Rebuilding trust following the economic crash

Pall Thorhallsson, Director General, Prime Minister´s Office

Pre-crash situation

• Trust in public institutions generally high

• High voter turnout

• Iceland considered to be relatively free from corruption

The nature of the 2008 crash

• All major banks collapsed

• The currency fell dramatically

• Housing loans skyrocketed

• Moral and political crisis

• Huge disillusionment and anger towards bankers and the authorities

Political landscape

• 2009-2013 First purely left-wing government in the history of the republic

• 2013-? The center- and right-wing parties are back in power again

2009-2013 – investigations and accountability

• Unprecedented parliamentary investigation of the causes of the collapse

• Former Prime Minister taken to State Court

• Criminal investigation of the banks, several hundred cases

2009-2013 - reform projects

• Constitutional reform process with a directly elected constitutional convention

• Revised information law, granting wider access to public documents

• Ethical codes for the public service with a lawbased coordination committee

• School of central government created

• Improved selection procedure for top-positions in the civil service

2009-2013 other reform and developments

• EU accession bid

• Attempts to revise the fishing quota system and make the quota owners pay more to the State

• Restructuring of banks, companies and private household debts

• Presidential power increases

• Crisis in relations with UK and NL (Icesave)

Preliminary results?

• Some reforms were adopted

• For others the former government did not have enough time or inner strength to complete them

• Remains to be seen what the new government aims to do in the field of governance reform

Impact on trust

• Trust in institutions remains relatively high

• Trust in politicians is very low

• Voter turnout is still relatively high

Reasons for lack of trust

• 79% mention the political culture, political fight and disrespect instead of cooperation

• 72% mention working methods in Parliament, Parliament not listening to the people, not having the right priorities

(Survey commissioned by Parliament)

Preliminary lessons

• The crisis created opportunities for reform

• Reforms which enjoy broad political support (which may be hard to create) have bigger chance of success

• Need to manage expectations, cf. the constitutional reform which failed