the electorate participated in the referendum. The prime minister and the minister of finance did not bother to vote.
Ministers usually follow party lines in the exercise of their duties and decisions, but individual ministers have considerable authority to make independent non-collective decisions. However, non-collective decisions are rare. In the present government, in office since 2009, some signs of disagreement have emerged having little to do specifically with ministerial actions. For example, when the Icelandic parliament voted in 2009 for the government resolution on Icelandic application for EU membership, one of the Left Green Movement officeholders, Minister of Agriculture and Fisheries Jón Bjarnason, voted against the resolution.
There is no official monitoring or oversight of line ministers’ activities. The small size of the cabinet makes it easy to observe the actions of individual ministers. This type of monitoring, rather more informal than formal, is effective. Although line ministries tend to guard the interests of their constituencies, particularly in the case of the fisheries, agriculture and communications industries, the Prime Minister’s Office often accedes to or even orchestrates a special interest-oriented agenda, so conflicts rarely arise. This informal control has become even stronger than before due to the fiscal austerity necessitated by the economic crisis.
Monitoring of agencies by ministries is quite weak. In the past, agencies have often spent more money than allotted to them in the government budget. The ministries themselves have in some cases engaged in the same practice of spending taxpayers’ money in excess of budget allocations. The problem is exacerbated by the fact that, due to capacity constraints and other reasons, the National Audit Office (Ríkisendurskoðun) has been able to monitor only a small fraction of the agencies under its jurisdiction. In the years between 2000 and 2007, the office audited only 44 out of 993 government agencies, or just 4.4% of the total, a very low percentage. In 2009, the first full year after the economic collapse and the fall of the big banks, almost half the effort of the office’s staff (43%) was devoted to financial auditing more or less connected to the collapse and its consequences.
Over the years there has been more or less constant strife between the local and state governments over the character of grant funding. The division of responsibilities between the central government and local governments has changed over time, but not broadly. In 1996, full responsibility for primary education was transferred from the central government to the municipalities. This transfer was in general accomplished without imposing a heavy financial burden on local governments, but a lack of funding did cause serious economic problems for many of the smallest municipalities. In quite a few cases, the shift in responsibilities forced these small municipalities to merge with neighboring municipalities. As of the time of writing, delegation of two important tasks – handicapped affairs and elderly affairs – from the state to the local level was planned. The extent to which the central government will be able to provide sufficient funding remains uncertain in view of the state’s dire post-crash fiscal straits.
Subnational or local government in Iceland has no formal constitutional status. The only paragraph in the constitution that concerns subnational government states that municipal affairs shall be decided by law. The general rules on local government are found in the Local Government Act (Sveitarstjórnarlög), which states that local authorities shall manage and take responsibility for their own affairs. The parliament or the ministry responsible for local government affairs can in general make decisions or laws that affect local authorities (Eythórsson, 1999). Icelandic local authorities are free to do anything that is not forbidden by laws concerning local government activities.
Eythórsson, Grétar (1999): The Iceland National Report. In Jacob, Linder, Nabholz and Heierli (eds.): Democracy and Local Governance. Nine Empirical Studies. Institute of Political science, University of Bern, Switzerland (p. 62-88).
A diverse set of special laws on local government services and activities is intended to set national standards. In most cases, these laws set minimal service standards. This is most apparent in areas such as primary education, child protection and social services. However, the central government does not seem to be able to monitor the extent to which these standards are met by local governments in all cases.
Though not an EU member state, Iceland has, as a member of the European Economic Area (EEA) since 1994, integrated and adapted EU structures to a considerable extent. Under the EEA agreement, Iceland is obliged to adopt around 80% of EU law. Iceland is also responsive to comments coming from the Council of Europe (CoEU), the Schengen Agreement states and U.N. institutions. As one of the five full members of the Nordic Council of Ministers, Iceland is bound by every unanimous decision taken in the council. However, the council deals only with issues connected to Nordic cooperation (Petersson, 2005). The government’s structure and organization accords well with international practice, and was reviewed and revised most recently in 2007. However, it has been argued for some years that additional streamlining of the ministries is desirable in order to weaken the long-standing links between special interest organizations and the line ministries. At the time of writing, the current government has already announced plans to reduce the number of ministries from 12 to nine, for example by merging the Ministry of Agriculture, the Ministry of Fisheries and the Ministry of Industry.
Petersson, Olof (2005): Nordisk Politik. Sjätte upplagan. Norstedts Juridik, Stockholm.
Iceland’s government is an active participant in international forums, but seldom initiates measures intended to shape or better international policies. After World War II, Iceland was a founding member of the United Nations, the International Monetary Fund and the World Bank, and in 1949 was a founding member of the North Atlantic Treaty Organization (NATO). In 2008, Iceland ran for a U.N. Security Council seat but lost to Austria and Turkey. In 2009, Iceland applied for membership in the European Union. Negotiations on the terms of accession are expected to commence soon. For the most part, Iceland has worked cooperatively in international affairs, but does not take any significant initiative in the international coordination of reform. A few years ago, the country participated in peacekeeping efforts in Iraq, and it participates in the work of the Organization for Security and Cooperation in Europe (OSCE) on a minimal level.
