Davíð Oddsson

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Davíð Oddsson
Prime Minister of Iceland
In office April 30, 1991 – September 15, 2004
Preceded by	Steingrímur Hermannsson
Succeeded by	Halldór Ásgrímsson
Born	17 January 1948 Reykjavík, Iceland
Political party	Independence Party

Davíð Oddsson (IPA: [ˈtaːvið ˈɔtsɔn]) (born 17 January 1948 in Reykjavík) is an Icelandic politician and the longest-serving Prime Minister of Iceland, holding office from 1991 to 2004. He also served as foreign minister from 2004 to 2005. Previously, he was mayor of Reykjavík from 1982 to 1991, and since 2005 he has chaired the board of governors of the Central Bank of Iceland.

[edit] Biography

[edit] Early years

Davíð Oddsson was born in Reykjavík. His father was a medical doctor, and his mother a secretary. His parents were not married, and he was brought up in his maternal grandfather’s home in Selfoss, a small town in the south of Iceland, until the grandfather died. Then he moved with his mother and his grandmother to Reykjavik. He took an early interest in acting and attended an acting school for a while. He also attended the gymnasium Menntaskólinn í Reykjavík where he graduated in the spring 1970. There, he became well-known for a masterful interpretation of the leading role (the king) in Alfred Jarry’s play Ubu roi, set up by the students and shown on television. He was also Inspector scholae, or president of the Student Association. In the autumn of 1970, Davíð married Ástríður Thorarensen, a nurse; they have one son. The next six years, Davíð read law at the University of Iceland, working almost full-time as well. He was assistant to the director of a small theatre (now the Borgarleikhúsið) for a while, and produced, with two friends, a popular radio comedy show for two years; he was for a while a political commentator at Morgunblaðið, and the director of publication of Almenna bókafélagið, a conservative publishing house. In 1973, Davíð translated a book by the Estonian emigre writer Anders Küng on the communist oppression in Estonia. Upon receiving his law degree in 1976, Davíð became a managing director of Sjúkrasamlag Reykjavíkur (the Reykjavík Public Health Insurance Company). He had been elected to the Municipal Council in Reykjavík in 1974, for the Independence Party.

[edit] Mayor of Reykjavík (1982–1991)

Perlan, a revolving restaurant set on water tanks on a Reykjavik hill, and built on the initative of Davíð Oddsson

Davíð Oddsson was a member of a group of young conservative-libertarians within the Independence Party who felt that the party should support more strongly attempts to extend economic freedom in the heavily regulated Icelandic economy. The group included Þorsteinn Pálsson, Geir H. Haarde, Jón Steinar Gunnlaugsson, Kjartan Gunnarsson, Magnús Gunnarsson, Brynjólfur Bjarnason and Hannes Hólmsteinn Gissurarson, and they published the magazine Eimreiðin from 1972 to 1975; in the following years they followed with interest what was happening in the United Kingdom under Margaret Thatcher and in the United States under Ronald Reagan; they also read books and articles by and about Milton Friedman, Friedrich Hayek and James M. Buchanan, who all visited Iceland in the early 1980s and whose messages of limited governments, privatisation, and liberalisation of the economy had a wide impact. Davíð got a chance to further his ideals when, in 1982, the Independence Party, under his leadership, regained the majority in the Reykjavík Municipal Council which it had lost four years earlier to three left-wing parties. Davíð swiftly reduced the number of Council members from 21 to 15, and merged the largest fishing firm in Reykjavik which belonged to the municipality and had been a huge burden, with a private fishing firm and then sold off the municipality’s assets in the new firm, Grandi, now one of the biggest fishing firms in Iceland. Incidentally, the director of Grandi, Brynjólfur Bjarnason, who oversaw what was Davíð’s first privatisation, later became the director of the Icelandic Telephone Company which turned out to be Davíð’s last privatisation in government (2005). As Mayor of Reykjavík, Davíð had a City Hall built by the Reykjavík pond (there had never been a City Hall in Reykjavík), and a big restaurant, Perlan, revolving over the old water tanks in Öskjuhlíð. Despite his libertarian leanings, Davíð also generously supported the Reykjavík City Theatre, in particular the building of a new theatre house which was opened in 1989. In the nine years when Davíð was Mayor of Reykjavík, a whole new district, Grafarvogur, was built and also a new shopping area around the shopping mall Kringlan. A forceful and uncompromising Mayor of Reykjavík, Davíð was much-criticized by the left-wing opposition in the Municipal Council.

