Davíð Oddsson ( ) (born 17
January 1948) 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 he
chaired the board of governors of the Central Bank of
Iceland
from 2005 to 2009. The
collapse of Iceland's banking
system led to vocal demands for his resignation both by members
of the Icelandic public and by Icelandic Prime Minister
Jóhanna
Sigurðardóttir, which resulted in him being replaced as head of
the Central Bank in 2009. In September 2009 he was hired as the
editor of
Morgunblaðið, one of Iceland's
largest newspapers.
Biography
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 his
grandfather died. He then moved with his mother and
grandmother to Reykjavík. 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 of 1970.
Davíð married
Ástríður Thorarensen, a
nurse; they have one son, Þorsteinn who is a judge at the district
court at Akureyri.
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 (
Þórarinn Eldjárn and
Hrafn Gunnlaugsson), a popular
radio comedy show for two years; he was for a while a political
commentator at the newspaper
Morgunblaðið, and the director
of publication of
Almenna bókafélagið, a
conservative publishing house.
He had been elected to the Municipal Council
in Reykjavík in 1974, for the Independence
Party.
Mayor of Reykjavík (1982–1991)
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 was behind the building of Reykjavík
City Hall
by The
Pond
in Reykjavík, and of Perlan
, a revolving
restaurant over the old water tanks in Öskjuhlíð. Despite his
libertarian leanings, Davíð also
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 new district, Grafarvogur
, was built and 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.
Alliance with the Social Democrats (1991–1995)
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 budget deficit and a burden of
unproductive investments; much money had been spent on fish farming
for example, with little result. Inflationary pressures were also
building up, while some fish stocks in the Icelandic waters were
being depleted. The budget 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 was 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, while some small companies were privatised.
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. From 1991, inflation in
Iceland was on a level with the neighbouring countries.
Alliance with the Progressive Party (1995–1999)
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; part-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; The two
coalition parties accepted the loud demand by many people that a
charge would be imposed on the holders of fishing quotas.
Davíð’s
two governments were staunch allies of the United States and strongly in support of NATO
, of which
Iceland is a founding member. He firmly supported
the actions undertaken by the U.S. and its allies in Afghanistan
and Iraq
, taking much
criticism from the Icelandic Left. Since 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. Davíð has not been enthusiastic about
joining the
European Union.
The latter Davíð Oddsson government (1995-2004) embarked on a
course of tax cuts. It cut the corporate income tax to 18%; it
abolished the net wealth tax; it lowered the personal income tax
and inheritance tax. This combination of opening up of the economy,
fiscal and monetary stabilisation created an entrepreneurial
climate in Iceland that spurred record economic growth in the
country, with the real average income of individual households
increasing by more than 17%.
Alliance with Progressive Party (1999–2004)
As a young man, Davíð Oddsson 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 festschrift
of more than 500 pages where many Icelandic writers, scholars and
politicians 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 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 concurred. 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 orchestrating 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 Alliance,
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".
Foreign Minister (2004–2005)
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 politicians, 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 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, 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,
Václav 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. A probable contribution
to this decision was a short, but dramatic, bout with cancer, soon
after the crisis over the failure of the media bill. He was,
however, fully cured.
Central Bank Governor (2005–2009)
In
October 2005, Davíð was appointed the Governor of the Central Bank
of Iceland. Following the collapse of the Icelandic
banking system in the autumn of 2008, the nation was forced to
ask for financial help from the International Monetary Fund
and friendly nations. Some blame the
collapse of the system on external factors, mainly a structural
flaw in the EEA Agreement, and the ruthlessness of the British
government which put Icelandic financial institutions on the list
of terrorist organisations. Others blame it on the economic
policies pursued by the Independence Party under Davíð’s
leadership, such as market liberalisation and privatisation.
Consequently, there were public calls for Davíð’s dismissal.
Following protests outside the Central Bank, the new Prime Minister
Jóhanna
Sigurðardóttir requested that Davíð and his two fellow
governors resign. He refused this request. On February 26, 2009,
following changes to the laws concerning the Central Bank, Davíð
was ousted from the bank and replaced by Norwegian economist
Svein Harald Øygard.
In April 2009, Davíð stated that Iceland needs to investigate the
“unusual and unconventional loans” given by the banks to senior
politicians during the years before the crisis.
Editor of Morgunblaðið (2009-present)
On September 24, 2009, the new owners of
Morgunblaðið announced that
Davíð Oddsson and
Haraldur
Johannessen, former editor of business paper
Viðskiptablaðið, had
been hired as editors of the paper. The decision was announced in
the wake of much speculation and rumours about who would be the new
editor after the dismissal of the previous editor,
Ólafur Þ. Stephensen.
References
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