There is no formal system of self-monitoring in the area of organizational reform. Monitoring of institutional arrangements does not occur on a regular basis. Institutional arrangements are reconsidered from time to time, and the 2007 – 2009 coalition government did in fact do some reshuffling by moving the responsibility for municipal affairs from the Ministry of Social Affairs to the Ministry of Communications, the responsibility for tourism from the Ministry of Communications to the Ministry of Industry, and the responsibility for social security transfers from the Ministry of Health to the Ministry of Social Affairs. The government in office since 2009 has announced a further revision of the ministry structure by merging the ministries of Agriculture, Fisheries and Industry into a single ministry, and by merging the Ministry of Communications and Municipal Affairs and the Ministry of Justice and Human Rights into a single Ministry of the Interior. These changes are intended to strengthen policy coordination and administrative capacity, which some of the small ministries currently lack.
The government is trying to strengthen its strategic capacity by changing and merging ministries. The government in office during the 2007 – 2009 period took some steps in this direction, and further mergers have been announced by the current government. At present, some ministries are too small, constituting a weak link within the state administration. The capacity of these small units to cope with complex and complicated issues such as international negotiations and contracts is questionable. Further, the informality of such small units is seen as a disadvantage. On these grounds, the government is pursuing its plan to merge ministries to form larger units. It is understood, however, that mergers by themselves are not enough to ensure better functioning. Coordination must take place in connection with such measures.
Icelandic citizens seem to be well informed about government policy. In local surveys, most citizens were familiar with policies in general, and more so with respect to those policies that either interested them or affected their everyday lives. This is more the case with domestic policies than with international politics, because Iceland’s political landscape is not highly complex. It is relatively easy to get a comprehensive overview of the politics, parties and the issues. Iceland is a small country with extensive interpersonal networks. The country’s relatively isolated island status also contributes to its citizens’ inward-looking domestic focus. Some of the voters’ immediate responses to the economic collapse in 2008 show an ability to adapt quickly to changed circumstances, as shown in a survey performed in connection with the parliamentary elections in 2007 and 2009. In this survey, the percentage of voters agreeing with the claim that the country is mainly governed in accordance with the popular will declined from 64% in 2007 to 31% in 2009 (Önnudóttir and Hardarson, 2009).
Önnudóttir, E.H. and Hardarson,Ó. Th. (2009):Óánægðir lýðræðissinnar: Afstaða Íslendinga til lýðræðis. (Dissatisfied democrats: The Icelanders’ attitudes towards democracy). In Gudmundsson, H.S. andÓmarsdóttir, S. B. (2009) Rannsóknirí félagsvísindum X. Reykjavík, Háskólaútgáfan.
The Information Act (50/1996) (Upplýsingalög) grants standing parliamentary committees the right to request almost all government documents needed in the course of their work, but they cannot force the government to give up classified documents. Exempted documents include minutes, memos and other documents from cabinet meetings, letters between the government and experts for use in court cases, and working documents marked only for government use (except those containing a final decision about a case or information that cannot be gathered elsewhere). The government can restrict access to documents if exceptional public interests are at stake, such as the security and defense of the country, international relations or business agreements (as when government institutions are in competition for a contract). The parliament’s Committee on Foreign Affairs has a special legal status that allows it to request government documents it needs in order to fulfill its legal obligations. The chair of the committee and the foreign minister can require that the committee’s work and discussions be kept confidential. The budget committee can also request the government documents it needs to fulfill its legal obligations.
Parliamentary committees can legally summon ministers for hearings, but seldom do so. The foreign minister usually attends or is summoned to meetings of the parliamentary Committee on Foreign Affairs. The cabinet parties at any given time have a majority in the parliament, and therefore in all parliamentary committees. Even in the turbulent times after the 2008 economic collapse, no minister was summoned to speak in front of a hearing. However, Central Bank manager (Seðlabankastjóri) and former Prime Minister Davíð Oddsson was summoned to a meeting in the Commerce Committee.
Independent experts are frequently asked to appear before standing parliamentary committees. After the dramatic events of 2008, the committees have more frequently summoned experts, mainly lawyers, economists, and finance and banking experts.
During the period under review, there were 12 ministries in the state administration and 12 parliamentary committees whose areas of responsibility coincided almost fully with the ministries. There are two economic committees, one on economy and taxes and one on commerce. These coincide with the Ministry of Economy and Commerce and the Ministry of Finance. Two of the 12 parliamentary committees have a special role connecting them to the government. The committee responsible for finance and budget preparation has the authority to request information from institutions and companies that ask for funding from the budget. The Committee on Foreign Affairs has advisory status vis-à-vis the government regarding all major international policies, and the government is obliged to discuss all major decisions concerning international affairs with the committee. Parliamentary committees rarely oppose or contradict the ministries because the government parties have a majority in the committees. Thus, the fact that the task areas of parliamentary committees and ministries nearly coincide is not a guarantee of effective monitoring, as the majority and chairperson of every committee belong to the governing parties. Minority members from the opposition benches can, however, use the committees as a venue to voice their opinions. Whether the planned reduction in the number of ministries from 12 to nine will lead to a corresponding change in the committee structure remains to be seen. Experience suggests that this will be the case.