[edit] Alliance with the Social Democrats (1991–1995)

Davíð Oddsson with the editors of his 50th birthday festschrift, 17 January 1998, from left: Jón Steinar Gunnlaugsson, later Supreme Court Judge, Þórarinn Eldjárn, one of Iceland’s best-known poets and writers, and Hannes Hólmsteinn Gissurarson, University Professor and Davíð Oddsson’s informal adviser

In 1983, Davíð Oddsson’s old friend and ally, Þorsteinn Pálsson, had been elected leader of the Independence Party, and in 1989 Davíð had been elected deputy leader, or Vice-Chairman of the Party. After Þorsteinn Pálsson had to resign as Prime Minister in 1988, after falling out with the leaders of his two coalition parties, there was a widespread feeling in the party that its leadership should be changed, and much pressure on Davíð to stand against Þorsteinn. This he did in 1991, and became leader of the Independence Party. Under Davíð Oddsson’s leadership, in the parliamentary elections of 1991, the Independence Party regained most of the support it had lost in 1987 when it had been severely weakened because of a split in its ranks. In record time, Davíð formed a coalition government with the social democrats, Alþýðuflokkurinn, whose leader, Jón Baldvin Hannibalsson, became Minister of Foreign Affairs. Jón Baldvin and Davíð jointly decided that Iceland should become the first state to recognise the reinstatement of the sovereignty and independence of the three Baltic countries, Estonia, Latvia and Lithuania, after the fall of Soviet Union.

Davíð’s government inherited a huge government deficit and a backlog of public malinvestments; much money had been invested, for example, in fish farming, with little result. Inflationary pressures were also building up, while some fish stocks in the Icelandic waters were being depleted. The government deficit was turned into a surplus in 1996, not least because of the close cooperation between Davíð and Friðrik Sophusson, the Minister of Finance, who had also been a prominent young libertarian. There has been a surplus almost continuously since then, which has been used to reduce the public debt, and also to reform the pension system, which is now almost wholly self-supporting. Monetary constraints were imposed by making the Central Bank largely independent of any political pressures. It also helped the Davíð Oddsson government that there was a consensus between the labour unions and the employers that the rampant inflation of the 1980s, with huge, but largely meaningless, nominal wage increases, could not go on; therefore, in 1990, the unions and the employers had signed a “National Accord”, whereby wage increased would be moderate, and government would be assisted in bringing down inflation. Since 1991, inflation in Iceland has been on a level with the neighbouring countries.

In the first four years of Davíð’s first government, also some small companies were privatised.

[edit] Alliance with the Progressive Party (1995–1999)

Davíð Oddsson at a birthday party 19 February 2003 with Kjartan Gunnarsson, the executive director of the Independence Party, and one of Davíð’s closest friends and advisers

In 1994, the Social Democratic Party split, and as a result they suffered a huge loss in the 1995 parliamentary elections. While in theory the coalition government maintained its majority, it only consisted of one seat. Davíð Oddsson therefore decided to form a coalition with the Progressive Party. The leader of the Progressive Party, Halldór Ásgrímsson, became Minister of Foreign Affairs. In the new government, privatisation was continued on a much greater scale than before: a big and important chain of fish processing plants was sold; semi-public or public investment funds were merged and sold as a private investment bank; the two commercial banks under government control were sold in a few stages, and are now wholly private; in 2005, as noted previously, the state-owned Icelandic telephone company Siminn was also privatised. The two coalition parties worked together to stabilise the legal framework in the fisheries: They accepted the loud demand by many people that a charge would be imposed on the holders of fishing quotas.

Davíð’s two governments have been staunch allies of the United States and strongly in support of NATO, of which Iceland is a founding member. Davíð firmly supported the actions undertaken by the U.S. and its allies in Afghanistan and Iraq, taking much criticism from the Icelandic Left. After the fall of the Soviet Union, there has been some uncertainty about whether the United States defence force could or should remain in Iceland, having been invited there in 1951, at the height of the Cold War. The incumbent Icelandic government believes that the U.S. should continue to commit itself to the defence of Iceland, while it has also made clear its willingness to share in the costs of maintaining the arrangements. Davíð has not been enthusiastic about joining the European Union (EU), unlike the leadership of the Social Democratic party. A vocal supporter of free market policies, Davíð has publicly expressed doubts about the dirigiste tendencies of the European Union; he has also feels that Iceland, as a prosperous high-income nation, would contribute much more to the EU than it would get back; again, most notably, the country would have to cede control to Brussels of the Icelandic waters, fought over and gained in the many “cod wars” of the past.