Kristinsson, Gunnar Helgi. (2007). Íslenska stjórnkerfið. Háskólaútgáfan; Reykjavík
Iceland’s National Audit Office is fully accountable to the parliament. It reports to parliament and performs its important function quite effectively, given its significant manpower constraints and inadequate funding. These latter issues mean that a vast majority of the agencies under its jurisdiction have never been subjected to an audit. No significant strengthening of the office’s staffing or financial resources has occurred in recent years, though the number of staff increased from 47 in 2007 to 49 in 2009.
The office of the Parliamentary Ombudsman (Umboðsmaður Alþingis) was established in 1997. The office takes up cases both on its own initiative and at the request of citizens and companies. It is independent in its work, efficient and well regarded.
Iceland’s main TV and radio stations provide fairly substantive in-depth information on government decisions. Radio analysis typically tends to be deeper than that found on television. The small size of the market limits the financial resources of TV stations. Critical analysis of government policies by independent observers, experts and journalists is a fairly recent phenomenon in Iceland. The Special Investigation Commission (SIC) report has a separate chapter on the mass media before and during the economic collapse in 2008. The report criticizes the mass media in general for not having been critical enough in their coverage of the Icelandic banks and other financial institutions during the pre-bust boom. The report argues on the basis of several content analyses that media coverage of the banks was to a large extent biased toward the banks’ own worldviews. This was likely associated with the fact that the owners of the banks also owned the main newspapers and the main private TV station.
Most electoral programs consist of ambiguous promises and vague policy declarations, and do not include a description of how policies will be implemented or how long they will remain in effect. Manifestos of this kind are hard to evaluate. This general ambiguity can be traced to the tradition of coalition governments. Most of the parties try to keep their options open during electoral campaigns with respect to making coalition partnerships after the elections. In the 2009 national elections, the high level of societal uncertainty in the wake of the economic collapse caused the main parties to be even less specific than usual with respect to planned policies and the details of potential implementation.
The main interest organizations in Iceland have had and still have considerable influence on public policy, and a long history of involvement with the political parties. The Confederation of Icelandic Employers (Samtök atvinnulífsins) has in modern times been closely, albeit not formally, associated with the right-wing Independence Party. Likewise, the Icelandic Confederation of Labor (AlþýðusambandÍslands, ASI) has a long history of close links to the parties on the left, although its formal ties to the Social Democratic Party were severed in 1942. Until its breakup in the 1990s, the cooperative movement, with its strong ties to the agricultural sector, was closely linked to the Progressive Party (Framsóknarflokkurinn), which has its origins in the farmers’ movement. All major interest organizations in Iceland have long maintained a staff of highly qualified employees, and use research to form policy proposals that are usually well grounded, coherent and in line with organizational goals. After the 2008 economic collapse, both the employers’ organization and the employees’ organizations signed an agreement with the government and the Federation of Municipalities aimed at securing economic stability (Stöðugleikasáttmáli). The agreement deals with the restructuring of the economy by keeping wages and prices down, among other issues. The Chamber of Commerce has been vocal in recent years, dispensing advice to the government on a regular basis. One of their recommendations, a few months before the crash of 2008, was the following: “The Chamber of Commerce recommends that Iceland stop comparing itself with other Nordic countries because we are superior to them in most respects.”
Many non-economic interest organizations are active in Iceland, working in various fields. Although many have a reasonable level of prominence, only a few have the capacity and competence to exert significant effect on government policy. The biggest two to mention in this context are the Organization of Disabled in Iceland (Öryrkjabandalagið), with 34 member associations and a staff of 15, and the Consumers’ Association of Iceland (Neytendasamtökin), with a staff of seven. To mention one organization more prominent than big, the Nature and Wildlife Conservation Organization (NáttúruverndarsamtökÍslands) gets by with a staff of only one. Even so, this group has managed to feature prominently in public debate about power plants, both on issues of hydropower and geothermal power, and has expressed reservations about further construction of aluminum smelters around the country.
Governments in charge
SGI 2011 review period (May 2008 to April 2010) is outlined. Shown are: Prime minister or president, type of government, and ruling parties. Asterisks indicate national parliamentary or presidential elections.
Country scores and texts were produced by the country coordinator, based on comprehensive assessments by two country experts.
Prof. Detlef Jahn University of Greifswald
Prof. Grétar Thór Eythórsson University of Akureyri
Prof. Thorvaldur Gylfason University of Iceland, Reykjavík