The latter Davíð Oddsson government (since 1995) embarked on a course of tax cuts. It cut the corporate income tax down to 18%; it abolished the net wealth tax; it lowered the personal income tax; and it lowered the inheritance tax. It is fair to say that the combination of the opening up of the economy, fiscal and monetary stabilisation have together created an entrepreneurial climate in Iceland. Since 1995, there has been record economic growth in the country, with the real average income of individual households increasing by more than 17% while the income of the wealth household has increased more than 45%. Icelanders have also been busily investing in other countries, especially the United Kingdom and Denmark.

[edit] Alliance with Progressive Party (1999–2004)

Davíð Oddsson with George W. Bush in the White House, July 6, 2004

As a young man, Davíð Oddsson had authored or co-authored several plays for the stage and for television. During his days as political leader, he pursued his literary interests as well, and in 1997, he published a collection of short stories, Nokkrir góðir dagar án Guðnýjar, which became a best-seller in Iceland. Davíð celebrated his 50th birthday at a huge reception in Perlan, paid for by the Independence Party, and his friends published a festchrift of more than 500 pages where many of the most distinguished writers, scholars and politicians of Iceland contributed papers. In the 1999 parliamentary elections, Davíð’s Independence Party retained strong support, despite the attempt by a former government minister of the Party, Sverrir Hermannsson, to establish a splinter party: the minister had been made director of the National Bank of Iceland and had had to resign because of financial irregularities. In 2002, Davíð published another collection of short stories, Stolið frá höfundi stafrófsins, which was also well-received.

However, in that same year, 2002, there began a controversy in Iceland about the company Baugur, owned by the successful entrepreneurs Jóhannes Jónsson and his son, Jón Ásgeir Jóhannesson. A giant on the Icelandic scene, Baugur controlled the majority of the retailing business in Iceland: in parliament, the then-leader of the social democratic party Össur Skarphéðinsson called for a closer supervision on possible monopoly pricing, specifically mentioning this company. Davíð said he agreed in general. In the summer of 2002, the Icelandic police raided the headquarters of Baugur, after a disgruntled former employee in their American operations had produced what he claimed was evidence of financial irregularities. The two main owners of Baugur did not take kindly to this and accused Davíð of being behind a campaign against them. They bought a newspaper, Fréttablaðið, which is sent free of charge into every household in Iceland. The paper opposed Davíð in the bitterly fought 2003 parliamentary election when there was talk of corruption, bribery and abuse of the police. In a speech on February 9 2003, the main spokesperson of the social democratic party, Ingibjörg Sólrún Gísladóttir, suggested that Davíð might be responsible for the tax investigation of businessman Jón Ólafsson, then owner of a private television station, and also for the police raid on Baugur. Paraphrasing Shakespeare, she asked: "Are you a friend of the Prime Minister or are you not; that is the question".

[edit] Foreign Minister (2004–2005)

Davíð Oddsson with Professor Ragnar Árnason, a leading free market economist in Iceland, at a Mont Pelerin Society meeting in Iceland 20 August 2005

After the 2003 elections, Davíð Oddsson and the leader of his coalition party, Halldór Ásgrímsson, Minister of Foreign Affairs, agreed that Davíð should remain Prime Minister until 15 September 2004, at which time Halldór would become Prime Minister, and that the Independence Party would, in exchange for relinquishing the Prime Minister’s post, gain an additional ministry in the government from its partner. In 2004 the Davíð Oddsson government became embroiled in controversy, as Davíð introduced a bill which would have made it impossible for large private companies to own more than 15% in any one media, and under which newspapers and television stations could not be owned by the same companies. Davíð argued that this was to prevent concentration of the media in the hands a few people, and to enable the media to remain independent and critical not only towards politicans, but also towards financial moguls. His critics maintained, however, that the proposal was directly aimed at Baugur which Davíð was, they said, obviously regarding as a political enemy. By then, Baugur had bought another newspaper, the television station from Jón Ólafsson and a few radio stations, and controlled more than half of the media market. In a much-softened version, parliament passed the media bill proposed by the government. But then, for the first time in the history of the Icelandic Republic, in the summer of 2004, the president, Ólafur Ragnar Grímsson, refused to sign the bill into law. Davíð bitterly criticized this, pointing out that the director of the television station formerly owned by Jón Ólafsson and recently bought by Baugur, Sigurður G. Guðjónsson, had been Ólafur Ragnar Grímsson’s campaign manager in his first presidential campaign, in 1996, and that Ólafur’s daughter was employed by Baugur. However, Baugur enjoys considerable goodwill in Iceland because their shops offer lower prices than are to be found elsewhere, while their owners are seen as an embodiment of an Icelandic dream of rags-to-riches; many also agreed that the media bill seemed to be a part of a political duel rather than an attempt to make general law. The conclusion of a long struggle was that Davíð Oddsson withdrew the bill instead of holding a national referendum on it, as required by the Icelandic constitution if the president refuses to sign a bill into law.

During his almost 14 years as Prime Minister, Davíð became acquainted with, or friend of, many Western leaders, including Bill Clinton, George W. Bush, Vaclav Klaus and Silvio Berlusconi. He has occasionally attended the meetings of the Bilderberg Group, and he has read a paper to the Mont Pelerin Society. But he only served as Minister of Foreign Affairs for one year. In the autumn of 2005, Davíð announced that he would leave politics. He said that he felt that the time had come for a new generation to take over. His close ally over many years, Geir H. Haarde, replaced him, both as leader of the Independence Party and Minister of Foreign Affairs. It may have contributed to Davíð’s decision, that a year earlier he had had a short, but dramatic, bout with cancer, soon after the crisis about the presidential refusal to sign the media bill into law. He was however fully cured and in October 2005, he became the Governor of the Central Bank.

[edit] Legacy

By Icelandic standards, Davíð Oddsson’s career is very successful. He was only 34 years old when he became Mayor of Reykjavík, and only 43 years when he formed his first government. He served as Prime Minister for over 13 years, longer than any other Icelandic politician. From the time Davíð became Prime Minister, the polls have consistently shown him to be the most popular politician in the country; at the same time, however, he has often (but not always) been the least popular politician. One reason for the controversy around Davíð is related to his implentation of wide-ranging and radical free-market reforms against bitter opposition. In that respect, his role in Icelandic politics is similar to that of Margaret Thatcher in the United Kingdom. It may have contributed to controversies about Davíð that in public debate, while he spoke softly, he carried a big stick; he was known for his biting wit; he often showed his ability to bring down the house with one innocent, but viciously funny remark; nevertheless his opponents, such as the former social democratic leader Össur Skarphéðinsson, have spoken about his personal charm and kindness. Davíð has consistently enjoyed very strong support from his own party, and while most observers would agree that he was a forceful leader, critics spoke of his authoritarianism and his disregard of proper democratic procedures. There is little doubt, whatever people think about Davíð Oddsson, that he has left a large mark on Icelandic political history and that under his leadership, the Icelandic economy has changed beyond recognition.

[edit] Elections

• 11 March 1991: At the Independence Party Convention, Davíð Oddsson received 733 votes, or 52.8%. Þorsteinn Pálsson received 651 votes, or 46.9%.
• 1991: In the parliamentary elections, the Independence Party received 38.6%, up from 27.2% four years earlier.
• 1995: In the parliamentary elections, the Independence Party received 37.1%
• 1999: In the parliamentary elections, the Independence Party received 40.7%
• 2003: In the parliamentary elections, the Independence Party received 33.7%

[edit] References

• May 2000 profile of Davíð Oddsson in the London Spectator, by Kristján Guy Burgess
• April 2001 profile of Davíð Oddsson in the Charlemagne column of The Economist

[edit] External links

Wikimedia Commons has media related to:

Davíð Oddsson

• Transcript of Davíð Oddsson's meeting with US President George W. Bush
• Privatisation during the Davíð Oddsson governments
• Article on Icelandic economic miracle by H.H.Gissurarson in Wall Street Journal 2004
• Davíð Oddsson’s address on the Icelandic economy at the AEI in Washington DC 14 June 2004
• Davíð Oddsson’s paper on Iceland and the EU at Linacre College, Oxford, 27 April 2004
• Comments by Richard Rahn on Davíð Oddsson’s paper at Mont Pelerin Society meeting in Iceland
• Summary of media coverage on Davíð Oddsson and Baugur in England